UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒ | QUARTERLY REPORT PURSUANT TO SECTION13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended SeptemberJune 30, 20172023
☐ | TRANSITION REPORT |
For the transition period from to
Commission file number: 000-55473001-38659
BIOSIG TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware | 26-4333375 | |
(State or other jurisdiction of incorporation or organization) | ( | |
55 Greens Farms Road, 1st Floor Westport, CT | 06880 | |
(Address of principal executive office) | (Zip Code) | |
(203) 409-5444 | ||
(Registrant’s telephone number, including area code) |
Securities registered pursuant to Section 12(b) of principal executive offices) (zip code)the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common Stock, par value $0.001 per share | BSGM | The NASDAQ Capital Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ | |
Non-accelerated filer | ☒ | Smaller reporting company | ☒ | |
Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of November 9, 2017,August 13, 2023, there were 28,313,74874,927,499 shares of registrant’s common stock outstanding.
TABLE OF CONTENTS
PART I. | FINANCIAL INFORMATION | |||||
ITEM 1. | ||||||
3 | ||||||
4 | ||||||
5 | ||||||
6 | ||||||
7 | ||||||
8-29 | ||||||
ITEM 2. | 30-38 | |||||
ITEM 3. | 39 | |||||
ITEM 4. | 39 | |||||
PART II. | OTHER INFORMATION | |||||
ITEM 1. | 40 | |||||
ITEM 1A. | 40 | |||||
ITEM 2. | 40 | |||||
ITEM 3. | 41 | |||||
ITEM 4. | 41 | |||||
ITEM 5. | 41 | |||||
ITEM 6. | 42 | |||||
44 | ||||||
PART 1I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
| BIOSIG TECHNOLOGIES, INC. | ||||||||
| September 30, | December 31, | |||||||
| 2017 | 2016 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | 234,285 | $ | 1,055,895 | ||||
| Prepaid expenses | 150,482 | 134,263 | ||||||
| Total current assets | 384,767 | 1,190,158 | ||||||
| Property and equipment, net | 18,866 | 24,188 | ||||||
| Other assets: | ||||||||
| Deposits | 19,473 | 27,612 | ||||||
| Total assets | $ | 423,106 | $ | 1,241,958 | ||||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses, including $17,888 and $15,755 to related parties as of September 30, 2017 and December 31, 2016, respectively | $ | 1,301,603 | $ | 373,103 | ||||
| Dividends payable | 396,939 | 359,891 | ||||||
| Warrant liability | 2,240,510 | 1,937,234 | ||||||
| Derivative liability | 285,032 | 288,934 | ||||||
| Total current liabilities | 4,224,084 | 2,959,162 | ||||||
| Series C Preferred Stock, 985 and 1,070 shares issued and outstanding; liquidation preference of $985,000 and $1,070,000 as of September 30, 2017 and December 31, 2016, respectively | 985,000 | 1,070,000 | ||||||
| Stockholders' deficit | ||||||||
| Preferred stock, $0.001 par value, authorized 1,000,000 shares, designated 200 shares of Series A, 600 shares of Series B and 4,200 shares of Series C Preferred Stock | ||||||||
| Common stock, $0.001 par value, authorized 200,000,000 shares, 26,413,745 and 22,588,184 issued and outstanding as of September 30, 2017 and December 31, 2016, respectively | 26,414 | 22,588 | ||||||
| Additional paid in capital | 46,888,447 | 41,019,251 | ||||||
| Common stock subscription | 279,940 | - | ||||||
| Accumulated deficit | (51,980,779 | ) | (43,829,043 | ) | ||||
| Total stockholders' deficit | (4,785,978 | ) | (2,787,204 | ) | ||||
| Total liabilities and stockholders' deficit | $ | 423,106 | $ | 1,241,958 | ||||
BIOSIG TECHNOLOGIES, INC. | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(In Thousands, Except Par Value and Share Amounts) | ||||||||
June 30, | December 31, | |||||||
2023 | 2022 | |||||||
(unaudited) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash | $ | 1,252 | $ | 357 | ||||
Accounts receivable | 21 | 9 | ||||||
Employee advance | 5 | - | ||||||
Inventory, short term | 189 | 336 | ||||||
Net investment in leases, short term | 102 | 101 | ||||||
Prepaid expenses and vendor deposits | 418 | 325 | ||||||
Total current assets | 1,987 | 1,128 | ||||||
Property and equipment, net | 621 | 665 | ||||||
Right-to-use assets, net | 561 | 705 | ||||||
Other assets: | ||||||||
Inventory, long term | - | 1,141 | ||||||
Net investment in leases, long term | 69 | 120 | ||||||
Patents, net | 298 | 307 | ||||||
Other assets | 514 | 44 | ||||||
Total assets | $ | 4,050 | $ | 4,110 | ||||
LIABILITIES AND EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued expenses, including $0 and $120 to related parties as of June 30, 2023 and December 31, 2022, respectively | $ | 2,906 | $ | 2,852 | ||||
Deferred revenue, short term | - | 5 | ||||||
Dividends payable | 96 | 91 | ||||||
Lease liability, short term | 330 | 313 | ||||||
Total current liabilities | 3,332 | 3,261 | ||||||
Lease liability, long term | 282 | 452 | ||||||
Total long term liabilities | 282 | 452 | ||||||
Total liabilities | 3,614 | 3,713 | ||||||
Commitments and contingencies (Note 11) | ||||||||
Series C 9% Convertible Preferred Stock, $0.001 par value, $1,000 stated value, authorized 4,200 shares, 105 shares issued and outstanding; liquidation preference of $105 as of June 30, 2023 and December 31, 2022 | 105 | 105 | ||||||
Equity: | ||||||||
Preferred stock, $0.001 par value, authorized 1,000,000 shares, designated 200 shares of Series A, 600 shares of Series B, 4,200 shares of Series C, 1,400 shares of Series D, 1,000 shares of Series E, 200,000 shares of Series F Preferred Stock. 105 shares of Series C outstanding as of June 30, 2023 and December 31, 2022 (see above) | - | - | ||||||
Common stock, $0.001 par value, authorized 200,000,000 shares, 73,457,375 and 54,610,638 issued and outstanding as of June 30, 2023 and December 31, 2022, respectively | 73 | 55 | ||||||
Additional paid in capital | 234,568 | 216,232 | ||||||
Accumulated deficit | (234,399 | ) | (215,974 | ) | ||||
Total stockholders' equity attributable to BioSig Technologies, Inc. | 242 | 313 | ||||||
Non controlling interest | 89 | (21 | ) | |||||
Total equity | 331 | 292 | ||||||
Total liabilities and equity | $ | 4,050 | $ | 4,110 | ||||
The accompanying notes to theare an integral part of these unaudited condensed financial statementsCondensed Consolidated Financial Statements.
| BIOSIG TECHNOLOGIES, INC. | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | $ | 1,124,506 | $ | 560,514 | $ | 3,802,149 | $ | 2,139,671 | ||||||||
| General and administrative | 786,948 | 991,852 | 4,020,625 | 7,257,852 | ||||||||||||
| Depreciation | 2,834 | 2,570 | 8,900 | 7,811 | ||||||||||||
| Total operating expenses | 1,914,288 | 1,554,936 | 7,831,674 | 9,405,334 | ||||||||||||
| Loss from operations | (1,914,288 | ) | (1,554,936 | ) | (7,831,674 | ) | (9,405,334 | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Gain (loss) on change in fair value of derivatives | 113,724 | 17,771 | (320,131 | ) | (807,087 | ) | ||||||||||
| Interest income | 15 | - | 69 | 1 | ||||||||||||
| Loss before income taxes | (1,800,549 | ) | (1,537,165 | ) | (8,151,736 | ) | (10,212,420 | ) | ||||||||
| Income taxes (benefit) | - | - | - | - | ||||||||||||
| Net loss | (1,800,549 | ) | (1,537,165 | ) | (8,151,736 | ) | (10,212,420 | ) | ||||||||
| Preferred stock dividend | (22,307 | ) | (24,726 | ) | (68,915 | ) | (85,467 | ) | ||||||||
| NET LOSS AVAILABLE TO COMMON STOCKHOLDERS | $ | (1,822,856 | ) | $ | (1,561,891 | ) | $ | (8,220,651 | ) | $ | (10,297,887 | ) | ||||
| Net loss per common share, basic and diluted | $ | (0.07 | ) | $ | (0.08 | ) | $ | (0.33 | ) | $ | (0.55 | ) | ||||
| Weighted average number of common shares outstanding, basic and diluted | 26,071,408 | 20,581,041 | 24,762,649 | 18,847,515 | ||||||||||||
BIOSIG TECHNOLOGIES, INC. | ||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
(In Thousands, Except Par Value and Share Amounts) | ||||||||||||||||
(unaudited) | ||||||||||||||||
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Revenue: | ||||||||||||||||
Service | $ | - | $ | 8 | $ | 5 | $ | 16 | ||||||||
Total revenue | - | 8 | 5 | 16 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 1,709 | 1,351 | 2,771 | 2,968 | ||||||||||||
General and administrative | 9,107 | 4,302 | 15,352 | 10,703 | ||||||||||||
Depreciation and amortization | 92 | 71 | 176 | 126 | ||||||||||||
Total operating expenses | 10,908 | 5,724 | 18,299 | 13,797 | ||||||||||||
Loss from operations | (10,908 | ) | (5,716 | ) | (18,294 | ) | (13,781 | ) | ||||||||
Other income (expense): | ||||||||||||||||
Interest income, net | 3 | - | 7 | - | ||||||||||||
Other income (expense), net: | (225 | ) | - | (225 | ) | - | ||||||||||
Loss before income taxes | (11,130 | ) | (5,716 | ) | (18,512 | ) | (13,781 | ) | ||||||||
Income taxes (benefit) | - | - | - | - | ||||||||||||
Net loss | (11,130 | ) | (5,716 | ) | (18,512 | ) | (13,781 | ) | ||||||||
Non-controlling interest | 37 | (43 | ) | 87 | 59 | |||||||||||
Net loss attributable to BioSig Technologies, Inc. | (11,093 | ) | (5,759 | ) | (18,425 | ) | (13,722 | ) | ||||||||
Preferred stock dividend | (3 | ) | (3 | ) | (5 | ) | (5 | ) | ||||||||
Preferred stock deemed dividend | - | (108 | ) | - | (108 | ) | ||||||||||
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ | (11,096 | ) | $ | (5,870 | ) | $ | (18,430 | ) | $ | (13,835 | ) | ||||
Net loss per common share, basic and diluted | $ | (0.16 | ) | $ | (0.15 | ) | $ | (0.28 | ) | $ | (0.36 | ) | ||||
Weighted average number of common shares outstanding, basic and diluted | 70,281,555 | 39,823,034 | 65,878,496 | 37,920,734 | ||||||||||||
The accompanying notes to theare an integral part of these unaudited condensed financial statementsCondensed Consolidated Financial Statements.
| BIOSIG TECHNOLOGIES, INC. | ||||||||||||||||||||||||
| NINE MONTHS ENDED SEPTEMBER 30, 2017 | ||||||||||||||||||||||||
| Additional | ||||||||||||||||||||||||
| Common stock | Paid in | Common stock | Accumulated | |||||||||||||||||||||
| Shares | Amount | Capital | Subscription | Deficit | Total | |||||||||||||||||||
| Balance, December 31, 2016 | 22,588,184 | $ | 22,588 | $ | 41,019,251 | $ | - | $ | (43,829,043 | ) | $ | (2,787,204 | ) | |||||||||||
| Sale of common stock | 2,870,865 | 2,871 | 4,118,033 | - | - | 4,120,904 | ||||||||||||||||||
| Common stock issued for services | 625,000 | 625 | 894,124 | - | - | 894,749 | ||||||||||||||||||
| Common stock issued upon conversion of Series C Preferred Stock at $1.50 per share | 56,669 | 57 | 84,943 | - | - | 85,000 | ||||||||||||||||||
| Common stock issued settlement of Series C Preferred Stock accrued dividends at $1.37 per share | 24,021 | 24 | 31,844 | - | - | 31,868 | ||||||||||||||||||
| Common stock received and canceled in connection with short term swing profit reimbursement | (10,744 | ) | (11 | ) | 11 | - | - | - | ||||||||||||||||
| Common stock subscription received | - | - | - | 279,940 | - | 279,940 | ||||||||||||||||||
| Reclassify fair value of derivative liability to equity upon conversion of Series C Preferred Stock to common shares | - | - | 20,757 | - | - | 20,757 | ||||||||||||||||||
| Fair value of warrant issued to acquire research and development | - | - | 543,927 | - | - | 543,927 | ||||||||||||||||||
| Stock based compensation | 259,750 | 260 | 244,472 | - | - | 244,732 | ||||||||||||||||||
| Preferred stock dividend | - | - | (68,915 | ) | - | - | (68,915 | ) | ||||||||||||||||
| Net loss | - | - | - | - | (8,151,736 | ) | (8,151,736 | ) | ||||||||||||||||
| Balance, September 30, 2017 (unaudited) | 26,413,745 | $ | 26,414 | $ | 46,888,447 | $ | 279,940 | $ | (51,980,779 | ) | $ | (4,785,978 | ) | |||||||||||
BIOSIG TECHNOLOGIES, INC. | ||||||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY | ||||||||||||||||||||||||
THREE AND SIX MONTHS ENDED JUNE 30, 2023 | ||||||||||||||||||||||||
(In Thousands, Except Par Value and Share Amounts) | ||||||||||||||||||||||||
Additional | Non- | |||||||||||||||||||||||
Common stock | Paid in | Accumulated | controlling | |||||||||||||||||||||
Shares | Amount | Capital | Deficit | Interest | Total | |||||||||||||||||||
Balance, December 31, 2022 | 54,610,638 | $ | 55 | $ | 216,232 | $ | (215,974 | ) | $ | (21 | ) | $ | 292 | |||||||||||
Common stock issued for services | 1,167,500 | 1 | 1,096 | - | - | 1,097 | ||||||||||||||||||
Common stock issued in settlement of accounts payable | 88,000 | * | 105 | - | - | 105 | ||||||||||||||||||
Sale of common stock and warrants, net transactional costs of $482 | 8,500,300 | 8 | 6,740 | - | - | 6,748 | ||||||||||||||||||
Stock based compensation | 2,491,249 | 3 | 1,044 | - | 5 | 1,052 | ||||||||||||||||||
Preferred stock dividend | - | - | (2 | ) | - | - | (2 | ) | ||||||||||||||||
Net loss | - | - | - | (7,332 | ) | (50 | ) | (7,382 | ) | |||||||||||||||
Balance, March 31, 2023 (unaudited) | 66,857,687 | 67 | 225,215 | (223,306 | ) | (66 | ) | 1,910 | ||||||||||||||||
Common stock issued for services | 3,854,346 | 4 | 4,807 | - | - | 4,811 | ||||||||||||||||||
Sale of common stock and warrants, net transactional costs of $201 | 2,590,906 | 2 | 3,243 | - | - | 3,245 | ||||||||||||||||||
Sale of subsidiary stock | - | - | 1,379 | - | 188 | 1,567 | ||||||||||||||||||
Common stock issued for exercise of warrants cashlessly | 43,601 | * | * | - | - | - | ||||||||||||||||||
Stock based compensation | 110,835 | * | (73 | ) | - | 4 | (69 | ) | ||||||||||||||||
Preferred stock dividend | - | - | (3 | ) | - | - | (3 | ) | ||||||||||||||||
Net loss | - | - | - | (11,093 | ) | (37 | ) | (11,130 | ) | |||||||||||||||
Balance, June 30, 2023 (unaudited) | 73,457,375 | $ | 73 | $ | 234,568 | $ | (234,399 | ) | $ | 89 | $ | 331 | ||||||||||||
* - less than $1
The accompanying notes to theare an integral part of these unaudited condensed financial statementsCondensed Consolidated Financial Statements.
| BIOSIG TECHNOLOGIES, INC. | ||||||||
| (unaudited) | ||||||||
| Nine months ended September 30, | ||||||||
| 2017 | 2016 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (8,151,736 | ) | $ | (10,212,420 | ) | ||
| Adjustments to reconcile net loss to cash used in operating activities: | ||||||||
| Depreciation | 8,900 | 7,811 | ||||||
| Equipment distribution as officer compensation | 3,210 | - | ||||||
| Change in derivative liabilities | 320,131 | 807,087 | ||||||
| Equity based compensation | 1,139,481 | 5,453,240 | ||||||
| Fair value of issued warrant to acquire research and development | 543,927 | - | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses | (16,219 | ) | (103,222 | ) | ||||
| Security deposit | 8,139 | - | ||||||
| Accounts payable | 930,110 | 202,534 | ||||||
| Deferred rent payable | (1,609 | ) | 417 | |||||
| Net cash used in operating activities | (5,215,666 | ) | (3,844,553 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of property and equipment | (6,788 | ) | (12,095 | ) | ||||
| Net cash used in investing activity | (6,788 | ) | (12,095 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from sale of common stock | 4,120,904 | 3,053,868 | ||||||
| Proceeds from common stock subscription | 279,940 | - | ||||||
| Net cash provided by financing activities | 4,400,844 | 3,053,868 | ||||||
| Net decrease in cash and cash equivalents | (821,610 | ) | (802,780 | ) | ||||
| Cash and cash equivalents, beginning of the period | 1,055,895 | 953,234 | ||||||
| Cash and cash equivalents, end of the period | $ | 234,285 | $ | 150,454 | ||||
| Supplemental disclosures of cash flow information: | ||||||||
| Cash paid during the period for interest | $ | - | $ | - | ||||
| Cash paid during the period for income taxes | $ | - | $ | - | ||||
| Non cash investing and financing activities: | ||||||||
| Common stock issued upon conversion of Series C Preferred Stock and accrued dividends | $ | 116,868 | $ | 465,355 | ||||
| Reclassify fair value of derivative liability to equity | $ | 20,757 | $ | 97,897 | ||||
BIOSIG TECHNOLOGIES, INC. | ||||||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY | ||||||||||||||||||||||||
THREE AND SIX MONTHS ENDED JUNE 30, 2022 | ||||||||||||||||||||||||
(In Thousands, Except Par Value and Share Amounts) | ||||||||||||||||||||||||
Additional | Non- | |||||||||||||||||||||||
Common stock | Paid in | Accumulated | controlling | |||||||||||||||||||||
Shares | Amount | Capital | Deficit | Interest | Total | |||||||||||||||||||
Balance, December 31, 2021 | 35,567,180 | $ | 36 | $ | 201,127 | $ | (188,922 | ) | $ | 219 | $ | 12,460 | ||||||||||||
Common stock issued for services | 1,312,500 | 1 | 1,600 | - | - | 1,601 | ||||||||||||||||||
Change in fair value of modified options | - | - | 15 | - | - | 15 | ||||||||||||||||||
Sale of common stock and warrants, net transactional costs of $3 | 2,613,130 | 2 | 3,000 | - | - | 3,002 | ||||||||||||||||||
Stock based compensation | 66,249 | * | 500 | - | (101 | ) | 399 | |||||||||||||||||
Preferred stock dividend | - | - | (2 | ) | - | - | (2 | ) | ||||||||||||||||
Net loss | - | - | - | (7,963 | ) | (102 | ) | (8,065 | ) | |||||||||||||||
Balance, March 31, 2022 (unaudited) | 39,559,059 | 39 | 206,240 | (196,885 | ) | 16 | 9,410 | |||||||||||||||||
Common stock issued for services | 567,500 | 1 | 482 | - | - | 483 | ||||||||||||||||||
Sale of common stock under At-the-market offering, net of transaction expenses of $46 | 322,404 | * | 302 | - | - | 302 | ||||||||||||||||||
Sale of common stock, net of transactional costs of $438 | 4,341,667 | 5 | 2,813 | - | - | 2,818 | ||||||||||||||||||
Issuance of subsidiary stock in settlement of debt to parent | - | - | (292 | ) | - | 292 | - | |||||||||||||||||
Stock based compensation | 21,250 |
| * | (86 | ) | - | (231 | ) | (317 | ) | ||||||||||||||
Accretion of deemed preferred stock dividend | - | - | 108 | - | - | 108 | ||||||||||||||||||
Deemed preferred stock dividend | - | - | (108 | ) | - | - | (108 | ) | ||||||||||||||||
Preferred stock dividend | - | - | (3 | ) | - | - | (3 | ) | ||||||||||||||||
Net loss | - | - | - | (5,759 | ) | 43 | (5,716 | ) | ||||||||||||||||
Balance, June 30, 2022 (unaudited) | 44,811,880 | $ | 45 | $ | 209,456 | $ | (202,644 | ) | $ | 120 | $ | 6,977 | ||||||||||||
* - less than $1
The accompanying notes to theare an integral part of these unaudited condensed financial statements
Condensed Consolidated Financial Statements.
BIOSIG TECHNOLOGIES, INC. | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(In Thousands, Except Par Value and Share Amounts) | ||||||||
(unaudited) | ||||||||
Six months ended June 30, | ||||||||
2023 | 2022 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net loss | $ | (18,512 | ) | $ | (13,781 | ) | ||
Adjustments to reconcile net loss to cash used in operating activities: | ||||||||
Depreciation and amortization | 176 | 126 | ||||||
Non-cash lease expense | 144 | 166 | ||||||
Non-cash inventory writedown | 1,307 | - | ||||||
Equity based compensation | 6,891 | 2,166 | ||||||
Change in fair value of modified options | - | 15 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (12 | ) | - | |||||
Lease receivables | 50 | - | ||||||
Employee advances | (5 | ) | - | |||||
Inventory | (19 | ) | (145 | ) | ||||
Prepaid expenses and other | (564 | ) | (277 | ) | ||||
Deferred revenue | (5 | ) | (16 | ) | ||||
Accounts payable and accrued expenses | 159 | (731 | ) | |||||
Operating lease liabilities | (153 | ) | (167 | ) | ||||
Net cash used in operating activities | (10,543 | ) | (12,644 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchase of property and equipment | (122 | ) | (60 | ) | ||||
Net cash used in investing activity | (122 | ) | (60 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from sale of common stock and warrants, net of issuance costs | 9,993 | 5,820 | ||||||
Proceeds from sale of common stock under a At-the-market offering, net of issuance costs | - | 302 | ||||||
Proceeds from the sale of subsidiary stock to non-controlling interest, net of issuance costs | 1,567 | - | ||||||
Net cash provided by financing activities | 11,560 | 6,122 | ||||||
Net increase (decrease) in cash and cash equivalents | 895 | (6,582 | ) | |||||
Cash, beginning of the period | 357 | 11,659 | ||||||
Cash, end of the period | $ | 1,252 | $ | 5,077 | ||||
Supplemental disclosures of cash flow information: | ||||||||
Cash paid during the period for interest | $ | - | $ | - | ||||
Cash paid during the period for income taxes | $ | - | $ | - | ||||
Non cash investing and financing activities: | ||||||||
Common stock issued in settlement of debt | $ | 105 | $ | - | ||||
Dividend payable on preferred stock charged to additional paid in capital | $ | 5 | $ | 5 | ||||
Series C convertible preferred stock deemed dividend | $ | - | $ | 108 | ||||
Record right-to-use assets and related lease liability | $ | - | $ | 502 | ||||
The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 20172023
(unaudited)
NOTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION
Business and organization
BioSig Technologies, Inc. (the(“BioSig” or the “Company”) was initially incorporated on February 24, 2009 under the laws of the State of Nevada and subsequently re-incorporated in the state of Delaware in 2011. The Company is principally devoted to improving the qualitystandard care in electrophysiology with our PURE EP Platform’s enhanced signal acquisition, digital signal processing, and analysis during ablation of cardiac recordings obtained during EP studies and catheter ablation procedures.arrhythmias. The Company has not generated anyminimal revenue to date and consequently its operations are subject to all risks inherent in business enterprises in early commercialization stage.
On November 7, 2018, the establishmentCompany formed a subsidiary under the laws of the State of Delaware originally under the name of NeuroClear Technologies, Inc. which was renamed to ViralClear Pharmaceuticals, Inc. (“ViralClear”) in March 2020. The subsidiary was established to pursue additional applications of the PURE EP™ signal processing technology outside of cardiac electrophysiology, and subsequently in 2020, was repurposed to develop merimepodib, a new business enterprise.
As of June 30, 2023, the Company had a majority interest in ViralClear of 69.08%.
On July 2, 2020, the Company formed an additional subsidiary, NeuroClear Technologies, Inc., a Delaware corporation, which was renamed to BioSig AI Sciences, Inc. (“BioSig AI”) on May 31, 2023. The subsidiary was established to pursue clinical needs of cardiac and neurological disorders through recordings and analyses of action potentials. BioSig AI aims to contribute to the advancements of AI-based diagnoses and therapies. On June 30, 2023, BioSig AI sold 1,710,000 shares of its common stock for net proceeds of $1,567,120 to fund initial operations. At June 30, 2023, the Company had a majority interest in BioSig AI of 87.5% (see Notes 8 and 10) prior to additional offerings after June 30, 2023 (see Note 14).
The unaudited condensed interimconsolidated financial statements include the accounts of BioSig Technologies, Inc., and its majority owned subsidiaries, ViralClear and BioSig AI.
The unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.
The condensed consolidated balance sheet as of December 31, 20162022 has been derived from audited financial statements.
Operating results for the three and ninesix months ended SeptemberJune 30, 20172023 are not necessarily indicative of results that may be expected for the year ending December 31, 2017.2023. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 20162022 filed with the Company’s Form 10-K with the Securities and Exchange Commission on March 31, 2023.
COVID-19
The World Health Organization determined that COVID-19 no longer fit the definition of a public health emergency and the U.S. government let the declaration of a public health emergency associated with COVID-19 expire on May 11, 2023. COVID-19 is expected to remain a serious endemic threat for an indefinite future period and may continue to adversely affect the global economy, resulting in delays to our commercialization objectives of the PURE EP Platform during 2023.
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2017.2023
(unaudited)
Inflation Reduction Act of 2022
On August 16, 2022, the U.S. government enacted the Inflation Reduction Act of 2022 that includes, among other provisions, changes to the U.S. corporate income tax system, including a fifteen percent minimum tax based on "adjusted financial statement income," which is effective for tax years beginning after December 31, 2022, and a one percent excise tax on net repurchases of stock after December 31, 2022. The Company evaluated the Inflation Reduction Act and its requirements, as well as its application to our business, and determined the Inflation Reduction Act to not have a material impact on our financial results.
NOTE 2 – GOING CONCERN AND MANAGEMENT’SMANAGEMENT’S LIQUIDITY PLANS
As of SeptemberJune 30, 2017,2023, the Company had cash of $234,285$1.3 million and working capital deficit (current liabilities in excess of current assets) of $3,839,317 principally due to$(1.3) million. During the inclusion of non-cash derivative and warrant liabilities recorded in current liabilities. In addition, the Company raised approximately $4,401,000 in ninesix months ended SeptemberJune 30, 2017 through the sale of common stock and warrants and approximately $2,850,000 subsequent to September 30, 2017 (See Note 12). As of September 30, 2017, excluding the derivative and warrant liabilities, the Company’s working capital deficit would have been $1,313,775. During the nine months ended September 30, 2017,2023, the Company used net cash in operating activities of $5,215,666.$10.5 million. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management believes that the Company has sufficient funds to meet its research and development and other funding requirements for at least the next 4 months.
The Company’s primary source of operating funds since inception has been cash proceeds from private placementsthe sale of common and preferred stock. The Company has experienced net losses and negative cash flows from operations since inception and expects these conditions to continue for the foreseeable future.
The Company’s plans include the continued commercialization of the PURE EP Platform and other applications of our core technology and raising capital through the sale of additional equity securities, debt or capital inflows from strategic partnerships. The Company’s strategic shift from a focus on technology development to commercialization will allow the Company to significantly reduce operating expenses.
The Company has stockholders’ deficiencies at September 30, 2017 and requireswill require additional financing to fund future operations. Further, although the Company does not have anybegan commercial products available for sale andoperations, there is no assurance that if approval of their products is received that the Company will be able to generate sufficient cash flow to fund operations. In addition, there can be no assurance that the Company’s continuing research and development will be successfully completed or that any productadditional products will be approved or commercially viable.
Accordingly, the accompanying unaudited condensed consolidated financial statements have been prepared in conformity with U.S. GAAP, which contemplates continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the unaudited condensed consolidated financial statements do not necessarily purport to represent realizable or settlement values. The unaudited condensed consolidated financial statements do not include any adjustment that might result from the outcome of this uncertainty.
NOTE 3 –SUMMARY– SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of estimates
The preparation of these unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the recoverability and useful lives of long-lived assets, the fair value of the Company’s stock, stock-based compensation fair values relating to warrant and other derivative liabilities and the valuation allowance related to deferred tax assets. Actual results may differ from these estimates.
Revenue Recognition
The Company derives its revenue primarily from the sale and lease of its medical device, the PURE EP™ Platform, and well as related support and maintenance services and software upgrades in connection with the device.
The Company recognizes revenue in accordance with Accounting Standards Codification (ASC) 842, Leases (“ASC 842”) for lease components and ASC 606, Revenue from Contracts with Customers (“ASC 606”) for non-lease components. For medical device sales, the Company recognize revenue under ASC 606.
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2023
(unaudited)
The core principle of ASC 606 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
Under ASC 606, the Company determines revenue recognition through the following five steps:
● | Identify the contract with the customer; | |
● | Identify the performance obligations in the contract; | |
● | Determine the transaction price; | |
● | Allocate the transaction price to the performance obligation in the contract; and | |
● | Recognize revenue when, or as, the performance obligations are satisfied. |
Performance obligations are the units of accounting for revenue recognition and generally represent the distinct goods or services that are promised to the customer. If the Company determines that it has not satisfied a performance obligation, it will defer recognition of the revenue until the performance obligation is deemed to be satisfied. Once the PURE EP Platform is delivered, installed, and accepted by the customer, our performance obligation is recognized. Support, maintenance, and software upgrades are performance obligations over a defined period and are recognized ratably over the contractual service period. Customers typically purchase these services with the initial sale of the PURE EP Platform and do not have the right to terminate their contracts unless we fail to perform material obligations.
The Company may execute more than one contract with a single customer. If so, it is evaluated whether the agreements were negotiated as a package with a single objective, whether the amount of consideration to be paid in one agreement depends on the price and/or performance of another agreement, or whether the goods or services promised in the agreements represent a single performance obligation. The conclusions reached can impact the allocation of the transaction price to each performance obligation and the timing of revenue recognition related to those arrangements.
The Company records accounts receivable for amounts invoiced to customers for which the Company has an unconditional right to consideration as provided under the contractual arrangement. Unbilled receivables, if any, include amounts related to the Company’s contractual right to consideration for completed performance obligations not yet invoiced. Deferred revenue includes payments received in advance of performance under the contract. Our unbilled receivables and deferred revenue are reported on an individual contract basis at the end of each reporting period. Unbilled receivables are classified as current or noncurrent based on the timing of when we expect to bill the customer. Deferred revenue is classified as current or noncurrent based on the timing of when we expect to recognize revenue.
The Company’s unconditional right to consideration for goods and services transferred to the customer is included in accounts receivable, net (if any) in the Company’s consolidated balance sheet.
In 2022, the Company entered two leases for our PURE EP Platform at a rate of $4,333 per month each. The term of the leases is for 30 months with an option provided to extend for an additional one year. The leases also have an option to purchase at the end of the lease at the fair market value. The Company accounts for the leases in accordance with ASC 842 and ASC 606.
The Company determined the leases meet the criteria of a sales-type lease whereby the present value of the future expected revenue (less the present value of the estimated unguaranteed residual value), cost of sales and profit and loss are recognized at the lease inception. Non-lease components are recognized under ASC 606. The discount rate utilized was the contract explicit rate of 2% per annum. (See Note 6 – Lease Receivables).
A reconciliation of contract liabilities with customers for the six months ended June 30, 2023 and 2022, are presented below:
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2023
(unaudited)
Six months ended June 30, 2023:
Balance at December 31, 2022 (000’s) | Consideration Received (000’s) | Recognized in Revenue (000’s) | Balance at June 30, 2023 (000’s) | |||||||||||||
Service revenue | $ | 5 | $ | - | $ | (5 | ) | $ | - | |||||||
Six months ended June 30, 2022:
Balance at December 31, 2021 (000’s) | Consideration Received (000’s) | Recognized in Revenue (000’s) | Balance at June 30, 2022 (000’s) | |||||||||||||
Service revenue | $ | 37 | $ | - | $ | (16 | ) | $ | 21 | |||||||
The table below summarizes our deferred revenue as of June 30, 2023 and December 31, 2022:
June 30, 2023 (000’s) | December 31, 2022 (000’s) | |||||||
Deferred revenue-current | $ | - | $ | 5 | ||||
Deferred revenue-noncurrent | - | - | ||||||
Total deferred revenue | $ | - | $ | 5 | ||||
The Company had one customer which accounts for 100% of our revenue in the six months ended June 30, 2023 and for the three and six months ended June 30, 2022.
At June 30, 2023, the Company had three customers representing 67.5%, 20.6% and 11.9% of the outstanding accounts receivable.
At December 31, 2022, the Company had two customers representing 52.2% and 47.8% of the outstanding accounts receivable.
The Company utilized one contract manufacturer for the manufacture and supply of the PURE EP Platform for the three and six months ended June 30, 2023 and 2022.
Cost of Revenue
Cost of revenue consists primarily of the delivered cost of our medical device(s) sold or leased under a sales-type lease.
Allowance for Doubtful Accounts
The Company adjusts accounts receivable down to net realizable value with its allowance methodology. In determining the allowance for doubtful accounts for estimated losses, aged receivables are analyzed periodically by management. Each identified receivable is reviewed based upon historical collection experience, financial condition of the customer and the status of any open or unresolved issues with the customer preventing the payment thereof. Corrective action, if necessary, is taken by the Company to resolve open issues related to unpaid receivables. The allowance for doubtful accounts was $0 at June 30, 2023 and December 31, 2022. The Company believes that its reserve is adequate, however results may differ in future periods. For the three and six months ended June 30, 2023 and 2022, bad debt expense totaled $0.
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2023
(unaudited)
Concentrations of Credit Risk
Financial instruments and related items, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents. The Company places its cash and temporary cash investments with credit quality institutions. At times, such amounts may be in excess of the FDIC insurance limit. At June 30, 2023 and December 31, 2022, deposits in excess of FDIC limits were $0.7 million and $0.05 million, respectively.
Fair Value of Financial Instruments
Accounting Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”) requires disclosure of the fair value of certain financial instruments. The carrying value of cash, and cash equivalents, accounts payable and accrued liabilities as reflected in the balance sheets, approximate fair value because of the short-term maturity of these instruments. All other significant financial assets, financial liabilities and equity instruments of the Company are either recognized or disclosed in the financial statements together with other information relevant for making a reasonable assessment of future cash flows, interest rate risk and credit risk. Where practicable the fair values of financial assets and financial liabilities have been determined and disclosed; otherwise only available information pertinent to fair value has been disclosed.
The Company follows Accounting Standards Codification subtopic 820-10, Fair Value Measurements and Disclosures (“ASC 820-10”) and Accounting Standards Codification subtopicASC 825-10, Financial Instruments (“ASC 825-10”), which permits entities to choose to measure many financial instruments and certain other items at fair value.
Inventory
The inventory is comprised of finished goods available for sale and are stated at the lower of cost or net realizable value using specific identification method for serial numbered inventory and first-in, first-out method for all other inventory for valuation. The inventory June 30, 2023 and December 31, 2022 was comprised of the following:
June 30, 2023 (000’s) | December 31, 2022 (000’s) | |||||||
Finished goods | $ | 1,496 | $ | 1,477 | ||||
Less: Inventory reserve | (1,307 | ) | - | |||||
Finished goods, net | 189 | 1,477 | ||||||
Finished goods-short term | 189 | 336 | ||||||
Finished goods-long term | $ | - | $ | 1,141 | ||||
During the six months ended June 30, 2023, the Company recorded an allowance for inventory for $1,307 due to age of underlying product.
Prepaid Expenses and Vendor Deposits
Prepaid expenses and vendor deposits are comprised of prepaid insurance, operating expenses and other prepayments.
Leases (lessee)
The Company accountsdetermines if a contractual arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, current operating lease liabilities, and noncurrent operating lease liabilities on the Company’s consolidated balance sheet. The Company evaluates and classifies leases as operating or finance leases for derivative instrumentsfinancial reporting purposes. The classification evaluation begins at the commencement date and the lease term used in accordancethe evaluation includes the non-cancellable period for which the Company has the right to use the underlying asset, together with renewal option periods when the exercise of the renewal option is reasonably certain and failure to exercise such option which result in an economic penalty. All the Company’s real estate leases are classified as operating leases. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term.
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2023
(unaudited)
The lease payments included in the present value are fixed lease payments. As most of the Company’s leases do not provide an implicit rate, the Company estimates its collateralized incremental borrowing rate, based on information available at the commencement date, in determining the present value of lease payments. The Company applies the portfolio approach in applying discount rates to its classes of leases. The operating lease ROU assets include any payments made before the commencement date. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company does not currently have subleases. The Company does not currently have residual value guarantees or restrictive covenants in its leases.
Leases (lessor)
The Company classifies contractual lease arrangements entered as a lessor as a sales-type, direct financing or operating lease as described in ASC 815, which establishes accounting842-Leases. For sales-type leases, the Company derecognizes the leased asset and reporting standards for derivative instruments and hedging activities, including certain derivative instruments embedded in other financial instruments or contracts and requires recognition of all derivativesrecognizes the lease investment on the balance sheetsheet.
Property and Equipment
Property and equipment are stated at cost and depreciated using the straight-line method over their estimated useful lives of 3 to 5 years. When retired or otherwise disposed, the related carrying value and accumulated depreciation are removed from the respective accounts and the net difference less any amount realized from disposition, is reflected in earnings.
Other Assets:
Other assets are comprised of the following:
June 30, 2023 (000’s) | December 31, 2022 (000’s) | |||||||
Vendor deposits | $ | 470 | $ | - | ||||
Security deposits | 43 | 43 | ||||||
Trademarks | 1 | 1 | ||||||
Total other assets | $ | 514 | $ | 44 | ||||
Impairment of Long-lived Assets
The Company recognizes an impairment of long-lived assets used in operations, other than goodwill, when events or circumstances indicate that the asset might be impaired and the estimated undiscounted cash flows to be generated by those assets over their remaining lives are less than the carrying amount of those items. The net carrying value of assets not recoverable is reduced to fair value, regardless of hedging relationship designation. Accounting for changes in fair value ofwhich is typically calculated using the derivative instruments depends on whether the derivatives qualify as hedge relationships and the types of relationships designated are based on the exposures hedged. At September 30, 2017 and December 31, 2016, thediscounted cash flow method. The Company did not haverecognize and record any derivative instruments that were designated as hedges.
Research and development costs
The Company accounts for research and development costs in accordance with the Accounting Standards Codification subtopic 730-10, Research and Development (“ASC 730-10”). Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and developments costs are expensed when the contracted work has been performed or as milestone results have been achieved. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred. The Company incurred research and development expenses of $1,124,506$1.7 million and $3,802,149$2.8 million for the three and ninesix months ended SeptemberJune 30, 2017;2023; and $560,514$1.4 million and $2,139,671$3.0 million for the three and ninesix months ended SeptemberJune 30, 2016,2022, respectively.
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 20172023
(unaudited)
Net Earnings (Loss)Income (loss) Per Common Share
The Company computes earnings (loss) per share under Accounting Standards Codification subtopic 260-10, Earnings Per Share (“ASC 260-10”). Net loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the year.period. Diluted earnings per share, if presented, would include the dilution that would occur upon the exercise or conversion of all potentially dilutive securities into common stock using the “treasury stock” and/or “if converted” methods as applicable.
The computation of basic and diluted loss per share as of SeptemberJune 30, 20172023 and 20162022 excludes potentially dilutive securities when their inclusion would be anti-dilutive, or if their exercise prices were greater than the average market price of the common stock during the period.
Potentially dilutive securities excluded from the computation of basic and diluted net lossincome (loss) per share are as follows:
September 30, 2017 | September 30, 2016 | |||||||
| Series C convertible preferred stock | 656,667 | 726,667 | ||||||
| Options to purchase common stock | 6,829,421 | 8,090,190 | ||||||
| Warrants to purchase common stock | 11,380,582 | 8,333,235 | ||||||
| Totals | 18,866,670 | 17,150,092 | ||||||
June 30, 2023 | June 30, 2022 | |||||||
Series C convertible preferred stock | 509,231 | 257,524 | ||||||
Options to purchase common stock | 5,309,651 | 5,023,484 | ||||||
Warrants to purchase common stock | 10,172,823 | 3,649,123 | ||||||
Restricted stock units to acquire common stock | 580,000 | 111,250 | ||||||
Totals | 16,571,705 | 9,041,381 | ||||||
Stock Based Compensation
The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. For employees and directors, the fair value of the award isas measured on the grant date and for non-employees, the fair value of the award is generally re-measured on vesting dates and interim financial reporting dates until the service period is complete.date. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period.
Income Taxes
The Company follows Accounting Standards Codification subtopic 740-10, Income Taxes (“ASC 740-10”) for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability during each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change. Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods.
Patents, Net
The Company capitalizes certain initial asset costs in connection with patent applications including registration, documentation and other professional fees associated with the application. Patent costs incurred prior to the Company’s U.S. Food and Drug Administration (“FDA”) 510(k) application on March 28, 2018 were charged to research and development expense as incurred. Commencing upon first in-man trials on February 18 and 19, 2019, capitalized costs are amortized to expense using the straight-line method over the lesser of the legal patent term or the estimated life of the product of 20 years. During the three and six months ended June 30, 2023, the Company recorded amortization of $4,752 and $9,603; and $4,752 and $9,503 for the three and six months ended June 30, 2022 to current period operations, respectively.
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 20172023
(unaudited)
Warranty
The Company generally warrants its products to be free from material defects and to conform to material specifications for a period of up to two (2) years. Warranty expense is estimated based primarily on historical experience and is reflected in the consolidated financial statements.
Segment Information
Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision-making group, in making decisions how to allocate resources and assess performance. The information disclosed herein represents all of the material financial information related to the Company’s principal operating segments. (See Note 12 – Segment Reporting).
Non-controlling Interest
The Company’s non-controlling interest represents the non-controlling shareholders ownership interests related to the Company’s subsidiaries, ViralClear and BioSig AI. The Company reports its non-controlling interest in subsidiaries as a separate component of equity in the unaudited condensed consolidated balance sheets and reports both net loss attributable to the non-controlling interest and net loss attributable to the Company’s common shareholders on the face of the unaudited condensed consolidated statements of operations. The Company’s equity interest in ViralClear and BioSig AI is 69.08% and 87.53%; and the non-controlling stockholders’ interest is 30.92% and 12.47%, respectively as of June 30, 2023. This is reflected in the consolidated statements of changes in equity.
Warrants
The Company accounts for registration rights agreementsstock warrants as either equity instruments, derivative liabilities, or liabilities in accordance with the Accounting Standards Codification subtopic 825-20, Registration Payment Arraignments (“ASC 825-20”). Under ASC 825-20, the Company is required to disclose the nature and terms of the arraignment, the maximum potential amount and to assess each reporting period the probable liability under these arraignments and, if exists, to record or adjust the liability to current period operations.
Recent Accounting Pronouncements
In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of a down round feature. For freestanding equity classifiedCredit Losses on Financial Instruments (“ASU 2016-13”), which requires the measurement and recognition of expected credit losses for financial instruments,assets held at amortized cost. ASU 2016-13 replaces the amendments require entitiesexisting incurred loss impairment model with an expected loss model that present earnings per share (EPS) in accordance with Topic 260requires the use of forward-looking information to recognizecalculate credit loss estimates. It also eliminates the effectconcept of the down round feature when it is triggered. That effect is treated as a dividendother-than-temporary impairment and requires credit losses on available-for-sale debt securities to be recorded through an allowance for credit losses instead of as a reduction of income available to common shareholders in basic EPS. Convertible instruments with embedded conversion options that have down round features are now subject to the specialized guidance for contingent beneficial conversion features (in Subtopic 470-20, Debt—Debt with Conversion and Other Options), including related EPS guidance (in Topic 260). The amendments in Part II of this Update recharacterize the indefinite deferral of certain provisions of Topic 480 that now are presented as pending content in the Codification, to a scope exception.
There arewere various other updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company'sCompany’s financial position, results of operations or cash flows.
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 20172023
(unaudited)
NOTE 4 – PROPERTY AND EQUIPMENT
Property and equipment as of SeptemberJune 30, 20172023 and December 31, 20162022 is summarized as follows:
September 30, 2017 | December 31, 2016 | |||||||
| Computer equipment | $ | 85,549 | $ | 84,704 | ||||
| Furniture and fixtures | 11,837 | 10,117 | ||||||
| Subtotal | 97,386 | 94,821 | ||||||
| Less accumulated depreciation | (78,520 | ) | (70,633 | ) | ||||
| Property and equipment, net | $ | 18,866 | $ | 24,188 | ||||
June 30, 2023 (000’s) | December 31, 2022 (000’s) | |||||||
Computer equipment | $ | 512 | $ | 397 | ||||
Furniture and fixtures | 109 | 109 | ||||||
Manufacturing equipment | 372 | 372 | ||||||
Testing/Demo equipment | 311 | 304 | ||||||
Leasehold improvements | 84 | 84 | ||||||
Total | 1,388 | 1,266 | ||||||
Less accumulated depreciation | (767 | ) | (601 | ) | ||||
Property and equipment, net | $ | 621 | $ | 665 | ||||
Property and equipment are stated at cost and depreciated using the straight-line method over their estimated useful lives of 3 to 5 years. Leasehold improvements are depreciated over the related expected lease term. When retired or otherwise disposed, the related carrying value and accumulated depreciation are removed from the respective accounts and the net difference less any amount realized from disposition is reflected in earnings.
Depreciation expense was $2,834expenses were $86,680 and $8,900$166,148 for three and six months ended June 30, 2023 and $66,243 and $116,625 for the three and ninesix months ended SeptemberJune 30, 2017, respectively;2022, respectively.
NOTE 5 – RIGHT TO USE ASSETS AND LEASE LIABILITY
As of June 30, 2023 and $2,570December 31, 2022, the Company had outstanding two leases with aggregate payments of $29,500 and $7,811$28,951 per month, respectively, expiring through July 31, 2025.
Right to use assets is summarized below:
June 30, 2023 (000’s) | December 31, 2022 (000’s) | |||||||
Right to use asset | $ | 995 | $ | 995 | ||||
Less accumulated amortization | (434 | ) | (290 | ) | ||||
Right to use assets, net | $ | 561 | $ | 705 | ||||
During the three and six months ended June 30, 2023, the Company recorded $93,057 and $184,577 and $108,612 and $216,346 for the three and ninesix months ended SeptemberJune 30, 2016,2022 as lease expense to current period operations, respectively.
Lease liability is summarized below:
June 30, 2023 (000’s) | December 31, 2022 (000’s) | |||||||
Total lease liability | $ | 612 | $ | 765 | ||||
Less: short term portion | (330 | ) | (313 | ) | ||||
Long term portion | $ | 282 | $ | 452 | ||||
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2023
(unaudited)
Maturity analysis under these lease agreements are as follows (000’s):
Year ended December 31, 2023 | $ | 180 | ||
Year ended December 31, 2024 | 370 | |||
Year ended December 31, 2025 | 106 | |||
Total | 656 | |||
Less: Present value discount | (44 | ) | ||
Lease liability | $ | 612 |
Lease expense for the three months ended June 30, 2023 and 2022 was comprised of the following:
June 30, 2023 (000’s) | June 30, 2022 (000’s) | |||||||
Operating lease expense | $ | 84 | $ | 81 | ||||
Short-term lease expense | 7 | 9 | ||||||
Variable lease expense | 2 | 19 | ||||||
Total | $ | 93 | $ | 109 | ||||
Lease expense for the six months ended June 30, 2023 and 2022 was comprised of the following:
June 30, 2023 (000’s) | June 30, 2022 (000’s) | |||||||
Operating lease expense | $ | 168 | $ | 166 | ||||
Short-term lease expense | 14 | 18 | ||||||
Variable lease expense | 3 | 32 | ||||||
Total | $ | 185 | $ | 216 | ||||
NOTE 6 – LEASE RECEIVABLES
In 2022, the Company entered into two leases for our PURE EP Platform at a rate of $4,333 per month each. The term of the leases is for 30 months with an option provided to extend for an additional one year. The leases also have an option to purchase at the end of the lease at the fair market value.
The Company determined the leases meet the criteria of a sales-type lease whereby the present value of the future expected revenue (less the present value of the estimated unguaranteed residual value), cost of sales and profit and loss are recognized at the lease inception. The discount rate utilized was the contract explicit rate of 2% per annum. The present value of the unguaranteed residual assets of $3 are included in net investment in leases in the balance sheet.
A reconciliation of lease receivables with customers for the six months ended June 30, 2023 is presented below (none for 2022):
Six months ended June 30, 2023:
Balance at December 31, 2022 (000’s) | Recognized in Revenue (000’s) | Invoiced to Customer (000’s) | Interest Earned (000’s) | Unguaranteed Residual Assets (000’s) | Balance at June 30, 2023 (000’s) | |||||||||||||||||||
Contract asset | $ | 221 | $ | - | $ | (53 | ) | $ | - | $ | 3 | $ | 171 | |||||||||||
Less current portion | (101 | ) | - | (1 | ) | - | - | (102 | ) | |||||||||||||||
Noncurrent portion | $ | 120 | $ | - | $ | (54 | ) | - | $ | 3 | $ | 69 | ||||||||||||
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2023
(unaudited)
Future cash flows under this lease agreement are as follows (000’s):
Year ended December 31, 2023 | $ | 53 | ||
Year ended December 31, 2024 | 104 | |||
Year ended December 31, 2025 | 13 | |||
Present value of unguaranteed residual assets | 3 | |||
Total | 173 | |||
Less: Present value discount | (2 | ) | ||
Net investment in leases | $ | 171 |
NOTE 57 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses at SeptemberJune 30, 20172023 and December 31, 20162022 consist of the following:
September 30, 2017 | December 31, 2016 | |||||||
| Accrued accounting and legal | $ | 165,424 | $ | 120,464 | ||||
| Accrued reimbursements | 12,222 | 43,116 | ||||||
| Accrued consulting | 23,481 | 1,192 | ||||||
| Accrued research and development expenses | 1,083,848 | 181,884 | ||||||
| Accrued office and other | 1,992 | 10,202 | ||||||
| Deferred rent | 1,303 | 2,912 | ||||||
| Accrued settlement related to arbitration | 13,333 | 13,333 | ||||||
| $ | 1,301,603 | $ | 373,103 | |||||
June 30, 2023 (000’s) | December 31, 2022 (000’s) | |||||||
Accrued accounting and legal | $ | 841 | $ | 646 | ||||
Accrued reimbursements and travel | 37 | 33 | ||||||
Accrued consulting | 569 | 546 | ||||||
Accrued research and development expenses | 315 | 625 | ||||||
Accrued product and equipment purchases | 15 | - | ||||||
Accrued marketing | 234 | 256 | ||||||
Accrued office and other | 244 | 220 | ||||||
Accrued payroll | 638 | 513 | ||||||
Accrued settlement related to arbitration | 13 | 13 | ||||||
| $ | 2,906 | $ | 2,852 | |||||
NOTE 8 – STOCKHOLDER STOCKHOLDERS’ EQUITY
Preferred stock
The Company is authorized to issue 1,000,000 shares of $0.001 par value preferred stock. As of SeptemberJune 30, 20172023 and December 31, 2016,2022, the Company has authorizeddesignated 200 shares of Series A preferred stock, 600 shares of Series B preferred stock, and 4,200 shares of Series C Preferred Stock, 1,400 shares of Series D Preferred Stock, 1,000 shares of Series E Preferred Stock and 200,000 shares of Series F Preferred Stock. As of SeptemberJune 30, 20172023 and December 31, 2016,2022, there were 0 and 0 Series A and Series B preferred stock outstanding and 985 and 1,070no outstanding shares of Series CA, Series B, Series D, Series E and Series F preferred stock, respectively.
Series C Preferred Stock
As of June 30, 2023 and accrued dividends.
Common stock
The Company is authorized to issue 200,000,000 shares of $0.001 par value common stock. As of SeptemberJune 30, 20172023 and December 31, 2016,2022, the Company had 26,413,74573,457,375 and 22,588,18454,610,638 shares issued and outstanding, respectively.
During the ninesix months ended SeptemberJune 30, 2017,2023, the Company issued an aggregate of 625,0007,391,846 shares of common stock for services at a fair value of $6,968,469, of which 2,370,000 common shares at a fair value of $1,060,740 was accrued at December 31, 2022.
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2023
(unaudited)
During the six months ended June 30, 2023, the Company issued an aggregate of 88,000 shares of common stock in settlement of 2022 board fees at a fair value of $104,720.
During the six months ended June 30, 2023, the Company issued an aggregate of 232,084 shares of common stock for vested restricted stock units.
At June 30, 2023, the Company accrued board fees of $105,000 as stock based compensation.
Equity sales:
BioSig Technologies, Inc.:
From January through May 2023, the Company entered into multiple Securities Purchase Agreements with certain institutional and accredited investors, pursuant to which the Company sold to the investors an aggregate of 11,091,206 shares of common stock at an average purchase price of $0.96 per share, and warrants to purchase up to an aggregate of 5,545,603 shares of common stock at an average exercise price of $0.91 per share, that will become exercisable six months after the date of issuance and will expire five and one-half years following the date of issuance, in exchange for aggregate consideration of $9,992,648, net of transactional expenses of $680,754 (the “2023 PIPEs”).
Pursuant to certain engagement agreements, dated October 11, 2022 and February 24, 2023 the Company had entered into with Laidlaw & Company (UK) Ltd. (“Laidlaw”), the Company issued to Laidlaw in connection with the 2023 PIPEs, warrants to purchase an aggregate of 471,085 shares of common stock at an average exercise price of $0.8692 per share. The Laidlaw warrants become exercisable six months after the date of issuance and will expire five and one-half years following the date of issuance.
BioSig AI Sciences, Inc.:
On June 30, 2023, BioSig AI sold 1,710,000 shares of its common stock for services totaling $894,749net proceeds of $1,567,120 ($1.431.00 per share).
Pursuant to an engagement agreement, dated June 13, 2023, as amended on July 19, 2023, BioSig AI entered into securitieswith Laidlaw, BioSig AI issued to Laidlaw to purchase agreements with investors pursuant to which the Company issued 2,870,865 shares of common stock and 1,615,964 warrants for aggregate proceeds of $4,120,904, net of $185,394 in expenses.
NOTE 9 – OPTIONS, RESTRICTED STOCK UNITS AND WARRANTS
BioSig Technologies, Inc.
2023 Long-Term Incentive Plan
On October 19, 2012,December 27, 2022, the Company’s Board of Directors of BioSig (the “Board”) approved the 2012 Equity Incentive Plan (“the “Plan) and terminated the2023 Long-Term Incentive Plan (the “2011 Plan”“Plan”). and on February 7, 2023 it was approved by the Company’s shareholders. The Plan provides for the issuance of options, stock appreciation rights, restricted stock, restricted stock units, performance awards, dividend equivalent rights, other awards, performance goals, and tandem awards which may be granted singly or in combination, or in tandem, to purchase up to 15,186,123 (as amended)5,265,945 shares of the Company’s common stock to officers, directors, employees and consultants of the Company (as amended).Company. Under the terms of the Plan the Company may issue Incentive Stock Options as defined by the Internal Revenue Code to employees of the Company only and nonstatutorynonqualified options. The Board of Directors of the Company or a committee thereof (the “Administrator”) administers the Plan and determines the exercise price, vesting and expiration period of the grants under the Plan.
However, the exercise price of an Incentive Stock Option should not be less than 110% of fair value of the common stock at the date of the grant for a 10% or more stockholder and 100% of fair value for a grantee who is not 10% stockholder. The fair value of the common stock is determined based on the quoted market price or in absence of such quoted market price, by the administratorAdministrator in good faith.
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2023
(unaudited)
Additionally, the vesting period of the grants under the Plan will be determined by the administrator,Administrator, in its sole discretion, with an expiration period of not more than ten years.
| Options Outstanding | Options Exercisable | |||||||||||||
| Weighted | ||||||||||||||
| Average | Exercisable | |||||||||||||
| Exercise | Number of | Remaining Life | Number of | |||||||||||
| Price | Options | In Years | Options | |||||||||||
| $ | 1.01-2.00 | 2,144,642 | 5.9 | 1,742,226 | ||||||||||
| 2.01-3.00 | 4,384,779 | 3.9 | 4,384,779 | |||||||||||
| 3.01-4.00 | 300,000 | 7.5 | 300,000 | |||||||||||
| 6,829,421 | 4.7 | 6,427,005 | ||||||||||||
| Weighted-Average | ||||||||||||||||
| Weighted-Average | Remaining | Aggregate | ||||||||||||||
| Shares | Exercise Price | Contractual Term | Intrinsic Value | |||||||||||||
| Outstanding at December 31, 2016 | 8,245,190 | $ | 2.24 | 5.8 | $ | - | ||||||||||
| Grants | - | 0 | $ | - | ||||||||||||
| Exercised | - | |||||||||||||||
| Canceled | (1,415,769 | ) | 2.17 | |||||||||||||
| Outstanding at September 30, 2017 | 6,829,421 | $ | 2.26 | 4.7 | $ | 2,000 | ||||||||||
| Exercisable at September 30, 2017 | 6,427,005 | $ | 2.29 | 4.6 | $ | 1,363 | ||||||||||
Options
Option valuation models require the input of highly subjective assumptions. The fair value of stock-based payment awards was estimated using the Black-Scholes option model with a volatility figure derived from an index of historical stock prices of comparable entities until sufficient data exists to estimate the volatility using the Company’s own historical stock prices. Management determined this assumption to be a more accurate indicator of value.Company. The Company accounts for the expected life of options using the based on the contractual life of options for non-employees.
For employees, the Company accounts for the expected life of options in accordance with the “simplified” method, which is used for “plain-vanilla” options, as defined in the accounting standards codification. The risk-free interest rate was determined from the implied yields of U.S. Treasury zero-coupon bonds with a remaining life consistent with the expected term of the options. The fair value of stock-based payment awards during
During the ninesix months ended SeptemberJune 30, 2017 and 2016 was estimated using2023, the Black-Scholes pricing model.
The following table summarizes the restricted stock activity for the nine month ended September 30, 2017:
| Exercise | Number | Expiration | |||||
| Price | Outstanding | Date | |||||
| $ | 0.001 | 383,320 | January 2020 | ||||
| $ | 1.50 | 7,258,936 | February 2018 to September2020 | ||||
| $ | 1.84 | 35,076 | January 2020 | ||||
| $ | 1.95 | 1,689,026 | October 2018 to September 2019 | ||||
| $ | 2.00 | 100,000 | August 2018 | ||||
| $ | 2.02 | 30,755 | January 2020 | ||||
| $ | 2.50 | 100,000 | August 2018 | ||||
| $ | 2.75 | 228,720 | August 2019 to September 2019 | ||||
| $ | 3.67 | 214,193 | December 2018 to January 2019 | ||||
| $ | 3.75 | 1,340,556 | April 2019 to March 2020 | ||||
| 11,380,582 | |||||||
| Options Outstanding |
|
| Options Exercisable |
| ||||||||||
|
|
|
|
|
|
|
|
| Weighted |
|
|
|
|
| |
|
|
|
|
|
|
|
|
| Average |
|
| Exercisable |
| ||
| Exercise |
|
| Number of |
|
| Remaining Life |
|
| Number of |
| ||||
| Price |
|
| Options |
|
| In Years |
|
| Options |
| ||||
| $ | Under 1.00 |
|
|
| 363,000 |
|
|
| 8.9 |
|
|
| 268,332 |
|
|
| 1.00-1.99 |
|
|
| 2,069,500 |
|
|
| 9.4 |
|
|
| 469,825 |
|
|
| 2.00-2.99 |
|
|
| 855,375 |
|
|
| 8.4 |
|
|
| 679,872 |
|
|
| 3.00-3.99 |
|
|
| 367,466 |
|
|
| 3.3 |
|
|
| 367,466 |
|
|
| 4.00-4.99 |
|
|
| 975,916 |
|
|
| 5.2 |
|
|
| 923,184 |
|
|
| 5.00-5.99 |
|
|
| 144,132 |
|
|
| 6.1 |
|
|
| 134,956 |
|
|
| 6.00-6.99 |
|
|
| 336,542 |
|
|
| 4.2 |
|
|
| 336,542 |
|
|
| 7.00-7.99 |
|
|
| 157,720 |
|
|
| 5.2 |
|
|
| 156,054 |
|
|
| Over 8.00 |
|
|
| 40,000 |
|
|
| 6.9 |
|
|
| 40,000 |
|
|
|
|
|
|
| 5,309,651 |
|
|
| 7.4 |
|
|
| 3,376,231 |
|
A summary of the warrantstock option activity and related information for the ninePlan for the six months ended SeptemberJune 30, 20172023 is as follows:
| Weighted-Average | ||||||||||||||||
| Weighted-Average | Remaining | Aggregate | ||||||||||||||
| Shares | Exercise Price | Contractual Term | Intrinsic Value | |||||||||||||
| Outstanding at December 31, 2016 | 9,128,189 | $ | 1.96 | 2.1 | $ | 494,099 | ||||||||||
| Grants | 2,290,965 | $ | 1.50 | 3.0 | - | |||||||||||
| Exercised | - | |||||||||||||||
| Canceled | (38,572 | ) | $ | 2.10 | 2.4 | - | ||||||||||
| Outstanding at September 30, 2017 | 11,380,582 | $ | 1.87 | 1.8 | $ | 563,097 | ||||||||||
| Vested and expected to vest at September 30, 2017 | 11,380,582 | $ | 1.86 | 1.6 | $ | 520,932 | ||||||||||
| Exercisable at September 30, 2017 | 11,380,582 | $ | 1.86 | 1.6 | $ | 520,932 | ||||||||||
Shares | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Term | Aggregate Intrinsic Value | |||||||||||||
Outstanding at December 31, 2022 | 4,555,484 | $ | 3.49 | 6.7 | $ | 3,000 | ||||||||||
Grants | 1,217,500 | $ | 1.34 | 10.0 | $ | - | ||||||||||
Forfeited/expired | (463,333 | ) | $ | 4.60 | ||||||||||||
Outstanding at June 30, 2023 | 5,309,651 | $ | 2.90 | 7.4 | $ | 244,770 | ||||||||||
Exercisable at June 30, 2023 | 3,376,231 | $ | 3.70 | 6.4 | $ | 184,934 | ||||||||||
The aggregate intrinsic value in the preceding tables represents the total pretax intrinsic value, based on warrantsoptions with an exercise price less than the Company’s stock price of $1.36BioSig of $1.25 as of SeptemberJune 30, 2017,2023, which would have been received by the warrantoption holders had those warrantoption holders exercised their warrantsoptions as of that date.
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2023
(unaudited)
During the six months ended June 30, 2023, the Company granted an aggregate of 1,217,500 options to purchase the Company’s common stock at a weighted average exercise price of $1.34 per share for a term of ten years, with vesting from one to three years from the date of grant.
The following assumptions were used in determining the fair value of options during the six months ended June 30, 2023:
Risk-free interest rate | 3.32% to 4.06 | % | ||
Dividend yield | 0 | % | ||
Stock price volatility | 94.44% to 97.17 | % | ||
Expected life | 5.5 to 6.0 | years | ||
Weighted average grant date fair value | $ | 1.03 | ||
The fair value of all options vesting during the three and six months ended June 30, 2023 of $386,336 and $639,523 and $356,394 and $1,006,386 for the three and six months ended June 30, 2022, respectively, was charged to current period operations. Unrecognized compensation expense of $1,883,443 at June 30, 2023 which the Company expects to recognize over a weighted average period of 0.70 years.
Warrants
The following table summarizes information with respect to outstanding warrants to purchase common stock of BioSig at June 30, 2023:
| Exercise |
|
| Number |
| Expiration | ||
| Price |
|
| Outstanding |
| Date | ||
| $ | 0.4066 |
|
|
| 250,000 |
| November 2032 |
| $ | 0.4455 |
|
|
| 1,130,012 |
| June 2028 |
| $ | 0.5136 |
|
|
| 1,160,372 |
| July 2028 |
| $ | 0.7181 |
|
|
| 957,596 |
| July 2028 |
| $ | 0.7502 |
|
|
| 98,436 |
| July 2028 |
| $ | 0.7963 |
|
|
| 883,206 |
| August 2028 |
| $ | 0.9000 |
|
|
| 217,083 |
| June 2027 |
| $ | 1.0099 |
|
|
| 191,154 |
| August 2028 |
| $ | 1.0260 |
|
|
| 517,030 |
| September 2028 |
| $ | 1.0468 |
|
|
| 842,881 |
| September 2028 |
$ | 1.1300 | 404,089 | October 2028 | |||||
$ | 1.3280 | 961,924 | November 2028 | |||||
| $ | 1.4000 |
|
|
| 1,740,130 |
| September 2025 |
| $ | 4.8000 |
|
|
| 250,000 |
| February 2025 to July 2026 |
| $ | 6.1600 |
|
|
| 568,910 |
| November 2027 |
|
|
|
|
|
| 10,172,823 |
|
|
During the six months ended June 30, 2023, the Company issued warrants to purchase an aggregate of 5,545,603 shares of its common stock to investors and warrants to purchase 471,085 shares of its common stock for engagement services at an average exercise price of $0.8976 per share that are exercisable six months after the date of issuance and will expire five and one-half years following the date of issuance.
During the six months ended June 30, 2023, the Company issued 43,601 shares of its common stock upon cashless exercise of warrants to purchase an aggregate of 60,976 shares of common stock, pursuant to the formula set forth in such warrants.
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2023
(unaudited)
A summary of the warrant activity for the six months ended June 30, 2023 is as follows:
Shares | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Term | Aggregate Intrinsic Value | |||||||||||||
Outstanding at December 31, 2022 | 4,217,111 | $ | 1.89 | 4.3 | $ | 3,960 | ||||||||||
Issued | 6,016,688 | $ | 0.90 | 5.2 | - | |||||||||||
Exercised | (60,976 | ) | $ | 0.41 | - | - | ||||||||||
Outstanding at June 30, 2023 | 10,172,823 | $ | 1.31 | 4.6 | $ | - | ||||||||||
Vested and expected to vest at June 30, 2023 | 10,172,823 | $ | 1.31 | 4.6 | $ | 3,391,187 | ||||||||||
Exercisable at June 30, 2023 | 4,156,135 | $ | 1.91 | 3.8 | $ | 1,195,924 | ||||||||||
The aggregate intrinsic value in the preceding tables represents the total pretax intrinsic value, based on options with an exercise price less than the company’s stock price of $1.25 as of June 30, 2023, which would have been received by the option holders had those option holders exercised their options as of that date.
Restricted Stock Units
The following table summarizes the restricted stock activity for the six months ended June 30, 2023:
Restricted shares issued as of January 1, 2023 | 239,584 | |||
Granted | 572,500 | |||
Vested and issued | (232,084 | ) | ||
Vested restricted shares as of June 30, 2023 | - | |||
Unvested restricted shares as of June 30, 2023 | 580,000 |
On January 29, 2023, in connection with a separation agreement, the Company granted 125,000 restricted stock units vesting at separation date at a fair value of $92,500.
On March 27, 2023, the Company granted an aggregate of 187,500 restricted stock units vesting on March 27, 2024 for services at a fair value of $223,125.
On June 26, 2023, the Company granted an aggregate of 260,000 restricted stock units vesting quarterly over one year for services at a fair value of $301,600.
Stock based compensation expense related to restricted stock grants was $101,822 and $206,526 for the three and six months ended June 30, 2023 and $71,187 and $141,541 for the three and six months ended June 30, 2022, respectively. As of June 30, 2023, the stock-based compensation relating to restricted stock of $518,354 remains unamortized.
ViralClear Pharmaceuticals, Inc.
2019 Long-Term Incentive Plan
On September 24, 2019, ViralClear’s Board of Directors approved the 2019 Long-Term Incentive Plan (as subsequently amended, the “ViralClear Plan”). The ViralClear Plan was approved by BioSig as ViralClear’s majority stockholder. The ViralClear Plan provides for the issuance of options, stock appreciation rights, restricted stock and restricted stock units to purchase up to 4,000,000 shares of ViralClear’s common stock to officers, directors, employees and consultants of the ViralClear. Under the terms of the ViralClear Plan, ViralClear may issue Incentive Stock Options as defined by the Internal Revenue Code to employees of ViralClear only and nonqualified options. The Board of Directors of ViralClear or a committee thereof (the “Administrator”) administers the ViralClear Plan and determines the exercise price, vesting and expiration period of the grants under the ViralClear Plan.
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2023
(unaudited)
However, the exercise price of an Incentive Stock Option should not be less than 110% of fair market value of the common stock at the date of the grant for a 10% or more stockholder and 100% of fair market value for a grantee who is not 10% stockholder. The fair market value of the common stock is determined based on the quoted market price or in absence of such quoted market price, by the Administrator in good faith.
Additionally, the vesting period of the grants under the ViralClear Plan will be determined by the Administrator, in its sole discretion, with an expiration period of not more than ten years. There are 2,650,071 shares remaining available for future issuance of awards under the terms of the ViralClear Plan.
ViralClear Options
The following table presents information related to stock options at June 30, 2023:
Options Outstanding |
|
| Options Exercisable |
| ||||||||||
|
|
|
|
|
|
|
| Weighted |
|
|
|
|
| |
|
|
|
|
|
|
|
| Average |
|
| Exercisable |
| ||
Exercise |
|
| Number of |
|
| Remaining Life |
|
| Number of |
| ||||
Price |
|
| Options |
|
| In Years |
|
| Options |
| ||||
$ | 5.00 |
|
|
| 25,000 |
|
|
| 1.00 |
|
|
| 25,000 |
|
The fair value of all options vesting during the three and six months ended June 30, 2023 of $0; and $0 and $36,520 for the three and six months ended June 30, 2022, respectively, was charged to current period operations. Unrecognized compensation expense of $0 at June 30, 2023 will be expensed in future periods.
Warrants (ViralClear)
The following table presents information related to warrants (ViralClear) at June 30, 2023:
| Exercise |
|
| Number |
| Expiration | ||
| Price |
|
| Outstanding |
| Date | ||
| $ | 5.00 |
|
|
| 473,772 |
| November 2027 |
|
| 10.00 |
|
|
| 6,575 |
| May 2025 |
|
|
|
|
|
| 480,347 |
|
|
Restricted stock units (ViralClear)
The following table summarizes the restricted stock activity for the six months ended June 30, 2023:
Total restricted shares outstanding at June 30, 2023: | 1,078,679 | |||
Comprised of: | ||||
Vested restricted shares as of June 30, 2023 | 678,679 | |||
Unvested restricted shares as of June 30, 2023 | 400,000 | |||
Total | 1,078,679 |
Stock based compensation expense related to restricted stock unit grants of ViralClear was $14,535 and $29,070 for the three and six months ended June 30, 2023 and $(744,767) and $(1,101,163) for the three and six months ended June 30, 2022, respectively. As of June 30, 2023, the stock-based compensation relating to restricted stock of $29,070 remains unamortized.
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2023
(unaudited)
BioSig AI Sciences, Inc.
Warrants (BioSig AI)
The following table summarizes information with respect to outstanding warrants to purchase common stock of BioSig AI at June 30, 2023:
| Exercise |
|
| Number |
| Expiration | ||
| Price |
|
| Outstanding |
| Date | ||
| $ | 1.00 |
|
|
| 90,000 |
| June 2028 |
On June 30, 2023, the BioSig AI issued warrants to purchase an aggregate of 90,000 shares of its common stock for investment banking services at an exercise price of $1.00 per share that are exercisable immediately and will expire five years following the date of issuance.
A summary of the warrant activity for the six months ended June 30, 2023 is as follows:
Shares | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Term | ||||||||||
Outstanding at December 31, 2022 | - | - | - | |||||||||
Issued | 90,000 | $ | 1.00 | 5.0 | ||||||||
Outstanding at June 30, 2023 | 90,000 | $ | 1.00 | 5.0 | ||||||||
Vested and expected to vest at June 30, 2023 | 90,000 | $ | 1.00 | 5.0 | ||||||||
Exercisable at June 30, 2023 | 90,000 | $ | 1.00 | 5.0 | ||||||||
NOTE 10 – NON-CONTROLLING INTEREST
On November 7, 2018, the Company formed a subsidiary, now known as ViralClear, to pursue additional applications of the PURE EP™ signal processing technology outside of cardiac electrophysiology, and subsequently in 2020, was repurposed to develop merimepodib, a broad-spectrum anti-viral agent that showed potential for the treatment of COVID-19. Since late 2020, ViralClear has been realigned with its original objective of pursuing additional applications of the PURE EP™ signal processing technology outside of cardiac electrophysiology.
As of June 30, 2023 and December 31, 2022, the Company had a majority interest in ViralClear of 69.08%.
On July 2, 2020, the Company formed an additional subsidiary, now known as BioSig AI Sciences, Inc., to pursue clinical needs of cardiac and neurological disorders through recordings and analyses of action potential. BioSig AI aims to contribute to the advancements of AI-based diagnoses therapies. On June 30, 2023, BioSig AI sold 1,710,000 shares of its common stock for net proceeds of $1,567,120 to fund initial operations.
As June 30, 2023 and December 31, 2022, the Company had a majority interest in BioSig AI of 87.5% and 100.0%, respectively.
A reconciliation of ViralClear Pharmaceuticals, Inc. and BioSig AI Sciences, Inc. non-controlling loss attributable to the Company:
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2023
(unaudited)
Net loss attributable to the non-controlling interest for the three months ended June 30, 2023 (000’s):
ViralClear Pharmaceuticals, Inc. (000’s) | BioSig AI Sciences, Inc. (000’s) | Total (000’s) | ||||||||||
Net Loss | $ | (120 | ) | $ | (17 | ) | $ | (137 | ) | |||
Average Non-Controlling interest percentage of profit/losses | 30.8 | % | 0 | % | 27.0 | % | ||||||
Net loss attributable to non-controlling interest | $ | (37 | ) | $ | 0 | $ | (37 | ) | ||||
Net loss attributable to the non-controlling interest for the three months ended June 30, 2022 (000’s):
ViralClear Pharmaceuticals, Inc. (000’s) | BioSig AI Sciences, Inc. (000’s) | Total (000’s) | ||||||||||
Net Income (loss) | $ | 137 | $ | (1 | ) | $ | 136 | |||||
Average Non-Controlling interest percentage of profit/losses | 31.3 | % | 0 | % | 31.6 | % | ||||||
Net loss attributable to non-controlling interest | $ | 43 | $ | 0 | $ | 43 | ||||||
Net loss attributable to the non-controlling interest for the six months ended June 30, 2023 (000’s):
ViralClear Pharmaceuticals, Inc. (000’s) | BioSig AI Sciences, Inc. (000’s) | Total (000’s) | ||||||||||
Net Loss | $ | (281 | ) | $ | (18 | ) | $ | (299 | ) | |||
Average Non-Controlling interest percentage of profit/losses | 31 | % | 0 | % | 29 | % | ||||||
Net loss attributable to non-controlling interest | $ | (87 | ) | $ | 0 | $ | (87 | ) | ||||
Net loss attributable to the non-controlling interest for the six months ended June 30, 2022 (000’s):
ViralClear Pharmaceuticals, Inc. (000’s) | BioSig AI Sciences, Inc. (000’s) | Total (000’s) | ||||||||||
Net Loss | $ | (185 | ) | $ | (1 | ) | $ | (186 | ) | |||
Average Non-Controlling interest percentage of profit/losses | 31.9 | % | 0 | % | 31.7 | % | ||||||
Net loss attributable to non-controlling interest | $ | (59 | ) | $ | 0 | $ | (59 | ) | ||||
The following table summarizes the changes in non-controlling interest for the six months ended June 30, 2023 (000’s):
ViralClear Pharmaceuticals, Inc. (000’s) | BioSig AI Sciences, Inc. (000’s) | Total (000’s) | ||||||||||
Balance, January 1, 2023 | $ | (21 | ) | $ | 0 | $ | (21 | ) | ||||
Allocation of equity to non-controlling interest due to sale of subsidiary stock | - | 188 | 188 | |||||||||
Allocation of equity to non-controlling interest due to equity-based compensation issued | 9 | - | 9 | |||||||||
Net loss attributable to non-controlling interest | $ | (87 | ) | $ | - | $ | (87 | ) | ||||
Balance, June 30, 2023 | $ | (99 | ) | $ | 188 | $ | 89 | |||||
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2023
(unaudited)
NOTE 10 11 – COMMITMENTS AND CONTINGENCIES
Licensing agreements
Master Services Agreement
On January 1, 2022, the Company entered into a master services agreement with Access Strategy Partners Incorporated (“ASPI”) whereby ASPI will provide commercial executives assigned with specific customer targets and develop sales and marketing plans that are mutually agreed to between ASPI and the Company and assist in their execution. The agreement expires two years from the effective date, with an additional one year extension option.
The Company is obligated to pay ASPI: i) a monthly service fee of $40,000 and ii) 10% commission on all New Account revenue, as defined, on a quarterly basis. At June 30, 2023 and December 31, 2022, accounts payable due under the contract was $40 and $80, respectively.
2017 Know-How License Agreement
On March 15, 2017, the Company entered into a know-how license agreement with Mayo Foundation for Medical Education and Research whereby the Company was granted an exclusive license, with the right to sublicense, certain know how and patent applications in the field of signal processing, physiologic recording, electrophysiology recording, electrophysiology software and autonomics to develop, make and offer for sale. The agreement expires in ten years from the effective date.
The Company is obligated to pay to Mayo Foundation a 1% or 2% royalty payment on net sales of licensed products, as defined.
Patent and Know-How License Agreement – EP Software Agreement
On November 20, 2019, the Company entered into a patent and know-how license agreement (the “EP Software Agreement”) with Mayo Foundation for Medical Education and Research (“Mayo”). The EP Software Agreement grants to the Company an exclusive worldwide license, with the right to sublicense, within the field of electrophysiology software and under certain patent rights as described in the EP Software Agreement (the “Patent Rights”), to make, have made, use, offer for sale, sell and import licensed products and a non-exclusive license to the Company to use the research and development information, materials, technical data, unpatented inventions, trade secrets, know-how and supportive information of Mayo to develop, make, have made, use, offer for sale, sell, and import licensed products. The EP Software Agreement will expire upon the later of either (a) the expiration of the Patent Rights or (b) the 10th anniversary of the date of the first commercial sale of a licensed product, unless earlier terminated by Mayo for the Company’s failure to cure a material breach of the EP Software Agreement, the Company’s or a sublicensee’s commencement of any action or proceedings against Mayo or its affiliates other than for an uncured material breach of the EP Software Agreement by Mayo, or insolvency of the Company.
In connection with the EP Software Agreement, the Company agreed to make earned royalty payments to Mayo in connection with the Company’s sales of the licensed products to third parties and sublicense income received by the Company and to make milestone payments of up to $625,000 in aggregate. At June 30, 2023 and December 31, 2022, accounts payable due under the contract was $0.
Amended and Restated Patent and Know-How License Agreement – Tools Agreement
On November 20, 2019, the Company entered into an amended and restated patent and know-how license agreement (the “Tools Agreement”) with Mayo. The Tools Agreement contains terms of license grant substantially identical to the EP Software Agreement, although it is for different patent rights and covers the field of electrophysiology systems. In June 2021, patent rights were issued 630,000(“Valid Claim”) as defined whereby the Company paid milestone one of $75,000 during the 2021 year.
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2023
(unaudited)
In connection with the Tools Agreement, the Company agreed to pay Mayo an upfront consideration of $100,000. The Company also agreed to make earned royalty payments to Mayo in connection with the Company’s sales of the licensed products to third parties and sublicense income received by the Company and to make milestone payments of up to $550,000 in aggregate. At June 30, 2023 and December 31, 2022, accounts payable due under the contract was $0.
ViralClear Patent and Know-How License Agreement
On November 20, 2019, the Company’s majority-owned subsidiary, ViralClear, entered into a patent and know-how license agreement (the “ViralClear Agreement”) with Mayo. The ViralClear Agreement contains terms of license grant substantially identical to the EP Software Agreement and the Tools Agreement, although it is for different patent rights and covers the field of stimulation and electroporation for hypotension/syncope management, renal and non-renal denervation for hypertension treatment, and for use in treatment of arrhythmias in the autonomic nervous system.
In connection with the ViralClear Agreement, ViralClear agreed to make earned royalty payments to Mayo in connection with ViralClear’s sales of the licensed products to third parties and sublicense income received by the Company and to make milestone payments of up to $700,000 in aggregate. In June 2021, patent rights were issued (“Valid Claim”) as defined whereby the Company paid milestone one of $75,000 during the 2021 year. At June 30, 2023 and December 31, 2022, accounts payable due under the contract was $0.
Trek Therapeutics, PBC
In the event of sublicensing, sale, transfer, assignment or similar transaction, ViralClear agreed to pay Trek 10% of the consideration received.
As part of the acquired assets, ViralClear received an assignment and licensing rights agreement from Trek with a third-party vendor regarding certain formulas and compounds usage. The agreement calls for milestone payments upon marketing authorization (as amended and defined with respect of product in a particular jurisdiction in the territory, the receipt of all approvals from the relevant regulatory authority necessary to market and sell such product in any such jurisdiction, excluding any pricing approval or reimbursement authorization) in any first and second country of $10 million and $5 million, respectively, in addition to 6% royalty payments. At June 30, 2023 and December 31, 2022, accounts payable due under the contract was $0.
BioSig AI Sciences, Inc. – Consulting Agreement
On June 17, 2023, BioSig AI entered into an agreement with Reified Labs LLC (“Reified”) whereby Reified will work with the BioSig AI to develop datasets for the purpose of creating a foundational artificial intelligence platform. The agreement has a one-year term from the effective date and automatically renews for successive one year terms, unless terminated.
BioSig AI is obligated to pay Reified a monthly consulting fee of $30,000. At June 30, 2023, accounts payable due under the contract was $9,333.
Defined Contribution Plan
Effective January 1, 2019, the Company established a qualified defined contribution plan (the “401(k) Plan”) pursuant to Section 401(k) of the Code, whereby all eligible employees may participate. Participants may elect to defer a percentage of their annual pretax compensation to the 401(k) plan, subject to defined limitations. The Company is required to make contributions to the 401(k) Plan equal to 3 percent of each participant’s eligible compensation, subject to limitations under the Code. For the three and six months ended June 30, 2023, the Company charged operations $63,818 and $129,737 and $67,888 and $135,528 for the three and six months ended June 30, 2022, respectively, for contributions under the 401(k) Plan.
Purchase commitments
As of June 30, 2023, the Company had aggregate purchase commitments of approximately $2,966,181 for future services or products, some of which are subject to modification or cancellations.
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2023
(unaudited)
Litigation
The Company is subject at times to other legal proceedings and claims, which arise in the ordinary course of its business. Although occasional adverse decisions or settlements may occur, the Company believes that the final disposition of such matters should not have a material adverse effect on its financial position, results of operations or liquidity.
NOTE 12 – SEGMENT REPORTING
In accordance with ASC 280-10, the Company reports segment information based on the “management” approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company’s reportable segments. The Company has three reportable segments: BioSig Technologies, Inc. (parent), BioSig AI Sciences, Inc.. and ViralClear Pharmaceuticals, Inc.
Information concerning the operations of the Company’s reportable segments is as follows:
Three Months Ended June 30, 2023 (000's) | Three Months Ended June 30, 2022 (000's) | Six Months Ended June 30, 2023 (000's) | Six Months Ended June 30, 2022 (000's) | |||||||||||||
Revenues (from external customers) | ||||||||||||||||
BioSig | $ | - | $ | 8 | $ | 5 | $ | 16 | ||||||||
ViralClear | - | - | - | - | ||||||||||||
BioSig AI | - | - | - | - | ||||||||||||
| $ | - | $ | 8 | $ | 5 | $ | 16 | |||||||||
Three Months Ended June 30, 2023 (000's) | Three Months Ended June 30, 2022 (000's) | Six Months Ended June 30, 2023 (000's) | Six Months Ended June 30, 2022 (000's) | |||||||||||||
Operating Expenses: | ||||||||||||||||
BioSig | $ | 10,771 | $ | 5,862 | $ | 18,001 | $ | 13,611 | ||||||||
ViralClear | 119 | (137 | ) | 280 | 185 | |||||||||||
BioSig AI | 18 | (1 | ) | 18 | 1 | |||||||||||
| $ | 10,908 | $ | 5,724 | $ | 18,299 | $ | 13,797 | |||||||||
Three Months Ended June 30, 2023 (000's) | Three Months Ended June 30, 2022 (000's) | Six Months Ended June 30, 2023 (000's) | Six Months Ended June 30, 2022 (000's) | |||||||||||||
Loss from Operations | ||||||||||||||||
BioSig | $ | (10,771 | ) | $ | (5,854 | ) | $ | (17,996 | ) | $ | (13,595 | ) | ||||
ViralClear | (119 | ) | 137 | (280 | ) | (185 | ) | |||||||||
BioSig AI | (18 | ) | 1 | (18 | ) | (1 | ) | |||||||||
| $ | (10,908 | ) | $ | (5,716 | ) | $ | (18,294 | ) | $ | (13,781 | ) | |||||
June 30, 2023 (000’s) | December 31, 2022 (000’s) | |||||||
Total Assets | ||||||||
BioSig | $ | 3,141 | $ | 4,051 | ||||
ViralClear | 12 | 49 | ||||||
BioSig AI | 897 | 10 | ||||||
| $ | 4,050 | $ | 4,110 | |||||
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2023
(unaudited)
NOTE 13 – RELATED PARTY TRANSACTIONS
Accounts payable and accrued expenses include due to related parties comprised primarily director fees and travel reimbursements. Due to related parties as of June 30, 2023 and December 31, 2022 was $0 and $120,000, respectively.
During the three and six months ended June 30, 2023, the Company’s Chief Financial Officer participated in the Company’s 2023 PIPES, acquiring 232,882 shares of the Company’s common stock and 116,441 warrants to acquire the Company’s common stock at an exercise price of $1.50,$0.7963, expiring on March 15, 2020.
During the three and six months ended June 30, 2017
Warrant Liability | Derivative | |||||||
| Balance, December 31, 2016 | $ | 1,937,234 | $ | 288,934 | ||||
| Total (gains) losses | ||||||||
| Transfers out due to conversion of Series C Preferred Stock | - | (20,757 | ) | |||||
| Mark to market to September 30, 2017 | 303,276 | 16,855 | ||||||
| Balance, September 30, 2017 | $ | 2,240,510 | $ | 285,032 | ||||
| Loss on change in warrant and derivative liabilities for the nine months ended September 30, 2017 | $ | (303,276 | ) | $ | (16,855 | ) | ||
NOTE 12 14 – SUBSEQUENT EVENTS
Equity Transactions
BioSig Technologies, Inc.:
On November 3, 2017,July 6, 2023, the Company filed the Certificate of Designations for the Series D Preferred Stock with the Secretary of State of the State of Delaware. Pursuant to such Certificate of Designations, in the event of the Company’s liquidation or winding upissued 2,500 shares of its affairs,common stock for vested restricted stock units.
On July 17, 2023, the holdersCompany granted an aggregate of Preferred Shares will be entitled12,000 options to a liquidation preference of the stated value per Preferred Share of $1,500 (the “Stated Value”) plus any accrued but unpaid dividends or any other fees due the holder. A total of 1,400 shares were designated as Series D Preferred Stock.
On November 3, 2017,July 31, 2023, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”)securities purchase agreement with a certain institutional accredited investors (the “Investors”),investor, pursuant to which the Company sold to the Investors an aggregate of 1,334 shares (the “Preferred Shares”) of its Series D Preferred Stock, par value $0.001 per share, and Class A Warrants to purchase an aggregate of 667,000investor 1,467,624 shares of the Company’s common stock par value $0.001at a purchase price of $1.02206 per share, and a warrant to purchase up to 733,812 shares of the Company’s common stock, at an exercise price of $1.75$0.95956 per share, (the “Class A Warrants”),that will become exercisable six months after the date of issuance and will expire five and one-half years following the date of issuance, in exchange for aggregate net cash proceeds of $1,929,975, netconsideration of expenses of $70,025. Contemporaneously with the entry into the Purchase Agreement,$1,345,875.
Pursuant to an engagement agreement, dated July 26, 2023, the Company andentered into with Laidlaw, the Purchasers agreedCompany issued to exchange outstanding warrantsLaidlaw to purchase 780,506110,072 shares of the Common StockCompany’s common stock at an exercise price of $1.50$0.95956 per shareshare. The Laidlaw warrants become exercisable six months after the date of issuance and will expire five and one-half years following the date of issuance.
BioSig AI Sciences, Inc.:
On July 18, 2023, BioSig AI sold 495,000 shares of its common stock for new Class B Warrantsnet proceeds of $420,475 ($1.00 per share).
Pursuant to an engagement agreement, dated June 13, 2023, as amended on July 19, 2023, BioSig AI entered into with Laidlaw, BioSig AI issued to Laidlaw a warrant to purchase an equal number of40,500 shares of its common stock at the same exercise price (the “Class B Warrants”).
ITEM 2. MANAGEMENT’SMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Management’sManagement’s Discussion and Analysis of Financial Condition and Results of Operations includes a number of forward-looking statements that reflect Management’sManagement’s current views with respect to future events and financial performance. You can identify these statements by forward-looking words such as “may,“may,” “will,“will,” “expect,“expect,” “anticipate,“anticipate,” “believe,“believe,” “estimate”“estimate” and “continue,“continue,” or similar words. Those statements include statements regarding the intent, belief or current expectations of us and members of our management team as well as the assumptions on which such statements are based. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risk and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements.
Readers are urged to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the Securities and Exchange Commission. Important factors currently known to Management could cause actual results to differ materially from those in forward-looking statements. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in the future operating results over time. We believe that our assumptions are based upon reasonable data derived from and known about our business and operations. No assurances are made that actual results of operations or the results of our future activities will not differ materially from our assumptions. Factors that could cause differences include, but are not limited to, expected market demand for our products, fluctuations in pricing for materials, and competition.
Business Overview
BioSig Technologies, Inc.
BioSig Technologies (“BioSig” or the “Company”) is a medical technology company focused on deciphering the body’s electrical signals, starting with heart rhythms. Our platform technology aims to address some of healthcare’s biggest challenges—saving time, saving costs, and saving lives.
The Company’s first product, the PURE EP™ Platform, an FDA 510(k) cleared non-invasive class II device, provides superior, real-time signal visualization allowing physicians to perform highly targeted cardiac ablation procedures with increased procedural efficiency and efficacy.
The PURE EP™ Platform serves physicians by enabling the real-time acquisition of raw cardiac signal data—absent of unnecessary noise or interference inherent in traditional approaches. By leveraging a first-of-its-kind combination of hardware and software, the PURE EP™ Platform is designed to deliver unprecedented intracardiac signal purity that pushes the boundaries of cardiac arrhythmia identification, diagnosis, and treatment.
In a blinded clinical study published in the Journal of Cardiovascular Electrophysiology, electrophysiologists rated PURE EP™ as superior to conventional systems for 75.2% of signal samples, with 93.6% earning a rating of equivalent or superior.
Data presented at Heart Rhythm Society 2023 demonstrated the PURE EP™ Platform’s capacity to facilitate ablations in a third of the usual time, reducing procedure time and improving workflow efficiencies, without sacrificing accuracy, precision, or efficacy.
The PURE EP™ Platform is currently in a national commercial launch and an integral part of well-respected healthcare systems, including Mayo Clinic, Texas Cardiac Arrhythmia Institute, Cleveland Clinic, and Kansas City Heart Rhythm Institute.
In addition to clinical evaluation, we have conducted pre-clinical evaluation with the PURE EP™ Platform under several protocols at Mayo Clinic in Rochester, Minnesota (including novel research programs such as Artificial Intelligence, or AI, and repolarization), we also conducted studies at Mount Sinai Hospital in New York, New York, the University of Pennsylvania, and Cleveland Clinic. We intend to continue additional research and development studies with our technology at institutions including Mayo Clinic and Cleveland Clinic.
Over 3,500 procedures have been performed using the PURE EP™ Platform with more than 80 physicians at 21 hospitals across the United States.
Our patent portfolio now includes 29 (issued/allowed) issued utility patents (21 utility patents where BioSig is at least one of the applicants). Thirty additional U.S. and foreign utility patent applications are pending covering various aspects of our PURE EP Platform for recording, measuring, calculating and displaying of electrocardiograms during cardiac ablation procedures (thirty U.S. and foreign utility patent applications where either BioSig, Mayo, or both is at least one of the applicants). One pending U.S. patent application and one allowed U.S. patent application are directed to artificial intelligence (AI). We also have 30 issued worldwide design patents, which cover various features of our display screens and graphical user interface for enhanced visualization of biomedical signals (30 design patents where BioSig is at least one of the applicants). Finally, of the patents and patent applications mentioned above, we have licenses to 7 patents and 13 additional worldwide utility patent applications from Mayo Foundation for Medical Education and Research that are pending (7 patents and 13 applications where only Mayo is the applicant). These patents and applications are generally directed to electroporation and stimulation.
ViralClear Pharmaceuticals, Inc.
ViralClear Pharmaceuticals, Inc. (“ViralClear”) is a development stagemajority-owned subsidiary of the Company originally known as NeuroClear Technologies, Inc. The subsidiary was established November 2018 to pursue additional applications of the PURE EP™ signal processing technology outside of EP. In March 2020, it was renamed ViralClear in connection with its prior objective to develop merimepodib, a broad-spectrum anti-viral agent that showed potential to treat COVID-19. We currently do not intend to further develop merimepodib and have discontinued our pharmaceutical operations. Since late 2020, ViralClear has been realigned with its original objective of pursuing additional applications of the PURE EP™ signal processing technology outside of cardiac electrophysiology with an initial emphasis on developing a novel nerve recording system. As of August 14, 2023, the Company retains 69.08% ownership of ViralClear.
Currently, ViralClear is an early-stage medical device company that is developing N-SENSE™, a proprietarynovel sensing technology platform to minimize noise and artifacts from cardiac recordings during electrophysiology studies and ablation. We are developingfor high-speed electroneurogram (ENG) recordings. The specifications for this new product were based on the core competencies of the PURE (Precise Uninterrupted Real-time evaluationEP™ signal processing technology, such as broad dynamic range of Electrograms) EP System, a surface electrocardiogramrecorded signals and intracardiac multichannel recordinglow signal-to-noise ratio and adapted to address disorders of the autonomic nervous systems through recordings and analysis system that acquires, processes and displays electrocardiogram and electrograms required during electrophysiology studies and ablation procedures.
ViralClear aims to address what we believe is not always easily obtained, if at all, from any other equipment presently usedto be the two main challenges of bioelectronic medicine devices: achieving accurate and targeted stimulation of specific nerves in electrophysiology labs. The PURE EP System’s ability to acquire high fidelity cardiac signals will potentially increase these signals’ diagnostic value,a nerve bundle and therefore offer improved accuracyimplementing an effective feedback loop that can self-adjust for the optimal amount and efficiencytiming of the electrophysiology studies and related procedures. We are developing signal processing tools within the PURE EP System.stimulation. We believe that advancements in overcoming these challenges will assist electrophysiologists in further differentiating true signals from noise,improve the safety and efficacy of current treatments and contribute to the developments of new therapy lines.
ViralClear will provide guidance in identifying ablation targets.
BioSig AI Sciences, Inc.
On July 2, 2020, we formed an additional subsidiary, NeuroClear Technologies, Inc., a Delaware corporation, which was renamed to BioSig AI Sciences, Inc. (“BioSig AI”) on May 31, 2023, to pursue clinical needs of electrophysiology studies. Using our proprietary signal processing tools that are part of the PURE EP System, we analyzed thesecardiac and neurological disorders through recordings and successfully removed baseline wander, noiseanalyses of action potential. BioSig AI intends to join BioSig’s technology team with external partners and artifacts fromcollaborators to advance the data thereby providing better diagnostic quality signals.
On June 30, 2023, BioSig AI sold 1,710,000 shares of its common stock for net proceeds of $1,567,120 to fund initial operations. On June 30, 2023, we had a 2009 articlemajority interest in Circulation: ArrhythmiaBioSig AI of 87.5% and Electrophysiology, ablation is superioras of August 14, 2023, 84.5%.
On July 20, 2023, BioSig AI announced that it was selected to pharmacological treatmentsjoin NVIDIA Inception, a program designed to partner with companies revolutionizing industries with advancements in AI and is becoming a first linedata sciences.
Recent Developments
Private Placements (BioSig Technologies, Inc.)
During the period from April 2023 through July 2023, we completed three private placement transactions where we sold shares and warrants to certain institutional and accredited investors, consisting of therapy for certain patients with arrhythmias (“Treatment(i) an aggregate of Atrial Fibrillation With Antiarrhythmic Drugs or Radiofrequency Ablation,” Circulation: Arrhythmia4,058,530 shares of our common stock, at purchase prices ranging from $1.02206 to $1.3905 per share, and Electrophysiology (2009) 2: 349-361).
In addition, pursuant to (i) certain tail provisions in an engagement agreement, dated October 11, 2022, we had entered into with Laidlaw, (ii) certain compensation provisions in an engagement agreement, dated February 24, 2023, we had entered into with Laidlaw, and (iii) certain compensation provisions in an engagement agreement, dated July 26, 2023, we had entered into with Laidlaw, we issued to Laidlaw warrants to purchase an aggregate of 180,632 shares of common stock in connection with the number of procedures performed in each electrophysiology labtransactions noted above.
Private Placements (BioSig AI Sciences, Inc.)
During the period from June 2023 through July 2023, BioSig AI completed two private placement transactions where BioSig AI sold shares to certain institutional and possibly improved patient outcomes.
In addition, pursuant to certain compensation provisions in an engagement agreement, dated June 2016, at Mayo Clinic13, 2023, as amended on July 19, 2023, BioSig AI had entered into with Laidlaw, BioSig AI issued to Laidlaw warrants to purchase an aggregate of 130,500 shares of common stock in Rochester, Minnesotaconnection with the PURE EP System prototype. We also conducted a pre-clinical study at the Mount Sinai Hospital in New York, NY with emphasis on the ventricular tachycardia (VT) model.
Results of Operations (000’s)
We anticipate that our results of operations will fluctuate for the foreseeable future due to several factors, such as the progress of our research and development and commercialization efforts, and the timing and outcome of future regulatory submissions.submissions and uncertainty around the current pandemic. Due to these uncertainties, accurate predictions of future operations are difficult or impossible to make.
Three Months Ended SeptemberJune 30, 20172023 Compared to Three Months Ended SeptemberJune 30, 20162022 (000’s)
Revenues and Cost of Goods Sold
.We derive our revenue primarily from the sale of our medical device, PURE EP Platform, as well as related support and 2016.maintenance services and software upgrades in connection with the device.
We recognize revenue in accordance with Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers (“ASC 606”). The core principle of ASC 606 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
Cost of sales for the three months ended June 30, 2023 and 2022 was nil.
Gross profit from the three months ended June 30, 2023 and 2022 was $0 and $8 or 100.0%.
Research and Development Expenses. Research and development expenses for the three months ended SeptemberJune 30, 20172023 were $1,124,506,$1,709, an increase of $563,992,$358, or 100.6%26.5%, from $560,514$1,351 for the three months ended SeptemberJune 30, 2016. This2022. The increase is primarily due additional personnel, outside design coststo increases in payroll and current year acquired research and developmentconsulting to $1,511 for the three months ended June 30, 2023 as we develop our proprietary technology platform. compared to $1,148 for the three months ended June 30, 2022 primarily in the BioSig Technologies segment, an increase of $363 or 31.7%.
Research and development expenses were comprised of the following:
Three months ended:
September 30, 2017 | September 30, 2016 | June 30, 2023 | June 30, 2022 | |||||||||||||
| Salaries and equity compensation | $ | 272,014 | $ | 262,227 | $ | 1,450 | $ | 1,108 | ||||||||
| Consulting expenses | 123,271 | 85,510 | 61 | 40 | ||||||||||||
| Clinical studies and design work | 668,676 | 162,293 | ||||||||||||||
Research and clinical studies and design work | 117 | 84 | ||||||||||||||
Data/AI development | - | 28 | ||||||||||||||
Regulatory | 31 | 9 | ||||||||||||||
| Travel, supplies, other | 60,545 | 50,484 | 50 | 82 | ||||||||||||
| Total | $ | 1,124,506 | $ | 560,514 | $ | 1,709 | $ | 1,351 | ||||||||
Stock based compensation for research and development personnel was $8,020$761 and $16,931$340 for the three months ended SeptemberJune 30, 20172023 and 2016,2022, respectively.
General and Administrative Expenses.
General and administrative expenses for the three months endedPayroll related expenses decreased to $260,125$1,954 in the current period from $292,275$2,042 for the three months ended SeptemberJune 30, 2016,2022, a decrease of $32,150.$88, or 4.3%. The decrease was primarily due to executivereduced staff reduction in 2017.commercialization, sales and general and administration in the BioSig Technologies segment. We incurred $48,603$3,980 in stock basedstock-based compensation in connection with the vesting of stock and stock options issued to board members, officers, employees and consultants for the three months ended SeptemberJune 30, 20172023 as compared to $223,986$36 in stock basedstock-based compensation for the same period in 2016.
Professional services for the three months ended SeptemberJune 30, 20172023 totaled $53,708, an increase$110, a decrease of $4,532,$56, or 9.2%33.7%, over the $49,176$166 recognized for the three months ended SeptemberJune 30, 2016.2022. Of professional services, legal fees totaled $34,458$136 for the three months ended SeptemberJune 30, 2017, a decrease2023; an increase of $1,715,$6, or 4.7%4.6%, from $36,173$130 incurred for the three months ended SeptemberJune 30, 2016.2022. The increase in legal fees are primarily due to costs incurred in 2023 for financing, contract work and patent filings for the BioSig Technologies segment not incurred during the three months ended June 30, 2022. Accounting fees incurred in the three months ended SeptemberJune 30, 20172023 amounted to $19,250,$54, an increase of $6,250,$18, or 48.1%50.0%, from $13,000$36 incurred in same period last year. The increaseIn 2023, we incurred added accounting fees relating to financing in legal fees was primarily due registration statements filed in 2017. our BioSig Technologies segment.
Consulting, public and investor relations fees for the three months ended SeptemberJune 30, 20172023 were $246,009$1,049 as compared to $226,065$1,258 incurred for the three months ended SeptemberJune 30, 2016.2022, a decrease of $209, or 16.6%. The increasedecrease primarily related to a reduction in consulting and investor relations feesmarketing during the three months ended SeptemberJune 30, 2017 relate2023 as compared to our continued efforts to develop our recognition throughout the medical industry in an effective manner.same period, last year.
Travel, meals and entertainment costs for the three months ended SeptemberJune 30, 20172023 were $85,222, an increase$229, a decrease of $36,622,$36, or 75.4%13.6%, from $48,600$265 incurred in the three months ended SeptemberJune 30, 2016.2022. Travel, meals and entertainment costs include travel related to business development and financing. The decrease in 2023 was due to better efficiency with our commercialization effort in 2023 as compared to 2022.
Rent for the three months ended SeptemberJune 30, 20172023 totaled $38,450, an increase$93, a decrease of $5,972$14, or 18.4%13.1%, from $32,478$107 incurred in three months ended SeptemberJune 30, 2016. 2022. The decrease in rent for 2023 as compared to 2022 is due primarily to a lower negotiated rent for our Los Angeles offices and reduction in our short-term storage leases in 2023.
Depreciation and Amortization Expense.
Depreciation and amortization expense for the three months endedPreferred Stock Dividend
. Preferred stock dividend for the three months endedNet Loss availableAttributable to common shareholders
Six Months Ended SeptemberJune 30, 20172023 Compared to NineSix Months Ended SeptemberJune 30, 20162022 (000’s)
Revenues and Cost of Goods Sold
.We derive our revenue primarily from the sale of our medical device, PURE EP Platform, as well as related support and 2016.maintenance services and software upgrades in connection with the device.
We recognize revenue in accordance with Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers (“ASC 606”). The core principle of ASC 606 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
Cost of sales for the six months ended June 30, 2023 and 2022 was nil.
Gross profit from the six months ended June 30, 2023 was $5 or 100% as compared to $16 or 100.0% for the six months ended June 30, 2022.
Research and Development Expenses. Research and development expenses for the ninesix months ended SeptemberJune 30, 20172023 were $3,802,149, an increase$2,771, a decrease of $1,662,478,$197, or 77.7%6.6%, from $2,139,671$2,968 for the ninesix months ended SeptemberJune 30, 2016. This increase2022. The decrease is primarily due additional personnel, outside designto a reduction in travel, supplies and other costs and current year acquired research and developmentfor the six months ended June 30, 2023 as we develop our proprietary technology platform. compared the six months ended June 30, 2022 in the BioSig Technologies segment; a decrease of 236 or 70.4%.
Research and development expenses were comprised of the following:
Six months ended:
September 30, 2017 | September 30, 2016 | |||||||
| Salaries and equity compensation | $ | 824,056 | $ | 1,491,448 | ||||
| Consulting expenses | 371,956 | 249,874 | ||||||
| Clinical studies and design work | 1,910,271 | 221,305 | ||||||
| Acquired research and development | 543,927 | - | ||||||
| Travel, supplies, other | 151,939 | 177,044 | ||||||
| Total | $ | 3,802,149 | $ | 2,139,671 | ||||
June 30, 2023 | June 30, 2022 | |||||||
Salaries and equity compensation | $ | 2,248 | $ | 2,159 | ||||
Consulting expenses | 68 | 171 | ||||||
Research and clinical studies and design work | 276 | 196 | ||||||
Data/AI development | 37 | 78 | ||||||
Regulatory | 43 | 29 | ||||||
Travel, supplies, other | 99 | 335 | ||||||
Total | $ | 2,771 | $ | 2,968 | ||||
Stock based compensation for research and development personnel was $29,144$851 and $752,713$713 for the ninesix months ended SeptemberJune 30, 20172023 and 2016,2022, respectively.
General and Administrative Expenses.
General and administrative expenses for thePayroll related expenses increaseddecreased to $1,004,717$4,040 in the current period from $894,995$4,574 for the ninesix months ended SeptemberJune 30, 2016, an increase2022, a decrease of $109,722.$534, or 11.7%. The increasedecrease was primarily due to added personnelreduced staff in commercialization, sales and bonuses paidgeneral and administration in 2017.the BioSig Technologies segment. We incurred $1,110,338$6,024 in stock basedstock-based compensation in connection with the vesting of stock and stock options issued to board members, officers, employees and consultants for the ninesix months ended SeptemberJune 30, 20172023 as compared to $4,717,458$1,469 in stock basedstock-based compensation for the same period in 2016.2022.
Professional services for the ninesix months ended SeptemberJune 30, 20172023 totaled $284,058,$532, an increase of $23,068,$26, or 8.8%5.1%, over the $260,990$506 recognized for the ninesix months ended SeptemberJune 30, 2016.2022. Of professional services, legal fees totaled $210,058$403 for the ninesix months ended SeptemberJune 30, 2017,2023; an increase of $16,568,$40, or 8.6%11.0%, from $193,490$363 incurred for the ninesix months ended SeptemberJune 30, 2016.2022. The increase is primarily due to costs incurred in 2023 for financing, contract work and patent filings for the BioSig Technologies segment not incurred in the prior period. Accounting fees incurred in the ninesix months ended SeptemberJune 30, 20172023 amounted to $74,000, an increase$130, a decrease of $6,500,$13, or 9.6%9.1%, from $67,500$143 incurred in same period last year. The increase in legal fees was primarily due to filing of registration statements in 2017 relating to our equity private placements and assistance with our know how agreements entered into in 2017. In 2022, we incurred added audit costs for the ViralClear segment.
Consulting, public and investor relations fees for the ninesix months ended SeptemberJune 30, 20172023 were $1,103,819$1,994 as compared to $971,932$1,380 incurred for the ninesix months ended SeptemberJune 30, 2016.2022, an increase of $614, or 44.5%. The increase in consulting, marketing and investor relations fees during the ninesix months ended SeptemberJune 30, 2017 relate2023 related to our continued efforts to develop our recognition throughout the medical industry.
Travel, meals and entertainment costs for the ninesix months ended SeptemberJune 30, 20172023 were $250,122, an increase$428, a decrease of $54,244,$136, or 27.7%24.1%, from $195,878$564 incurred in the ninesix months ended SeptemberJune 30, 2016.2022. Travel, meals and entertainment costs include travel related to business development and financing. The decrease in 2023 was due to better efficiency with our commercialization effort in 2023 as compared to 2022.
Rent for the ninesix months ended SeptemberJune 30, 20172023 totaled $101,859,$185, a decrease of $28, or 13.1%, from $213 incurred in six months ended June 30, 2022. The decrease in rent for 2023 as compared to 2022 is due primarily to a lower negotiated rent for our Los Angeles offices and reduction in our short-term storage leases in 2023.
Depreciation and Amortization Expense. Depreciation and amortization expense for the six months ended June 30, 2023 totaled $176, an increase of $5,346$50, or 5.5%, from $96,513 incurred in nine months ended September 30, 2016.
Preferred Stock Dividend
. Preferred stock dividend for theNet Loss availableAttributable to common shareholders
Segment Results
The Company reports segment information based on the “management” approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company’s reportable segments.
Summary Statement of Operations for the three and six months ended June 30, 2023 as compared to the three and six months ended June 30, 2022 are detailed in Note 12 of the accompanying unaudited condensed consolidated financial statements.
COVID-19
The World Health Organization determined that COVID-19 no longer fit the definition of a public health emergency and the U.S. government let the declaration of a public health emergency associated with COVID-19 expire on May 11, 2023. COVID-19 is expected to remain a serious endemic threat for an indefinite future period and may continue to adversely affect the global economy, resulting in delaying our commercialization objectives of the PURE EP Platform during 2023.
Liquidity and Capital Resources and Going Concern ($000’s)
As of SeptemberJune 30, 2017,2023, we had a working capital deficit (current liabilities in excess of current assets) of $3,839,317,$1,345, comprised of cash of $234,285$1,252, accounts receivable of $21, employee advances of $5, current portion of inventory of $189, current portion of net investments in leases of $102 and prepaid expenses and vendor deposits of $150,482,$418, which was offset by $1,301,603$2,906 of accounts payable and accrued expenses, accrued dividends on preferred stock issuances of $396,939$96 and an aggregate of $2,525,542lease liability of warrant and derivative liabilities. Excluding the warrant and derivative liabilities, the Company’s working capital deficit would have been $1,313,775.$330. For the ninesix months ended SeptemberJune 30, 2017,2023, we used $5,215,666$10,543 of cash in operating activities and $6,788$122 of cash in investing activities.
Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2022 (000’s)
Cash provided by financing activities totaled $4,400,844,$11,560, comprised of proceeds from the sale of our common stock and receiptwarrants, net of expenses, of $9,993 and proceeds from the sale of BioSig AI’s common stock subscriptions. of $1,567.
In the comparable period in 2016,2022, our aggregate cash provided by financing activities totaled $3,053,868$6,122 comprised of proceeds from the sale of our common stock.stock of $5,820 and proceeds from the sale of our common stock in an At-the-marketing offering of $302. At SeptemberJune 30, 2017,2023, we had cash of $234,285$1,252 compared to $1,055,895$5,077 at December 31, 2016.June 30, 2022. Our cash is held in bank deposit accounts. At SeptemberJune 30, 20172023 and December 31, 2016,June 30, 2022, we had no convertible debentures outstanding.
Cash used in operations for the ninesix months ended SeptemberJune 30, 20172023 and 20162022 was $5,215,666$10,543 and $3,844,553,$12,644, respectively, which represent cash outlays for research and development and general and administrative expenses in such periods. The increasedecreases in cash outlays principally resulted from additional in reduced operating costs, and general and administrative expenses in 2023 and with increases in our operating assets of $269 and a net with an increasedecrease in our operating liabilities of our outstanding accounts payable by $930,110.$1.
We used $6,788$122 cash for investing activities for the ninesix months ended SeptemberJune 30, 2017,2023, compared to $12,095$60 for the ninesix months ended SeptemberJune 30, 2016.2022. For both periods,the current period and comparable period, we purchased computer and other equipment.
We had an accumulated deficit as of June 30, 2017,2023 of $234.4 million, as well as a net loss attributable to BioSig of $18.4 million and negative operating cash flows. We expect to continue incurring losses and negative cash flows from operations until our independent registered public accounting firm stated at December 31, 2016, there isproducts (primarily PURE EP Platform) reach full commercial profitability.
These conditions raise substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is an issue raised due to our net losses and negative cash flows from operations since inception and our expectation is that these conditions will continue for the foreseeable future. In addition, weWe will require additional financing to fund future operations.
Our plans include the continued commercialization of the PURE EP Platform and other applications of our core technology and raising capital through the sale of additional equity securities, debt or capital inflows from strategic partnerships. Our shift from a focus on technology development to commercialization has allowed us to reduce our annual expenses in a meaningful way. As a result of this transition, we have been able to achieve savings through reductions in executive and management compensation and a reduction of our utilization of external consultants and professional service providers. We believe these cost-saving measures combined with our expectations of positive trends in commercial activity create the potential for us to achieve a lower cash flow breakeven rate. There are no assurances, however, that we will be successful in obtaining the level of financing needed for our operations. The COVID-19 endemic has resulted in significant financial market volatility and uncertainty, and COVID-19 may continue to adversely affect the global economy. In addition, U.S. and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the start of the military conflict between Russia and Ukraine.
A continuation or worsening of the levels of market disruption and volatility seen in the recent past could have an adverse effect on our ability to access capital and on the market price of our common stock, and we may not be able to successfully raise capital through the sale of our securities.
Our Series C Preferred Stock contains triggering events which would, among other things, require redemption (i) in cash, at the greater of (a) 120% of the stated value of $1 or (b) the product of (I) the variable weighted average price of our common stock on the trading day immediately preceding the date of the triggering event and (II) the stated value divided by the then conversion price or (ii) in shares of our common stock, equal to a number of shares equal to the amount set forth in (i) above divided by 75%. As of June 30, 2023, the aggregate stated value of our Series C Preferred Stock was $105. The triggering events include our being subject to a judgment of greater than $100 or our initiation of bankruptcy proceedings. If any of the triggering events contained in our Series C Preferred Stock occur, the holders of our Series C Preferred Stock may demand redemption, an obligation we may not have the ability to meet at the time of such demand. We will be required to pay interest on any amounts remaining unpaid after the required redemption of our Series C Preferred Stock, at a rate equal to the lesser of 18% per annum or the maximum rate permitted by applicable law.
We expect to incur losses from operations for the near future. We expect to incur increasing marketing and commercialization expenses related to our PURE EP Platform in addition to additional research and development expenses,costs relating to the PURE EP and other product candidates, including expenses related to clinical trials. We expect that our general and administrative expenses will increase in the future as we expand our business development, add infrastructure and incur additional costs related to being a public company, including incremental audit fees, investor relations programs and increased professional services.
Our future capital requirements will depend on a number of factors, including the progress of our research and development of product candidates, the timing and outcome of regulatory approvals, the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims and other intellectual property rights, the status of competitive products, the availability of financing and our success in developing markets for our product candidates. We believe our existing cash will not be sufficient to fund our operating expenses and capital equipment requirements. We anticipate we will need approximately $4 million in addition to our current cash on hand to fund our operating expenses and capital equipment requirements for the next 12 months.
Future financing may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses or experience unexpected cash requirements that would force us to seek alternative financing. Furthermore, if we issue additional equity or debt securities, existing holders of our securities may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our securities.
If additional financing is not available or is not available on acceptable terms, we may be required to delay, reduce the scope of or eliminate our research and development programs, reduce our commercialization efforts or obtain funds through arrangements with collaborative partners or others that may require us to relinquish rights to certain product candidates that we might otherwise seek to develop or commercialize independently.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses. We evaluate our estimates and judgments on an ongoing basis. We base our estimates on historical experience and on assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our financial statements.
Revenue Recognition
We derive our revenue primarily from the sale of our medical device, the PURE EP™ Platform, as well as related support and maintenance services and software upgrades in connection with the device.
We recognize revenue in accordance with Accounting Standards Codification (ASC) 842, Leases (“ASC 842”) for lease components and ASC 606, Revenue from Contracts with Customers (“ASC 606”) for non-lease components. For medical device sales, the Company recognize revenue under ASC 606.
The core principle of ASC 606 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
Under ASC 606, we determine revenue recognition through the following five steps:
● | Identify the contract with the customer; | |
● | Identify the performance obligations in the contract; | |
● | Determine the transaction price; | |
● | Allocate the transaction price to the performance obligation in the contract; and | |
● | Recognize revenue when, or as, the performance obligations are satisfied. |
Performance obligations are the units of accounting for revenue recognition and generally represent the distinct goods or services that are promised to the customer. If we determine that it has not satisfied a performance obligation, we will defer recognition of the revenue until the performance obligation is deemed to be satisfied. Once the PURE EP Platform is delivered, installed, and accepted by the customer, our performance obligation is recognized. Support, maintenance, and software upgrades are performance obligations over a defined period and are recognized ratably over the contractual service period. Customers typically purchase these services with the initial sale of the PURE EP Platform and do not have the right to terminate their contracts unless we fail to perform material obligations.
We may execute more than one contract with a single customer. If so, it is evaluated whether the agreements were negotiated as a package with a single objective, whether the amount of consideration to be paid in one agreement depends on the price and/or performance of another agreement, or whether the goods or services promised in the agreements represent a single performance obligation. The conclusions reached can impact the allocation of the transaction price to each performance obligation and the timing of revenue recognition related to those arrangements.
We record accounts receivable for amounts invoiced to customers for which we have an unconditional right to consideration as provided under the contractual arrangement. Unbilled receivables, if any, include amounts related to our contractual right to consideration for completed performance obligations not yet invoiced. Deferred revenue includes payments received in advance of performance under the contract. Our unbilled receivables and deferred revenue are reported on an individual contract basis at the end of each reporting period. Unbilled receivables are classified as current or noncurrent based on the timing of when we expect to bill the customer. Deferred revenue is classified as current or noncurrent based on the timing of when we expect to recognize revenue.
Our unconditional right to consideration for goods and services transferred to the customer is included in accounts receivable, net (if any) in the Company’s consolidated balance sheet.
Research and Development.
We account for research and development costs in accordance with the Accounting Standards Codification subtopic 730-10, Research and Development (“ASC 730-10”). Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and developmentsdevelopment costs are expensed when the contracted work has been performed or as milestone results have been achieved. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred.
Stock Based Compensation
All stock-based payments to employees and to nonemployee directors for their services as directors consisted of grants of restricted stock and stock options, which are measured at fair value on the grant date and recognized in the statements of operations as compensation expense over the relevant vesting period. Restricted stock payments and stock-based payments to nonemployees are recognized as an expense over the period of performance.
Such payments are measured at fair value at the earlier of the date a performance commitment is reached, or the date performance is completed. In addition, for awards that vest immediately and are non-forfeitable, the measurement date is the date the award is issued.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not required under Regulation S-K for “smaller reporting companies.”
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As required under Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of September 30, 2017.the end of the period covered by this report. Based upon that evaluation, theour Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of September 30, 2017were not designed at a reasonable assurance level and were not effective forto ensure that information required to be disclosed by us in the same reasonsreports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as previously disclosed under Item 9A. “Controls and Procedures” in our Annual Report on Form 10-K for our fiscal year ended December 31, 2016. appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Controls over Financial Reporting
Management, including our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2022, based on the criteria in a framework developed by the Company’s management pursuant to and in compliance with the criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations (“COSO”) of the Treadway Commission. This evaluation included review of the documentation of controls, evaluation of the design effectiveness of controls, walkthroughs of the operating effectiveness of controls and a conclusion on this evaluation. Based on this evaluation, management has concluded that our internal control over financial reporting was not effective as of December 31, 2022, because management identified that inadequate identification, recording and reporting of stock based compensation due under consulting or other third-party contracts entered into by the Company, but not yet ratified by the Company’s Board of Directors which resulted in deficiencies, which, in aggregate, amounted to a material weakness in the Company’s internal control over financial reporting. The material weaknesses did not result in any identified misstatements to the consolidated financial statements and there were no changes to previously released financial results.
Management’s Remediation Plan
During the three months ended June 30, 2023, we have added additional measures including multiple reviews of contract language with all future contracts to ensure that any stock-based compensation is subject to the Company’s Board of Directors approval. We believe the added contract revision reviews will remediate the underlying deficiencies as identified by us. The remediation efforts will include an ongoing review of the implementation of additional controls to ensure all risks have been addressed. We believe the added contract revision reviews as well as implementation of additional levels of reviews of stock-based compensation will remediate the underlying deficiencies as identified by us.
As a result of the material weaknesses discussed above or of others, we may experience negative impacts on our ability to accurately report our results of operation and financial condition in a timely manner. If we do identify a material weakness in our internal control over financial reporting and are unsuccessful in implementing or following a remediation plan, or fail to update our internal control over financial reporting as our business evolves or to integrate acquired businesses into our controls system, if additional material weaknesses are found in our internal controls in the future, or if our external auditors cannot attest to the effectiveness of our internal control over financial review, if applicable, we may not be able to timely or accurately report our financial condition, results of operations or cash flows or to maintain effective disclosure controls and procedures. If we are unable to report financial information in a timely and accurate manner or to maintain effective disclosure controls and procedures, we could be subject to, among other things, regulatory or enforcement actions by the SEC, an inability for us to be accepted for listing on any national securities exchange in the near future, securities litigation and a general loss of investor confidence, any one of which could adversely affect our business prospects and the market value of our common stock. Further, there are inherent limitations to the effectiveness of any system of controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. We could face additional litigation exposure and a greater likelihood of an SEC enforcement or other regulatory action if further restatements were to occur or other accounting-related problems emerge.
The weaknesses will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.
There have been no other changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) and 15d-(f) of the Exchange Act) that occurred during the our last fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II –II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in such matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or operating results.
There are no material proceedings in which any of our directors, officers or affiliates or any registered or beneficial shareholder of more than 5% of our common stock is an adverse party or has a material interest adverse to our interest.
ITEM 1A. RISK FACTORS
A description of the risks associated with our business, financial condition and results of operations is set forth in Item 1A. “Risk Factors” of our annual report on Form 10-K for the fiscal year ended December 31, 2022, as filed with the SEC on March 31, 2023. There have been no material changes to these risks during the three months ended June 30, 2023.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On July 13, 2017, we consummated one closing under the Unit Purchase Agreement, dated April 6, 2017, by and among certain accredited investors (as defined by Rule 501 under the Securities Act of 1933, as amended), pursuant to which we12, 2023, BioSig Technologies, Inc. issued 267,002100,000 shares of our common stock and 133,501 warrants to purchase one share of our common stock, exercisable at a price of $1.50 per share and expiring July 13, 2020,JKW Family LTD-Joshua Shaun Weiss, general partner in exchange for aggregate considerationconsulting services with a fair value of $400,380, net$112,000, pursuant to consulting agreement dated April 11, 2023.
On April 12, 2023, BioSig Technologies, Inc. issued 50,000 shares of $123common stock to MBS GLOEQ Corp, Matt Silvers, president in expenses. exchange for consulting services with a fair value of $57,500, pursuant to consulting agreement dated April 10, 2023.
On April 12, 2023, BioSig Technologies, Inc. issued 25,000 shares of common stock to Erica Grossman in exchange for consulting services with a fair value of $28,000, pursuant to consulting agreement dated April 11, 2023.
On April 12, 2023, BioSig Technologies, Inc. issued 38,000 shares of common stock to Paul Silverberg in exchange for consulting services with a fair value of $42,560, pursuant to consulting agreement dated April 11, 2023.
On April 17, 2023, BioSig Technologies, Inc. issued 27,000 shares of common stock to Craig Loucks in exchange for consulting services with a fair value of $29,700, pursuant to consulting agreement dated April 13, 2023.
On April 27, 2023, BioSig Technologies, Inc. issued 100,000 shares of common stock to JKW Family LTD-Joshua Shaun Weiss, general partner in exchange for consulting services with a fair value of $122,000, pursuant to consulting agreement dated April 27, 2023.
On April 27, 2023, BioSig Technologies, Inc. issued 250,000 shares of common stock to Laidlaw & Company (UK) Ltd in exchange for advisory services with a fair value of $177,500, pursuant to consulting agreement dated January 18, 2023.
On May 8, 2023, BioSig Technologies, Inc. issued 200,000 shares of common stock to Tolson Holdings Professional Group in exchange for consulting services with a fair value of $252,000, pursuant to consulting agreement dated April 18, 2023.
On May 10, 2023, BioSig Technologies, Inc. issued 150,000 shares of common stock to Alchemist Assets in exchange for consulting services with a fair value of $189,000, pursuant to consulting agreement dated April 18, 2023.
On June 13, 2023, BioSig Technologies, Inc. issued 300,000 shares of common stock to Alchemist Assets in exchange for consulting services with a fair value of $378,000, pursuant to consulting agreement dated June 13, 2023.
On June 14, 2023, BioSig Technologies, Inc. issued 50,000 shares of common stock to Vincent Russo in exchange for consulting services with a fair value of $63,000, pursuant to consulting agreement dated June 13, 2023.
On June 28, 2023, BioSig Technologies, Inc. issued 100,000 shares of common stock to Sim Farar in exchange for advisory services with a fair value of $116,000, pursuant to an advisory board agreement dated June 26, 2023.
On June 29, 2023, BioSig Technologies, Inc. issued 100,000 shares of common stock to Frank Quintero in exchange for advisory services with a fair value of $116,000, pursuant to an advisory board agreement dated June 26, 2023.
The securities sold in this offeringissuances of the shares of common stock as described above were not registered under the Securities Act, of 1933, as amended, or the securities laws of any state, and the shares of the common stock were offered and soldissued in reliance on the exemption from registration under the Securities Act of 1933, as amended, provided bypursuant to Section 4(2) and Regulation D (Rule 506) under4(a)(2) of the Securities Act of 1933, as amended.Act.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
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3.14 | ||
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4.3 | ||
4.4 | ||
4.5 | ||
4.6 | ||
4.7 | ||
4.8 | ||
4.9 | ||
4.10 | ||
4.11 | ||
4.12 | ||
4.13 | ||
4.14 | ||
4.15 |
4.16 | ||
4.17 | ||
4.18 | ||
10.1 | ||
10.2 | ||
10.3 | ||
10.4 | ||
10.5 | ||
10.6 | ||
10.7 | ||
10.8 | ||
10.9 | ||
10.10 | ||
| 10.11 | ||
| 10.12 | ||
| 10.13 | ||
| 10.14 | ||
31.01* | ||
31.02* | ||
32.01** | ||
101 INS* | ||
Inline XBRL Instance Document | ||
101 SCH* | ||
Inline XBRL Taxonomy Extension Schema Document | ||
101 CAL* | ||
Inline XBRL Taxonomy Calculation Linkbase Document | ||
101 LAB* | Inline XBRL Taxonomy Labels Linkbase Document | |
101 | Inline XBRL Taxonomy Presentation Linkbase Document | |
101 DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
104* | ||
Cover Page Interactive Data File (formatted as Inline XBRL | ||
* Filed herewith.
** Furnished herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
BIOSIG TECHNOLOGIES, INC. | |||
Date: | By: | /s/ | |
Kenneth L. Londoner | |||
Chairman & Chief Executive Officer (Principal Executive Officer) | |||
Date: | By: | /s/ | |
Steven | |||
Chief Financial Officer (Principal Accounting Officer) | |||