Streamex Corp 10-Q for FY2021 Q1
Streamex Corp. (STEX)
About this 10-Q
Streamex Corp filed this 10-Q on May 17, 2021, covering the quarter ended March 31, 2021 (FY2021 Q1).
Headline figures
Quarter ended March 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $118.05K
- compared with $0 a year earlier
- Net loss
- $8.32M
- compared with a net loss of $11.34M a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
| | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
| | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number:
(Exact name of registrant as specified in its charter)
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| (State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) | |
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| (Address of principal executive office) | (Zip Code) | (Registrant’s telephone number, Including area code) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| | | The |
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.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
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 | ☐ | |
| | ☒ | 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 ☐
As of May 14, 2021, there were
TABLE OF CONTENTS
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PART I. FINANCIAL INFORMATION |
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ITEM 1. |
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Condensed consolidated balance sheets as of March 31, 2021 (unaudited) and December 31, 2020 |
3 |
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4 |
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5 |
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6 |
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7 |
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Notes to condensed consolidated financial statements (unaudited) |
8-27 |
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ITEM 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
28-34 |
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ITEM 3. |
35 |
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ITEM 4. |
35 |
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PART II. OTHER INFORMATION |
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ITEM 1. |
36 |
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ITEM 1A. |
36 |
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ITEM 2. |
36 |
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ITEM 3. |
36 |
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ITEM 4. |
36 |
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ITEM 5. |
36 |
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ITEM 6. |
37 |
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38 |
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PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
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BIOSIG TECHNOLOGIES, INC. |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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(In Thousands, Except Par Value and Share Amounts) |
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March 31, |
December 31, |
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2021 |
2020 |
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(unaudited) |
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ASSETS |
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Current assets: |
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Cash |
$ | $ | ||||||
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Inventory |
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Prepaid expenses and vendor deposits |
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Total current assets |
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Property and equipment, net |
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Right-to-use assets, net |
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Other assets: |
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Patents, net |
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Trademarks |
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Prepaid expenses, long term |
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Deposits |
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Total assets |
$ | $ | ||||||
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LIABILITIES AND EQUITY |
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Current liabilities: |
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| Accounts payable and accrued expenses, including $ |
$ | $ | ||||||
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Deferred revenue, short term |
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Dividends payable |
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Lease liability, short term |
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Total current liabilities |
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Deferred revenue, long term |
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Lease liability, long term |
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Total long-term debt |
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Total liabilities |
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Commitments and contingencies (Note 11) |
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| Series C 9% Convertible Preferred Stock, $0.001 par value, $1,000 stated value, authorized 4,200 shares, |
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Equity: |
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| Preferred stock, $ |
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| Common stock, $ |
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Additional paid in capital |
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Accumulated deficit |
( |
) | ( |
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Total stockholders' equity attributable to BioSig Technologies, Inc. |
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Non-controlling interest |
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Total equity |
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Total liabilities and equity |
$ | $ | ||||||
See the accompanying notes to the unaudited condensed consolidated financial statements
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BIOSIG TECHNOLOGIES, INC. |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
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(In Thousands, Except Par Value and Share Amounts) |
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(unaudited) |
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Three months ended March 31, |
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2021 |
2020 |
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Revenue: |
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Product sales |
$ | $ | ||||||
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Service |
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Total Revenue |
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Cost of goods sold |
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Gross profit |
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Operating expenses: |
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Research and development |
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General and administrative |
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Depreciation and amortization |
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Total operating expenses |
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Loss from operations |
( |
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Other income (expense): |
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Interest income, net |
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Loss before income taxes |
( |
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Income taxes (benefit) |
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Net loss |
( |
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Non-controlling interest |
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Net loss attributable to BioSig Technologies, Inc. |
( |
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Preferred stock dividend |
( |
) | ( |
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NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS |
$ | ( |
) | $ | ( |
) | ||
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Net loss per common share, basic and diluted |
$ | ( |
) | $ | ( |
) | ||
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Weighted average number of common shares outstanding, basic and diluted |
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See the accompanying notes to the unaudited condensed consolidated financial statements
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BIOSIG TECHNOLOGIES, INC. |
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CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY |
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THREE MONTHS ENDED MARCH 31, 2021 |
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(In Thousands, Except Par Value and Share Amounts) |
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Common stock |
Additional Paid in |
Accumulated |
Non-controlling |
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Shares |
Amount |
Capital |
Deficit |
Interest |
Total |
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Balance, December 31, 2020 |
$ | $ | $ | ( |
) | $ | $ | |||||||||||||||||
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Common stock issued for services |
- | - | - | |||||||||||||||||||||
| Common stock issued upon exercise of options at $ |
- | - | - | |||||||||||||||||||||
| Sale of common stock under At-the-market offering, net of transaction expenses of $ |
- | - | - | |||||||||||||||||||||
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Stock based compensation |
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Preferred stock dividend |
- | - | ( |
) | - | - | ( |
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Net loss |
- | - | - | ( |
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Balance, March 31, 2021 (unaudited) |
$ | $ | $ | ( |
) | $ | $ | |||||||||||||||||
See the accompanying notes to the unaudited condensed consolidated financial statements
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BIOSIG TECHNOLOGIES, INC. |
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CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY |
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THREE MONTHS ENDED MARCH 31, 2020 |
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(In Thousands, Except Par Value and Share Amounts) |
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Common stock |
Additional Paid in |
Accumulated |
Non-controlling |
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Shares |
Amount |
Capital |
Deficit |
Interest |
Total |
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Balance, December 31, 2019 |
$ | $ | $ | ( |
) | $ | $ | |||||||||||||||||
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Sale of common stock |
- | - | ||||||||||||||||||||||
| Common stock issued upon conversion of Series C Preferred Stock at $ |
- | - | - | |||||||||||||||||||||
| Common stock issued settlement of Series C Preferred Stock accrued dividends at $ |
- | - | - | |||||||||||||||||||||
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Common stock issued upon cashless exercise of warrants |
- | - | - | - | - | |||||||||||||||||||
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Common stock issued upon cashless exercise of options |
- | - | - | - | - | |||||||||||||||||||
| Common stock issued upon exercise of warrants at an average of $ |
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Fair value of subsidiary shares issued to acquire research and development from Trek Therapeutics, PBC |
- | - | - | |||||||||||||||||||||
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Stock based compensation |
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Preferred stock dividend |
- | - | ( |
) | - | - | ( |
) | ||||||||||||||||
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Net loss |
- | - | - | ( |
) | ( |
) | ( |
) | |||||||||||||||
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Balance, March 31, 2020 (unaudited) |
$ | $ | $ | ( |
) | $ | $ | |||||||||||||||||
See the accompanying notes to the unaudited condensed consolidated financial statements
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BIOSIG TECHNOLOGIES, INC. |
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
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(In Thousands, Except Par Value and Share Amounts) |
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(unaudited) |
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Three months ended March 31, |
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2021 |
2020 |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net loss |
$ | ( |
) | $ | ( |
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Adjustments to reconcile net loss to cash used in operating activities: |
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Depreciation and amortization |
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Amortization of right to use assets |
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Equity based compensation |
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Fair value of subsidiary stock issued to acquire research and development from Trek Therapeutics, PBC |
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Changes in operating assets and liabilities: |
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Inventory |
( |
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Vendor deposits |
( |
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Prepaid expenses |
( |
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Deferred revenue |
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Accounts payable and accrued expenses |
( |
) | ( |
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Operating lease liabilities |
( |
) | ( |
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Net cash used in operating activities |
( |
) | ( |
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Purchase of property and equipment |
( |
) | ( |
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Net cash used in investing activity |
( |
) | ( |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Proceeds from sale of common stock, net of issuance costs |
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Proceeds from sale of common stock under a At-the-market offering, net of issuance costs |
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Proceeds from exercise of options |
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Proceeds from exercise of warrants |
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Net cash provided by financing activities |
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Net (decrease) increase in cash and cash equivalents |
( |
) | ||||||
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Cash and cash equivalents, beginning of the period |
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Cash and cash equivalents, end of the period |
$ | $ | ||||||
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Supplemental disclosures of cash flow information: |
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Cash paid during the period for interest |
$ | $ | ||||||
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Cash paid during the period for income taxes |
$ | $ | ||||||
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Noncash investing and financing activities: |
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Common stock issued upon conversion of Series C Preferred Stock and accrued dividends |
$ | $ | ||||||
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Dividend payable on preferred stock charged to additional paid in capital |
$ | $ | ||||||
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Record right-to-use assets and related lease liability |
$ | $ | ||||||
See the accompanying notes to the unaudited condensed consolidated financial statements
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(unaudited)
NOTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION
BioSig Technologies, Inc. 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 standard of care in electrophysiology with its initial product offering, the PURE EP™ System, designed for enhanced cardiac signal acquisition, digital signal processing, and analysis during ablation of cardiac arrhythmias. The Company has generated minimal 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 Company 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 broad-spectrum anti-viral agent that showed potential for the treatment of COVID-19. As of March 31, 2021, ViralClear had been realigned with its original objective of pursuing additional applications of the PURE EP™ signal processing technology outside of cardiac electrophysiology.
In 2019 and 2020, ViralClear sold an aggregate of
On July 2, 2020, the Company formed an additional subsidiary, NeuroClear Technologies, Inc., a Delaware corporation.
The unaudited condensed consolidated financial statements include the accounts of BioSig Technologies, Inc., its wholly owned subsidiary, NeuroClear Technologies, Inc. and its majority owned subsidiary, ViralClear Pharmaceuticals, Inc. as the “Company” or “BioSig”.
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, 2020 has been derived from audited financial statements.
Operating results for the three months ended March 31, 2021 are not necessarily indicative of results that may be expected for the year ending December 31, 2021. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2020 filed with the Company’s Form 10-K with the Securities and Exchange Commission on March 15, 2021.
COVID-19
On March 11, 2020, the World Health Organization declared a pandemic related to the rapidly spreading coronavirus (COVID-19) outbreak, which has led to a global health emergency. The full public-health impact of the ongoing pandemic is currently indeterminable and rapidly evolving, and the related health crisis has adversely affected and may continue to adversely affect the global economy, resulting in delaying to our commercialization objectives of the PURE EP Systems into 2021.
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(unaudited)
NOTE 2 – MANAGEMENT’S LIQUIDITY PLANS
BioSig Technologies, Inc.’s primary efforts are principally devoted to improving the standard care of electrophysiology with its PURE EP System’s enhanced signal acquisition, digital signal processing, and analysis during ablation of cardiac arrhythmias; NeuroClear’s and ViralClear’s efforts are in developing additional applications of the PURE EP™ signal processing technology outside of cardiac electrophysiology. The Company has experienced net losses and negative cash flows from operations since inception and expects these conditions to continue for the foreseeable future. Further, the Company has generated minimal revenues and there is no assurance that the Company will be able to generate cash flow to fund operations. In addition, there can be no assurance that the Company's ongoing research and development will be successfully completed or that any product will be commercially viable.
At March 31, 2021, the Company had working capital of approximately $
At March 31, 2021, the Company had cash of approximately $
NOTE 3 – 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 unaudited condensed 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 long-term operating leases, patent capitalization, fair value of acquired 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 of its medical device, the PURE EP™ System, and well as related support and maintenance services and software upgrades in connection with the system.
The Company recognizes 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.
The Company determines revenue recognition through the following five steps:
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Identify the contract with the customer; |
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Identify the performance obligations in the contract; |
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Determine the transaction price; |
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Allocate the transaction price to the performance obligation in the contract; and |
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Recognize revenue when, or as, the performance obligations are satisfied. |
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(unaudited)
Performance obligations are the unit 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. 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 System 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 unaudited condensed consolidated balance sheet.
A reconciliation of contract liabilities with customers is presented below:
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Balance at December 31, 2020 |
Consideration Received |
Recognized in Revenue |
Balance at March 31, 2021 |
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Product revenue |
$ | $ | $ | ( |
) |
$ | ||||||||||
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Service revenue |
( |
) |
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Total |
$ | $ | $ | ( |
) |
$ | ||||||||||
The table below summarizes our deferred revenue as of March 31, 2021 and December 31, 2020:
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March 31, 2021 |
December 31, 2020 |
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Deferred revenue-current |
$ | $ | ||||||
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Deferred revenue-noncurrent |
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Total deferred revenue |
$ | $ | ||||||
We had one customer which accounted for approximately 100% of our revenue in the three months ended March 31, 2021.
Cost of Goods Sold
Cost of goods sold consists primarily of the delivered cost of our medical device(s) sold.
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.
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(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 March 31, 2021 and December 31, 2020, deposits in excess of FDIC limits were $
Inventory
The inventory is comprised of finished goods available for sale and are stated at the lower of cost or net realizable value using the first-in, first-out method of valuation. The inventory at March 31, 2021 and December 31, 2020 were $
Prepaid Expenses and Vendor Deposits
Prepaid expenses and vendor deposits are comprised of prepaid insurance, operating expenses and other prepayments.
Leases
The Company determines 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 financial reporting purposes. The classification evaluation begins at the commencement date and the lease term used in the 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. 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.
Property and Equipment
Property and equipment are stated at cost and depreciated using the straight-line method over their estimated useful lives of
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, which is typically calculated using the discounted cash flow method. The Company did not recognize and record any impairments of long-lived assets used in operations during the three months ended March 31, 2021 and 2020.
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(unaudited)
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 $
Net 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 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 March 31, 2021 and 2020 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.
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March 31, 2021 |
March 31, 2020 |
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Series C convertible preferred stock |
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Options to purchase common stock |
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Warrants to purchase common stock |
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Restricted stock units to acquire common stock |
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Totals |
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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 as measured on the grant 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.
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 financial statements.
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(unaudited)
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
Non-controlling Interest
The Company’s non-controlling interest represents the non-controlling shareholders ownership interests related to the Company’s subsidiary, ViralClear Pharmaceuticals, Inc. The Company reports its non-controlling interest in subsidiaries as a separate component of equity in the 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 consolidated statements of operations. The Company’s equity interest in ViralClear is
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).
Reclassifications
Certain reclassifications have been made to prior periods’ data to conform with the current year’s presentation. These reclassifications had no effect on reported income or losses.
Recent Accounting Pronouncements
There were various 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’s financial position, results of operations or cash flows.
NOTE 4 – PROPERTY AND EQUIPMENT
Property and equipment as of March 31, 2021 and December 31, 2020 is summarized as follows:
|
March 31, 2021 |
December 31, 2020 |
|||||||
|
Computer equipment |
$ | $ | ||||||
|
Furniture and fixtures |
||||||||
|
Manufacturing equipment |
||||||||
|
Testing/Demo equipment |
||||||||
|
Total |
||||||||
|
Less accumulated depreciation |
( |
) |
( |
) |
||||
|
Property and equipment, net |
$ | $ | ||||||
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(unaudited)
Property and equipment are stated at cost and depreciated using the straight-line method over their estimated useful lives of
Depreciation expense was $
NOTE 5 – RIGHT TO USE ASSETS AND LEASE LIABILITY
Operating leases:
On February 10, 2021 the Company entered into a Sixth Amendment to the Office Lease at 12424 Wilshire Blvd in Los Angeles dated August 9, 2011 – it is the Fourth Extended Term with respect to Suite 745 and the Expansion Term with respect to Suite 740 which is from July 1, 2021 until June 30, 2022 with a fixed monthly rent equal to $
The Company determined that the Sixth Amendment was a lease modification and accordingly reassessed the lease classification, remeasured the lease liability and adjusted the right-to-use asset. At February 10, 2021 the Company removed the remaining right-to-use net assets of $
On October 1, 2019, the Company entered into a lease agreement whereby the Company leased approximately
As of March 31, 2021, the Company had outstanding
Right to use assets is summarized below:
|
March 31, 2021 |
December 31, 2020 |
|||||||
|
Right to use assets, net |
$ | $ | ||||||
|
Less accumulated depreciation |
( |
) |
( |
) |
||||
|
Right to use assets, net |
$ | $ | ||||||
During the three months ended March 31, 2021 and 2020, the Company recorded $
Lease liability is summarized below:
|
March 31, 2021 |
December 31, 2020 |
|||||||
|
Total lease liability |
$ | $ | ||||||
|
Less: short term portion |
( |
) |
( |
) |
||||
|
Long term portion |
$ | $ | ||||||
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(unaudited)
Maturity analysis under these lease agreements are as follows:
|
Remainder of 2021 |
$ | |||
|
Year ended December 31, 2022 |
||||
|
Total |
||||
|
Less: Present value discount |
( |
) |
||
|
Lease liability |
$ |
Lease expense for the three months ended March 31, 2021 and 2020 was comprised of the following:
|
March 31, 2021 |
March 31, 2020 |
|||||||
|
Operating lease expense |
$ | $ | ||||||
|
Short-term lease expense |
||||||||
|
Variable lease expense |
||||||||
|
Total |
$ | $ | ||||||
NOTE 6 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses at March 31, 2021 and December 31, 2020 consist of the following:
|
March 31, 2021 |
December 31, 2020 |
|||||||
|
Accrued accounting and legal |
$ | $ | ||||||
|
Accrued reimbursements and travel |
||||||||
|
Accrued consulting |
||||||||
|
Accrued research and development expenses |
||||||||
|
Accrued product purchases |
||||||||
|
Accrued marketing |
||||||||
|
Accrued office and other |
||||||||
|
Accrued payroll |
||||||||
|
Accrued settlement related to arbitration |
||||||||
| $ | $ | |||||||
NOTE 7 – SERIES C 9% CONVERTIBLE PREFERRED STOCK
Series C 9% Convertible Preferred Stock
On January 9, 2013, the Board of Directors authorized the issuance of up to
The Series C Preferred Stock is entitled to preference over holders of junior stock upon liquidation in the amount of $1,000 plus any accrued and unpaid dividends; entitled to dividends as a preference to holders of junior stock at a rate of
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(unaudited)
As a result of an amendment to the conversion price of our Series C Preferred Stock, the conversion price effective as of March 31, 2021 and December 31, 2020 was $
The 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 $1,000 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 March 31, 2021, the aggregate stated value of our Series C Preferred Stock was $105,000. The triggering events include our being subject to a judgment of greater than $100,000 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 the Company may not have the ability to meet at the time of such demand. The Company 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. Accordingly, the Company has classified the Series C Preferred Stock as a mezzanine obligation in the accompanying consolidated balance sheets.
Series C Preferred Stock issued and outstanding totaled
NOTE 8 – STOCKHOLDER EQUITY
Shareholder rights plan
On July 14, 2020, our board of directors adopted a stockholder rights plan (the “Rights Plan”) and
Preferred stock
The Company is authorized to issue
Common stock
BioSig Technologies, Inc.
The Company is authorized to issue
In January 2021, the Company issued an aggregate of
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(unaudited)
During the three months ended March 31, 2021, the Company issued
During the three months ended March 31, 2021, the Company issued
During the three months ended March 31, 2021, the Company issued an aggregate of
Open Market Sale Agreement
On August 28, 2020, the Company entered into an Open Market Sale Agreement (the “Sales Agreement”) with Jefferies LLC to act as the Company’s sales agent and/or principal (“Jefferies” or the “Agent”), with respect to the issuance and sale of up to $
Upon delivery of a placement notice and subject to the terms and conditions of the Sales Agreement, Jefferies may sell the Shares by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended. The Company may sell the common stock in amounts and at times to be determined by the Company from time to time subject to the terms and conditions of the Sales Agreement, but it has no obligation to sell any of the Shares under the Sales Agreement. The Company or Jefferies may suspend or terminate the offering of Shares upon notice to the other party and subject to other conditions. Jefferies will act as sales agent on a commercially reasonable efforts basis consistent with its normal trading and sales practices and applicable state and federal law, rules and regulations and the rules of Nasdaq.
The Company paid Agent a commission equal to
The offering of Shares pursuant to the Sales Agreement will terminate upon the earlier of (i) the sale of all common stock subject to the Sales Agreement or (ii) termination of the Sales Agreement in accordance with its terms.
The common stock was sold and issued pursuant the Company’s shelf registration statement on Form S-3 (File No. 333-230448), which was previously declared effective by the Securities and Exchange Commission, and a related prospectus.
From January 15, 2021 through February 16, 2021, the Company sold
On March 25, 2021, the Company delivered written notice to Jefferies to terminate the Sales Agreement effective as of April 8, 2021, pursuant to Section 7(b)(i) thereof. The Company was not subject to any termination penalties related to the termination of the Sales Agreement.
NOTE 9 – OPTIONS, RESTRICTED STOCK UNITS AND WARRANTS
BioSig Technologies, Inc.
2012 Equity Incentive Plan
On October 19, 2012, the Board of Directors of BioSig Technologies, Inc. approved the 2012 Equity Incentive Plan (“the “Plan”) and terminated the Long-Term Incentive Plan (the “2011 Plan”). The Plan provides for the issuance of options, stock appreciation rights, restricted stock and restricted stock units to purchase up to
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(unaudited)
However,
Additionally, the vesting period of the grants under the Plan will be determined by the administrator, in its sole discretion, with an expiration period of not more than
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. The Company accounts for the expected life of options 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 the three months ended March 31, 2021 was estimated using the Black-Scholes pricing model.
During the three months ended March 31, 2021, the Company granted an aggregate of
The following table presents information related to stock options at March 31, 2021:
|
Options Outstanding |
Options Exercisable |
|||||||||||||
|
Weighted |
||||||||||||||
|
Average |
Exercisable |
|||||||||||||
|
Exercise |
Number of |
Remaining Life |
Number of |
|||||||||||
|
Price |
Options |
In Years |
Options |
|||||||||||
| $ | ||||||||||||||
A summary of the stock option activity and related information for the Plan for the three months ended March 31, 2021 is as follows:
|
Weighted-Average |
||||||||||||||||
|
Weighted-Average |
Remaining |
Aggregate |
||||||||||||||
|
Shares |
Exercise Price |
Contractual Term |
Intrinsic Value |
|||||||||||||
|
Outstanding at December 31, 2020 |
$ | $ | ||||||||||||||
|
Grants |
$ | - | ||||||||||||||
|
Exercised |
( |
) |
$ | - | ||||||||||||
|
Forfeited/expired |
( |
) |
$ | - | ||||||||||||
|
Outstanding at March 31, 2021 |
$ | $ | ||||||||||||||
|
Exercisable at March 31, 2021 |
$ | $ | ||||||||||||||
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(unaudited)
The aggregate intrinsic value in the preceding tables represents the total pretax intrinsic value, based on options with an exercise price less than the stock price of BioSig Technologies, Inc. of $
On January 12, 2021, BioSig Technologies, Inc. granted
On February 16, 2021, BioSig Technologies, Inc. granted
The following assumptions were used in determining the fair value of options during the three months ended March 31, 2021:
|
Risk-free interest rate |
0.83% - 0.94 |
% |
||
|
Dividend yield |
% |
|||
|
Stock price volatility |
% |
|||
|
Expected life |
|
|||
|
Weighted average grant date fair value |
$ | |||
The fair value of all options vesting during the three months ended March 31, 2021 and 2020 of $
Warrants
|
Exercise |
Number |
Expiration |
|||||
|
Price |
Outstanding |
Date |
|||||
| $ | |
||||||
| $ | |
||||||
| $ | |
||||||
| $ | |
||||||
A summary of the warrant activity for the three months ended March 31, 2021 is as follows:
|
Weighted-Average |
||||||||||||||||
|
Weighted-Average |
Remaining Contractual |
Aggregate |
||||||||||||||
|
Shares |
Exercise Price |
Term |
Intrinsic Value |
|||||||||||||
|
Outstanding at December 31, 2020 |
$ | $ | ||||||||||||||
|
Grants |
- | |||||||||||||||
|
Exercised |
- | |||||||||||||||
|
Expired |
( |
) |
$ | - | - | |||||||||||
|
Outstanding at March 31, 2021 |
$ | $ | - | |||||||||||||
|
Vested and expected to vest at March 31, 2021 |
$ | $ | - | |||||||||||||
|
Exercisable at March 31, 2021 |
$ | $ | - | |||||||||||||
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(unaudited)
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 $4.31 of March 31, 2021, 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 three months ended March 31, 2021:
|
Restricted shares issued as of December 31, 2020 |
||||
|
Granted |
||||
|
Vested and issued |
( |
) |
||
|
Forfeited |
( |
) |
||
|
Vested restricted shares as of March 31, 2021 |
||||
|
Unvested restricted shares as of March 31, 2021 |
On January 4, 2021, the Company granted
On March 8, 2021 the Company granted
Stock based compensation expense related to restricted stock grants was $
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
However,
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
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(unaudited)
ViralClear Options
A summary of the stock option activity and related information for the ViralClear Plan for the three months ended March 31, 2021 is as follows:
|
Weighted-Average |
||||||||||||
|
Weighted-Average |
Remaining Contractual |
|||||||||||
|
Shares |
Exercise Price |
Term |
||||||||||
|
Outstanding at December 31, 2020 |
$ | |||||||||||
|
Grants |
- | |||||||||||
|
Exercised |
||||||||||||
|
Forfeited/expired |
( |
) |
$ | |||||||||
|
Outstanding at March 31, 2021 |
$ | |||||||||||
|
Exercisable at March 31, 2021 |
$ | |||||||||||
The following table presents information related to stock options at March 31, 2021:
|
Options Outstanding |
Options Exercisable |
|||||||||||||
|
Weighted |
||||||||||||||
|
Average |
Exercisable |
|||||||||||||
|
Exercise |
Number of |
Remaining Life |
Number of |
|||||||||||
|
Price |
Options |
In Years |
Options |
|||||||||||
| $ | ||||||||||||||
The fair value of the 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 with the market value of stock price based on recent sales. 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 all options vesting during the three months ended March 31, 2021 and 2020 of $
Warrants (ViralClear)
The following table presents information related to warrants (ViralClear) at March 31, 2021:
|
Exercise |
Number |
Expiration |
|||||
|
Price |
Outstanding |
Date |
|||||
| $ | |
||||||
| |
|||||||
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(unaudited)
Restricted stock units (ViralClear)
The following table summarizes the restricted stock activity for the three months ended March 31, 2021:
|
Restricted shares issued as of December 31, 2020 |
||||
|
Granted |
- | |||
|
Forfeited |
( |
) |
||
|
Total |
||||
|
Comprised of: |
||||
|
Vested restricted shares as of March 31, 2021 |
||||
|
Unvested restricted shares as of March 31, 2021 |
Stock based compensation expense related to restricted stock unit grants of ViralClear was $
NOTE 10 – NON-CONTROLLING INTEREST
On November 7, 2018, the Company formed ViralClear Pharmaceuticals, Inc., a Delaware Corporation, formerly known as NeuroClear Technologies, Inc. for the purpose to pursue additional applications of the PURE EP™ signal processing technology outside of electrophysiology and subsequently in 2020 was repurposed to develop a broad-spectrum anti-viral agent that had potential against the COVID-19 virus. In late 2020, ViralClear again was repurposed back to pursuing additional applications of the PURE EP™ signal processing technology outside of cardiac electrophysiology.
As of March 31, 2021 and December 31, 2020, the Company had a majority interest in ViralClear of
A reconciliation of the ViralClear Pharmaceuticals, Inc. non-controlling loss attributable to the Company:
Net loss attributable to the non-controlling interest for the three months ended March 31, 2021:
|
Net loss |
$ | ( |
) |
|
|
Average Non-controlling interest percentage of profit/losses |
% |
|||
|
Net loss attributable to the non-controlling interest |
$ | ( |
) |
Net loss attributable to the non-controlling interest for the three months ended March 31, 2020:
|
Net loss |
$ | ( |
) |
|
|
Average Non-controlling interest percentage of profit/losses |
% |
|||
|
Net loss attributable to the non-controlling interest |
$ | ( |
) |
The following table summarizes the changes in non-controlling interest for the three months ended March 31, 2021:
|
Balance, December 31, 2020 |
$ | |||
|
Allocation of equity to non-controlling interest due to equity-based compensation issued |
||||
|
Net loss attributable to non-controlling interest |
( |
) |
||
|
Balance, March 31, 2021 |
$ |
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(unaudited)
NOTE 11 — COMMITMENTS AND CONTINGENCIES
Licensing agreements
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
The Company is obligated to pay to Mayo Foundation a
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 issued to Mayo an
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 connection with the Tools Agreement, the Company issued to Mayo an 8-year warrant (the “Tools Warrant”) to purchase 284,455 shares of the Company’s common stock at an exercise price of $
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.
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(unaudited)
In connection with the ViralClear Agreement, NeuroClear issued to Mayo an
Trek Therapeutics, PBC
In the event of sublicensing, sale, transfer, assignment or similar transaction, ViralClear agreed to pay Trek
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.
3LP Advisors LLC (d/b/a Sherpa Technology Group)
On November 1, 2017, in connection with Mr. Filler joining the Company’s Board of Directors, the Company entered into a Master Services Agreement with 3LP Advisors LLC (d/b/a Sherpa Technology Group) (“Sherpa”) and an initial statement of work (the “SOW”), pursuant to which Sherpa will develop, execute and expand the Company’s intellectual property strategy over the course of the next approximately 18 months by evaluating the business and technology landscape in which the Company operates, and charting and executing a strategy of patent filing and licensing.
During the three months ended March 31, 2021 and 2020, the Company paid $
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 months ended March 31, 2021 and 2020, the Company charged operations $
Purchase commitments
As of March 31, 2021, the Company had aggregate purchase commitments of approximately $
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(unaudited)
Litigation
Aurigene Pharmaceutical Services LTD vs. ViralClear Pharmaceuticals Inc. and BioSig Technologies, Inc.
On January 8, 2021, Aurigene Pharmaceutical Services, LTD (“Aurigene”) filed a complaint with the United States District Court for the District of Connecticut claiming the Company is in default of certain milestone payments for manufacturing and services under contracts dated June 23, 2020 and July 16, 2020 in aggregate amount of $1,530,000. The Company contends that it is not a proper party to the lawsuit since the agreements at issue were signed by a subsidiary. The Company also contends that Aurigene is not entitled to the relief it seeks, because it did not meet its own obligations under the contracts, including several manufacturing milestones. The Company intends to defend itself vigorously.
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), NeuroClear Technologies, Inc. and ViralClear Pharmaceuticals, Inc.
Information concerning the operations of the Company’s reportable segments is as follows:
Summary Unaudited condensed consolidated Statement of Operations for the
|
BioSig Technologies, Inc. |
ViralClear Pharmaceuticals, Inc. |
NeuroClear Technologies, Inc. |
Total |
|||||||||||||
|
Revenue: |
||||||||||||||||
|
Product sales |
$ | $ | $ | $ | ||||||||||||
|
Service |
||||||||||||||||
|
Total Revenue |
||||||||||||||||
|
Cost of goods sold |
||||||||||||||||
|
Gross profit |
||||||||||||||||
|
Operating expenses: |
||||||||||||||||
|
Research and development |
( |
) |
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General and administrative |
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Depreciation and amortization |
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Total operating expenses |
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Loss from operations |
( |
) |
( |
) |
( |
) |
( |
) |
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Other income: |
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Interest income and other income, net |
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Net loss |
$ | ( |
) |
$ | ( |
) |
$ | ( |
) |
$ | ( |
) |
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BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(unaudited)
Summary Unaudited condensed consolidated Statement of Operations for the three months ended March 31, 2020:
|
BioSig Technologies, Inc. |
ViralClear Pharmaceuticals, Inc. |
NeuroClear Technologies, Inc. |
Total |
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Operating expenses: |
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Research and development |
$ | $ | $ | $ | ||||||||||||
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General and administrative |
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Depreciation and amortization |
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Total operating expenses |
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Loss from operations |
( |
) |
( |
) |
( |
) |
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Other income: |
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Interest income and other income, net |
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Net loss |
$ | ( |
) |
$ | ( |
) |
$ | $ | ( |
) |
||||||
Summary of assets at March 31, 2021:
|
BioSig Technologies, Inc. |
ViralClear Pharmaceuticals, Inc. |
NeuroClear Technologies, Inc. |
Total |
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|
Cash |
$ | $ | $ | $ | ||||||||||||
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Inventory |
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Other current assets |
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Total operating assets |
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Property and equipment, net |
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Right-to-use assets, net |
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Other assets |
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Total assets |
$ | $ | $ | $ | ||||||||||||
NOTE 13 – RELATED PARTY TRANSACTIONS
At March 31, 2021 and December 31, 2020, the Company had reimbursable travel, compensation and other related expenses due related parties of $
On November 1, 2017, in connection with Mr. Filler joining the Company’s Board of Directors,
During the three months ended March 31, 2021 and 2020, the Company paid $
On January 5, 2021, the Company issued an aggregate of 450,000 shares of common stock to officers of the Company as part of annual compensation.
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(unaudited)
NOTE 14 – FAIR VALUE MEASUREMENT
The Company adopted the provisions of Accounting Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”). ASC 825-10 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. ASC 825-10 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 825-10 establishes three levels of inputs that may be used to measure fair value:
Level 3 – Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.
All items required to be recorded or measured on a recurring basis are based upon level 3 inputs.
To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed and is determined based on the lowest level input that is significant to the fair value measurement.
The carrying value of the Company’s cash and cash equivalents, accounts payable and other current assets and liabilities approximate fair value because of their short-term maturity.
As of March 31, 2021, and December 31, 2020, the Company did not have any items that would be classified as level 1, 2 or 3 disclosures.
As of March 31, 2021, and December 31, 2020, the Company did not have any derivative instruments that were designated as hedges.
There were no derivative and warrant liability as of March 31, 2021 and December 31, 2020.
NOTE 15 – SUBSEQUENT EVENTS
On April 1, 2021, ViralClear issued
On April 5, 2021, BioSig Technologies, Inc. issued
On April 9, 2021, BioSig Technologies, Inc. granted an aggregate of
On April 13, 2021, BioSig Technologies, Inc. granted
On April 28, 2021, BioSig Technologies, Inc. issued
On April 30, 2021, BioSig Technologies, Inc. issued an aggregate of
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Management’s Discussion and Analysis of Financial Condition and Results of Operations includes a number of forward-looking statements that reflect Management’s current views with respect to future events and financial performance. You can identify these statements by forward-looking words such as “may,” “will,” “expect,” “anticipate,” “believe,” “estimate” and “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.
We are a medical technology company that is commercializing our PURE EP™ System which is an advanced signal acquisition and processing platform designed to provide essential diagnostic signals with high clinical value in all types of cardiac catheter ablations.
PURE EP™ is designed to address long-standing limitations that slow and disrupt cardiac catheter ablation procedures, such as environmental lab noise, signal saturation, slow signal recovery, and inaccurate display of fractionated potentials.
Cardiac catheter ablation is a procedure that involves delivery of energy through the tip of a catheter that scars or destroys heart tissue to correct heart rhythm disturbances. In August 2018, we received 510(k) clearance from the U.S. Food and Drug Administration (the “FDA”) to market our PURE (Precise Uninterrupted Real-time evaluation of Electrograms) EP™ System.
PURE EP™ is a signal processing platform that combines advanced hardware and software to address known challenges associated to signal acquisition, to enable electrophysiologists to see more signals and analyze them in real-time. The device aims to minimize noise and artifacts from cardiac recordings and acquire high-fidelity cardiac signals. Improving fidelity of acquired cardiac signals may potentially increase the diagnostic value of these signals, thereby possibly improving accuracy and efficiency of the EP studies and ablation procedures.
Our initial focus is on improving intracardiac signal acquisition and enhancing diagnostic information for catheter ablation procedures for complex arrhythmias like ventricular tachycardia (“VT”), a potentially life-threatening arrhythmia, and atrial fibrillation (“AF”), the most common cardiac arrhythmia associated with a fivefold risk of stroke.
During 2019, we began conducting our first clinical observational patient cases using the PURE EP System at Texas Cardiac Arrhythmia Institute at St. David’s Medical Center in Austin, Texas; Prisma Health at Greenville Health System in South Carolina; Indiana University; and Santa Barbara Cottage Hospital in California. The initial experience across these early evaluation centers showed that the PURE EP™ System functions as designed: we received positive feedback from the EP users about the improved signal detection and fidelity during ablation procedures on patients with various arrhythmias, such as ischemic ventricular tachycardia, AF, atypical flutter, atrioventricular nodal reentry tachycardia (AVNRT), supraventricular tachycardia, premature ventricular contractions (PVC), and a rare case of dual septal pathway.
In November 2019, we commenced our first clinical study for the PURE EP™ System titled, “Novel Cardiac Signal Processing System for Electrophysiology Procedures (PURE EP 2.0 Study).” Texas Cardiac Arrhythmia Research Foundation (TCARF) in Austin, Texas, was the first institution to conduct patient cases under the clinical study; Mayo Clinic in Jacksonville, Florida was the second institution; and Massachusetts General Hospital (MGH) was the third to conduct patient cases under the same clinical study. As of March 8, 2021, 81 patients have been enrolled in the study. Initial results of evaluated data from the PURE EP 2.0 Study found that a cumulative total of 29 PURE EP signals out of 34 (85.3%) were rated as statistically equivalent or better for the dataset (identical electrocardiographic and intracardiac signal data recorded during 15 AF ablation procedures from the PURE EP System, the signal recording system, and the 3D mapping system). In 35.5% of samples, the reviewers selected PURE EP because "more signal components were visible." On April 13, 2021 we announced the completion of the enrollment in the PURE EP 2.0 Study.
We continue to install PURE EP Systems at centers of excellence for clinical evaluation under our market development plan. The PURE EP System has been utilized at several institutions, including University of Pennsylvania Hospital; Overland Park Regional Medical System in Overland Park, Kansas; Deborah Heart and Lung Center in Browns Mills, New Jersey; and Memorial Hospital of South Bend, part of Beacon Health System, in South Bend, Indiana; and Houston Methodist in Texas.
To date, more than 800 patient procedures have been conducted with the PURE EP System by more than 44 electrophysiologists across nine different clinical sites in the United States.
In addition to clinical evaluation, we have conducted a total of twenty-seven pre-clinical studies with the PURE EP™ System, twenty-two of which were performed at Mayo Clinic in Rochester, Minnesota. We also conducted a pre-clinical study at the Mount Sinai Hospital in New York, New York, with an emphasis on the VT model; and four pre-clinical studies at the University of Pennsylvania. We intend to continue additional research and development studies with our technology at Mayo Clinic and the University of Pennsylvania. We also intend to continue additional clinical external evaluation at a select number of other centers.
We have made progress towards obtaining a European CE marking certificate for medical devices. We intend to commence audit preparation for the International Organization for Standardization (“ISO”) 13485 with the expectation to proceed with the audit to obtain the ISO 13485 Certification and CE Mark in the first half of 2021 and subsequently file for CE Mark in the second half of 2021 or early in 2022, subject to the guidance from the European notified body.
In December 2020, we announced that three units were contracted for purchase by St David’s Healthcare of Austin, Texas and subsequently sold in February 2021. These units were our first commercial sale. On April 6, 2021 we announced the sale of our units to multiple campuses of a leading hospital system, Mayo Foundation for Medical Education and Research. Additionally, we are in active discussions with numerous accounts about the acquisition of the PURE EP™ System. We anticipate our initial customers will be medical centers of excellence and other healthcare facilities that operate EP labs.
ViralClear Pharmaceuticals, Inc.
ViralClear Pharmaceuticals, Inc. (“ViralClear”) is a majority-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 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. As of March 31, 2021, the Company retains 70.2% ownership of ViralClear.
Recent Developments
Mayo Clinic Artificial Intelligence (AI) Research Collaboration
On January 2, 2021 we entered into a research agreement with Mayo Clinic regarding a Novel AI Program for our Novel Signal Recording System. The program is a strategic collaboration with Mayo to develop a next-generation AI- and machine learning-powered software for our PURE EP™ System. The new collaboration includes an R&D program that is expected to expand our proprietary hardware and software with advanced signal processing capabilities and aim to develop novel technological solutions by combining the electrophysiological signals delivered by PURE EP™ and other data sources.
The development program is under the leadership of Samuel J. Asirvatham, M.D., Mayo Clinic’s Vice-Chair of Innovation and Medical Director, Electrophysiology Laboratory, and Alexander D. Wissner-Gross, Ph.D., Managing Director of Reified LLC. We entered into a 10-year collaboration agreement with Mayo Clinic in March 2017 and in November 2019, we signed a patent and know-how license agreement with Mayo Foundation for Medical Education and Research in which such terms apply to this program. We also entered into a partnership with Reified LLC, a provider of advanced artificial intelligence-focused technical advisory services to the private sector in late 2019.
Results of Operations
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, the timing and outcome of future regulatory 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 March 31, 2021 Compared to Three Months Ended March 31, 2020
Revenues and Cost of Goods Sold. Revenue for the three months ended March 31, 2021 totaled $118,047 comprised of product sales of $115,367 and recognized service revenue of $2,680 as compared to nil for the three months ended March 31, 2020.
We derive our revenue primarily from the sale of our medical device, PURE EP system, as well as related support and maintenance services and software upgrades in connection with the system.
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 March 31, 2021 was $98,518 comprised of the delivered product as compared to nil for the three months ended March 31, 2020.
Gross profit from the three months ended March 31, 2021 was $19,529 as compared to nil for the three months ended March 31, 2020.
Research and Development Expenses. Research and development expenses for the three months ended March 31, 2021 were $1,265,507, a decrease of $3,661,207, or 74.3%, from $4,926,714 for the three months ended March 31, 2020. This decrease is primarily due to acquired research and development cost incurred during the three months ended March 31, 2020 of $3,524,550 as compared to nil for the current period in the ViralClear segment. Research and development expenses were comprised of the following:
Three months ended:
|
March 31, 2021 |
March 31, 2020 |
|||||||
|
Salaries and equity compensation |
$ | 498,729 | $ | 892,502 | ||||
|
Consulting expenses |
188,636 | 271,963 | ||||||
|
Research and clinical studies and design work |
295,460 | 166,153 | ||||||
|
Acquired Research and Development |
- | 3,524,550 | ||||||
|
Data/AI development |
126,875 | - | ||||||
|
Regulatory |
58,646 | - | ||||||
|
Product development |
14,578 | - | ||||||
|
Travel, supplies, other |
82,583 | 71,546 | ||||||
|
Total |
$ | 1,265,507 | $ | 4,926,714 | ||||
Stock based compensation for research and development personnel was $(66,605) and $314,303 for the three months ended March 31, 2021 and 2010, respectively.
General and Administrative Expenses. General and administrative expenses for the three months ended March 31, 2021 were $7,271,461, a decrease of $583,759, or 7.4%, from $7,855,220 incurred in the three months ended March 31, 2020. This decrease is primarily due to reduction in the activities of our ViralClear segment, net with an increase in employee performance pay and staff in the current period as compared to the same period in the prior year and additional service provider fees paid.
Payroll related expenses increased to $1,848,821 in the current period from $1,302,971 for the three months ended March 31, 2020, an increase of $545,850 or 41.9%. The increase was due to performance pay and added staff in the later part of 2020 and 2021 for commercialization and support personnel. We incurred $2,585,900 in stock-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 March 31, 2021 as compared to $4,098,281 in stock-based compensation for the same period in 2020.
Professional services for the three months ended March 31, 2021 totaled $379,504, a decrease of $111,668, or 22.7%, over the $491,172 recognized for the three months ended March 31, 2020. Of professional services, legal fees totaled $307,779 for the three months ended March 31, 2021; a decrease of $77,687 or 20.2% from $385,466 incurred for the three months ended March 31, 2020. The decrease is primarily due to costs incurred in 2020 for financing. Accounting fees incurred in the three months ended March 31, 2021 amounted to $71,725, a decrease of $33,981 or 32.2%, from $105,706 incurred in same period last year. In 2020, we incurred additional audit costs associated with internal control and ViralClear audits in addition to our yearend requirements.
Consulting, public and investor relations fees for the three months ended March 31, 2021 were $1,374,320 as compared to $1,286,392 incurred for the three months ended March 31, 2020, an increase of $87,928 or 6.8%. The increase in consulting, marketing and investor relations fees during the three months ended March 31, 2021 related to our continued efforts to develop our recognition throughout the medical industry in an effective manner.
Travel, meals and entertainment costs for the three months ended March 31, 2021 were $108,940, a decrease of $94,950, or 46.6%, from $203,890 incurred in the three months ended March 31, 2020. Travel, meals and entertainment costs include travel related to business development and financing. The decrease in 2021 was due to various restrictions imposed by the COVID-19 outbreak as compared to 2020.
Rent for the three months ended March 31, 2021 totaled $117,347, a decrease of $2,061 or 1.7%, from $119,408 incurred in three months ended March 31, 2020. The decrease in rent for 2021 as compared to 2020 is due primarily reduction in warehousing costs in 2021.
Depreciation and Amortization Expense. Depreciation and amortization expense for the three months ended March 31, 2021 totaled $41,586, an increase of $20,571, or 97.9%, over the expense of $21,015 incurred in the three months ended March 31, 2020, as a result of the adding additional office computers and other equipment.
Preferred Stock Dividend. Preferred stock dividend for the three months ended March 31, 2021 totaled $2,330, a decrease of $2,288, or 49.5% from $4,618 incurred during the three months ended March 31, 2020. Preferred stock dividends are related to the dividends accrued on our Series C Preferred Stock issued during the period from 2013 through 2015. The decrease in 2021 as compared to 2020 is the result of conversions in 2020.
Net Loss available to BioSig Technologies, Inc. common shareholders. As a result of the foregoing, net loss available to common shareholders for the three months ended March 31, 2021 was $8,321,311 compared to a net loss of $11,340,178 for the three months ended March 31, 2020.
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 months ended March 31, 2021 as compared to the three months ended March 31, 2020 are detailed in Note 12 of the accompanying unaudited condensed consolidated financial statements.
COVID-19
On March 11, 2020, the World Health Organization (the “WHO”) declared a pandemic related to the rapidly spreading coronavirus (COVID-19) outbreak, which has led to a global health emergency. The full public-health impact of the ongoing pandemic is currently indeterminable and rapidly evolving, and the related health crisis has adversely affected and may continue to adversely affect the global economy, resulting in delaying to our commercialization objectives of the PURE EP Systems into 2021.
Liquidity and Capital Resources
As of March 31, 2021, we had a working capital of $19,437,887, comprised of cash of $22,474,866, inventory of $649,937 and prepaid expenses and vendor deposits of $208,746, which was offset by $3,459,035 of accounts payable and accrued expenses, accrued dividends on preferred stock issuances of $74,547 and current portions of deferred revenue of $32,156 and of lease liability of $329,924. For the three months ended March 31, 2021, we used $6,991,172 of cash in operating activities and $129,876 of cash in investing activities.
Three Months Ended March 31, 2021 Compared to Three Months Ended March 31, 2020
Cash provided by financing activities totaled $1,327,885, comprised of proceeds from the sale of our common stock under our at-the-marketing offering of $1,300,135 and proceeds from exercise of options of $27,750.
In the comparable period in 2020, our aggregate cash provided by financing activities totaled $9,353,951, comprised of proceeds from the sale of our common stock of $9,052,331 and proceeds from exercise of warrants of $301,620. At March 31, 2021, we had cash of $22,474,866 compared to $15,499,734 at March 31, 2020. Our cash is held in bank deposit accounts. At March 31, 2021 and March 31, 2020, we had no convertible debentures outstanding.
Cash used in operations for the three months ended March 31, 2021 and 2020 was $6,991,172 and $5,942,321, respectively, which represent cash outlays for research and development and general and administrative expenses in such periods. The increases in cash outlays principally resulted from additional operating costs, general and administrative expenses, net with a decrease in our operating assets of $214,287,a decrease in our operating liabilities of $1,318,000 and stock-based compensation and depreciation and amortization.
We used $129,876 cash for investing activities for the three months ended March 31, 2021, compared to $20,478 for the three months ended March 31, 2020. For the current period and comparable period, we purchased computer and other equipment.
We had an accumulated deficit as of March 31, 2021 of $165.3 million, as well as a net loss attributable to BioSig Technologies, Inc. of $8.3 million and negative operating cash flows. We expect to continue incurring losses and negative cash flows from operations until our products (primarily PURE EP System) reach commercial profitability. We believe that our existing cash on hand will be sufficient to enable us to fund our projected operating requirements for approximately one year and a day. However, we may need to raise additional funds more quickly if one or more of our assumptions prove to be incorrect or if we choose to expand our product development efforts more rapidly than we presently anticipate. We also may decide to raise additional funds before we require them if we are presented with favorable terms for raising capital.
Our plans include the continued commercialization of the PURE EP System and other applications of our core technology and raising capital through the sale of additional equity securities, debt or capital inflows from strategic partnerships. There are no assurances, however, that we will be successful in obtaining the level of financing needed for our operations. The ongoing COVID-19 pandemic has resulted and continues to result in significant financial market volatility and uncertainty in recent months.
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. If we are unsuccessful in commercializing our products and raising capital, we may need to reduce activities, curtail or cease operations.
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 $1,000 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 March 31, 2021, the aggregate stated value of our Series C Preferred Stock was $105,000. The triggering events include our being subject to a judgment of greater than $100,000 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 system in addition to additional research and development 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.
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.
At-the-Market Offering
On August 28, 2020, we entered into an Open Market Sale Agreement (the “Sales Agreement”) with Jefferies LLC to act as our sales agent and/or principal (“Jefferies” or the “Agent”), with respect to the issuance and sale of up to $45,000,000 of our shares of common stock, par value $0.001 per share (the “Shares”), from time to time in an at-the-market offering (the “Offering”).
Upon delivery of a placement notice, Jefferies may sell the Shares by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended (the “Securities Act”). We may sell the Shares in amounts and at times to be determined by us from time to time subject to the terms and conditions of the Sales Agreement, but we have no obligation to sell any of the Shares under the Sales Agreement. We or Jefferies may suspend or terminate the offering of Shares upon notice to the other party and subject to other conditions. Jefferies will act as sales agent on a commercially reasonable efforts basis consistent with its normal trading and sales practices and applicable state and federal law, rules and regulations and the rules of Nasdaq.
We will pay Agent a commission equal to 3.0% of the gross proceeds from the sale of the Shares pursuant to the Sales Agreement. The Company has also agreed to provide Jefferies with customary indemnification and contribution rights.
The offering of Shares pursuant to the Sales Agreement will terminate upon the earlier of (i) the sale of all Shares subject to the Sales Agreement or (ii) termination of the Sales Agreement in accordance with its terms.
From January 15, 2021 through February 16, 2021, the Company sold 251,720 shares of its common stock through the Open Market Sales Agreement for net proceeds of $1,300,135, after transactional costs of $40,365.
The Shares are sold and issued pursuant the Company’s shelf registration statement on Form S-3 (File No. 333-230448), which was previously declared effective by the Securities and Exchange Commission, and a related prospectus. On March 25, 2021, the Sales Agreement was canceled with approximately $41M remaining available under the Shelf registration.
On March 25, 2021, the Company delivered written notice to Jefferies to terminate the Sales Agreement effective as of April 8, 2021, pursuant to Section 7(b)(i) thereof. The Company was not subject to any termination penalties related to the termination of the Sales Agreement.
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.
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 development 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.
On October 29, 2014, our common stock commenced trading on OTCQB and on September 21, 2018 on the NASDAQ Capital Market under the symbol “BSGM.” Fair value of options are typically determined by the sales prices of our common stock for the 10 trading days immediately preceding the date of the award.
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 unaudited condensed 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 long-term operating leases, patent capitalization, fair value of acquired 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.
Acquisition of Intellectual Property
Intellectual property acquired are accounted for under the acquisition method of accounting. This method requires the recording of acquired assets, including separately identifiable intangible assets, and assumed liabilities at their acquisition date fair values. The method records any excess purchase price over the fair value of acquired net assets as goodwill.
The acquired intellectual property from the Trek acquisition was considered unproven compounds, the success of which was uncertain at the time of the acquisition. Accordingly, the fair value of the consideration paid was charged as acquired research and development to current period operations.
Income Taxes
Deferred income tax assets and liabilities are determined based on the estimated future tax effects of net operating loss and credit carryforwards and temporary differences between the tax basis of assets and liabilities and their respective financial reporting amounts measured at the current enacted tax rates. We record an estimated valuation allowance on our deferred income tax assets if it is not more likely than not that these deferred income tax assets will be realized. We recognize a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement.
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, with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports 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 appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Controls over Financial Reporting
There have been no 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 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. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Aurigene Pharmaceutical Services LTD vs. ViralClear Pharmaceuticals Inc. and BioSig Technologies, Inc.
On January 8, 2021, Aurigene Pharmaceutical Services, LTD (“Aurigene”) filed a complaint with the United States District Court for the District of Connecticut claiming the Company is in default of certain milestone payments for manufacturing and services under contracts dated June 23, 2020 and July 16, 2020 in aggregate amount of $1,530,000. The Company contends that it is not a proper party to the lawsuit since the agreements at issue were signed by a subsidiary. The Company also contends that Aurigene is not entitled to the relief it seeks, because it did not meet its own obligations under the contracts, including several manufacturing milestones. The Company intends to defend itself vigorously.
From time to time, we may become involved in other 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 these or other 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
Not required under Regulation S-K for “smaller reporting companies”
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On January 13, 2021, BioSig Technologies, Inc. issued 18,868 shares of common stock to IRTH Communications LLC in exchange for consulting services rendered with a fair value of $75,283, pursuant to a service renewal agreement, dated December 11, 2019.
On March 29, 2021, BioSig Technologies, Inc issued 125,000, 125,000 and 75,000 shares of common stock to Draper, Inc., Carriage House Capital Corp. and Church & Keeler, Inc., respectively, in exchange for consulting services with an aggregate fair value of $1,384,500, pursuant to consulting agreements entered into in March 2021.
The issuance of the shares of common stock to IRTH, Draper, Inc., Carriage House Capital Corp. and Church & Keeler, Inc. were not registered under the Securities Act, or the securities laws of any state, and the shares of the common stock were issued in reliance on the exemption from registration under the Securities Act pursuant to Section 4(a)(2) of the Securities 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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3.1 |
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3.2 |
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3.3 |
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3.4 |
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3.5 |
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3.6 |
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3.7 |
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3.8 |
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3.10 |
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3.11 |
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3.14 |
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31.01* |
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31.02* |
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32.01* |
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101 INS* |
Inline XBRL Instance Document |
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101 SCH* |
Inline XBRL Taxonomy Extension Schema Document |
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101 CAL* |
Inline XBRL Taxonomy Calculation Linkbase Document |
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101 DEF* |
Inline XBRL Taxonomy Extension Definition Linkbase Document |
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101 LAB* |
Inline XBRL Taxonomy Labels Linkbase Document |
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101 PRE* |
Inline XBRL Taxonomy Presentation Linkbase Document |
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104* |
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
* Filed 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.
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BIOSIG TECHNOLOGIES, INC. |
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Date: May 17, 2021 |
By: |
/s/ Kenneth L. Londoner |
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Kenneth L. Londoner |
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Chairman & Chief Executive Officer (Principal Executive Officer) |
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Date: May 17, 2021 |
By: |
/s/ Steven Chaussy |
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Steven Chaussy |
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Chief Financial Officer (Principal Accounting Officer) |
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EXHIBIT 31.01
CERTIFICATION
I, Kenneth L. Londoner, certify that:
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1. |
I have reviewed this quarterly report on Form 10-Q of BioSig Technologies, Inc.; |
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2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
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3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
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4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
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(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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(d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
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5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
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(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonable likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting. |
Date: May 17, 2021
/s/ Kenneth L. Londoner
Kenneth L. Londoner
Chairman & Chief Executive Officer (Principal Executive Officer)
EXHIBIT 31.02
CERTIFICATION
I, Steven Chaussy, certify that:
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1. |
I have reviewed this quarterly report on Form 10-Q of BioSig Technologies, Inc.; |
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2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
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3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
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4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
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(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
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5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
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(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonable likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting. |
Date: May 17, 2021
/s/ Steven Chaussy
Steven Chaussy
Chief Financial Officer (Principal Accounting Officer)
Exhibit 32.01
CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Kenneth L. Londoner, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of BioSig Technologies, Inc. on Form 10-Q for the fiscal quarter ended March 31, 2021 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in this Quarterly Report on Form 10-Q fairly presents in all material respects the financial condition and results of operations of BioSig Technologies, Inc.
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By: |
/s/ Kenneth L. Londoner |
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Date: May 17, 2021 |
Name: |
Kenneth L. Londoner |
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Title: |
Chairman & Chief Executive Officer (Principal Executive Officer) |
I, Steven Chaussy, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of BioSig Technologies, Inc. on Form 10-Q for the fiscal quarter ended March 31, 2021 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in this Quarterly Report on Form 10-Q fairly presents in all material respects the financial condition and results of operations of BioSig Technologies, Inc.
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By: |
/s/ Steven Chaussy |
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Date: May 17, 2021 |
Name: |
Steven Chaussy |
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Title: |
Chief Financial Officer (Principal Accounting Officer) |