biosig20220331

BIOSIG TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

THREE MONTHS ENDED MARCH 31, 2022

(In Thousands, Except Par Value and Share Amounts)

biosig20220331_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

☐

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-38659

BIOSIG TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)


Delaware		26-4333375
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

55 Greens Farms Road, 1st Floor Westport, CT		06880
(Address of principal executive office)		(Zip Code)

(203) 409-5444
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	BSGM	The NASDAQ Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically 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). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 16, 2022, there were 39,611,559 shares of registrant’s common stock outstanding.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

	ITEM 1.	Financial Statements

		Condensed consolidated balance sheets as of March 31, 2022 (unaudited) and December 31, 2021	3

		Condensed consolidated statements of operations for the three months ended March 31, 2022 and 2021 (unaudited)	4

		Condensed consolidated statement of changes in equity for the three months ended March 31, 2022 (unaudited)	5

		Condensed consolidated statement of changes in equity for the three months ended March 31, 2021 (unaudited)	6

		Condensed consolidated statements of cash flows for the three months ended March 31, 2022 and 2021 (unaudited)	7

		Notes to condensed consolidated financial statements (unaudited)	8-25

	ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26-32
	ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	33
	ITEM 4.	Controls and Procedures	33

PART II. OTHER INFORMATION

	ITEM 1.	Legal Proceedings	34
	ITEM 1A.	Risk Factors	34
	ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
	ITEM 3.	Defaults Upon Senior Securities	34
	ITEM 4.	Mine Safety Disclosures	34
	ITEM 5.	Other Information	34
	ITEM 6.	Exhibits	35

	SIGNATURES		36

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BIOSIG TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Par Value and Share Amounts)

	March 31,			December 31,
	2022			2021
	(unaudited)
ASSETS
Current assets:
Cash	$	8,665		$	11,659
Inventory		2,026			1,881
Prepaid expenses and vendor deposits		311			354
Total current assets		11,002			13,894

Property and equipment, net		656			652

Right-to-use assets, net		519			604

Other assets:
Patents, net		322			326
Trademarks		1			1
Deposits		42			42

Total assets	$	12,542		$	15,519

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued expenses, including $100 and $86 to related parties as of March 31, 2022 and December 31, 2021, respectively	$	2,344		$	2,179
Deferred revenue, short term		29			32
Dividends payable		84			82
Lease liability, short term		252			283
Total current liabilities		2,709			2,576

Deferred revenue, long term		-			5
Lease liability, long term		318			373
Total long-term liabilities		318			378

Total liabilities		3,027			2,954

Commitments and contingencies (Note 10)

Series C 9% Convertible Preferred Stock, $0.001 par value, $1,000 stated value, authorized 4,200 shares, 105 shares issued and outstanding; liquidation preference of $105 as of March 31, 2022 and December 31, 2021		105			105

Equity:
Preferred stock, $0.001 par value, authorized 1,000,000 shares, designated 200 shares of Series A, 600 shares of Series B, 4,200 shares of Series C, 1,400 shares of Series D, 1,000 shares of Series E, 200,000 shares of Series F Preferred Stock, none issued		-			-
Common stock, $0.001 par value, authorized 200,000,000 shares, 39,559,059 and 35,567,180 issued and outstanding as of March 31, 2022 and December 31, 2021, respectively		39			36
Additional paid in capital		206,240			201,127
Accumulated deficit		(196,885	)		(188,922	)
Total stockholders' equity attributable to BioSig Technologies, Inc.		9,394			12,241
Non-controlling interest		16			219
Total equity		9,410			12,460

Total liabilities and equity	$	12,542		$	15,519

See the accompanying notes to the unaudited condensed consolidated financial statements

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BIOSIG TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands, Except Par Value and Share Amounts)

(unaudited)

	Three months ended March 31,
	2022			2021
Revenue:
Product sales	$	-		$	115
Service		8			3
Total revenue		8			118

Cost of goods sold		-			99

Gross profit		8			19

Operating expenses:
Research and development		1,617			1,266
General and administrative		6,401			7,271
Depreciation and amortization		55			42
Total operating expenses		8,073			8,579

Loss from operations		(8,065	)		(8,560	)

Other income (expense):
Interest income, net		-			1

Loss before income taxes		(8,065	)		(8,559	)

Income taxes (benefit)		-			-

Net loss		(8,065	)		(8,559	)

Non-controlling interest		102			240

Net loss attributable to BioSig Technologies, Inc.		(7,963	)		(8,319	)

Preferred stock dividend		(2	)		(2	)

NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	(7,965	)	$	(8,321	)

Net loss per common share, basic and diluted	$	(0.22	)	$	(0.26	)

Weighted average number of common shares outstanding, basic and diluted		35,997,298			31,584,142

See the accompanying notes to the unaudited condensed consolidated financial statements

Table of Contents

					Additional
	Common stock				Paid in			Accumulated			Non-controlling
	Shares		Amount		Capital			Deficit			Interest			Total
Balance, December 31, 2021		35,567,180	$	36	$	201,127		$	(188,922	)	$	219		$	12,460
Common stock issued for services		1,312,500		1		1,600			-			-			1,601
Change in fair value of modified options		-		-		15			-			-			15
Sale of common stock and warrants, net transactional costs of $3		2,613,130		2		3,000			-			-			3,002
Stock based compensation		66,249		*		500			-			(101	)		399
Preferred stock dividend		-		-		(2	)		-			-			(2	)
Net loss		-		-		-			(7,963	)		(102	)		(8,065	)
Balance, March 31, 2022 (unaudited)		39,559,059	$	39	$	206,240		$	(196,885	)	$	16		$	9,410

*- less than $1

See the accompanying notes to the unaudited condensed consolidated financial statements

Table of Contents

					Additional
	Common stock				Paid in			Accumulated			Non-controlling
	Shares		Amount		Capital			Deficit			Interest			Total
Balance, December 31, 2020		30,764,792	$	31	$	181,344		$	(157,005	)	$	802		$	25,172
Common stock issued for services		406,692		-		1,777			-			-			1,777
Common stock issued upon exercise of options at $2.96 per share		9,375		*		28			-			-			28
Sale of common stock under At-the-market offering, net of transaction expenses of $40		251,720		*		1,300			-			-			1,300
Stock based compensation		682,202		1		721			-			20			742
Preferred stock dividend		-		-		(2	)		-			-			(2	)
Net loss		-		-		-			(8,319	)		(240	)		(8,559	)
Balance, March 31, 2021 (unaudited)		32,114,781	$	32	$	185,168		$	(165,324	)	$	582		$	20,458

*- less than $1

See the accompanying notes to the unaudited condensed consolidated financial statements

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BIOSIG TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands, Except Par Value and Share Amounts)
(unaudited)

	Three months ended March 31,
	2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(8,065	)	$	(8,559	)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization		55			42
Non-cash lease expense		85			111
Equity based compensation		2,000			2,519
Change in fair value of modified options		15			-
Changes in operating assets and liabilities:
Inventory		(145	)		118
Prepaid expenses and other		43			96
Deferred revenue		(8	)		61
Accounts payable and accrued expenses		165			(1,263	)
Operating lease liabilities		(86	)		(116	)
Net cash used in operating activities		(5,941	)		(6,991	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(55	)		(130	)
Net cash used in investing activity		(55	)		(130	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock and warrants, net of issuance costs		3,002			-
Proceeds from sale of common stock under an At-the-market offering, net of issuance costs		-			1,300
Proceeds from exercise of options		-			28
Net cash provided by financing activities		3,002			1,328

Net decrease in cash and cash equivalents		(2,994	)		(5,793	)

Cash, beginning of the period		11,659			28,268
Cash, end of the period	$	8,665		$	22,475

Supplemental disclosures of cash flow information:
Cash paid during the period for interest	$	-		$	-
Cash paid during the period for income taxes	$	-		$	-

Noncash investing and financing activities:
Dividend payable on preferred stock charged to additional paid in capital	$	2		$	2
Record right-to-use assets and related lease liability	$	-		$	218

See the accompanying notes to the unaudited condensed consolidated financial statements

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BIOSIG TECHNOLOGIES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2022

(unaudited)

NOTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION

Business and organization

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 care in electrophysiology with our PURE EP System’s enhanced 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. Since late 2020, ViralClear has been realigned with its original objective of pursuing additional applications of the PURE EP™ signal processing technology outside of cardiac electrophysiology.

As of March 31, 2022, the Company had a majority interest in ViralClear of 68.44%.

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, 2021 has been derived from audited financial statements.

Operating results for the three months ended March 31, 2022 are not necessarily indicative of results that may be expected for the year ending December 31, 2022. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2021 filed with the Company’s Form 10-K with the Securities and Exchange Commission on March 31, 2022.

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 2022.

NOTE 2 – GOING CONCERN AND MANAGEMENT’S LIQUIDITY PLANS

As of March 31, 2022, the Company had cash of $8.7 million and working capital of $8.3 million. During the three months ended March 31, 2022, the Company used net cash in operating activities of $5.9 million. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

The Company’s primary source of operating funds since inception has been cash proceeds from sale of common and preferred stock. The Company has experienced net losses and negative cash flows from operations since inception and expects these conditions to continue for the foreseeable future.

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BIOSIG TECHNOLOGIES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2022

(unaudited)

The Company’s 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. The Company’s strategic shift from a focus on technology development to commercialization will allow the Company to significantly reduce operating expenses.

The Company will require additional financing to fund future operations. Further, although the Company began commercial operations; there is no assurance that the Company will be able to generate sufficient cash flow to fund operations. In addition, there can be no assurance that the Company’s continuing research and development will be successfully completed or that any additional products will be commercially viable.

Accordingly, the accompanying unaudited condensed consolidated financial statements have been prepared in conformity with U.S. GAAP, which contemplates continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the unaudited condensed consolidated financial statements do not necessarily purport to represent realizable or settlement values. The unaudited condensed consolidated financial statements do not include any adjustment that might result from the outcome of this uncertainty.

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of these unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the recoverability and useful lives of long-lived assets, stock-based compensation 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:

●

Identify the contract with the customer;

●

Identify the performance obligations in the contract;

●

Determine the transaction price;

●

Allocate the transaction price to the performance obligation in the contract; and

●

Recognize revenue when, or as, the performance obligations are satisfied.

Performance obligations are the 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. Once the PURE EP system is delivered, installed, and accepted by the customer, our performance obligation is recognized. Support, maintenance, and software upgrades are performance obligations over a defined period and are recognized ratably over the contractual service period. Customers typically purchase these services with the initial sale of the PURE EP System and do not have the right to terminate their contracts unless we fail to perform material obligations.

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BIOSIG TECHNOLOGIES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2022

(unaudited)

The Company may execute more than one contract with a single customer. If so, it is evaluated whether the agreements were negotiated as a package with a single objective, whether the amount of consideration to be paid in one agreement depends on the price and/or performance of another agreement, or whether the goods or services promised in the agreements represent a single performance obligation. The conclusions reached can impact the allocation of the transaction price to each performance obligation and the timing of revenue recognition related to those arrangements.

The Company records accounts receivable for amounts invoiced to customers for which the Company has an unconditional right to consideration as provided under the contractual arrangement. Unbilled receivables, if any, include amounts related to the Company’s contractual right to consideration for completed performance obligations not yet invoiced. Deferred revenue includes payments received in advance of performance under the contract. Our unbilled receivables and deferred revenue are reported on an individual contract basis at the end of each reporting period. Unbilled receivables are classified as current or noncurrent based on the timing of when we expect to bill the customer. Deferred revenue is classified as current or noncurrent based on the timing of when we expect to recognize revenue.

The Company’s unconditional right to consideration for goods and services transferred to the customer is included in accounts receivable, net (if any) in the Company’s consolidated balance sheet.

A reconciliation of contract liabilities with customers for the three months ended March 31, 2022 and 2021, are presented below:

Three months ended March 31, 2022:

	Balance at December 31, 2021 (000’s)		Consideration Received (000’s)		Recognized in Revenue (000’s)			Balance at March 31, 2022 (000’s)
Product revenue	$	-	$	-	$	-		$	-
Service revenue		37		-		(8	)		29
Total	$	37	$	-	$	(8	)	$	29

Three months ended March 31, 2021:

	Balance at December 31, 2020 (000’s)		Consideration Received (000’s)		Recognized in Revenue (000’s)			Balance at March 31, 2021 (000’s)
Product revenue	$	-	$	115	$	(115	)	$	-
Service revenue		-		65		(3	)		62
Total	$	-	$	180	$	(118	)	$	62

The table below summarizes our deferred revenue as of March 31, 2022 and December 31, 2021:

	March 31, 2022 (000’s)		December 31, 2021 (000’s)
Deferred revenue-current	$	29	$	32
Deferred revenue-noncurrent		-		5
Total deferred revenue	$	29	$	37

The Company had one customer which accounted for approximately 100% of their revenue in the three months ended March 31, 2022 and 2021.

The Company utilized one contract manufacturer for the manufacture and supply of the PURE EP system for the three months ended March 31, 2022 and 2021.

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BIOSIG TECHNOLOGIES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2022

(unaudited)

Cost of Goods Sold

Cost of goods sold consists primarily of the delivered cost of our medical device(s) sold.

Allowance for Doubtful Accounts

The Company adjusts accounts receivable down to net realizable value with its allowance methodology. In determining the allowance for doubtful accounts for estimated losses, aged receivables are analyzed periodically by management. Each identified receivable is reviewed based upon historical collection experience, financial condition of the customer and the status of any open or unresolved issues with the customer preventing the payment thereof. Corrective action, if necessary, is taken by the Company to resolve open issues related to unpaid receivables. The allowance for doubtful accounts was $0 at March 31, 2022 and December 31, 2021. The Company believes that its reserve is adequate, however results may differ in future periods. For the three months ended March 31, 2022 and 2021, bad debt expense totaled $0.

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, accounts payable and accrued liabilities as reflected in the balance sheets, approximate fair value because of the short-term maturity of these instruments. All other significant financial assets, financial liabilities and equity instruments of the Company are either recognized or disclosed in the financial statements together with other information relevant for making a reasonable assessment of future cash flows, interest rate risk and credit risk. Where practicable the fair values of financial assets and financial liabilities have been determined and disclosed; otherwise only available information pertinent to fair value has been disclosed.

The Company follows Accounting Standards Codification subtopic 820-10, Fair Value Measurements and Disclosures (“ASC 820-10”) and ASC 825-10, which permits entities to choose to measure many financial instruments and certain other items at fair value.

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, 2022 and December 31, 2021, deposits in excess of FDIC limits were $8.2 million and $11.2 million, respectively.

Inventory

The inventory is comprised of raw materials and finished goods available for sale and are stated at the lower of cost or net realizable value using specific identification method for serial numbered inventory and first-in, first-out method for all other inventory for valuation. The inventory at March 31, 2022 and December 31, 2021, inventory was comprised of the following:

	March 31, 2022 (000’s)		December 31, 2021 (000’s)
Raw materials	$	176	$	-
Finished goods		1,850		1,881
Total inventory	$	2,026	$	1,881

Prepaid Expenses and Vendor Deposits

Prepaid expenses and vendor deposits are comprised of prepaid insurance, operating expenses and other prepayments.

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BIOSIG TECHNOLOGIES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2022

(unaudited)

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 3 to 5 years. When retired or otherwise disposed, the related carrying value and accumulated depreciation are removed from the respective accounts and the net difference less any amount realized from disposition, is reflected in earnings.

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, 2022 and 2021.

Research and Development Costs

The Company accounts for research and development costs in accordance with the Accounting Standards Codification subtopic 730-10, Research and Development (“ASC 730-10”). Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and developments costs are expensed when the contracted work has been performed or as milestone results have been achieved. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred. The Company incurred research and development expenses of $1.6 million and $1.3 million for the three months ended March 31, 2022 and 2021, respectively.

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.

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BIOSIG TECHNOLOGIES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2022

(unaudited)

The computation of basic and diluted loss per share as of March 31, 2022 and 2021 excludes potentially dilutive securities when their inclusion would be anti-dilutive, or if their exercise prices were greater than the average market price of the common stock during the period.

Potentially dilutive securities excluded from the computation of basic and diluted net income (loss) per share are as follows:

	March 31, 2022		March 31, 2021
Series C convertible preferred stock		162,634		47,659
Options to purchase common stock		4,869,484		3,780,037
Warrants to purchase common stock		3,432,040		1,436,200
Restricted stock units to acquire common stock		82,500		346,000
Totals		8,546,658		5,609,896

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.

Patents, Net

The Company capitalizes certain initial asset costs in connection with patent applications including registration, documentation and other professional fees associated with the application. Patent costs incurred prior to the Company’s U.S. Food and Drug Administration (“FDA”) 510(k) application on March 28, 2018 were charged to research and development expense as incurred. Commencing upon first in-man trials on February 18 and 19, 2019, capitalized costs are amortized to expense using the straight-line method over the lesser of the legal patent term or the estimated life of the product of 20 years. During the three months ended March 31, 2022 and 2021, the Company recorded amortization of $4,751 and $4,751 to current period operations, respectively.

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 unaudited condensed consolidated financial statements.

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BIOSIG TECHNOLOGIES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2022

(unaudited)

Non-controlling Interest

The Company’s non-controlling interest represents the non-controlling shareholders ownership interests related to the Company’s subsidiary, ViralClear. The Company reports its non-controlling interest in subsidiaries as a separate component of equity in the unaudited condensed consolidated balance sheets and reports both net loss attributable to the non-controlling interest and net loss attributable to the Company’s common shareholders on the face of the unaudited condensed consolidated statements of operations. The Company’s equity interest in ViralClear is 68.44% and the non-controlling stockholders’ interest is 31.56% as of March 31, 2022. This is reflected in the unaudited condensed consolidated statements of changes in equity.

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).

Recent Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss model that requires the use of forward-looking information to calculate credit loss estimates. It also eliminates the concept of other-than-temporary impairment and requires credit losses on available-for-sale debt securities to be recorded through an allowance for credit losses instead of as a reduction in the amortized cost basis of the securities. ASU 2016-13 was effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2019. Early adoption was permitted, including adoption in any interim period.

In February 2020, the FASB issued ASU 2020-02, Financial Instruments-Credit Losses (Topic 326) and Leases (Topic 842) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases (Topic 842), which amended the effective date of the original pronouncement for smaller reporting companies. ASC 2016-13 and its amendments will be effective for annual and interim periods beginning after December 15, 2022 for smaller reporting companies. The Company did not have a significant impact upon adoption of this new standard on its unaudited condensed consolidated financial statements and related disclosures.

There were other 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, 2022 and December 31, 2021 is summarized as follows:

	March 31, 2022 (000’s)			December 31, 2021 (000’s)
Computer equipment	$	388		$	383
Furniture and fixtures		88			88
Manufacturing equipment		302			286
Testing/Demo equipment		178			145
Leasehold improvements		79			79
Total		1,035			981
Less accumulated depreciation		(379	)		(329	)
Property and equipment, net	$	656		$	652

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BIOSIG TECHNOLOGIES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2022

(unaudited)

Property and equipment are stated at cost and depreciated using the straight-line method over their estimated useful lives of 3 to 5 years. Leasehold improvements are depreciated over the related expected lease term. When retired or otherwise disposed, the related carrying value and accumulated depreciation are removed from the respective accounts and the net difference less any amount realized from disposition, is reflected in earnings.

Depreciation expense was $50,082 and $36,834 for three months ended March 31, 2022 and 2021, respectively.

NOTE 5 – RIGHT TO USE ASSETS AND LEASE LIABILITY

As of March 31, 2022 and December 31, 2021, the Company had outstanding five leases with aggregate payments of $32,143 per month, expiring through December 31, 2024.

Right to use assets is summarized below:

	March 31, 2022 (000’s)			December 31, 2021 (000’s)
Right to use asset	$	803		$	803
Less accumulated amortization		(284	)		(199	)
Right to use assets, net	$	519		$	604

During the three months ended March 31, 2022 and 2021, the Company recorded $107,734 and $118,601 as lease expense to current period operations, respectively.

Lease liability is summarized below:

SEC Form 10-Q filed by BioSig Technologies Inc.