SEC Form 10-Q filed by BioSig Technologies Inc.
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 PURSUANT TO 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)
(State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) | |
| (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 | ||
| N/A | N/A | N/A |
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 (§232.405 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 ☐ No
As of November 14, 2024, there were shares of the registrant’s common stock, $ par value per share, outstanding.
TABLE OF CONTENTS
| 2 |
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BIOSIG TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Par Value and Share Amounts)
| September 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable | ||||||||
| Employee advance | ||||||||
| Net investment in leases, short term | ||||||||
| Prepaid expenses and vendor deposits | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Right-to-use assets, net | ||||||||
| Other assets: | ||||||||
| Net investment in leases, long term | ||||||||
| Patents, net | ||||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND EQUITY (DEFICIT) | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses, including
$ | $ | $ | ||||||
| Customer deposits | ||||||||
| Dividends payable | ||||||||
| Lease liability, short term | ||||||||
| Total current liabilities | ||||||||
| Long term liabilities: | ||||||||
| Lease liability, long term | ||||||||
| Total long-term liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 12) | ||||||||
| Series C 9% Convertible Preferred Stock,
$ par value, $ stated value, authorized shares, shares issued and outstanding; liquidation preference of $ | ||||||||
| Deficit | ||||||||
| Preferred stock, $ par value, authorized shares, designated shares of Series A, shares of Series B, shares of Series C, shares of Series D, shares of Series E, shares of Series F Preferred Stock. shares of Series C outstanding as of September 30, 2024 and December 31, 2023 (see above) | ||||||||
| Common stock, $ par value, authorized shares, and issued and outstanding as of September 30, 2024 and December 31, 2023, respectively | ||||||||
| Additional paid-in-capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ deficit attributable to BioSig Technologies, Inc. | ( | ) | ( | ) | ||||
| Non-controlling interest | ||||||||
| Total deficit | ( | ) | ( | ) | ||||
| Total liabilities and equity | $ | $ | ||||||
The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements
| 3 |
BIOSIG TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Par Value and Share Amounts)
(unaudited)
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Revenue: | ||||||||||||||||
| Service | $ | $ | $ | $ | ||||||||||||
| Total revenue | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Impairment of long term assets | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense) | ||||||||||||||||
| Interest income, net | ( | ) | ||||||||||||||
| Gain on settlement and forgiveness of accounts payable | ||||||||||||||||
| Other income (expense), net: | ( | ) | ||||||||||||||
| Loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income taxes (benefit) | ||||||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Non-controlling interest | ( | ) | ( | ) | ||||||||||||
| Net loss attributable to BioSig Technologies, Inc. | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Preferred stock dividend | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Preferred stock deemed dividend | ( | ) | ( | ) | ||||||||||||
| NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||
| Net loss per common share, basic and diluted | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted average number of common shares outstanding, basic and diluted | ||||||||||||||||
The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements
| 4 |
BIOSIG TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024
(In Thousands, Except Par Value and Share Amounts)
| Additional | Non- | |||||||||||||||||||||||
| Common stock | Paid in | Accumulated | controlling | |||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Interest | Total | |||||||||||||||||||
| Balance, December 31, 2023 | $ | | $ | $ | ( | ) | $ | | $ | ( | ) | |||||||||||||
| Common stock issued for services | ||||||||||||||||||||||||
| Sale of common stock and warrants | * | |||||||||||||||||||||||
| Stock based compensation | * | ( | ) | ( | ) | |||||||||||||||||||
| Accretion of deemed preferred stock dividend | - | |||||||||||||||||||||||
| Deemed preferred stock dividend | - | ( | ) | ( | ) | |||||||||||||||||||
| Preferred stock dividend | - | ( | ) | ( | ) | |||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||
| Balance, March 31, 2024 (unaudited) | $ | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||
| Common stock issued for services | * | |||||||||||||||||||||||
| Sale of common stock and warrants, net transactional costs | ||||||||||||||||||||||||
| Common stock issued in exchange for principal and accrued interest on a note payable | * | |||||||||||||||||||||||
| Sale of common stock and warrants, net transactional costs | ||||||||||||||||||||||||
| Stock issued as forgiveness of accounts payable | * | |||||||||||||||||||||||
| Stock based compensation | ||||||||||||||||||||||||
| Preferred stock dividend | - | ( | ) | ( | ) | |||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance, June 30, 2024 (unaudited) | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Stock based compensation | ||||||||||||||||||||||||
| Accretion of deemed preferred stock dividend | - | |||||||||||||||||||||||
| Deemed preferred stock dividend | - | ( | ) | ( | ) | |||||||||||||||||||
| Preferred stock dividend | - | ( | ) | ( | ) | |||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance, September 30, 2024 (unaudited) | $ | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||
| * |
The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements
| 5 |
BIOSIG TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023
(In Thousands, Except Par Value and Share Amounts)
| Additional | Non- | |||||||||||||||||||||||
| Common stock | Paid in | Accumulated | controlling | |||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Interest | Total | |||||||||||||||||||
| Balance, December 31, 2022 | $ | | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||
| Common stock issued for services | * | |||||||||||||||||||||||
| Common stock issued in settlement of accounts payable | * | |||||||||||||||||||||||
| Sale of common stock and warrants, net transactional
costs of $ | ||||||||||||||||||||||||
| Stock based compensation | * | |||||||||||||||||||||||
| Preferred stock dividend | - | ( | ) | ( | ) | |||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||
| Balance, March 31, 2023 (unaudited) | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Common stock issued for services | * | |||||||||||||||||||||||
| Sale of common stock and warrants, net transactional
costs of $ | ||||||||||||||||||||||||
| Sale of subsidiary stock | - | |||||||||||||||||||||||
| Common stock issued for exercise of warrants cashless | * | |||||||||||||||||||||||
| Stock based compensation | * | ( | ) | ( | ) | |||||||||||||||||||
| Preferred stock dividend | - | ( | ) | ( | ) | |||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||
| Balance, June 30, 2023 (unaudited) | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Common stock issued for services | * | |||||||||||||||||||||||
| Sale of common stock and warrants, net transactional
costs of $ | * | |||||||||||||||||||||||
| Sale of common stock under at-the-market offerings,
net of transactional expenses of $ | * | ( | ) | ( | ) | |||||||||||||||||||
| Sale of subsidiary stock | - | |||||||||||||||||||||||
| Stock based compensation | * | ( | ) | ( | ) | ( | ) | |||||||||||||||||
| Preferred stock dividend | - | ( | ) | ( | ) | |||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance, September 30, 2023 (unaudited) | $ | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||
| * |
The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements
| 6 |
BIOSIG TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands, Except Par Value and Share Amounts)
(unaudited)
| Nine months ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Non-cash lease expense | ||||||||
| Non-cash inventory write-down | ||||||||
| Impairment of long-term assets | ||||||||
| Gain on settlement and forgiveness of accounts payable | ||||||||
| Equity based compensation | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Lease receivables | ||||||||
| Employee advances | ( | ) | ||||||
| Inventory | ( | ) | ||||||
| Prepaid expenses and other | ( | ) | ||||||
| Deferred expense | ( | ) | ||||||
| Deferred revenue | ( | ) | ||||||
| Customer deposits | ( | ) | ||||||
| Accounts payable and accrued expenses | ( | ) | ||||||
| Operating lease liabilities | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of property and equipment | ( | ) | ||||||
| Net cash used in investing activity | ( | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from issuance of related party note payable | ||||||||
| Proceeds from sale of common stock and warrants, net of issuance costs | ||||||||
| Proceeds from sale of common stock under at-the-market offerings, net of issuance costs | ( | ) | ||||||
| Proceeds from the sale of subsidiary stock to non-controlling interest, net of issuance costs | ||||||||
| Net cash provided by financing activities | ||||||||
| Net increase in cash and cash equivalents | ||||||||
| Cash, beginning of the period | ||||||||
| Cash, end of the period | $ | $ | ||||||
| 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: | ||||||||
| Common stock issued in settlement of accounts payable | $ | $ | ||||||
| Common stock issued in settlement of accrued severance | $ | |||||||
| Dividend payable on preferred stock charged to additional paid in capital | $ | $ | ||||||
| Series C convertible preferred stock deemed dividend | $ | $ | ||||||
| Common stock issued for conversion of note payable and accrued interest | $ | $ | ||||||
The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements
| 7 |
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(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 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 shares of its common stock to investors for net proceeds of $
On
July 2, 2020, the Company formed an additional subsidiary, NeuroClear Technologies, Inc., a Delaware corporation, which was renamed to
BioSig AI Sciences, Inc. (“BioSig AI”) on May 31, 2023. The subsidiary was established to pursue clinical needs of cardiac
and neurological disorders through recordings and analyses of action potentials. BioSig AI aims to contribute to the advancements of
AI-based diagnoses and therapies. At September 30, 2024 and December 31, 2023, the Company had a majority interest in BioSig AI of
The Company continues to evaluate opportunities for the two subsidiaries.
On
January 28, 2024 and February 20, 2024, management of the Company commenced a workforce reduction intended to reduce significantly the
annual cash burn which was completed as of February 20, 2024. The workforce reduction consisted of the departure of sixteen employees,
effective as of January 31, 2024 and included the departure of John Sieckhaus, the Company’s Chief Operating Officer, and Gray
Fleming, the Company’s Chief Commercial Officer and twenty-six employees effective February 20, 2024. The effect of the workforce
reductions has significantly reduced operations in the short term. In connection with workforce reduction, the Company issued an aggregate
of shares of common stock with a fair value of $
On
March 5, 2024, the Company received a letter from the Listing Qualifications Department of Nasdaq (the “Staff”) stating that
the Company has not regained compliance with Listing Rule 5550(a)(2) because the Company’s common stock did not meet the minimum
bid price of $ per share required for continued listing on The Nasdaq Capital Market LLC (“Nasdaq”), and the Company
is not eligible for a second 180 day cure period under Rule 5810(c)(3)(A)(2) because the Company does not comply with the $
| 8 |
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(unaudited)
The
letter further stated that the Company no longer meets the requirement of Rule 5550(b)(2) to maintain a minimum Market Value of Listed
Securities of $
On June 10, 2024, the Company received formal notice that the Nasdaq Hearings Panel had determined to delist the Company’s common stock from Nasdaq due to the Company’s continued non-compliance with the minimum stockholders’ equity requirement set forth in Nasdaq Listing Rule 5550(b)(2) for continued listing on Nasdaq. As a result, trading in the Company’s common stock will be suspended on Nasdaq effective with the open of business on Wednesday, June 12, 2024. The Company’s common stock should be eligible to trade on the OTC Markets’ Pink Current Information tier under symbol “BSGM” effective with the open of trading on Wednesday, June 12, 2024. The Company seeked the Panel’s reconsideration of its decision in accordance with the Nasdaq Listing Rules.
On June 24, 2024, the Company was notified by Nasdaq that the Nasdaq Hearings Panel had declined to reconsider its decision dated June 10, 2024 to delist the Company’s common stock from Nasdaq (the “Delisting Decision”). Trading in the Company’s securities was suspended on Nasdaq effective with the open of business on June 12, 2024, at which point the Company’s common stock was eligible to trade on the OTC Market’s Pink Current Information tier.
On July 10, 2024, the Company filed a submission in support of an appeal to the Delisting Decision to the Nasdaq Listing and Hearing Review Council.
On July 23, 2024, the Company commenced trading of its common stock on the OTCQB, operated by OTC Markets Group, Inc.
On
October 18, 2024, the Company received a decision from the Nasdaq Listing and Hearing Review Council granting the Company a grace
period until March 7, 2025 to regain compliance with the Nasdaq Listing Rule 5550(b)(2) (the “MVLS Rule”), which
requires a market value of listed securities of at least $
On October 21, 2024, the Company was notified that its common stock will commence trading on The Nasdaq Capital Market on Wednesday, October 23, 2024, effective at the opening of trading.
On October 24, 2024, the Company received a letter from the Nasdaq Listing Qualifications (“Nasdaq”) notifying the Company that based upon the closing bid price of the Company’s common stock from the period of June 11, 2024 through the reinstatement date, October 23, 2024, the Company did not meet the minimum bid price of $ per share required by the Nasdaq Listing Rules (“Rules”) and as a result, the Company no longer meets this requirement. However, the Rules also provides the Company a compliance period of 180 calendar days in which to regain compliance.
On November 13, 2024, the Company issued a press release announcing its Nasdaq bid price compliance.
The unaudited condensed consolidated financial statements include the accounts of BioSig Technologies, Inc., and its majority owned subsidiaries, ViralClear and BioSig AI.
The unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.
The condensed consolidated balance sheet as of December 31, 2023 has been derived from audited financial statements.
Operating results for the three and nine months ended September 30, 2024 are not necessarily indicative of results that may be expected for the year ending December 31, 2024. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2023 filed with the Company’s Form 10-K with the Securities and Exchange Commission on April 16, 2024.
NOTE 2 – GOING CONCERN AND MANAGEMENT’S LIQUIDITY PLANS
As
of September 30, 2024, the Company had cash of $
The Company’s primary source of operating funds since inception has been cash proceeds from sale of equity securities and issuance of debt. The Company has experienced net losses and negative cash flows from operations since inception and expects these conditions to continue for the foreseeable future.
The Company’s plans include the continued commercialization of the PURE EP 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 to potentially hiring a team of an additional 4-6 persons to execute a business development strategy of finding partners for the commercialization of PURE EP, develop new products in the field of Pulse Field Ablation and to continue to integrate PURE EP into today’s lab equipment 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.
| 9 |
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(unaudited)
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 consolidated financial statements do not necessarily purport to represent realizable or settlement values. The consolidated financial statements do not include any adjustment that might result from the outcome of this uncertainty.
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies applied in the preparation of the accompanying consolidated financial statements follows.
Reverse Stock Split
On
January 31, 2024, the Company filed a Reverse Stock Split Amendment with the Secretary of State of the State of Delaware, effective February
2, 2024. Pursuant to the Reverse Stock Split Amendment, the Company effected a
Use of Estimates
The preparation of these 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 upgrade rentals in connection with the system.
The Company recognizes revenue in accordance with Accounting Standards Codification (ASC) 842, Leases (“ASC 842”) for lease components and ASC 606, Revenue from Contracts with Customers (“ASC 606”) for non-lease components. For medical device sales and software rentals, the Company recognizes revenue under ASC 606.
The core principle of ASC 606 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
Under ASC 606, 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. |
| 10 |
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(unaudited)
Performance obligations are the units of accounting for revenue recognition and generally represent the distinct goods or services that are promised to the customer. If the Company determines that it has not satisfied a performance obligation, it will defer recognition of the revenue until the performance obligation is deemed to be satisfied. Once the PURE EP Platform is delivered, installed, and accepted by the customer, our performance obligation is recognized. Support, maintenance, and software upgrade rentals are performance obligations over a defined period and are recognized rateably over the contractual service period. Customers typically purchase these services with the initial sale of the PURE EP Platform and do not have the right to terminate their contracts unless we fail to perform material obligations.
The Company may execute more than one contract with a single customer. If so, it is evaluated whether the agreements were negotiated as a package with a single objective, whether the amount of consideration to be paid in one agreement depends on the price and/or performance of another agreement, or whether the goods or services promised in the agreements represent a single performance obligation. The conclusions reached can impact the allocation of the transaction price to each performance obligation and the timing of revenue recognition related to those arrangements.
The Company records accounts receivable for amounts invoiced to customers for which the Company has an unconditional right to consideration as provided under the contractual arrangement. Unbilled receivables, if any, include amounts related to the Company’s contractual right to consideration for completed performance obligations not yet invoiced. Deferred revenue includes payments received in advance of performance under the contract. Our unbilled receivables and deferred revenue are reported on an individual contract basis at the end of each reporting period. Unbilled receivables are classified as current or noncurrent based on the timing of when we expect to bill the customer. Deferred revenue is classified as current or noncurrent based on the timing of when we expect to recognize revenue.
The Company’s unconditional right to consideration for goods and services transferred to the customer is included in accounts receivable, net (if any) in the Company’s consolidated balance sheet.
In
2022, the Company entered two leases for our PURE EP Platform at a rate of $
In 2023, the Company entered into a one-year lease for software upgrade. The Company accounts for the lease in accordance with ASC 606.
The
Company determined the leases meet the criteria of a sales-type lease whereby the present value of the future expected revenue (less
the present value of the estimated unguaranteed residual value), cost of sales and profit and loss are recognized at the lease inception.
Non-lease components are recognized under ASC 606. The discount rate utilized was the contract explicit rate of
A reconciliation of contract liabilities with customers for the nine months ended September 30, 2024 and 2023, are presented below:
Nine months ended September 30,2024:
Balance at December
31, (000’s) | Consideration Received (000’s) | Recognized in Revenue (000’s) | Balance at September 30, 2024 (000’s) | |||||||||||||
| Service revenue | $ | $ | $ | ( | ) | $ | ||||||||||
| 11 |
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(unaudited)
Nine months ended September 30, 2023:
Balance at December
31, (000’s) | Consideration Received (000’s) | Recognized in Revenue (000’s) | Balance at September 30, 2023 (000’s) | |||||||||||||
| Service revenue | $ | $ | $ | ( | ) | $ | ||||||||||
The
Company had one customer which accounts for
At
September 30, 2024, the Company had three customers representing
The Company utilized one contract manufacturer for the manufacture and supply of the PURE EP Platform for the three and nine months ended September 30, 2024 and 2023.
Deferred Costs (Contract acquisition costs)
The Company capitalizes initial and renewal sales commissions in the period the commission is earned, which generally occurs when a customer contract is obtained, and amortize deferred commission costs on a straight-line basis over the expected period of benefit, which we have deemed to be the contract term. As a practical expedient, the Company expenses sales commissions as incurred when the amortization period of related deferred commission costs would have been one year or less.
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 $
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 September 30, 2024 and December 31, 2023, deposits in excess of FDIC limits were $
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.
| 12 |
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(unaudited)
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.
Prepaid Expenses and Vendor Deposits
Prepaid expenses and vendor deposits are comprised of prepaid insurance, operating expenses and other prepayments.
Leases (lessee)
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.
Leases (lessor)
The Company classifies contractual lease arrangements entered as a lessor as a sales-type, direct financing or operating lease as described in ASC 842-Leases. For sales-type leases, the Company derecognizes the leased asset and recognizes the lease investment on the balance sheet.
Property and Equipment
Property
and equipment are stated at cost and depreciated using the straight-line method over their estimated useful lives of
| 13 |
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(unaudited)
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.
During
the three and nine months ended September 30, 2024, the Company re-assessed its carrying amounts of certain property and equipment due
to reduced manufacturing of its commercial products and determined that these carrying amounts exceeded the estimated undiscounted future
cash flows. Accordingly, the Company recorded a $ and $
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 $
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 September 30, 2024 and 2023 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.
September 30, 2024 | September 30, 2023 | |||||||
| Series C convertible preferred stock | ||||||||
| Options to purchase common stock | ||||||||
| Warrants to purchase common stock | ||||||||
| Restricted stock units to acquire common stock | ||||||||
| Totals | ||||||||
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.
| 14 |
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(unaudited)
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
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 (
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 13 – Segment Reporting).
Non-controlling Interest
The
Company’s non-controlling interest represents the non-controlling shareholders ownership interests related to the Company’s
subsidiaries, ViralClear and BioSig AI. The Company reports its non-controlling interest in subsidiaries as a separate component of equity
in the unaudited condensed consolidated balance sheets and reports both net loss attributable to the non-controlling interest and net
loss attributable to the Company’s common shareholders on the face of the unaudited condensed consolidated statements of operations.
The Company’s equity interest in ViralClear and BioSig AI is
Warrants
The Company accounts for stock warrants as either equity instruments, derivative liabilities, or liabilities in accordance with ASC 480, Distinguishing Liabilities from Equity (ASC 480), and ASC 815, Derivatives and Hedging (ASC 815), depending on the specific terms of the warrant agreement.
| 15 |
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(unaudited)
Recent Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which requires disaggregated information about our effective tax rate reconciliation as well as information on income taxes paid. The guidance will first be effective in our annual disclosures for the year ending December 31, 2025, and should be applied on a prospective basis with the option to apply retrospectively. Early adoption is permitted. The Company is in the process of assessing the impact of ASU 2023-09 on our disclosures.
In November 2023, the FASB issued ASU No. 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). ASU 2023-07 modifies reportable segment disclosure requirements, primarily through enhanced disclosures about segment expenses categorized as significant or regularly provided to the Chief Operating Decision Maker (CODM). In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, and contain other disclosure requirements. The purpose of the amendments is to enable investors to better understand an entity’s overall performance and assess potential future cash flows. This ASU is effective for annual periods beginning after December 15, 2023, and interim periods within annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the potential impact of adopting this new guidance on the consolidated financial statements and related disclosures.
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 September 30, 2024 and December 31, 2023 is summarized as follows:
September 30, 2024 (000’s) | December 31, 2023 (000’s) | |||||||
| Computer equipment | $ | $ | ||||||
| Furniture and fixtures | ||||||||
| Manufacturing equipment | ||||||||
| Testing/Demo equipment | ||||||||
| Leasehold improvements | ||||||||
| Total | ||||||||
| Less accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
Property
and equipment are stated at cost and depreciated using the straight-line method over their estimated useful lives of
During
the three and nine months ended September 30, 2024, the Company re-assessed its carrying amounts of certain property and equipment due
to reduced manufacturing of its commercial products and determined that these carrying amounts exceeded the estimated undiscounted future
cash flows. Accordingly, the Company recorded a $ and $
Depreciation
expenses were $
NOTE 5 – RIGHT TO USE ASSETS AND LEASE LIABILITY
On July 15, 2024 the Company terminated its sublease for the office space at 55 Greens Farms Road Westport, Connecticut which was set to end at December 15, 2024.
As
of December 31, 2023, the Company had outstanding
As
of September 30, 2024, the Company had
Right to use assets is summarized below:
September 30, 2024 (000’s) | December 31, 2023 (000’s) | |||||||
| Right to use asset | $ | $ | ||||||
| Less accumulated amortization | ( | ) | ( | ) | ||||
| Right to use assets, net | $ | $ | ||||||
During
the three months ended September 30, 2024 and 2023, the Company recorded $
| 16 |
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(unaudited)
Lease liability is summarized below:
September 30, 2024 (000’s) | December 31, 2023 (000’s) | |||||||
| Total lease liability | $ | $ | ||||||
| Less: short term portion | ( | ) | ( | ) | ||||
| Long term portion | $ | $ | ||||||
Maturity analysis under these lease agreements are as follows (000’s):
| Year ended December 31, 2024 | ||||
| Year ended December 31, 2025 | ||||
| Total | ||||
| Less: Present value discount | ( | ) | ||
| Lease liability | $ |
Lease expense for the three months ended September 30, 2024 and 2023 was comprised of the following:
September 30, 2024 (000’s) | September 30, 2023 (000’s) | |||||||
| Operating lease expense | $ | $ | ||||||
| Short-term lease expense | ||||||||
| Variable lease expense | ||||||||
| Total | $ | $ | ||||||
Lease expense for the nine months ended September 30, 2024 and 2023 was comprised of the following:
September 30, 2024 (000’s) | September 30, 2023 (000’s) | |||||||
| Operating lease expense | $ | $ | ||||||
| Short-term lease expense | ||||||||
| Variable lease expense | ||||||||
| Total | $ | $ | ||||||
NOTE 6 – LEASE RECEIVABLES
In
2022, the Company entered into two leases for our PURE EP Platform at a rate of $
The
Company determined the leases meet the criteria of a sales-type lease whereby the present value of the future expected revenue (less
the present value of the estimated unguaranteed residual value), cost of sales and profit and loss are recognized at the lease inception.
The discount rate utilized was the contract explicit rate of
A reconciliation of lease receivables with customers for the nine months ended September 30, 2024 and 2023 are presented below:
Nine months ended September 30, 2024:
Balance at December 31, 2023 (000’s) | Recognized in Revenue (000’s) | Invoiced to Customer (000’s) | Interest Earned (000’s) | Unguaranteed Residual Assets (000’s) | Balance
September 30, 2024 (000’s) | |||||||||||||||||||
| Contract asset | $ | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||||
| Less current portion | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Noncurrent portion | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| 17 |
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(unaudited)
Nine months ended September 30, 2023:
Balance at December 31, 2022 (000’s) | Recognized in Revenue (000’s) | Invoiced to Customer (000’s) | Interest Earned (000’s) | Unguaranteed Residual Assets (000’s) | Balance September 30, 2023 (000’s) | |||||||||||||||||||
| Contract asset | $ | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||||
| Less current portion | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Noncurrent portion | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
Future cash flows under this lease agreement are as follows (000’s):
| Year ended December 31, 2024 | ||||
| Year ended December 31, 2025 | ||||
| Present value of unguaranteed residual assets | ||||
| Total | ||||
| Less: Present value discount | ( | ) | ||
| Net investment in leases | $ |
NOTE 7 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses at September 30, 2024 and December 31, 2023 consist of the following:
September 30, 2024 (000’s) | December 31, 2023 (000’s) | |||||||
| Accrued accounting and legal | $ | $ | ||||||
| Accrued reimbursements and travel | ||||||||
| Accrued consulting | ||||||||
| Accrued research and development expenses | ||||||||
| Accrued marketing | ||||||||
| Accrued office and other | ||||||||
| Accrued payroll | ||||||||
| $ | $ | |||||||
During the three and nine months ended September 30,
2024, the company recorded a gain on settlement and forgiveness of accounts payable of approximately $
NOTE 8 – NOTE PAYABLE-RELATED PARTY
On
March 7, 2024, the Company issued a promissory note for $
NOTE 9 – STOCKHOLDER EQUITY
Preferred stock
The Company is authorized to issue shares of $ par value preferred stock. As of September 30, 2024 and December 31, 2023, the Company has designated shares of Series A preferred stock, shares of Series B preferred stock, shares of Series C Preferred Stock, shares of Series D Preferred Stock, shares of Series E Preferred Stock and shares of Series F Preferred Stock. As of September 30, 2024 and December 31, 2023, there were no outstanding shares of Series A, Series B, Series D, Series E and Series F preferred stock.
Series C Preferred Stock
As
of September 30, 2024 and December 31, 2023, the Company had
shares of Series C Preferred stock issued and outstanding. During the nine months ended September 30, 2024, the conversion price of
the Series C Preferred stock was reset from $
| 18 |
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(unaudited)
Common stock
On
January 31, 2024, the Company filed a Reverse Stock Split Amendment with the Secretary of State of the State of Delaware, effective February
2, 2024. Pursuant to the Reverse Stock Split Amendment, the Company effected a
The Company is authorized to issue shares of $ par value common stock. As of September 30, 2024 and December 31, 2023, the Company had and shares issued and outstanding, respectively.
During
the nine months ended September 30, 2024, the Company issued an aggregate of shares of common stock for the forgiveness of accounts
payable at a fair value of $
During
the nine months ended September 30, 2024, the Company issued an aggregate of shares of common stock for services at a fair
value of $
During the nine months ended September 30, 2024, the Company issued an aggregate of shares of common stock for vested restricted stock units.
Sale of common stock.
On
January 12, 2024, the Company entered into a securities purchase agreement with certain accredited and institutional investors, pursuant
to which the Company sold to the investors an aggregate of shares of the Company’s common stock and warrants to purchase
up to
On
May 1, 2024, the Company entered into a securities purchase agreement with certain accredited investors, pursuant to which the Company
sold to the Investors an aggregate of shares of the Company’s common stock at a purchase price of $ per share, and
warrants to purchase up to
On
May 29, 2024, the Company entered into a securities purchase agreement with certain institutional investors, pursuant to which the
Company agreed to sell and issue to the investors (i) in a registered direct offering,
shares (the “Shares”) of Common Stock, par value $
per share of the Company at a price of $
per share and (ii) in a concurrent private placement, common stock purchase warrants to purchase up to an aggregate of
| 19 |
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(unaudited)
BioSig Technologies, Inc.
2023 Long-Term Incentive Plan
On December 27, 2022, the Board of Directors of BioSig Technologies, Inc. approved the 2023 Long-Term Incentive Plan (the “2023 Plan”). The 2023 Plan provides for the issuance of options, stock appreciation rights, restricted stock and restricted stock units to purchase up to shares, plus any prior plan awards of the Company’s common stock to officers, directors, employees and consultants of the Company. Under the terms of the Plan the Company may issue Incentive Stock Options as defined by the Internal Revenue Code to employees of the Company only and nonstatutory options. The Board of Directors of the Company or a committee thereof administers the Plan and determines the exercise price, vesting and expiration period of the grants under the Plan.
However, The fair value of the common stock is determined based on the quoted market price or in absence of such quoted market price, by the administrator in good faith.
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 . At September 30, 2024, there were shares available under the 2023 Long-Term Incentive Plan.
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 historical stock prices of the Company. The Company accounts for the expected life of options using the based on the contractual life of options for non-employees.
For employees, the Company accounts for the expected life of options in accordance with the “simplified” method, which is used for “plain-vanilla” options, as defined in the accounting standards codification. The risk-free interest rate was determined from the implied yields of U.S. Treasury zero-coupon bonds with a remaining life consistent with the expected term of the options.
During the nine months ended September 30, 2024, an employee was issued stock option to purchase shares of the Company’s common stock with an exercise price $ per share, with 50% of the Options vesting on the date of grant and the remaining 50% of the options vesting over a term of 3 years in equal bi-annual instalments with vesting commencing on the date of grant. The grant date fair value of the option was $.
| Options Outstanding | Options Exercisable | |||||||||||||
| Weighted | ||||||||||||||
| Average | Exercisable | |||||||||||||
| Exercise | Number of | Remaining Life | Number of | |||||||||||
| Price | Options | In Years | Options | |||||||||||
| $ | Under | |||||||||||||
| - | ||||||||||||||
| - | - | |||||||||||||
| - | - | |||||||||||||
| - | ||||||||||||||
| - | - | |||||||||||||
| - | ||||||||||||||
| - | ||||||||||||||
| Shares | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Term | Aggregate Intrinsic Value | |||||||||||||
| Outstanding at January 1, 2024 | $ | $ | ||||||||||||||
| Issued | ||||||||||||||||
| Forfeited/expired | ( | $ | ||||||||||||||
| Outstanding at September 30, 2024 | $ | $ | ||||||||||||||
| Exercisable at September 30, 2024 | $ | $ | ||||||||||||||
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 $ as of September 30, 2024, which would have been received by the option holders had those option holders exercised their options as of that date.
The option value during the nine months ended September 30, 2024, was valued using the Black-Scholes option pricing model the Company used the following assumptions (i) an expected term of years , (ii) volatility of %, (iii) risk free interest rate of % and a (iv) dividend yield rate of %.
The fair value of all options vesting during the three and nine months ended September 30, 2024 of $ and $, respectively, was charged to current period operations. The fair value of all options vesting during the three and nine months ended September 30, 2023 of $ and $, respectively, was charged to current period operations. Unrecognized compensation expense of $ at September 30, 2024 which the Company expects to recognize over a weighted average period of years.
| 20 |
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(unaudited)
Warrants
| Exercise | Number | Expiration | ||||||
| Price | Outstanding | Date | ||||||
| $ | ||||||||
| 21 |
During
the nine months ended September 30, 2024, the Company issued warrants to purchase an aggregate of
A summary of the warrant activity for nine months ended September 30, 2024 is as follows:
| Shares | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Term | Aggregate Intrinsic Value | |||||||||||||
| Outstanding at January 1, 2024 | $ | $ | ||||||||||||||
| Issued | $ | |||||||||||||||
| Outstanding at September 30, 2024 | $ | $ | ||||||||||||||
| Vested and expected to vest at September 30, 2024 | $ | $ | ||||||||||||||
| Exercisable at September 30, 2024 | $ | $ | ||||||||||||||
The aggregate intrinsic value in the preceding tables represents the total pretax intrinsic value, based on warrants with an exercise price less than the company’s stock price of $ of September 30, 2024, which would have been received by the warrant holders had those warrants holders exercised their options as of that date.
The
fair value of warrants issued for services during the three and nine months ended September 30, 2024 and 2023 of $
Restricted Stock Units
| Restricted shares issued as of January 1, 2024 | ||||
| Granted | ||||
| Vested and issued | ( | ) | ||
| Forfeited | ( | ) | ||
| Total | ||||
| Comprised of: | ||||
| Vested restricted shares as of September 30, 2024 | ||||
| Unvested restricted shares as of September 30, 2024 |
| 22 |
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(unaudited)
On
March 1, 2024, the Company granted restricted stock units for shares of its common stock to a key consultant, , for services rendered, valued at $
On
April 1, 2024, the Company granted restricted stock units for shares of its common stock to employees, , for services rendered, valued at $
On
May 1, 2024, the Company issued restricted stock units for shares of its common stock to an employee for services rendered valued
at $
On May 1, 2024, the Company granted restricted stock units for shares of its common stock to an employee .
On May 30, 2024, the Company granted an aggregate of restricted stock units for shares of its common stock to consultants of which shares were fully vested at the time of grant and shares vest on July 3, 2024 and the remaining vest on October 4, 2024.
June
1, 2024, the Company issued restricted stock units for shares of its common stock to a consultant for services rendered valued
at $
On
June 7, 2024, the Company granted an aggregate of restricted stock units for shares of its common stock to employees and board
members, the shares were fully vested at the time of grant valued at $
On
July 26, 2024, the Company granted an aggregate of restricted stock units for shares of its common stock to employees and board
members, the shares were fully vested at the time of grant valued at $
On
July 26, 2024, the Company paid $
On September 11, 2024, the company granted shares of restricted common stock, with a grant date fair
value of $
Stock based compensation expense related to restricted stock grants was $ and $ for the three and nine months ended September 30, 2024, respectively. Stock based compensation expense related to restricted stock grants was $ and $ for the three and nine months ended September 30, 2023, respectively. As of September 30, 2024, the stock-based compensation relating to restricted stock of $ remains unamortized.
ViralClear Pharmaceuticals, Inc.
2019 Long-Term Incentive Plan
On September 24, 2019, ViralClear’s Board of Directors approved the 2019 Long-Term Incentive Plan (as subsequently amended, the “ViralClear Plan”). The ViralClear Plan was approved by BioSig as ViralClear’s majority stockholder. The ViralClear Plan provides for the issuance of options, stock appreciation rights, restricted stock and restricted stock units to purchase up to shares of ViralClear’s common stock to officers, directors, employees and consultants of the ViralClear. Under the terms of the ViralClear Plan, ViralClear may issue Incentive Stock Options as defined by the Internal Revenue Code to employees of ViralClear only and nonqualified options. The Board of Directors of ViralClear or a committee thereof (the “Administrator”) administers the ViralClear Plan and determines the exercise price, vesting and expiration period of the grants under the ViralClear Plan.
However, The fair market value of the common stock is determined based on the quoted market price or in absence of such quoted market price, by the Administrator in good faith.
Additionally, the vesting period of the grants under the ViralClear Plan will be determined by the Administrator, in its sole discretion, with an expiration period of not more than . There are shares remaining available for future issuance of awards under the terms of the ViralClear Plan.
ViralClear Options
As of September 30, 2024, there were options outstanding for ViralClear. The remaining options with an exercise price of $ were forfeited as of September 30, 2024.
The fair value of all options vesting during the three and nine months ended September 30, 2024 of $; and $ and $ and $ for the three and nine months ended September 30, 2023, respectively, was charged to current period operations. Unrecognized compensation expense of $ at September 30, 2024 will be expensed in future periods.
| 23 |
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(unaudited)
Warrants (ViralClear)
| Exercise | Number | Expiration | ||||||||
| Price | Outstanding | Date | ||||||||
| $ | ||||||||||
Restricted stock units (ViralClear)
| Restricted shares outstanding at January 1, 2024: | ||||
| Forfeited | ( | ) | ||
| Total restricted shares outstanding at September 30, 2024: | ||||
| Comprised of: | ||||
| Vested restricted shares as of September 30, 2024 | ||||
| Unvested restricted shares as of September 30, 2024 | ||||
| Total |
Stock based compensation expense related to restricted stock unit grants of ViralClear was $ and $ for the three and nine months ended September 30, 2024 and $ and $ for the three and nine months ended September 30, 2023, respectively. As of September 30, 2024, the stock-based compensation relating to restricted stock of $ remains unamortized.
BioSig AI Sciences, Inc.
Warrants (BioSig AI)
| Exercise | Number | Expiration | ||||||||
| Price | Outstanding | Date | ||||||||
| $ | ||||||||||
NOTE 11 – NON-CONTROLLING INTEREST
On November 7, 2018, the Company formed a subsidiary, now known as ViralClear, to pursue additional applications of the PURE EP™ signal processing technology outside of cardiac electrophysiology, and subsequently in 2020, was repurposed to develop merimepodib, a broad-spectrum anti-viral agent that showed potential for the treatment of COVID-19. Since late 2020, ViralClear has been realigned with its original objective of pursuing additional applications of the PURE EP™ signal processing technology outside of cardiac electrophysiology.
As
of September 30, 2024 and December 31, 2023, the Company had a majority interest in ViralClear of
On
July 2, 2020, the Company formed an additional subsidiary, now known as BioSig AI Sciences, Inc., to pursue clinical needs of cardiac
and neurological disorders through recordings and analyses of action potential. BioSig AI aims to contribute to the advancements of AI-based
diagnoses therapies. In June and July 2023, BioSig AI sold shares of its common stock for net proceeds of $
As
of September 30, 2024 and December 31, 2023, the Company had a majority interest in BioSig AI of
| 24 |
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(unaudited)
A reconciliation of ViralClear Pharmaceuticals, Inc. and BioSig AI Sciences, Inc. non-controlling loss attributable to the Company:
Net loss attributable to the non-controlling interest for the three months ended September 30, 2024 (000’s):
ViralClear Pharmaceuticals, Inc. (000’s) | BioSig AI Sciences, Inc. (000’s) | Total (000’s) | ||||||||||
| Net Income (loss) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Average Non-Controlling interest percentage of losses | % | % | % | |||||||||
| Net income (loss) attributable to non-controlling interest | $ | ) | $ | ( | ) | $ | ) | |||||
Net loss attributable to the non-controlling interest for the three months ended September 30, 2023 (000’s):
ViralClear Pharmaceuticals, Inc. (000’s) | BioSig AI Sciences, Inc. (000’s) | Total (000’s) | ||||||||||
| Net loss | $ | $ | ( | ) | $ | |||||||
| Average Non-Controlling interest percentage of profit/losses | % | % | % | |||||||||
| Net loss attributable to non-controlling interest | $ | $ | ( | ) | $ | |||||||
Net loss attributable to the non-controlling interest for the nine months ended September 30, 2024 (000’s):
ViralClear Pharmaceuticals, Inc. (000’s) | BioSig AI Sciences, Inc. (000’s) | Total (000’s) | ||||||||||
| Net Income (loss) | $ | ( | ) | $ | $ | ( | ) | |||||
| Average Non-Controlling interest percentage of losses | % | % | % | |||||||||
| Net income (loss) attributable to non-controlling interest | $ | ( | ) | $ | $ | ( | ) | |||||
Net loss attributable to the non-controlling interest for the nine months ended September 30, 2023 (000’s):
ViralClear Pharmaceuticals, Inc. (000’s) | BioSig AI Sciences, Inc. (000’s) | Total (000’s) | ||||||||||
| Net loss | $ | $ | ( | ) | $ | |||||||
| Average Non-Controlling interest percentage of profit/losses | % | % | % | |||||||||
| Net loss attributable to non-controlling interest | $ | $ | ( | ) | $ | |||||||
The following table summarizes the changes in non-controlling interest for the nine months ended September 30, 2024 (000’s):
ViralClear Pharmaceuticals, Inc. (000’s) | BioSig AI Sciences, Inc. (000’s) | Total (000’s) | ||||||||||
| Balance, January 1, 2024 | $ | ( | ) | $ | $ | |||||||
| Net income (loss) attributable to non-controlling interest | ( | ) | ( | ) | ||||||||
| Balance, September 30, 2024 | $ | ( | ) | $ | $ | |||||||
| 25 |
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(unaudited)
NOTE 12 — COMMITMENTS AND CONTINGENCIES
Operating leases
See Note 5 for operating lease discussion.
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 ten years from the effective date.
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 agreed to make earned royalty payments to Mayo in connection with the Company’s
sales of the licensed products to third parties and sublicense income received by the Company and to make milestone payments of up to
$
Amended and Restated Patent and Know-How License Agreement – Tools Agreement
On
November 20, 2019, the Company entered into an amended and restated patent and know-how license agreement (the “Tools Agreement”)
with Mayo. The Tools Agreement contains terms of license grant substantially identical to the EP Software Agreement, although it is for
different patent rights and covers the field of electrophysiology systems. In June 2021, patent rights were issued (“Valid Claim”)
as defined whereby the Company paid milestone one of $
In
connection with the Tools Agreement, the Company agreed to pay Mayo an upfront consideration 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.
In
connection with the ViralClear Agreement, ViralClear agreed to make earned royalty payments to Mayo in connection with
ViralClear’s sales of the licensed products to third parties and sublicense income received by the Company and to make
milestone payments of up to $
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 $
| 26 |
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(unaudited)
BioSig AI Sciences, Inc. – Consulting Agreement
On June 17, 2023, BioSig AI entered into an agreement with Reified Labs LLC (“Reified”) whereby Reified will work with the BioSig AI to develop datasets for the purpose of creating a foundational artificial intelligence platform. The agreement has a one-year term from the effective date and automatically renews for successive one year terms, unless terminated. On January 1, 2024, the contract was terminated.
BioSig
AI is obligated to pay Reified a monthly consulting fee of $
Neuro-Kinesis Corporation
On
July 1, 2024, the Company announced the intent to acquire the assets of Neuro-Kinesis Corporation (NKC), a privately held Los Angeles-based
medical technology company developing smart EP tools. A non-binding letter of intent (LOI) has been executed confirming BioSig’s
preliminary interest in the proposed acquisition of the assets of NKC. The purchase price will be paid through the issuance of shares
of BioSig’s common stock to the shareholders of NKC. In addition, at closing, NKC will provide a minimum of $
Defined Contribution Plan
Effective
January 1, 2019, the Company established a qualified defined contribution plan (the “401(k) Plan”) pursuant to Section 401(k)
of the Code, whereby all eligible employees may participate. Participants may elect to defer a percentage of their annual pretax compensation
to the 401(k) plan, subject to defined limitations. The Company is required to make contributions to the 401(k) Plan equal to 3 percent
of each participant’s eligible compensation, subject to limitations under the Code. For the three and nine months ended September 30,
2024, the Company charged operations $
Purchase commitments.
As
of September 30, 2024, the Company had aggregate purchase commitments of approximately $
Litigation
Threatened litigation.
On
December 4, 2023, the Company received a threat of litigation for the termination of employment with the Company alleging the termination
of employment was in retaliation for bringing to the attention of the Company’s board of directors and executives a series of wrongful
and questionable practices by members of the Company’s board of directors, Chief Executive Officer and Chief Financial Officer.
The claimant sought compensation in the amount of $
On
February 22, 2024, the Company received a threat of litigation seeking restitution for losses resulting from unlawful actions taken by
the Company’s board of directors. The claimant contends that he and others have sustained losses totaling $
On
March 22, 2024, plaintiff, Michael Gray Fleming (the “Plaintiff”), filed a lawsuit in Hennepin County, Minnesota
District Court naming the Company, its former Chief Executive Officer and former Chief Financial Officer as defendants. The
Plaintiff contends that the Company failed to meet its obligations in issuing the Plaintiff stock certificates under the terms of a
restricted stock award agreement. Plaintiff is seeking at least $
We may be 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.
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.
| 27 |
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(unaudited)
Stock-based compensation
The Company takes some tax positions, including the reporting of stock-based compensation, that may not be accepted by the Internal Revenue Service upon an examination, and we may be subject to penalties for underreporting of recipient’s income. The result of any such examination is uncertain, and any such penalties could be material to our financial position and results of operations given our current limited cash and revenues.
NOTE 13 – 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), ViralClear Pharmaceuticals, Inc. and BioSig AI Sciences, Inc.
Information concerning the operations of the Company’s reportable segments is as follows:
| Three Months Ended | Three Months Ended | Nine Months Ended | Nine Months Ended | |||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| (000’s) | (000’s) | (000’s) | (000’s) | |||||||||||||
| Revenues (from external customers) | ||||||||||||||||
| BioSig | $ | $ | | $ | $ | |||||||||||
| ViralClear | ||||||||||||||||
| BioSig AI Sciences | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Three Months Ended | Three Months Ended | Nine Months Ended | Six Months Ended | |||||||||||||
| September 30, | September 30, | September 30 | September 30 | |||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| (000’s) | (000’s) | (000’s) | (000’s) | |||||||||||||
| Operating Expenses: | ||||||||||||||||
| BioSig | $ | $ | $ | $ | ||||||||||||
| ViralClear | ( | ) | ( | ) | ||||||||||||
| BioSig AI Sciences | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Three Months Ended | Three Months Ended | Nine Months Ended | Nine Months Ended | |||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| (000’s) | (000’s) | (000’s) | (000’s) | |||||||||||||
| Loss from Operations: | ||||||||||||||||
| BioSig | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| ViralClear | ( | ) | ||||||||||||||
| BioSig AI Sciences | ( | ) | ( | ) | ( | ) | ||||||||||
| $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||
| 28 |
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(unaudited)
September
30, (000’s) | December
31, (000’s) | |||||||
| Total Assets | ||||||||
| BioSig | $ | $ | ||||||
| ViralClear | ||||||||
| BioSig AI Sciences | ||||||||
| $ | $ | |||||||
NOTE 14 – RELATED PARTY TRANSACTIONS
On June 5, 2024, the Company and Mr. Ferdinand Groenewald entered into a consulting agreement (the “Agreement”) effective June 5, 2024, pursuant to which Mr. Groenewald will lead accounting and financial reporting activities of the Company. Mr. Groenewald will serve as the Company’s interim chief financial officer, principal accounting officer and vice president of finance. The Agreement will continue indefinitely until terminated by either party upon 30 days’ advance notice. The Agreement provides for compensation at a fixed rate of $ per month and reimbursement by the Company for any usual and customary business expenses incurred by Mr. Groenewald in connection with performing services pursuant to the Agreement. In addition, the Agreement provides for the Company to indemnify Mr. Groenewald on terms customary for officers.
Accounts
payable and accrued expenses include due to related parties comprised primarily director fees and travel reimbursements. Due to related
parties as of September 30, 2024 and December 31, 2023 was $
On
March 1, 2024, the Company issued shares of common stock to Frederick D Hrkac, director in exchange for consulting services with
a fair value of $
On
March 1, 2024, the Company issued shares of common stock to Anthony Amato, CEO and director in exchange for services with a fair
value of $
On
June 7, 2024, the Company issued shares of common stock to Anthony Amato, CEO and director in exchange for services with a fair
value of $
On
March 7, 2024, the company issued a promissory note to a significant shareholder for $
NOTE 15 – SUBSEQUENT EVENTS
The Company has evaluated subsequent events from the balance sheet date through the date on which these condensed financial statements were issued. Other than as described in the notes above, the Company did not have any material subsequent events that impacted its condensed financial statements or disclosures.
Subsequent to September 30, 2024, the Company issued shares of common stock for vested restricted stock.
Subsequent to September 30, 2024, the Company issued shares of common for services provided by a consultant.
On
October 17, 2024, the Company’s board of directors agreed to amend the existing
| 29 |
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 is a medical device company with an advanced digital signal processing technology platform to deliver insights to the treatment of cardiovascular arrhythmias. Through collaboration with physicians, experts, and healthcare leaders across the field of electrophysiology (EP), we are committed to addressing healthcare’s biggest priorities — saving time, saving costs, and saving lives.
Our first product, the PURE EP™ System, is an FDA 510(k) cleared non-invasive class II device consisting of a unique combination of hardware and software designed to provide unprecedented signal clarity and precision for real-time visualization of intracardiac signals paving the way for personalized patient care. Integrating with existing systems in the EP lab, PURE EP™ is designed to accurately pinpoint even the most complex signals to maximize procedural success and efficiency.
By capturing critical cardiac signals—even the most complex, the PURE EP™ System is designed to enhance clinical decision-making and improve clinical workflow for all types of arrhythmias - even the most challenging procedures for cardiac arrhythmias, like ventricular tachycardia (VT) and atrial fibrillation (AF).
On July 1, 2024, the Company announced the intent to acquire the assets of Neuro-Kinesis Corporation (NKC), a privately held Los Angeles-based medical technology company developing smart EP tools. A non-binding letter of intent (LOI) has been executed confirming BioSig’s preliminary interest in the proposed acquisition of the assets of NKC. The purchase price will be paid through the issuance of shares of BioSig’s common stock to the shareholders of NKC. In addition, at closing, NKC will provide a minimum of $2.5 million, but could provide up to $6 million, of unrestricted cash to BioSig. The proposed acquisition will require extensive due diligence, potentially through year-end, with full disclosures in the Company’s next proxy statement for shareholder vote.
Our owned patent portfolio now includes 41 issued/allowed utility patents (29 utility patents where BioSig is at least one of the applicants). Twenty-seven additional U.S. and foreign utility patent applications are pending covering various aspects of our PURE EP System for recording, measuring, calculating and displaying of electrocardiograms during cardiac ablation procedures (27 U.S. and foreign utility patent applications where either BioSig, Mayo, or both is at least one of the applicants). We also have one U.S. patent and one U.S. Pending application directed to artificial intelligence (AI). We also have 30 issued worldwide design patents, which cover various features of our display screens and graphical user interface for enhanced visualization of biomedical signals (30 design patents where BioSig is at least one of the applicants). Finally, we have licenses to 12 (issued/allowed) patents and 9 additional worldwide utility patent applications from Mayo Foundation for Medical Education and Research that are pending (12 issued/allowed patents and 9 applications where only Mayo is the applicant). These patents and applications are generally directed to electroporation and stimulation.
| 30 |
Notices of Delisting
On March 5, 2024, the Company received a letter from the Listing Qualifications Department of Nasdaq (the “Staff”) stating that the Company has not regained compliance with Listing Rule 5550(a)(2) because the Company’s common stock did not meet the minimum bid price of $1.00 per share required for continued listing on The Nasdaq Capital Market, and the Company is not eligible for a second 180 day cure period under Rule 5810(c)(3)(A)(2) because the Company does not comply with the $5,000,000 minimum stockholders’ equity initial listing requirement for The Nasdaq Capital Market, and that accordingly, Nasdaq would delist the Company’s common stock unless the Company requested an appeal of this determination. On March 11, 2024, the Company submitted a request for a hearing before the Nasdaq Hearings Panel to appeal the Staff’s delisting determination.
On March 12, 2024, the Company received a letter from the Staff stating that based upon the Staff’s review of the Company and pursuant to Listing Rule 5101, the Staff believes that the Company no longer has an operating business and is a “public shell,” and that the continued listing of its securities is no longer warranted, in view of work force reductions and resignations of members of the board of directors and officers (see below).
The letter further stated that the Company no longer meets the requirement of Rule 5550(b)(2) to maintain a minimum Market Value of Listed Securities of $35 million, if none of the other standards set forth in Rule 5550(b) is met.
The Staff stated that the foregoing matters serve as an additional basis for delisting the Company’s common stock from The Nasdaq Stock Market, and that the Hearings Panel will consider this matter in rendering a determination regarding the Company’s continued listing on The Nasdaq Capital Market.
On June 10, 2024, the Company received formal notice that the Nasdaq Hearings Panel had determined to delist the Company’s common stock from Nasdaq due to the Company’s continued non-compliance with the minimum stockholders’ equity requirement set forth in Nasdaq Listing Rule 5550(b)(2) for continued listing on Nasdaq. As a result, trading in the Company’s common stock will be suspended on Nasdaq effective with the open of business on Wednesday, June 12, 2024. The Company’s common stock should be eligible to trade on the OTC Markets’ Pink Current Information tier under symbol “BSGM” effective with the open of trading on Wednesday, June 12, 2024. The Company sought the Panel’s reconsideration of its decision in accordance with the Nasdaq Listing Rules
On June 24, 2024, the Company was notified by Nasdaq that the Nasdaq Hearings Panel had declined to reconsider its decision dated June 10, 2024 to delist the Company’s common stock from Nasdaq (the “Delisting Decision”). Trading in the Company’s securities was suspended on Nasdaq effective with the open of business on June 12, 2024, at which point the Company’s common stock was eligible to trade on the OTC Market’s Pink Current Information tier.
On July 10, 2024, the Company filed a submission in support of an appeal to the Delisting Decision to the Nasdaq Listing and Hearing Review Council and is currently awaiting a decision.
On July 23, 2024, the Company commenced trading of its common stock on the OTCQB, operated by OTC Markets Group, Inc On October 18, 2024, the Company received a decision from the Nasdaq Listing and Hearing Review Council granting the Company a grace period until March 7, 2025 to regain compliance with the Nasdaq Listing Rule 5550(b)(2), the MVLS Rule, which requires a market value of listed securities of at least $35 million.
On October 21, 2024, the Company was notified that its common stock will commence trading on The Nasdaq Stock Market on Wednesday, October 23, 2024 effective at the opening of trading.
On October 24, 2024, the Company received a letter from the Nasdaq Listing Qualifications (“Nasdaq”) notifying the Company that based upon the closing bid price of the Company’s common stock from the period of June 11, 2024 through the reinstatement date, October 23, 2024, the Company did not meet the minimum bid price of $1.00 per share required by the Listing Rules (“Rules”) and as a result, the Company no longer meets this requirement. However, the Rules also provides the Company a compliance period of 180 calendar days in which to regain compliance.
On November 13, 2024, the Company issued a press release announcing its Nasdaq bid price compliance.
If at any time during this 180 day period the closing bid price of the Company’s security is at least $1 for a minimum of ten consecutive business days, Nasdaq will provide written confirmation of compliance and this matter will be closed. In the event the Company does not regain compliance, the Company may be eligible for additional time. To qualify, the Company will be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the bid price requirement, and will need to provide written notice of its intention to cure the deficiency during the second compliance period, by effecting a reverse stock split, if necessary.
Private Placement:
On May 1, 2024, the Company entered into a securities purchase agreement with certain accredited investors, pursuant to which the Company sold to the Investors an aggregate of 783,406 shares of the Company’s common stock at a purchase price of $1.4605 per share, and warrants to purchase up to 391,703 shares of common stock at an exercise price of $1.398 per share, that will become exercisable six months after the date of issuance and will expire five and one-half years following the date of issuance, in exchange for aggregate consideration of $1,144,164, including $634,999 in cash and $509,165 representing conversion of the principal balance of and accrued interest on the previously issued related party note payable. The note was not convertible by its terms, but the holder has agreed to convert it into shares of common stock and warrants under the Purchase Agreement as described above. (See Note 9).
On May 29, 2024, the Company entered into a securities purchase agreement (the “SPA”) with certain institutional investors, pursuant to which the Company agreed to sell and issue to the investors (i) in a registered direct offering, 1,570,683 shares (the “Shares”) of Common Stock, par value $0.001 per share of the Company (the “Common Stock”) at a price of $1.91 per share and (ii) in a concurrent private placement, common stock purchase warrants (the “Private Placement Warrants”) to purchase up to an aggregate of 1,570,683 shares of Common Stock, at an exercise price of $1.78 per share of Common Stock.
| 31 |
Lack of funding, workforce reductions, resignations and appointments of members of the Company’s board of directors and certain officers
On January 28, 2024 and February 20, 2024, management of the Company commenced a workforce reduction intended to reduce significantly the annual cash burn which was completed as of February 20, 2024. The workforce reduction consisted of the departure of sixteen employees, effective as of January 31, 2024 and included the departure of John Sieckhaus, the Company’s Chief Operating Officer, and Gray Fleming, the Company’s Chief Commercial Officer and twenty six employees effective February 20, 2024. The effect of the workforce reductions had significantly reduce operations in the short-term.
On February 15, 2024, Steve Buhaly resigned from his position as the Chief Financial Officer of the Company effective as of the same date.
On February 19, 2024, David Weild IV, Donald E. Foley, Patrick J. Gallagher and James J. Barry, resigned from their positions as directors of the Company, effective as of the same date.
On February 20, 2024, James L. Klein and Frederick D. Hrkac resigned from their positions as directors of the Company, effective as of the same date.
On February 20, 2024 due to lack of funding, the company had laid off the entire workforce except for the CEO.
On February 27, 2024, the company re-appointed Frederick D. Hrkac as a director and the president and principal executive officer. Additionally, on February 27, 2024, Kenneth L. Londoner resigned from his positions as director, executive chairman and chief executive officer of the Company and from any and all committees, offices, appointments, designations, responsibilities or other capacities related to the Company or any of its subsidiaries, effective as of the same date.
On April 30, 2024, the board of directors appointed former advisory board member and consultant, Anthony Amato as a director, president, chief executive officer and principal executive officer, effective immediately. In connection with the appointment of Mr. Amato, Mr. Hrkac tendered his resignation as president and principal executive officer effective as of the same date, however, continues to serve as a director and acted as chief financial officer until June 5, 2024.
On May 2, 2024, the board of directors appointed Mr. Chris Baer as a director on the Board.
On May 3, 2024, the board of directors appointed Messrs. Steven E. Abelman and Donald F. Browne as directors on the board.
On June 5, 2024, Frederick D. Hrkac resigned as acting chief financial officer and principal accounting officer of the Company, effective as of the same date. Also on June 5, 2024, the Company and Ferdinand Groenewald entered into the Agreement effective June 5, 2024, pursuant to which Mr. Groenewald will lead accounting and financial reporting activities of the Company. Mr. Groenewald currently serves as the Company’s interim chief financial officer, principal accounting officer and vice president of finance. The Agreement will continue indefinitely until terminated by either party upon 30 days’ advance notice. The Agreement provides for compensation at a fixed rate of $15,000 per month and reimbursement by the Company for any usual and customary business expenses incurred by Mr. Groenewald in connection with performing services pursuant to the Agreement. In addition, the Agreement provides for the Company to indemnify Mr. Groenewald on terms customary for officers.
Currently, the Company has 5 employees and 6 key consultants. Dependent upon funding, the Company would plan on hiring a team of 4-6 persons to execute the business development strategy of finding partners for the commercialization of PURE EP, develop new products in the field of Pulse Field Ablation and to continue to integrate PURE EP into today’s lab equipment.
Results of Operations (000’s)
We anticipate that our results of operations will fluctuate for the foreseeable future due to several factors, such as the progress of our research and development and commercialization efforts, 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.
| 32 |
Three Months Ended September 30, 2024 Compared to Three Months September 30, 2023 (000’s)
Revenues and Cost of Goods Sold. Revenue for the three months ended September 30, 2024 was $0, comprised of recognized service revenue, as compared to $1, comprised of recognized service revenue for the three months ended September 30, 2023.
We derive our revenue primarily from the sale of our medical device, PURE EP Platform, as well as related support and maintenance services and software upgrades in connection with the device.
We recognize revenue in accordance with Accounting Standards Codification (ASC) 842, Leases for lease components and ASC 606, Revenue from Contracts with Customers (“ASC 606”) for non-lease components. For medical device sales, we recognize revenue under ASC 606.
The core principle of ASC 606 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
Research and Development Expenses. Research and development expenses for the three months ended September 30, 2024 were $156, a decrease of $989, or 86.38%, from $1,145 for the three months ended September 30, 2023. The decrease is primarily due to decreases in payroll, consulting, Data/AI development and research and clinical studies and design work to $139 for the three months ended September 30, 2024 as compared to $1,066 for the three months ended September 30, 2023.
Research and development expenses were comprised of the following:
Three months ended:
September 30, 2024 | September 30, 2023 | |||||||
| Salaries and equity compensation | $ | 105 | $ | 815 | ||||
| Consulting expenses | - | 135 | ||||||
| Research and clinical studies and design work | 34 | 62 | ||||||
| Data/AI development | - | 54 | ||||||
| Regulatory | 1 | 21 | ||||||
| Travel, supplies, other | 16 | 58 | ||||||
| Total | $ | 156 | $ | 1,145 | ||||
Stock based compensation for research and development personnel was $7 and $147 for the three months ended September 30, 2024 and 2023, respectively.
General and Administrative Expenses. General and administrative expenses for the three months ended September 30, 2024 were $2,763, a decrease of $52 or 1.85%, from $2,815 incurred in the three months ended September 30, 2023. This decrease is primarily due to a decrease in employee and service provider (stock-based) performance pay in the current period as compared to the same period in the prior year and additional service provider fees paid.
Payroll related expenses, including stock-based compensation expenses, increase to $1,744 in the current period from $1,302 for the three months ended September 30, 2023, an increase of $442, or 33.95%. The increase was primarily due to increase stock-based compensation in the current period compared to the prior period. We incurred $1,510 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 September 30, 2024 as compared to $(506) in stock-based compensation for the same period in 2023.
Professional services for the three months ended September 30, 2024 totaled $227, a decrease of $14, or 5.81%, over the $241 recognized for the three months ended September 30, 2023. Of professional services, the decrease is mainly attributed to a decrease in legal expenses and accounting fees in the current period as compared to the prior period.
Consulting, public and investor relations fees for the three months ended September 30, 2024 were $527 as compared to $734 incurred for the three months ended September 30, 2023, a decrease of $207, or 28.20%. The decrease primarily related to a reduction in investor relations, marketing and consulting during the three months ended September 30, 2024 as compared to the same period, last year.
Travel, meals and entertainment costs for the three months ended September 30, 2024 were $99, a decrease of $66, or 40%, from $165 incurred in the three months ended September 30, 2023. Travel, meals and entertainment costs include travel related to business development and financing. The decrease in 2024 was due to staff reductions in 2024 as compared to 2022.
Rent for the three months ended September 30, 2024 and 2023 was $38 and $96.
Impairment of Long Term Assets. During the three months ended September 30, 2024, the Company re-assessed it’s carrying amounts of certain property and equipment due to reduced manufacturing of its commercial products and determined that these carrying amounts did not exceed the estimated undiscounted future cash flows. Accordingly, the Company recorded no impairment charge.
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Depreciation and Amortization Expense. Depreciation and amortization expense for the three months ended September 30, 2024 totaled $31, a decrease of $61, or 66.30%, over the expense of $92 incurred in the three months ended September 30, 2023, as a result aging of equipment.
Other Income (Expense). Other income (expense) for the three months ended September 30, 2024 totaled $1,036, an increase in other income of $1,035, over the income of $1 incurred in the three months ended September 30, 2023, as a direct result of our gain on settlement and forgiveness of accounts payable negotiated by management during the current period.
Preferred Stock Dividend. Preferred stock dividend for the three months ended September 30, 2024 and 2023 totaled $26 and $2, respectively. Preferred stock dividends are related to the dividends accrued on our Series C Preferred Stock issued during the period from 2013 through 2015.
Net Loss Attributable to BioSig Technologies, Inc. Common Shareholders. As a result of the foregoing, net loss attributable to common shareholders for the three months ended September 30, 2024 was $1,940 compared to a net loss of $4,569 for the three months ended September 30, 2023.
Nine months ended September 30, 2024 Compared to nine months ended September, 2023 (000’s)
Revenues and Cost of Goods Sold. Revenue for the nine months ended September 30, 2024 was $27, comprised of recognized service revenue, as compared to $6, comprised of recognized service revenue for the nine months ended September 30, 2023.
We derive our revenue primarily from the sale of our medical device, PURE EP Platform, as well as related support and maintenance services and software upgrades in connection with the device.
We recognize revenue in accordance with Accounting Standards Codification (ASC) 842, Leases for lease components and ASC 606, Revenue from Contracts with Customers (“ASC 606”) for non-lease components. For medical device sales, we recognize revenue under ASC 606.
The core principle of ASC 606 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
Research and Development Expenses. Research and development expenses for the nine months ended September 30, 2024 were $736, a decrease of $3,180, or 81.21%, from $3,916 for the nine months ended September 30, 2023. The decrease is primarily due to decreases in payroll, consulting, Data/AI development and research and clinical studies and design work to $674 for the nine months ended September 30, 2024 as compared to $6,695 for the nine months ended September 30, 2023 primarily in the BioSig Technologies segment, a decrease of $3,021 or 81.76%.
Research and development expenses were comprised of the following:
Nine months ended:
September 30, 2024 | September 30, 2023 | |||||||
| Salaries and equity compensation | $ | 469 | $ | 3,063 | ||||
| Consulting expenses | 120 | 203 | ||||||
| Research and clinical studies and design work | 85 | 338 | ||||||
| Data/AI development | - | 91 | ||||||
| Regulatory | 3 | 64 | ||||||
| Travel, supplies, other | 59 | 157 | ||||||
| Total | $ | 736 | $ | 3,916 | ||||
Stock based compensation for research and development personnel was $83 and $998 for the nine months ended September 30, 2024 and 2023, respectively.
General and Administrative Expenses. General and administrative expenses for the nine months ended September 30, 2024 were $10,559, a decrease of $7,608 or 41.88%, from $18,167 incurred in the nine months ended September 30, 2023. This decrease is primarily due to a decrease in employee and service provider (stock-based) performance pay in the current period as compared to the same period in the prior year and additional service provider fees paid.
Payroll related expenses, including stock-based compensation expenses, decreased to $7,481 in the current period from $11,366 for the nine months ended September 30, 2023, a decrease of $3,885, or 34.18%. The decrease was primarily due to reduced staff in commercialization, sales and general and administration in the BioSig Technologies segment. We incurred $6,508 in stock-based compensation in connection with the vesting of stock and stock options issued to board members, officers, employees and consultants for the nine months ended September 30, 2024 as compared to $5,534 in stock-based compensation for the same period in 2023.
Professional services for the nine months ended September 30, 2024 totaled $884, a decrease of $26 or 2.88%, over the $910 recognized for the nine months ended September 30, 2023. Of professional services, legal fees totaled $556 for the nine months ended September 30, 2024; a decrease of $24, or 4.14%, from $580 incurred for the nine months ended September 30, 2023. The decrease in legal fees are primarily due to costs reduced costs incurred in 2024 for contract work and patent filings for the BioSig Technologies segment as compared to the nine months ended September 30, 2023. Accounting fees incurred in the nine months ended September 30, 2024 amounted to $139, a decrease of $17, or 10.90%, from $156 incurred in same period last year. In 2023, we incurred added accounting fees relating to financing in our BioSig Technologies segment.
Consulting, public and investor relations fees for the nine months ended September 30, 2024 were $986 as compared to $2,733 incurred for the nine months ended September 30, 2023, a decrease of $1,747, or 63.92%. The decrease primarily related to a reduction in investor relations, marketing and consulting during the nine months ended September 30, 2024 as compared to the same period, last year.
Travel, meals and entertainment costs for the nine months ended September 30, 2024 were $308, a decrease of $285, or 48.06%, from $593 incurred in the nine months ended September 30, 2023. Travel, meals and entertainment costs include travel related to business development and financing. The decrease in 2024 was due to staff reductions in 2024 as compared to 2022.
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Rent for the nine months ended September 30, 2024 and 2023 was $203 and $281.
Impairment of Long Term Assets. During the nine months ended September 30, 2024, the Company re-assessed it’s carrying amounts of certain property and equipment due to reduced manufacturing of its commercial products and determined that these carrying amounts exceeded the estimated undiscounted future cash flows. Accordingly, the Company recorded a $253 impairment charge to current operations.
Depreciation and Amortization Expense. Depreciation and amortization expense for the nine months ended September 30, 2024 totaled $158, a decrease of $110, or 41.04%, over the expense of $268 incurred in the nine months ended September 30, 2023, as a result aging of equipment.
Other Income (Expense). Other income (expense) for the nine months ended September 30, 2024 totaled $2,439, an increase in other income of $2,656, over the expense of $(217) incurred in the nine months ended September 30, 2023, as a direct result of our gain on settlement and forgiveness of accounts payable negotiated by management during the current period.
Preferred Stock Dividend. Preferred stock dividend for the nine months ended September 30, 2024 totaled $164, an increase of $157 over the expense of $7 incurred in the nine months ended September 30, 2023. Preferred stock dividends are related to the dividends accrued on our Series C Preferred Stock issued during the period from 2013 through 2015. In addition, the Series C Preferred stock conversion rate reset from $2.50 to $0.41 during the nine months ended September 30, 2024, therefore we recorded a non-cash deemed preferred stock dividend of $157 in the current period.
Net Loss Attributable to BioSig Technologies, Inc. Common Shareholders. As a result of the foregoing, net loss attributable to common shareholders for the nine months ended September 30, 2024 was $9,395 compared to a net loss of $22,999 for the nine months ended September 30, 2023.
Segment Results
The Company reports segment information based on the “management” approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company’s reportable segments.
Summary Statement of Operations for the three and nine months ended September 30, 2024 as compared to the three and nine months ended September 30, 2023 are detailed in Note 13 of the accompanying unaudited condensed consolidated financial statements.
Liquidity and Capital Resources and Going Concern ($000’s)
As of September 30, 2024, we had a working capital deficit of $853, comprised of cash of $615, accounts receivable of $81, current portion of net investments in leases of $39 and prepaid expenses and other current assets of $113, which was offset by $1,448 of accounts payable and accrued expenses, accrued dividends on preferred stock issuances of $108 and of current portion of lease liability of $145. For the nine months ended September 30, 2024, we used $4,284 of cash in operating activities and nil of cash in investing activities.
Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023 (000’s)
Cash provided by financing activities totaled $4,709, comprised of proceeds from the sale of our common stock and warrants, net of expenses, of $4,209 and proceeds from issuance of a related party note of $500.
In the comparable period in 2023, our aggregate cash provided by financing activities totaled $14,585 comprised of proceeds from the sale of our common stock and warrants. At September 30, 2024, we had cash of $615 compared to $389 at September 30, 2023. Our cash is held in bank deposit accounts. At September 30, 2024 and 2023, we had no convertible debentures outstanding.
Cash used in operations for the nine months ended September 30, 2024 and 2023 was $4,284 and $14,371, respectively, which represent cash outlays for research and development and general and administrative expenses in such periods. The decreases in cash outlays principally resulted in reduced operating costs, general and administrative expenses in 2024 and with net decreases in our operating assets of $114 and a net increase in our operating liabilities of $5,242.
We used nil cash for investing activities for the nine months ended September 30, 2024, compared to $182 for the nine months ended September 30, 2023. For the comparable period, we purchased computers and other equipment.
We had an accumulated deficit as of September 30, 2024 of $254.24 million, as well as a net loss attributable to BioSig of $9.2 million and negative operating cash flows. We expect to continue incurring losses and negative cash flows from operations until our products (primarily PURE EP Platform) reach full commercial profitability.
These conditions raise substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is an issue raised due to our net losses and negative cash flows from operations since inception and our expectation is that these conditions will continue for the foreseeable future. In addition, we will require additional financing to fund future operations. Although we have commercial products available for sale, we have not generated significant revenues to date, and there is no assurance that we will be able to generate cash flow to fund operations. In addition, there can be no assurance that our research and development will be successfully completed or that any additional products will be approved or commercially viable. Our ability to continue as a going concern is subject to our ability to obtain necessary funding from outside sources, including obtaining additional funding from the sale of our securities, obtaining loans from various financial institutions or being awarded grants from government agencies, where possible. Our continued net operating losses increase the difficulty in meeting such goals and there can be no assurances that such methods will prove successful. Additionally, with our reduction in staff, our planned commercialization may be further delayed.
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. Our shift from a focus on technology development to commercialization has allowed us to reduce our annual expenses in a meaningful way. As a result of this transition, we have been able to achieve savings through reductions in executive and management compensation and a reduction of our utilization of external consultants and professional service providers. We believe these cost-saving measures combined with our expectations of positive trends in commercial activity create the potential for us to achieve a lower cash flow breakeven rate. There are no assurances, however, that we will be successful in obtaining the level of financing needed for our operations. The ongoing COVID-19 pandemic has resulted and continues to result in significant financial market volatility and uncertainty in recent months. In addition, U.S. and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the start of the military conflict between Russia and Ukraine.
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A continuation or worsening of the levels of market disruption and volatility seen in the recent past could have an adverse effect on our ability to access capital and on the market price of our common stock, and we may not be able to successfully raise capital through the sale of our securities.
Our Series C Preferred Stock contains triggering events which would, among other things, require redemption (i) in cash, at the greater of (a) 120% of the stated value of $1 or (b) the product of (I) the variable weighted average price of our common stock on the trading day immediately preceding the date of the triggering event and (II) the stated value divided by the then conversion price or (ii) in shares of our common stock, equal to a number of shares equal to the amount set forth in (i) above divided by 75%. As of September 30, 2024, the aggregate stated value of our Series C Preferred Stock was $105. The triggering events include our being subject to a judgment of greater than $100 or our initiation of bankruptcy proceedings. If any of the triggering events contained in our Series C Preferred Stock occur, the holders of our Series C Preferred Stock may demand redemption, an obligation we may not have the ability to meet at the time of such demand. We will be required to pay interest on any amounts remaining unpaid after the required redemption of our Series C Preferred Stock, at a rate equal to the lesser of 18% per annum or the maximum rate permitted by applicable law.
We expect to incur losses from operations for the near future. We expect to incur additional 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.
Equity Financing
On January 12, 2024, we entered into a securities purchase agreement with certain accredited and institutional investors, pursuant to which we sold to the investors an aggregate of 260,720 shares of our common stock and warrants to purchase up to 130,363 shares of common stock, at a purchase price of $3.989 per share and a warrant to purchase one-half of a share. The warrants have an exercise price of $3.364 per share, will become exercisable six months after the date of issuance and will expire five and one-half years following the date of issuance. The gross proceeds from this offering were $1,040,000.
On May 1, 2024, we entered into a securities purchase agreement with certain accredited investors, pursuant to which we sold to the Investors an aggregate of 783,406 shares of our common stock at a purchase price of $1.4605 per share, and warrants to purchase up to 391,703 shares of common stock at an exercise price of $1.398 per share, that will become exercisable six months after the date of issuance and will expire five and one-half years following the date of issuance, in exchange for aggregate consideration of $1,144,164, including $634,999 in cash and $509,165 representing conversion of the principal balance of and accrued interest on the previously issued related party note payable. The note was not convertible by its terms, but the holder has agreed to convert it into shares of common stock and warrants under the purchase agreement as described above. (See Below).
On May 29, 2024, the Company entered into a securities purchase agreement (the “SPA”) with certain institutional investors, pursuant to which the Company agreed to sell and issue to the investors (i) in a registered direct offering, 1,570,683 shares (the “Shares”) of Common Stock, par value $0.001 per share of the Company (the “Common Stock”) at a price of $1.91 per share and (ii) in a concurrent private placement, common stock purchase warrants (the “Private Placement Warrants”) to purchase up to an aggregate of 1,570,683 shares of Common Stock, at an exercise price of $1.78 per share of Common Stock.
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On May 30, 2024, the Company closed the registered direct offering and the concurrent private placement (collectively, the “Offering”), raising gross proceeds of approximately $3.0 million before deducting placement agent fees and other offering expenses payable by the Company. The Company intends to use the net proceeds from the Offering for working capital and general corporate purposes.
Issuance of Debt
On March 7, 2024, we issued a promissory note to an investor and an affiliate (10% or more shareholder) for $500,000. We designated its 12% note due 2026, in accordance with exemptions from registration under the Securities Act of 1933, as amended (the “Securities Act”).
The note is due March 7, 2026. We promise to pay interest in cash on the unpaid principal amount of this note at a rate per annum equal to twelve percent (12%), commencing to accrue on the date hereof and payable on the maturity date or earlier prepayment as provided therein. The Note contains customary events of default.
We may prepay all or any portion of the principal amount of the Note at any time or from time to time without penalty.
On May 1, 2024, we converted the promissory note and related accrued interest of $509,165 into 348,624 shares of common stock and warrants to purchase 174,312 shares of common stock at $1.398 per share, that will become exercisable six months after the date of issuance and will expire five and one-half years following the date of issuance.
Critical Accounting Estimates
The following discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the U.S. The preparation of consolidated financial statements in accordance with generally accepted accounting principles in the U.S. requires us to make estimates and assumptions that affect the amounts reported in our consolidated financial statements. The consolidated financial statements include estimates based on currently available information and our judgment as to the outcome of future conditions and circumstances.
We believe the following critical accounting estimates affect our more significant judgments and estimates used in the preparation of our financial statements. We evaluate these estimates and judgments on an ongoing basis. We base our estimates on our historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Among the significant judgments made by management in the preparation of our financial statements are the following:
Stock Based Compensation
We estimate the fair value of options and stock warrants granted using the Black Scholes Merton model. We estimate when and if performance-based awards will be earned. If an award is not considered probable of being earned, no amount of equity-based compensation expense is recognized. If the award is deemed probable of being earned, related equity-based compensation expense is recorded. The fair value of an award ultimately expected to vest is recognized as an expense, net of forfeitures, over the requisite service periods in our statements of operations, which is generally the vesting period of the award.
The Black Scholes Merton model requires the input of certain subjective assumptions and the application of judgment in determining the fair value of the awards. The most significant assumptions and judgments include the expected volatility, risk-free interest rate, the expected dividend yield, and the expected term of the awards. In addition, the recognition of equity-based compensation expense is impacted by our forfeitures, which are accounted for as they occur.
The assumptions used in our option pricing model represent management’s best estimates. If factors change and different assumptions are used, our equity-based compensation expense could be materially different in the future. The assumptions used in our option pricing model represent management’s best estimates. If factors change and different assumptions are used, our equity-based compensation expense could be materially different in the future.
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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 non-employees are recognized as an expense over the period of performance.
Such payments are measured at fair value at the earlier of the date a performance commitment is reached, or the date performance is completed. In addition, for awards that vest immediately and are non-forfeitable, the measurement date is the date the award is issued.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not required under Regulation S-K for “smaller reporting companies.”
ITEM 4. CONTROLS AND PROCEDURES
Management’s evaluation of disclosure controls and procedures.
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(e) under the Exchange Act. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Based on management’s evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are not designed at a reasonable assurance level and are not effective in providing reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC 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.
Management’s report on internal control over financial reporting.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting for our company. Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Exchange Act, as a process designed by, or under the supervision of, a company’s principal executive and principal financial officer and effected by the our board of directors, management and other personnel, 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 and includes those policies and procedures that:
| (1) | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; | |
| (2) | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made in accordance with authorizations of management and directors of the company; and | |
| (3) | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements. |
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible enhancements to controls and procedures.
Management, including our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2023, based on the criteria in a framework developed by the Company’s management pursuant to and in compliance with the criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations (“COSO”) of the Treadway Commission. This evaluation included review of the documentation of controls, evaluation of the design effectiveness of controls, walkthroughs of the operating effectiveness of controls and a conclusion on this evaluation. Based on this evaluation, management has concluded that our internal control over financial reporting was not effective as of September 30, 2024, because management identified that i) inadequate identification, recording and reporting of stock based compensation, ii) ineffective review processes over period end financial disclosure and reporting, and (iii) inadequate segregation of duties for transaction posting and processing, amounted to a material weakness in the Company’s internal control over financial reporting.
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The material weaknesses did not result in any identified misstatements to the consolidated financial statements and there were no changes to previously released financial results.
Management’s Remediation Plan
In 2025, we have intents to add sufficient staff and oversight supervision controls to provide adequate accounting segregation. We believe these changes will remediate the underlying deficiencies as identified by us. The remediation efforts will include an ongoing review of the implementation of additional controls to ensure all risks have been addressed.
As a result of the material weaknesses discussed above or of others, we may experience negative impacts on our ability to accurately report our results of operation and financial condition in a timely manner. If we do identify a material weakness in our internal control over financial reporting and are unsuccessful in implementing or following a remediation plan, or fail to update our internal control over financial reporting as our business evolves or to integrate acquired businesses into our controls system, if additional material weaknesses are found in our internal controls in the future, or if our external auditors cannot attest to the effectiveness of our internal control over financial review, if applicable, we may not be able to timely or accurately report our financial condition, results of operations or cash flows or to maintain effective disclosure controls and procedures. If we are unable to report financial information in a timely and accurate manner or to maintain effective disclosure controls and procedures, we could be subject to, among other things, regulatory or enforcement actions by the SEC, an inability for us to be accepted for listing on any national securities exchange in the near future, securities litigation and a general loss of investor confidence, any one of which could adversely affect our business prospects and the market value of our common stock. Further, there are inherent limitations to the effectiveness of any system of controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. We could face additional litigation exposure and a greater likelihood of an SEC enforcement or other regulatory action if further restatements were to occur or other accounting-related problems emerge.
The weaknesses will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.
Changes in Internal Control over Financial Reporting
There has been no change in our internal control over financial reporting identified in connection with the evaluation referred to above that occurred during our last completed fiscal quarter that has materially negatively affected, or is reasonably likely to materially affect, our internal control over financial reporting. As discussed above, management has remediation plans that will be implemented in 2025.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On December 4, 2023, we received a threat of litigation for the termination of employment with the Company alleging the termination of employment was in retaliation for bringing to the attention of the Company’s board of directors and executives a series of wrongful and questionable practices by members of the Company’s board of directors, Chief Executive Officer and Chief Financial Officer. The claimant sought compensation of in the amount of $775,782. After an investigation conducted by the Board and guidance of legal counsel, it was concluded that the claim was without merit.
On February 22, 2024, we received a threat of litigation seeking restitution for losses resulting from unlawful actions taken by the Company’s board of directors. The claimant contends that he and others have sustained losses totaling $1,440,000. On March 22, 2024, the claimant sent another letter to the Company referencing the previous letter and requesting several documents. The Company believes that these claims are without merit.
On March 22, 2024, plaintiff, Michael Gray Fleming (the “Plaintiff”), filed a lawsuit in Hennepin County, Minnesota District Court naming the Company, its former Chief Executive Officer and former Chief Financial Officer as defendants. The Plaintiff contends that the Company failed to meet its obligations in issuing the Plaintiff stock certificates under the terms of a restricted stock award agreement. Plaintiff is seeking at least $288,000 in damages. The Company believes Plaintiff’s allegations are baseless, and its intent is to contest the allegations vigorously. As of the date of this report, the Company is unable to provide an evaluation of the outcome of the litigation or to provide an estimate of the amount of or a range of potential loss that might be incurred by the Company. The Company has moved to dismiss Plaintiff’s claims; a hearing is set in September 2024. The Company also has learned that, following expiration of the SEC Rule 144 waiting period for affiliate/control shares, Plaintiff was able to have his restrictions removed. In light of the pending motion and legend removal, the Company hopes that Plaintiff will simply withdraw his complaint.
We may be 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.
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.
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ITEM 1A. RISK FACTORS
The following description of risk factors includes any material changes to risk factors associated with our business, financial condition and results of operations previously disclosed in Item 1A. “Risk Factors” of our annual report on Form 10-K for the fiscal year ended December 31, 2023, as filed with the SEC on April 16, 2024. Our business, financial condition and operating results can be affected by a number of factors, whether currently known or unknown, including but not limited to those described below, any one or more of which could, directly or indirectly, cause our actual financial condition and operating results to vary materially from past, or from anticipated future, financial condition and operating results. Any of these factors, in whole or in part, could materially and adversely affect our business, financial condition, operating results, and stock price.
The following discussion of risk factors contains forward-looking statements. These risk factors may be important to understanding other statements in this Form 10-Q. The following information should be read in conjunction with the condensed consolidated financial statements and related notes in Part I, Item 1, “Financial Statements” and Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-Q.
Our common stock is subject to the “penny stock” rules of the SEC and the trading market in the securities is limited, which makes transactions in the stock cumbersome and may reduce the value of an investment in the stock.
Rule 15g-9 under the Exchange Act, establishes the definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require: (a) that a broker or dealer approve a person’s account for transactions in penny stocks; and (b) the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.
In order to approve a person’s account for transactions in penny stocks, the broker or dealer must: (a) obtain financial information and investment experience objectives of the person and (b) make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight form: (a) sets forth the basis on which the broker or dealer made the suitability determination; and (b) confirms that the broker or dealer received a signed, written agreement from the investor prior to the transaction. Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our common stock.
Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker or dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
ITEM 5. OTHER INFORMATION
None.
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ITEM 6. EXHIBITS
* Filed herewith.
** Furnished herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| BIOSIG TECHNOLOGIES, INC. | ||
| Date: November 14, 2024 | By: | /s/ Anthony Amato |
| Anthony Amato | ||
| Chief Executive Officer (Principal Executive Officer) | ||
| Date: November 14, 2024 | By: | /s/ Ferdinand Groenewald |
| Ferdinand Groenewald | ||
| Acting Chief Financial Officer (Principal Accounting Officer) | ||
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