UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
| | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
| | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(Address of principal executive office) | (Zip Code) | (Registrant’s telephone number, Including area code) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Non-accelerated filer | ☐ |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
As of August 6, 2020, there were
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION |
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ITEM 1. |
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Condensed consolidated balance sheets as of June 30, 2020 (unaudited) and December 31, 2019 |
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Notes to condensed consolidated financial statements (unaudited) |
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10-34 |
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ITEM 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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35-45 |
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ITEM 3. |
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46 |
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ITEM 4. |
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46 |
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PART II. OTHER INFORMATION |
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ITEM 1. |
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47 |
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ITEM 1A. |
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ITEM 2. |
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51 |
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ITEM 3. |
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52 |
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ITEM 4. |
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52 |
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ITEM 5. |
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52 |
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ITEM 6. |
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53 |
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54 |
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BIOSIG TECHNOLOGIES, INC. |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
June 30, |
December 31, |
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2020 |
2019 |
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(unaudited) |
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ASSETS |
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Current assets: |
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Cash |
$ | $ | ||||||
Inventory |
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Vendor deposits |
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Prepaid expenses |
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Total current assets |
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Property and equipment, net |
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Right-to-use assets, net |
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Other assets: |
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Patents, net |
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Trademarks |
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Prepaid expenses, long term |
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Deposits |
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Total assets |
$ | $ | ||||||
LIABILITIES AND EQUITY |
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Current liabilities: |
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Accounts payable and accrued expenses, including $ |
$ | $ | ||||||
Dividends payable |
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Lease liability, short term |
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Total current liabilities |
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Lease liability, long term |
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Total debt |
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Commitments and contingencies (Note 11) |
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Series C 9% Convertible Preferred Stock, $0.001 par value, $1,000 stated value, designated 4,200 shares, |
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Equity: |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid in capital |
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Accumulated deficit |
( |
) | ( |
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Total stockholders' equity attributable to BioSig Technologies, Inc. |
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Non-controlling interest |
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Total equity |
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Total liabilities and equity |
$ | $ |
See the accompanying notes to the unaudited condensed consolidated financial statements
BIOSIG TECHNOLOGIES, INC. |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
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(unaudited) |
Three months ended June 30, |
Six months ended June 30, |
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2020 |
2019 |
2020 |
2019 |
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Operating expenses: |
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Research and development |
$ | $ | $ | $ | ||||||||||||
General and administrative |
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Depreciation and amortization |
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Total operating expenses |
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Loss from operations |
( |
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Other income (expense): |
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Interest income, net |
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Loss on foreign currency translation |
( |
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Loss before income taxes |
( |
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Income taxes (benefit) |
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Net loss |
( |
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Non-controlling interest |
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Net loss attributable to BioSig Technologies, Inc. |
( |
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Preferred stock dividend |
( |
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) | ( |
) | ( |
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NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
Net loss per common share, basic and diluted |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
Weighted average number of common shares outstanding, basic and diluted |
See the accompanying notes to the unaudited condensed consolidated financial statements
BIOSIG TECHNOLOGIES, INC. |
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CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY |
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THREE MONTHS ENDED JUNE 30, 2020 |
Common stock |
Additional Paid in |
Accumulated |
Non-controlling |
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Shares |
Amount |
Capital |
Deficit |
Interest |
Total |
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Balance, March 31, 2020 (unaudited) |
$ | $ | $ | ( |
) | $ | $ | |||||||||||||||||
Sale of common stock |
- | - | ||||||||||||||||||||||
Sale of subsidiary shares to non-controlling interest |
- | - | - | |||||||||||||||||||||
Common stock issued for services |
- | - | ||||||||||||||||||||||
Fair value of subsidiary shares issued to acquire research and development |
- | - | - | |||||||||||||||||||||
Common stock issued upon conversion of Series C Preferred Stock at $ |
- | - | ||||||||||||||||||||||
Common stock issued for settlement of Series C Preferred Stock accrued dividends at $ |
- | - | ||||||||||||||||||||||
Common stock issued upon cashless exercise of warrants |
( |
) | - | - | - | |||||||||||||||||||
Common stock issued upon cashless exercise of options |
( |
) | - | - | - | |||||||||||||||||||
Common stock issued upon exercise of options at an average of $ |
- | - | ||||||||||||||||||||||
Common stock issued upon exercise of warrants at an average of $ |
- | - | ||||||||||||||||||||||
Stock based compensation |
- | |||||||||||||||||||||||
Preferred stock dividend |
- | - | ( |
) | - | - | ( |
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Net loss |
- | - | - | ( |
) | ( |
) | ( |
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Balance, June 30, 2020 (unaudited) |
$ | $ | $ | ( |
) | $ | $ |
See the accompanying notes to the unaudited condensed consolidated financial statements
BIOSIG TECHNOLOGIES, INC. |
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CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY |
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THREE MONTHS ENDED JUNE 30, 2019 |
Common stock |
Additional Paid in |
Common stock |
Accumulated |
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Shares |
Amount |
Capital |
Subscription |
Deficit |
Total |
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Balance, March 31, 2019 (unaudited) |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||||||
Common stock issued upon exercise of warrants at an average of $ |
( |
) | - | |||||||||||||||||||||
Common stock issued upon exercise of options at an average of $ |
- | - | ||||||||||||||||||||||
Common stock issued upon cashless exercise of warrants |
( |
) | - | - | - | |||||||||||||||||||
Common stock issued upon cashless exercise of options |
( |
) | - | - | - | |||||||||||||||||||
Common stock issued upon conversion of Series C Preferred Stock at $ |
- | - | ||||||||||||||||||||||
Common stock issued settlement of Series C Preferred Stock accrued dividends at $ |
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Change in fair value of modified options |
- | - | - | - | ||||||||||||||||||||
Stock based compensation |
- | - | ||||||||||||||||||||||
Preferred stock dividend |
- | - | ( |
) | - | - | ( |
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Net loss |
- | - | - | - | ( |
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Balance, June 30, 2019 (unaudited) |
$ | $ | $ | - | $ | ( |
) | $ |
See the accompanying notes to the unaudited condensed consolidated financial statements
BIOSIG TECHNOLOGIES, INC. |
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CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY |
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SIX MONTHS ENDED JUNE 30, 2020 |
Common stock |
Additional Paid in |
Accumulated |
Non-controlling |
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Shares |
Amount |
Capital |
Deficit |
Interest |
Total |
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Balance, December 31, 2019 |
$ | $ | $ | ( |
) | $ | $ | |||||||||||||||||
Sale of common stock |
- | - | ||||||||||||||||||||||
Sale of subsidiary shares to non-controlling interest |
- | - | - | |||||||||||||||||||||
Common stock issued for services |
- | - | ||||||||||||||||||||||
Fair value of subsidiary shares issued to acquire research and development |
- | - | - | |||||||||||||||||||||
Common stock issued upon conversion of Series C Preferred Stock at $ |
- | - | ||||||||||||||||||||||
Common stock issued settlement of Series C Preferred Stock accrued dividends at $ |
- | - | ||||||||||||||||||||||
Common stock issued upon cashless exercise of warrants |
( |
) | - | - | - | |||||||||||||||||||
Common stock issued upon cashless exercise of options |
( |
) | - | - | - | |||||||||||||||||||
Common stock issued upon exercise of options at an average of $ |
- | - | ||||||||||||||||||||||
Common stock issued upon exercise of warrants at an average of $ |
- | - | ||||||||||||||||||||||
Fair value of subsidiary shares issued to acquire research and development from Trek Therapeutics, PBC |
- | - | - | |||||||||||||||||||||
Stock based compensation |
- | |||||||||||||||||||||||
Preferred stock dividend |
- | - | ( |
) | - | - | ( |
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Net loss |
- | - | - | ( |
) | ( |
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Balance, June 30, 2020 (unaudited) |
$ | $ | $ | ( |
) | $ | $ |
See the accompanying notes to the audited condensed consolidated financial statements
BIOSIG TECHNOLOGIES, INC. |
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CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY |
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SIX MONTHS ENDED JUNE 30, 2019 |
Common stock |
Additional Paid in |
Common stock |
Accumulated |
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Shares |
Amount |
Capital |
Subscription |
Deficit |
Total |
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Balance, December 31, 2018 |
$ | $ | $ | - | $ | ( |
) | $ | ||||||||||||||||
Common stock issued for services |
- | - | ||||||||||||||||||||||
Sale of common stock |
- | - | ||||||||||||||||||||||
Common stock issued upon exercise of warrants at an average of $ |
- | - | ||||||||||||||||||||||
Common stock issued upon exercise of options at an average of $ |
- | - | ||||||||||||||||||||||
Common stock issued upon cashless exercise of warrants |
( |
) | - | - | - | |||||||||||||||||||
Common stock issued upon cashless exercise of options |
( |
) | - | - | - | |||||||||||||||||||
Common stock issued upon conversion of Series C Preferred Stock at $ |
- | - | ||||||||||||||||||||||
Common stock issued settlement of Series C Preferred Stock accrued dividends at $ |
- | - | ||||||||||||||||||||||
Change in fair value of modified options |
- | - | - | - | ||||||||||||||||||||
Stock based compensation |
- | - | ||||||||||||||||||||||
Preferred stock dividend |
- | - | ( |
) | - | - | ( |
) | ||||||||||||||||
Net loss |
- | - | - | - | ( |
) | ( |
) | ||||||||||||||||
Balance, June 30, 2019 (unaudited) |
$ | $ | $ | - | $ | ( |
) | $ |
See the accompanying notes to the unaudited condensed consolidated financial statements
BIOSIG TECHNOLOGIES, INC. |
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
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(unaudited) |
Six months ended June 30, |
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2020 |
2019 |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net loss |
$ | ( |
) | $ | ( |
) | ||
Adjustments to reconcile net loss to cash used in operating activities: |
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Depreciation and amortization |
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Equity based compensation |
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Change in fair value of modified options |
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Fair value of subsidiary stock issued to acquire research and development from Trek Therapeutics, PBC-related party |
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Fair value of subsidiary stock issued to acquire research and development |
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Changes in operating assets and liabilities: |
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Inventory |
( |
) | ||||||
Vendor deposits |
( |
) | ||||||
Prepaid expenses |
( |
) | ( |
) | ||||
Deposits |
( |
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Accounts payable and accrued expenses |
( |
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Lease liability, net |
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Net cash used in operating activities |
( |
) | ( |
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Payments of patent costs |
( |
) | ||||||
Payment of trademark costs |
( |
) | ||||||
Purchase of property and equipment |
( |
) | ( |
) | ||||
Net cash used in investing activity |
( |
) | ( |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Proceeds from sale of common stock, net of issuance costs |
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Proceeds from sale of subsidiary stock to non-controlling interest, net of issuance costs |
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Proceeds from exercise of options |
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Proceeds from exercise of warrants |
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Net cash provided by financing activities |
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Net increase in cash and cash equivalents |
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Cash and cash equivalents, beginning of the period |
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Cash and cash equivalents, end of the period |
$ | $ | ||||||
Supplemental disclosures of cash flow information: |
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Cash paid during the period for interest |
$ | $ | ||||||
Cash paid during the period for income taxes |
$ | $ | ||||||
Noncash investing and financing activities: |
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Common stock issued upon conversion of Series C Preferred Stock and accrued dividends |
$ | $ | ||||||
Dividend payable on preferred stock charged to additional paid in capital |
$ | $ | ||||||
Right-to-use assets and lease liability recorded upon adoption of ASC 842 |
$ | $ | ||||||
Record right-to-use assets and related lease liability |
$ | $ |
See the accompanying notes to the unaudited condensed consolidated financial statements
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020
(unaudited)
NOTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION
BioSig Technologies, Inc. was initially incorporated on February 24, 2009 under the laws of the State of Nevada and subsequently re-incorporated in the state of Delaware in 2011. The company is principally devoted to improving the quality of cardiac recordings obtained during EP studies and catheter ablation procedures. The company has not generated any revenue to date and consequently its operations are subject to all risks inherent in the establishment of a new business enterprise.
On November 7, 2018, the company formed ViralClear Pharmaceuticals, Inc. (“ViralClear”) under the laws of the State of Delaware formerly under the name of NeuroClear Technologies, Inc. for the purpose to pursue additional applications of the PURE EP™ signal processing technology outside of electrophysiology and subsequently in 2020, which was repurposed to bring a broad-spectrum anti-viral agent against the COVID-19 virus to market (see below). In 2019, the company sold
On March 30, 2020, ViralClear amended its Certificate of Incorporation to change its name to ViralClear Pharmaceuticals, Inc. from NeuroClear Technologies, Inc.
On March 24, 2020, ViralClear entered into an asset purchase agreement (the “Asset Purchase Agreement”) with Trek Therapeutics, PBC (“Trek”), a related party; entity controlled by a member of the Company’s board of directors. Pursuant to the Asset Purchase Agreement, Trek sold to ViralClear all right, title and interest of Trek and its affiliates to certain assets (the “Purchased Assets”). As consideration for the Purchased Assets, ViralClear agreed to pay Trek in upfront and milestone payments a combination of cash, shares of ViralClear’s common stock, which common stock may equal up to 10% of ViralClear’s outstanding equity, and sublicense fees in the event ViralClear sublicenses the Purchased Assets. On March 30, 2020, pursuant to the Asset Purchase Agreement, ViralClear paid $
On April 8, 2020, ViralClear entered into the Agreement with Mayo. The Agreement grants to ViralClear (i) an exclusive worldwide license, with the right to sublicense, within the field of anti-viral agents to target COVID-19 (the “Field”) to certain patent rights for the development and commercialization of products, methods, and processes for public use and benefit (the “Licensed Products”) and (ii) a non-exclusive worldwide license, with the right to sublicense, within the Field, to use the know-how of Mayo that is necessary to develop the Licensed Products. The Agreement will expire upon the later of either (a) the expiration of the licensed patent rights or (b) the 7th anniversary of the date of the first commercial sale of a Licensed Product, unless earlier terminated by Mayo for ViralClear’s failure to cure a material breach of the Agreement, ViralClear’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 Agreement by Mayo, or insolvency ViralClear.
In connection with the Agreement, ViralClear issued to Mayo
In May 2020, ViralClear sold
The unaudited condensed consolidated financial statements include the accounts of BioSig Technologies, Inc. and its majority owned subsidiary, ViralClear Pharmaceuticals, Inc. to as the “Company” or “BioSig”.
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020
(unaudited)
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, 2019 has been derived from audited financial statements.
Operating results for the three and six months ended June 30, 2020 are not necessarily indicative of results that may be expected for the year ending December 31, 2020. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2019 filed with the Company’s Form 10-K with the Securities and Exchange Commission on March 13, 2020.
COVID-19
On March 11, 2020, the World Health Organization declared a pandemic related to the rapidly spreading coronavirus (COVID-19) outbreak, which has led to a global health emergency. The full public-health impact of the ongoing pandemic is currently indeterminable and rapidly evolving, and the related health crisis has adversely affected and may continue to adversely affect the global economy, resulting in delaying to our commercialization objectives of the PURE EP systems and therapeutic candidates ViralClear is developing.
NOTE 2 – MANAGEMENT’S LIQUIDITY PLANS
The BioSig Technologies, Inc.’s primary efforts are principally devoted to improving the quality of cardiac recordings obtained during ablation of atrial fibrillation (AF) and ventricular tachycardia (VT) and ViralClear’s efforts are devoted to developing a broad-spectrum, anti-viral candidate acquired from Trek. The Company has experienced net losses and negative cash flows from operations since inception and expects these conditions to continue for the foreseeable future. Further, the Company has not generated revenues and there is no assurance that the Company will be able to generate cash flow to fund operations. In addition, there can be no assurance that the Company's ongoing research and development will be successfully completed or that any product will be approved or commercially viable.
At June 30, 2020, the Company had working capital of approximately $
At June 30, 2020, the Company had cash of approximately $
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of these unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the recoverability and useful lives of long-lived assets, the fair value of long-term operating leases, patent capitalization, fair value of acquired assets, the fair value of the Company’s stock, stock-based compensation, fair values relating to warrant and other derivative liabilities and the valuation allowance related to deferred tax assets. Actual results may differ from these estimates.
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020
(unaudited)
Acquisition of Intellectual Property
Intellectual property acquired are accounted for under the acquisition method of accounting. This method requires the recording of acquired assets, including separately identifiable intangible assets, and assumed liabilities at their acquisition date fair values. The method records any excess purchase price over the fair value of acquired net assets as goodwill.
The acquired intellectual property from the Trek acquisition was considered unproven compounds, the success of which was uncertain at the time of the acquisition. Accordingly, the fair value of the consideration paid was charged as acquired research and development to current period operations.
Fair Value of Financial Instruments
Accounting Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”) requires disclosure of the fair value of certain financial instruments. The carrying value of cash and cash equivalents, accounts payable and accrued liabilities as reflected in the balance sheets, approximate fair value because of the short-term maturity of these instruments. All other significant financial assets, financial liabilities and equity instruments of the Company are either recognized or disclosed in the financial statements together with other information relevant for making a reasonable assessment of future cash flows, interest rate risk and credit risk. Where practicable the fair values of financial assets and financial liabilities have been determined and disclosed; otherwise only available information pertinent to fair value has been disclosed.
The Company follows Accounting Standards Codification subtopic 820-10, Fair Value Measurements and Disclosures (“ASC 820-10”) and Accounting Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”), which permits entities to choose to measure many financial instruments and certain other items at fair value.
Concentrations of Credit Risk
Financial instruments and related items, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents. The Company places its cash and temporary cash investments with credit quality institutions. At times, such amounts may be in excess of the FDIC insurance limit. At June 30, 2020 and December 31,2019, deposits in excess of FDIC limits were $
Inventory
The inventory is comprised of finished goods available for sale and are stated at the lower of cost or net realizable value using the first-in, first-out method of valuation. The inventory at June 30, 2020 and December 31, 2019 were $
Prepaid Expenses and Vendor Deposits
Prepaid expenses and vendor deposits are comprised of prepaid insurance and operating expense and other prepayments.
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020
(unaudited)
Leases
The Company determines if a contractual arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, current operating lease liabilities, and noncurrent operating lease liabilities on the Company’s unaudited condensed 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.
Research and Development Costs
The Company accounts for research and development costs in accordance with the Accounting Standards Codification subtopic 730-10, Research and Development (“ASC 730-10”). Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and developments costs are expensed when the contracted work has been performed or as milestone results have been achieved. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred. The Company incurred research and development expenses of $
Net Income (loss) Per Common Share
The Company computes earnings (loss) per share under Accounting Standards Codification subtopic 260-10, Earnings Per Share (“ASC 260-10”). Net loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share, if presented, would include the dilution that would occur upon the exercise or conversion of all potentially dilutive securities into common stock using the “treasury stock” and/or “if converted” methods as applicable.
The computation of basic and diluted loss per share as of June 30, 2020 and 2019 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.
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020
(unaudited)
June 30, 2020 |
June 30, 2019 |
|||||||
Series C convertible preferred stock |
||||||||
Options to purchase common stock |
||||||||
Warrants to purchase common stock |
||||||||
Totals |
Stock Based Compensation
The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award as measured on the grant date. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period.
As of June 30, 2020, BioSig Technologies, Inc. had options to purchase
As of December 31, 2019, there were BioSig Technologies, Inc. options to purchase
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
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020
(unaudited)
Impairment of Long-lived Assets
Non-controlling Interest
The Company’s non-controlling interest represents the non-controlling shareholders ownership interests related to the Company’s subsidiary, ViralClear Pharmaceuticals, Inc. The Company reports its non-controlling interest in subsidiaries as a separate component of equity in the consolidated balance sheets and reports both net loss attributable to the non-controlling interest and net loss attributable to the Company’s common shareholders on the face of the consolidated statements of operations. The Company’s equity interest in ViralClear is
Segment Information
Recent Accounting Pronouncements
There were various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company’s financial position, results of operations or cash flows.
NOTE 4 – PROPERTY AND EQUIPMENT
June 30, 2020 |
December 31, 2019 |
|||||||
Computer equipment |
$ | $ | ||||||
Furniture and fixtures |
||||||||
Manufacturing equipment |
||||||||
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
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020
(unaudited)
Depreciation expense was $
NOTE 5 – RIGHT TO USE ASSETS AND LEASE LIABILITY
Operating leases:
The Company has several leases and at lease commencement dates, the Company estimated the lease liability and the right of use assets at present value using the Company’s estimated incremental borrowing rate of
June 30, 2020 |
December 31, 2019 |
|||||||
Right to use assets, net |
||||||||
Less accumulated depreciation |
( |
) |
( |
) |
||||
Right to use assets, net |
$ | $ |
During the three and six months ended June 30, 2020, the Company recorded $
June 30, 2020 |
December 31, 2019 |
|||||||
Total lease liability |
||||||||
Less: short term portion |
( |
) |
( |
) |
||||
Long term portion |
$ | $ |
Year ended December 31, 2020 |
$ | |||
Year ended December 31, 2021 |
||||
Total |
||||
Less: Present value discount |
( |
) |
||
Lease liability |
$ |
June 30, 2020 |
June 30, 2019 |
|||||||
Operating lease expense |
$ | $ | ||||||
Short-term lease expense |
||||||||
Variable lease expense |
||||||||
Total |
$ | $ |
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020
(unaudited)
Lease expense for the six months ended June 30, 2020 and 2019 was comprised of the following:
June 30, 2020 |
June 30, 2019 |
|||||||
Operating lease expense |
$ | $ | ||||||
Short-term lease expense |
||||||||
Variable lease expense |
||||||||
Total |
$ | $ |
NOTE 6 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES
June 30, 2020 |
December 31, 2019 |
|||||||
Accrued accounting and legal |
$ | $ | ||||||
Accrued reimbursements and travel |
||||||||
Accrued consulting |
||||||||
Accrued research and development expenses |
||||||||
Accrued product purchases |
||||||||
Accrued marketing |
||||||||
Accrued office and other |
||||||||
Accrued payroll |
||||||||
Accrued settlement related to arbitration |
||||||||
$ | $ |
NOTE 7 – SERIES C 9% CONVERTIBLE PREFERRED STOCK
Series C 9% Convertible Preferred Stock
On January 9, 2013, the Board of Directors authorized the issuance of up to
The Series C Preferred Stock is entitled to preference over holders of junior stock upon liquidation in the amount of $1,000 plus any accrued and unpaid dividends; entitled to dividends as a preference to holders of junior stock at a rate of
As a result of an amendment to the conversion price of our Series C Preferred Stock, the conversion price effective as of June 30, 2020 and December 31, 2019 was $
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020
(unaudited)
In January 2020, the Company issued
In April 2020, the Company issued 41,100 shares of its common stock in exchange for 100 shares of the Company’s Series C Preferred Stock and accrued dividends.
NOTE 8 – STOCKHOLDER EQUITY
Preferred stock
The Company is authorized to issue
Series F Preferred Stock
On July 14, 2018, the Board of Directors of BioSig authorized the issuance of up to
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020
(unaudited)
Dividends and Distributions
Subject to the prior and superior rights of the holders of any shares of any class or series of stock of the Company ranking prior and superior to the shares of Series F Preferred Stock with respect to dividends, the holders of shares of Series F Preferred Stock, in preference to the holders of shares of any class or series of stock of the Company ranking junior to the Series F Preferred Stock with respect to dividends, shall be entitled to receive, when, as and if declared by the Board of Directors an amount per share equal to the greater of (i) $0.001 and (ii) the sum of (A) the Adjustment Number (as defined in the Certificate of Designations) times the aggregate per share amount of all cash dividends, plus (B) the Adjustment Number times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions other than a dividend payable in shares of common stock of the Corporation, commencing on the first dividend payment date after the first issuance of a share (or fraction thereof) of Series F Preferred Stock. Dividends shall begin to accrue and be cumulative on outstanding shares of Series F Preferred Stock from the Payment Date (as defined in the Certificate of Designations) as set forth in the Certificate of Designations.
Voting Rights
Each share of Series F Preferred Stock shall entitle the holder thereof to a number of votes equal to the Adjustment Number (as defined in the Certificate of Designations) on all matters submitted to a vote of the stockholders of the Company, and shall vote collectively with the holders of common stock of the Company as one class on all matters submitted to a vote of stockholders of the Company, except as provided by law or expressly set forth in the Certificate of Designations
Redemption Rights
The shares of Series F Preferred Stock shall not be redeemable.
Fractional Shares
Series F Preferred Stock may be issued in fractions of a share which shall entitle the holder, in proportion to such holder’s fractional shares, to exercise voting rights, receive dividends, participate in distributions and to have the benefit of all other rights of holders of Series F Preferred Stock.
Common stock
During the six months ended June 30, 2020, the Company issued an aggregate of
On February 25, 2020, the Company entered into securities purchase agreements with investors pursuant to which the Company issued
On June 24, 2020, the Company entered into securities purchase agreements with investors pursuant to which the Company issued
During the six months ended June 30, 2020, the Company issued
During the six months ended June 30, 2020, the Company issued
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020
(unaudited)
During the six months ended June 30, 2020, the Company issued
During the six months ended June 30, 2020, the Company issued
During the six months ended June 30, 2020, the Company issued
NOTE 9 – OPTIONS, RESTRICTED STOCK UNITS AND WARRANTS
BioSig Technologies, Inc.
2012 Equity Incentive Plan
On October 19, 2012, the Board of Directors of BioSig Technologies, Inc. approved the 2012 Equity Incentive Plan (“the “Plan”) and terminated the Long-Term Incentive Plan (the “2011 Plan”). The Plan provides for the issuance of options, stock appreciation rights, restricted stock and restricted stock units to purchase up to
However,
Additionally, the vesting period of the grants under the Plan will be determined by the administrator, in its sole discretion, with an expiration period of not more than
Options
Option valuation models require the input of highly subjective assumptions. The fair value of stock-based payment awards was estimated using the Black-Scholes option model with a volatility figure derived from an index of historical stock prices of comparable entities until sufficient data exists to estimate the volatility using the Company’s own historical stock prices. Management determined this assumption to be a more accurate indicator of value. The Company accounts for the expected life of options based on the contractual life of options for non-employees.
For employees, the Company accounts for the expected life of options in accordance with the “simplified” method, which is used for “plain-vanilla” options, as defined in the accounting standards codification. The risk-free interest rate was determined from the implied yields of U.S. Treasury zero-coupon bonds with a remaining life consistent with the expected term of the options. The fair value of stock-based payment awards during the six months ended June 30, 2020 was estimated using the Black-Scholes pricing model.
During the six months ended June 30, 2020, the Company granted an aggregate of
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020
(unaudited)
Options Outstanding |
Options Exercisable |
||||||||||||||
Weighted |
|||||||||||||||
Average |
Exercisable |
||||||||||||||
Exercise |
Number of |
Remaining Life |
Number of |
||||||||||||
Price |
Options |
In Years |
Options |
||||||||||||
$ | |||||||||||||||
Weighted-Average |
||||||||||||||||
Weighted-Average |
Remaining |
Aggregate |
||||||||||||||
Shares |
Exercise Price |
Contractual Term |
Intrinsic Value |
|||||||||||||
Outstanding at December 31, 2019 |
$ | $ | ||||||||||||||
Grants |
$ | - | ||||||||||||||
Exercised |
( |
) |
$ | |||||||||||||
Forfeited/expired |
( |
) |
$ | |||||||||||||
Outstanding at June 30, 2020 |
$ | $ | ||||||||||||||
Exercisable at June 30, 2020 |
$ | $ |
The aggregate intrinsic value in the preceding tables represents the total pretax intrinsic value, based on options with an exercise price less than the stock price of BioSig Technologies, Inc. of $
On January 10, 2020, BioSig Technologies, Inc. granted
On March 24, 2020, BioSig Technologies, Inc. granted
On March 31, 2020, BioSig Technologies, Inc. granted
On April 14, 2020, BioSig Technologies, Inc. granted an aggregate of
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020
(unaudited)
On May 20, 2020, BioSig Technologies, Inc. granted an aggregate of
The following assumptions were used in determining the fair value of options during the six months ended June 30, 2020:
Risk-free interest rate |
0.42% - 1.83 |
% |
||
Dividend yield |
% |
|||
Stock price volatility |
% |
|||
Expected life |
|
|||
Weighted average grant date fair value |
$ |
The fair value of all options vesting during the three and six months ended June 30, 2020 of $
Warrants
Exercise |
Number |
Expiration |
||||||
Price |
Outstanding |
Date |
||||||
$ | |
|||||||
$ | |
|||||||
$ | |
|||||||
$ | |
|||||||
$ | |
|||||||
On February 25, 2020, BioSig Technologies, Inc. issued warrants to purchase
Weighted-Average |
||||||||||||||||
Weighted-Average |
Remaining |
Aggregate |
||||||||||||||
Shares |
Exercise Price |
Contractual Term |
Intrinsic Value |
|||||||||||||
Outstanding at December 31, 2019 |
$ | $ | ||||||||||||||
Grants |
||||||||||||||||
Exercised |
( |
) |
$ | |||||||||||||
Expired |
( |
) |
$ | - | - | |||||||||||
Outstanding at June 30, 2020 |
$ | $ | ||||||||||||||
Vested and expected to vest at June 30, 2020 |
$ | $ | ||||||||||||||
Exercisable at June 30, 2020 |
$ | $ |
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020
(unaudited)
The aggregate intrinsic value in the preceding tables represents the total pretax intrinsic value, based on options with an exercise price less than the company’s stock price of $
Restricted Stock
Restricted shares issued as of December 31, 2019 |
||||
Granted |
||||
Vested and issued |
( |
) |
||
Vested restricted shares as of June 30, 2020 |
( |
) |
||
Unvested restricted shares as of June 30, 2020 |
On March 30, 2020, the Company granted
Stock based compensation expense related to restricted stock grants was $
ViralClear Pharmaceuticals, Inc.
2019 Long-Term Incentive Plan
On September 24, 2019, ViralClear’s Board of Directors approved the 2019 Long-Term Incentive Plan (as subsequently amended, the “ViralClear Plan”). The ViralClear Plan was approved by BioSig as ViralClear’s majority stockholder. The Plan provides for the issuance of options, stock appreciation rights, restricted stock and restricted stock units to purchase up to
However,
Additionally, the vesting period of the grants under the ViralClear Plan will be determined by the administrator, in its sole discretion, with an expiration period of not more than
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020
(unaudited)
ViralClear Options
A summary of the stock option activity and related information for the 2012 Plan for the six months ended June 30, 2020 is as follows:
Weighted-Average |
||||||||||||
Weighted-Average |
Remaining |
|||||||||||
Shares |
Exercise Price |
Contractual Term |
||||||||||
Outstanding at December 31, 2019 |
$ | |||||||||||
Grants |
$ | |||||||||||
Exercised |
- | |||||||||||
Forfeited/expired |
||||||||||||
Outstanding at June 30, 2020 |
$ | |||||||||||
Exercisable at June 30, 2020 |
$ |
The following table presents information related to stock options at June 30, 2020:
Options Outstanding |
Options Exercisable |
||||||||||||||
Weighted |
|||||||||||||||
Average |
Exercisable |
||||||||||||||
Exercise |
Number of |
Remaining Life |
Number of |
||||||||||||
Price |
Options |
In Years |
Options |
||||||||||||
$ | |||||||||||||||
The fair value of the stock-based payment awards was estimated using the Black-Scholes option model with a volatility figure derived from an index of historical stock prices of comparable entities with the market value of stock price based on recent sales. The Company accounts for the expected life of options in accordance with the “simplified” method, which is used for “plain-vanilla” options, as defined in the accounting standards codification. The risk-free interest rate was determined from the implied yields of U.S. Treasury zero-coupon bonds with a remaining life consistent with the expected term of the options.
On April 21, 2020, ViralClear granted
On April 29, 2020, ViralClear granted an aggregate of
On May 5, 2020, ViralClear granted
On June 2, 2020, ViralClear granted
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020
(unaudited)
The following assumptions were used in determining the change in fair value of the ViralClear options for the six months ended June 30, 2020:
Risk-free interest rate |
0.36% to 0.52 |
% |
||
Dividend yield |
% |
|||
Stock price volatility |
% |
|||
Expected life |
|
|||
Weighted average grant date fair value |
$ |
The fair value of all options vesting during the three and six months ended June 30, 2020 of $
Warrants (ViralClear)
The following table presents information related to warrants (ViralClear) at June 30, 2020:
Exercise |
Number |
Expiration |
||||||
Price |
Outstanding |
Date |
||||||
$ | |
|||||||
|
||||||||
On May 20, 2020, ViralClear issued warrants to purchase
Restricted stock units (ViralClear)
On March 25, 2020, the Company granted an aggregate of
On March 30, 2020, the Company granted an aggregate of
The following table summarizes the restricted stock activity for the six months ended June 30, 2020:
Restricted shares issued as of December 31, 2019 |
||||
Granted |
||||
Vested |
||||
Vested restricted shares as of June 30, 2020 |
||||
Unvested restricted shares as of June 30, 2020 |
Stock based compensation expense related to restricted stock unit grants of ViralClear was $
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020
(unaudited)
NOTE 10 – NON-CONTROLLING INTEREST
On November 7, 2018, the Company formed ViralClear Pharmaceuticals, Inc., a Delaware Corporation, formerly known as NeuroClear Technologies, Inc. for the purpose to pursue additional applications of the PURE EP™ signal processing technology outside of electrophysiology and subsequently in 2020, which was repurposed to bring a broad-spectrum anti-viral agent against the COVID-19 virus to market (see below).
In 2019, ViralClear sold
On March 24, 2020, ViralClear entered into an asset purchase agreement (the “Asset Purchase Agreement”) with Trek Therapeutics, PBC (“Trek”), a related party; entity controlled by a member of the Company’s board of directors. Pursuant to the Asset Purchase Agreement, Trek sold to ViralClear all right, title and interest of Trek and its affiliates to certain assets (the “Purchased Assets”). As consideration for the Purchased Assets, ViralClear agreed to pay Trek in upfront and milestone payments a combination of cash, shares of ViralClear’s common stock, which common stock may equal up to 10% of ViralClear’s outstanding equity, and sublicense fees in the event ViralClear sublicenses the Purchased Assets. On March 30, 2020, pursuant to the Asset Purchase Agreement, ViralClear paid $
In connection with the asset purchase agreement with Trek Therapeutics, PBC, ViralClear is obligated to pay to Trek upon the receipt of United States Food and Drug Administration (“FDA”) granting ViralClear approval to manufacture and market COVID-19 antiviral containing compounds, as defined, on a commercial basis in the United States a sum of $500,000 and 2.5% of the issued and outstanding shares of ViralClear’s common stock at the occurrence of the milestone event.
In addition, in the event of sublicensing, sale, transfer, assignment or similar transaction, ViralClear is obligated to pay to Trek 10% of the consideration received.
The common stock issued, and cash paid was accounted for as acquired research and development.
On April 8, 2020, ViralClear entered into a know-how license agreement (the “Agreement”) with Mayo Foundation for Medical Education and Research (“Mayo”). In connection with the Agreement, ViralClear issued to Mayo
On May 20, 2020, ViralClear entered into securities purchase agreements with investors pursuant to which the Company issued
As of June 30, 2020, the Company had a majority interest in ViralClear of
A reconciliation of the ViralClear Pharmaceuticals, Inc. non-controlling loss attributable to the Company:
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020
(unaudited)
Net loss attributable to the non-controlling interest for the three months ended June 30, 2020:
Net loss |
$ | ( |
) |
|
Average Non-controlling interest percentage of profit/losses |
% |
|||
Net loss attributable to the non-controlling interest |
$ | ( |
) |
Net loss attributable to the non-controlling interest for the six months ended June 30, 2020:
Net loss |
$ | ( |
) |
|
Average Non-controlling interest percentage of profit/losses |
% |
|||
Net loss attributable to the non-controlling interest |
$ | ( |
) |
ViralClear was a wholly owned subsidiary of the Company until August 2019.
Balance, December 31, 2019 |
$ | |||
Allocation of equity to non-controlling interest due to equity-based compensation issued |
||||
Allocation of equity to non-controlling interest due to sale of common stock |
||||
Allocation of equity to non-controlling interest due to issuance of equity to acquire Trek and research and development |
||||
Net loss attributable to non-controlling interest |
( |
) |
||
Balance, June 30, 2020 |