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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

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

 

For the quarterly period ended March 31, 2024

 

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: 001-38659

 

BIOSIG TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

 

Delaware   26-4333375

(State or other jurisdiction of incorporation

or organization)

 

(IRS Employer

Identification No.)

     

55 Greens Farms Road, 1st Floor

Westport, CT

  06880
(Address of principal executive office)   (Zip Code)

(203) 409-5444

(Registrant’s telephone number, including area code)

 

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

 

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

 

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

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

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

 

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

 

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

 

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

 

As of May 17, 2024, there were 12,476,413 shares of registrant’s common stock outstanding.

 

 

 

 

 

 

TABLE OF CONTENTS

 

PART I. FINANCIAL INFORMATION    
         
  ITEM 1. Financial Statements    
         
    Condensed consolidated balance sheets as of March 31, 2024 (unaudited) and December 31, 2023   3
         
    Condensed consolidated statements of operations for the three months ended March 31, 2024 and 2023 (unaudited)   4
         
    Condensed consolidated statement of changes in deficit for the three months ended March 31, 2024 (unaudited)   5
         
    Condensed consolidated statement of changes in equity for the three months ended March 31, 2023 (unaudited)   6
         
    Condensed consolidated statements of cash flows for the three months ended March 31, 2024 and 2023 (unaudited)   7
         
    Notes to condensed consolidated financial statements (unaudited)   8-28
         
  ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations   29-36
  ITEM 3. Quantitative and Qualitative Disclosures about Market Risk   36
  ITEM 4. Controls and Procedures   36
         
PART II. OTHER INFORMATION    
         
  ITEM 1. Legal Proceedings   39
  ITEM 1A. Risk Factors   40
  ITEM 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities   41
  ITEM 3. Defaults Upon Senior Securities   42
  ITEM 4. Mine Safety Disclosures   42
  ITEM 5. Other Information   42
  ITEM 6. Exhibits   42
         
  SIGNATURES   46

 

2

 

 

PART IFINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

BIOSIG TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Par Value and Share Amounts)

 

   March 31,   December 31, 
   2024   2023 
   (unaudited)     
ASSETS          
Current assets:          
Cash  $416   $190 
Accounts receivable   14    24 
Employee advance   -    5 
Net investment in leases, short term   90    103 
Prepaid expenses and vendor deposits   220    206 
Total current assets   740    528 
           
Property and equipment, net   182    509 
           
Right-to-use assets, net   335    412 
           
Other assets:          
Net investment in leases, long term   4    17 
Patents, net   284    288 
Other assets   44    44 
           
Total assets  $1,589   $1,798 
           
LIABILITIES AND EQUITY (DEFICIT)          
Current liabilities:          
Accounts payable and accrued expenses, including $20 and $30 to related parties as of March 31, 2024 and December 31, 2023, respectively  $4,821   $4,116 
Customer deposits   -    16 
Dividends payable   103    101 
Lease liability, short term   308    349 
Total current liabilities   5,232    4,582 
           
Long term liabilities:          
Note payable-related party, long term   500    - 
Lease liability, long term   60    103 
Total long term liabilities   560    103 
           
Total liabilities   5,792    4,685 
           
Commitments and contingencies (Note 12)   -    - 
           
Series C 9% Convertible Preferred Stock, $0.001 par value, $1,000 stated value, authorized 4,200 shares, 105 shares issued and outstanding; liquidation preference of $105 as of March 31, 2024 and December 31, 2023   105    105 
           
Deficit          
Preferred stock, $0.001 par value, authorized 1,000,000 shares, designated 200 shares of Series A, 600 shares of Series B, 4,200 shares of Series C, 1,400 shares of Series D, 1,000 shares of Series E, 200,000 shares of Series F Preferred Stock. 105 shares of Series C outstanding as of March 31, 2024 and December 31, 2023 (see above)   -    - 
Common stock, $0.001 par value, authorized 200,000,000 shares, 11,165,007 and 9,040,043 issued and outstanding as of March 31, 2024 and December 31, 2023, respectively   11    9 
Additional paid in capital   244,085    241,988 
Accumulated deficit   (248,417)   (245,015)
Total stockholders’ deficit attributable to BioSig Technologies, Inc.   (4,321)   (3,018)
Non controlling interest   13    26 
Total deficit   (4,308)   (2,992)
           
Total liabilities and deficit  $1,589   $1,798 

 

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 March 31, 
   2024   2023 
Revenue:          
Service  $14   $5 
           
Operating expenses:          
Research and development   238    1,062 
General and administrative   2,882    6,245 
Impairment of long term assets   253    - 
Depreciation and amortization   78    84 
Total operating expenses   3,451    7,391 
           
Loss from operations   (3,437)   (7,386)
           
Other income (expense):          
Interest income, net   (3)   4 
Other income (expense), net:   25    - 
           
Loss before income taxes   (3,415)   (7,382)
           
Income taxes (benefit)   -    - 
           
Net loss   (3,415)   (7,382)
           
Non-controlling interest   13    50 
           
Net loss attributable to BioSig Technologies, Inc.   (3,402)   (7,332)
           
Preferred stock dividend   (2)   (2)
Preferred stock deemed dividend   (133)   - 
           
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS  $(3,537)  $(7,334)
           
Net loss per common share, basic and diluted  $(0.36)  $(1.19)
           
Weighted average number of common shares outstanding, basic and diluted   9,856,261    6,186,666 

 

 

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 MONTHS ENDED MARCH 31, 2024

(In Thousands, Except Par Value and Share Amounts)

 

           Additional             
   Common stock   Paid in   Accumulated   Non-controlling     
   Shares   Amount   Capital   Deficit   Interest   Total 
Balance, December 31, 2023   9,040,043   $9   $241,988   $(245,015)  $26   $(2,992)
Common stock issued for services   1,862,744    2    1,249    -    -    1,251 
Sale of common stock and warrants   260,720    -*     1,040    -    -    1,040 
Stock based compensation   1,500    -*     (190)   -    -    (190)
Accretion of deemed preferred stock dividend   -    -    133    -    -    133 
Deemed preferred stock dividend   -    -    (133)   -    -    (133)
Preferred stock dividend   -    -    (2)   -    -    (2)
Net loss   -    -    -    (3,402)   (13)   (3,415)
Balance, March 31, 2024 (unaudited)   11,165,007   $11   $244,085   $(248,417)  $13   $(4,308)

 

*- less than $1

 

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 MONTHS ENDED MARCH 31, 2023

(In Thousands, Except Par Value and Share Amounts)

 

           Additional             
   Common stock   Paid in   Accumulated   Non-controlling     
   Shares   Amount   Capital   Deficit   Interest   Total 
Balance, December 31, 2022   5,505,068   $5   $216,282   $(215,974)  $(21)  $292 
Common stock issued for services   116,750    -*     1,097    -    -    1,097 
Common stock issued in settlement of accounts payable   8,800    -*     105    -    -    105 
Sale of common stock and warrants, net transactional costs of $482   850,030    1    6,747    -    -    6,748 
Stock based compensation   249,125    -*    1,047    -    5    1,052 
Preferred stock dividend   -    -    (2)   -    -    (2)
Net loss   -    -    -    (7,332)   (50)   (7,382)
Balance, March 31, 2023 (unaudited)   6,729,773   $6   $225,276   $(223,306)  $(66)  $1,910 

 

*- less than $1

 

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)

 

       
   Three months ended March 31, 
   2024   2023 
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net loss  $(3,415)  $(7,382)
Adjustments to reconcile net loss to cash used in operating activities:          
Depreciation and amortization   78    84 
Non-cash lease expense   77    71 
Impairment of long-term assets   253    - 
Equity based compensation   1,061    2,149 
Changes in operating assets and liabilities:          
Accounts receivable   10    (8)
Lease receivables   25    25 
Employee advances   5    - 
Inventory   -    (9)
Prepaid expenses and other   (13)   (151)
Deferred revenue   -    (5)
Customer deposits   (16)   8 
Accounts payable and accrued expenses   705    (355)
Operating lease liabilities   (84)   (75)
Net cash used in operating activities   (1,314)   (5,648)
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
Purchase of property and equipment   -    (45)
Net cash used in investing activity   -    (45)
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Proceeds from issuance of related party note payable   500    - 
Proceeds from sale of common stock and warrants, net of issuance costs   1,040    6,748 
Net cash provided by financing activities   1,540    6,748 
           
Net increase in cash and cash equivalents   226    1,055 
           
Cash, beginning of the period   190    357 
Cash, end of the period  $416   $1,412 
           
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 debt  $-   $105 
Dividend payable on preferred stock charged to additional paid in capital  $2   $2 
Series C convertible preferred stock deemed dividend  $133   $- 

 

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

MARCH 31, 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 has 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 1,965,240 shares of its common stock to investors for net proceeds of $15.6 million and issued an aggregate of 894,869 shares of its common stock in connection with acquiring assets and with know-how agreements. As of March 31, 2024 and December 31, 2023, the Company had a majority interest in ViralClear of 69.08%.

 

On July 2, 2020, the Company formed an additional subsidiary, NeuroClear Technologies, Inc., a Delaware corporation, which was renamed to BioSig AI Sciences, Inc. (“BioSig AI”) on May 31, 2023. The subsidiary was established to pursue clinical needs of cardiac and neurological disorders through recordings and analyses of action potentials. BioSig AI aims to contribute to the advancements of AI-based diagnoses and therapies. At March 31, 2024 and December 31, 2023, the Company had a majority interest in BioSig AI of 84.5% (see Notes 9 and 11).

 

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 85,244 shares of common stock with a fair value of $72,065 as severance.

 

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).

 

8

 

 

BIOSIG TECHNOLOGIES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 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 $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.

 

The Company appealed the foregoing determinations. The requested hearing before the Hearings Panel was held on May 7, 2024 and results are pending as of May 17, 2024. The Company believes we have met all requirements except for the shareholder equity requirement which it expects to meet shortly. The delisting results are pending the Company meeting requirements.

 

Delisting from Nasdaq Stock Market could negatively impact the Company’s ability to raise additional financing to fund future operations.

 

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 months ended March 31, 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 March 31, 2024, the Company had cash of $0.4 million and working capital deficit of $4.5 million. During the three months ended March 31, 2024, the Company used net cash in operating activities of $1.3 million. These balances create a liquidity concern, which in turn raises substantial doubt about the Company’s ability to continue as a going concern.

 

The Company’s primary source of operating funds since inception has been cash proceeds from sale of 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

MARCH 31, 2024

(unaudited)

 

Accordingly, the accompanying 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 3SUMMARY 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 1-for-10 reverse stock split of its issued and outstanding shares of common stock. The Company accounted for the reverse stock split on a retrospective basis pursuant to ASC 260, Earnings Per Share. All authorized, issued and outstanding common stock, common stock warrants, stock option awards, exercise prices and per share data have been adjusted in these consolidated financial statements, on a retroactive basis, to reflect the reverse stock split for all periods presented. Authorized common and preferred stock was not adjusted because of the reverse stock split.

 

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

MARCH 31, 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 ratably over the contractual service period. Customers typically purchase these services with the initial sale of the PURE EP Platform and do not have the right to terminate their contracts unless we fail to perform material obligations.

 

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

 

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

 

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

 

In 2022, the Company entered two leases for our PURE EP Platform at a rate of $4,333 per month each. The term of the leases is for 30 months with an option provided to extend for an additional one year. The leases also have an option to purchase at the end of the lease at the fair market value. The Company accounts for the leases in accordance with ASC 842 and ASC 606.

 

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 2% per annum. (See Note 6 – Lease Receivables).

 

A reconciliation of contract liabilities with customers for the three months ended March 31, 2024 and 2023, are presented below:

 

Three months ended March 31,2024:

 

  

Balance at

December 31, 2023

(000’s)

  

Consideration Received

(000’s)

  

Recognized in Revenue

(000’s)

  

Balance at

March 31,

2024

(000’s)

 
Service revenue  $-   $14   $(14)  $- 

 

11

 

 

BIOSIG TECHNOLOGIES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024

(unaudited)

 

Three months ended March 31,2023:

 

  

Balance at

December 31, 2022

(000’s)

  

Consideration Received

(000’s)

  

Recognized in Revenue

(000’s)

  

Balance at

March 31,

2023

(000’s)

 
Service revenue  $5   $-   $(5)  $- 

 

The Company had one customer which accounts for 93% and 100% of our revenue in the three months ended March 31, 2024 and 2023, respectively.

 

At March 31, 2024, the Company had three customers representing 33.6%, 30.8% and 35.6% of the outstanding accounts receivable and had three customers which accounts for approximately 62.3%, 19.6% and 18.0% of our outstanding accounts receivable at December 31, 2023.

 

The Company utilized one contract manufacturer for the manufacture and supply of the PURE EP Platform for the three months ended March 31, 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 $0 at March 31, 2024 and December 31, 2023. The Company believes that its reserve is adequate, however results may differ in future periods. For the three months ended March 31, 2024 and 2023, bad debt expense totaled $0.

 

Concentrations of Credit Risk

 

Financial instruments and related items, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents. The Company places its cash and temporary cash investments with credit quality institutions. At times, such amounts may be in excess of the FDIC insurance limit. At March 31, 2024 and December 31, 2023, deposits in excess of FDIC limits were $0.2 million and nil, respectively.

 

Fair Value of Financial Instruments

 

Accounting Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”) requires disclosure of the fair value of certain financial instruments. The carrying value of cash, 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

MARCH 31, 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 3 to 5 years. When retired or otherwise disposed, the related carrying value and accumulated depreciation are removed from the respective accounts and the net difference less any amount realized from disposition is reflected in earnings.

 

Other Assets:

 

Other assets are comprised of the following:

 

  

March 31,

2024

(000’s)

  

December 31,

2023

(000’s)

 
Security deposits   43    43 
Trademarks   1    1 
Total other assets  $44   $44 

 

13

 

 

BIOSIG TECHNOLOGIES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 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 months ended March 31, 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.

 

The Company did not recognize and record any impairments of long-lived assets used in operations during the three months ended March 31, 2023.

 

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 $0.2 million and $1.1 million for the three months ended March 31, 2024 and 2023, respectively.

 

Net Income (loss) Per Common Share

 

The Company computes earnings (loss) per share under Accounting Standards Codification subtopic 260-10, Earnings Per Share (“ASC 260-10”). Net loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share, if presented, would include the dilution that would occur upon the exercise or conversion of all potentially dilutive securities into common stock using the “treasury stock” and/or “if converted” methods as applicable.

 

The computation of basic and diluted loss per share as of March 31, 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.

 

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

 

  

March 31,

2024

  

March 31,

2023

 
Series C convertible preferred stock   376,170    51,499 
Options to purchase common stock   543,479    461,616 
Warrants to purchase common stock   2,878,734    886,779 
Restricted stock units to acquire common stock   605,000    43,084 
Totals   4,403,383    1,442,978 

 

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.

 

14

 

 

BIOSIG TECHNOLOGIES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 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 20 years. During the three months ended March 31, 2024 and 2023, the Company recorded amortization of $4,752 and $4,851 to current period operations, respectively.

 

Warranty

 

The Company generally warrants its products to be free from material defects and to conform to material specifications for a period of up to two (2) years. Warranty expense is estimated based primarily on historical experience and is reflected in the consolidated financial statements.

 

Segment Information

 

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision-making group, in making decisions how to allocate resources and assess performance. The information disclosed herein represents all of the material financial information related to the Company’s principal operating segments. (See Note 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 69.08% and 84.48%; and the non-controlling stockholders’ interest is 30.92% and 15.52%, respectively as of March 31, 2024 and December 31, 2023. This is reflected in the consolidated statements of changes in equity.

 

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

MARCH 31, 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.

 

There were various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company’s financial position, results of operations or cash flows.

 

NOTE 4 PROPERTY AND EQUIPMENT

 

Property and equipment as of March 31, 2024 and December 31, 2023 is summarized as follows:

 

  

March 31,

2024

(000’s)

  

December 31,

2023

(000’s)

 
Computer equipment  $531   $531 
Furniture and fixtures   109    109 
Manufacturing equipment   -    372 
Testing/Demo equipment   312    356 
Leasehold improvements   84    84 
Total   1,036    1,452 
Less accumulated depreciation   (854)   (943)
Property and equipment, net  $182   $509 

 

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

 

During the three months ended March 31, 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 $253,411 impairment charge to current operations.

 

Depreciation expenses were $73,376 and $79,468 for the three months ended March 31, 2024 and 2023, respectively.

 

NOTE 5RIGHT TO USE ASSETS AND LEASE LIABILITY

 

As of March 31, 2024 and December 31, 2023, the Company had outstanding two leases with aggregate payments of $30,544 and $29,995 per month, respectively, expiring through July 31, 2025.

 

Right to use assets is summarized below:

 

  

March 31,

2024

(000’s)

  

December 31,

2023

(000’s)

 
Right to use asset  $995   $995 
Less accumulated amortization   (660)   (583)
Right to use assets, net  $335   $412 

 

During the three months ended March 31, 2024 and 2023, the Company recorded $91,889 and $92,081 as lease expense to current period operations, respectively.

 

16

 

 

BIOSIG TECHNOLOGIES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024

(unaudited)

 

Lease liability is summarized below:

 

  

March 31,

2024

(000’s)

  

December 31,

2023

(000’s)

 
Total lease liability  $368   $452 
Less: short term portion   (308)   (349)
Long term portion  $60   $103 

 

Maturity analysis under these lease agreements are as follows (000’s):

 

      
Year ended December 31, 2024   278 
Year ended December 31, 2025   106 
Total   384 
Less: Present value discount   (16)
Lease liability  $368 

 

Lease expense for the three months ended March 31, 2024 and 2023 was comprised of the following:

 

  

March 31,

2024

(000’s)

  

March 31,

2023

(000’s)

 
Operating lease expense  $77   $71 
Short-term lease expense   7    6 
Variable lease expense   8    15 
Total  $92   $92 

 

NOTE 6LEASE RECEIVABLES

 

In 2022, the Company entered into two leases for our PURE EP Platform at a rate of $4,333 per month each. The term of the leases is for 30 months with an option provided to extend for an additional one year. The leases also have an option to purchase at the end of the lease at the fair market value.

 

The Company determined the leases meet the criteria of a sales-type lease whereby the present value of the future expected revenue (less the present value of the estimated unguaranteed residual value), cost of sales and profit and loss are recognized at the lease inception. The discount rate utilized was the contract explicit rate of 2% per annum. The present value of the unguaranteed residual assets of $4 are included in net investment in leases in the balance sheet.

 

A reconciliation of lease receivables with customers for the three months ended March 31, 2024 and 2023 are presented below:

 

Three months ended March 31, 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 at

March 31,
2024

(000’s)

 
Contract asset  $120   $-   $(30)  $-   $4   $94 
Less current portion   (103)   -    (15)   -    (2)   (90)
Noncurrent portion  $17   $-   $(15)   -   $2   $4 

 

17

 

 

BIOSIG TECHNOLOGIES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024

(unaudited)

 

Three months ended March 31, 2023:

 

  

Balance at

December 31, 2022

(000’s)

  

Recognized in Revenue

(000’s)

  

Invoiced to Customer

(000’s)

  

Interest Earned

(000’s)

  

Unguaranteed

Residual

Assets

(000’s)

  

Balance at

March 31,
2023

(000’s)

 
Contract asset  $221   $-   $(30)  $-   $4   $195 
Less current portion   (101)   -    -    -    -    (101)
Noncurrent portion  $120   $-   $(30)   -   $4   $94 

 

Future cash flows under this lease agreement are as follows (000’s):

 

     
Year ended December 31, 2024   78 
Year ended December 31, 2025   13 
Present value of unguaranteed residual assets   4 
Total   95 
Less: Present value discount   (1)
Net investment in leases  $94 

 

NOTE 7ACCOUNTS PAYABLE AND ACCRUED EXPENSES

 

Accounts payable and accrued expenses at March 31, 2024 and December 31, 2023 consist of the following:

 

  

March 31,

2024

(000’s)

  

December 31,

2023

(000’s)

 
Accrued accounting and legal  $1,608   $1,277 
Accrued reimbursements and travel   9    9 
Accrued consulting   682    804 
Accrued research and development expenses   812    802 
Accrued marketing   334    333 
Accrued office and other   704    290 
Accrued payroll   672    601 
Accounts payable and accrued expenses  $4,821   $4,116 

 

NOTE 8 – NOTE PAYABLE-RELATED PARTY

 

On March 7, 2024, the Company issued a promissory note for $500,000 to a significant shareholder/investor due March 7, 2026. The promissory note is unsecured and bears interest of twelve percent (12%) per annum, payable at maturity. The Company may prepay all or any portion of the promissory note at any time without penalty.

 

NOTE 9STOCKHOLDER EQUITY

 

Preferred stock

 

The Company is authorized to issue 1,000,000 shares of $0.001 par value preferred stock. As of March 31, 2024 and December 31, 2023, the Company has designated 200 shares of Series A preferred stock, 600 shares of Series B preferred stock, 4,200 shares of Series C Preferred Stock, 1,400 shares of Series D Preferred Stock, 1,000 shares of Series E Preferred Stock and 200,000 shares of Series F Preferred Stock. As of March 31, 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 March 31, 2024 and December 31, 2023, the Company had 105 shares of Series C Preferred stock issued and outstanding. During the three months ended March 31, 2024, the conversion price of the Series C Preferred stock was reset from $2.50 per share to $0.5302 per share. As such, the Company recorded a noncash deemed dividend of $132,931 during the three months ended March 31, 2024.

 

18

 

 

BIOSIG TECHNOLOGIES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 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 1-for-10 reverse stock split of its issued and outstanding shares of common stock. The Company accounted for the reverse stock split on a retrospective basis pursuant to ASC 260, Earnings Per Share. All authorized, issued and outstanding common stock, common stock warrants, stock option awards, exercise prices and per share data have been adjusted in these consolidated financial statements, on a retroactive basis, to reflect the reverse stock split for all periods presented. Authorized common and preferred stock was not adjusted because of the reverse stock split.

 

The Company is authorized to issue 200,000,000 shares of $0.001 par value common stock. As of March 31, 2024 and December 31, 2023, the Company had 11,165,007 and 9,040,043 shares issued and outstanding, respectively.

 

During the three months ended March 31, 2024, the Company issued an aggregate of 1,862,744 shares of common stock for services at a fair value of $1,250,595.

 

During the three months ended March 31, 2024, the Company issued an aggregate of 1,500 shares of common stock for vested restricted stock units.

 

At March 31, 2024, the Company accrued 75,000 shares of common stock due a consultant at an estimated fair value of $123,500.

 

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 260,720 shares of the Company’s 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.

 

NOTE 10OPTIONS, RESTRICTED STOCK UNITS AND WARRANTS

 

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 876,595 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 exercise price of an Incentive Stock Option should not be less than 110% of fair value of the common stock at the date of the grant for a 10% or more stockholder and 100% of fair value for a grantee who is not 10% stockholder. The fair value of the common stock is determined based on the quoted market price or in absence of such quoted market price, by the 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 ten years. At March 31, 2024, there were 259,968 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.

 

19

 

 

BIOSIG TECHNOLOGIES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024

(unaudited)

 

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 following table presents information related to stock options at March 31, 2024:

 

Options Outstanding   Options Exercisable 
        Weighted     
        Average   Exercisable 
Exercise   Number of   Remaining Life   Number of 
Price   Options   In Years   Options 
$Under 9.99    103,610    6.2    69,762 
 10.00-19.99    174,150    3.4    76,216 
 20.00-29.99    85,538    0.1    76,757 
 30.00-39.99    32,748    0.1    32,748 
 40.00-49.99    79,842    0.6    79,631 
 50.00-59.99    14,414    0.1    14,414 
 60.00-69.99    33,405    0.7    33,405 
 70.00-79.99    15,772    0.8    15,772 
 Over 79.99    4,000    0.1    4,000 
      543,479    2.5    402,705 

 

A summary of the stock option activity and related information for the Plan for the three months ended March 31, 2024 is as follows:

 

   Shares   Weighted-Average Exercise Price   Weighted-Average Remaining Contractual Term   Aggregate Intrinsic Value 
Outstanding at January 1, 2024   603,229   $25.67    6.7   $- 
Forfeited/expired   (59,750)  $20.92           
Outstanding at March 31, 2024   543,479   $26.19    2.5   $- 
Exercisable at March 31, 2024   402,705   $31.12    1.8   $- 

 

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 $0.661 as of March 31, 2024, which would have been received by the option holders had those option holders exercised their options as of that date.

 

The fair value of all options vesting during the three months ended March 31, 2024 and 2023 of $(2,682) and $257,187, respectively, was chargedto current period operations. Unrecognized compensation expense of $178,967 at March 31, 2024 which the Company expects to recognize over a weighted average period of 0.31 years.

 

20

 

 

BIOSIG TECHNOLOGIES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024

(unaudited)

 

Warrants

 

The following table summarizes information with respect to outstanding warrants to purchase common stock of BioSig Technologies, Inc. at March 31, 2024:

 

Exercise   Number   Expiration
Price   Outstanding   Date
$3.364    130,363   July 2029
$3.573    1,399,386   May 2025-November 2028
$4.066    25,000   November 2032
$4.455    113,005   June 2028
$4.466    48,980   November 2028
$4.6626    64,982   April 2029
$4.9252    56,307   March 2029
$4.929    76,997   March 2029
$5.1358    116,045   July 2028
$7.181    95,761   July 2028
$7.502    9,846   July 2028
$7.963    88,324   August 2028
$9.000    21,709   June 2027
$9.596    84,390   January 2029
$10.0992    19,118   August 2028
$10.26    51,705   September 2028
$10.4678    84,296   September 2028
$11.30    40,417   October 2028
$13.28    96,198   November 2028
$14.00    174,013   September 2025
$48.00    25,000   February 2025 to July 2026
$61.60    56,892   November 2027
      2,878,734    

 

During the three months ended March 31, 2024, the Company issued warrants to purchase an aggregate of 130,363 shares of its common stock to investors at an exercise price of $3.364 per share that are exercisable six months after the date of issuance and will expire five and one half years after following the date of issuance.

 

A summary of the warrant activity for three months ended March 31, 2024 is as follows:

 

   Shares   Weighted-Average Exercise Price   Weighted-Average Remaining Contractual Term   Aggregate Intrinsic Value 
Outstanding at January 1, 2024   2,748,371   $7.40    3.7   $1,717,104 
Issued   130,363   $3.36    5.3    - 
Outstanding at March 31, 2024   2,878,734   $7.21    3.6   $- 
                     
Vested and expected to vest at March 31, 2024   2,878,734   $7.21    3.6   $- 
Exercisable at March 31, 2024   2,683,389   $7.46    3.4   $- 

 

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 $0.661 of March 31, 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 months ended March 31, 2024 and 2023 of $0 and was charged to current period operations. Unrecognized compensation expense of $0 at March 31, 2024.

 

Restricted Stock Units

 

The following table summarizes the restricted stock activity for the three months ended March 31, 2024:

 

Restricted shares issued as of January 1, 2024   163,250 
Granted   500,000 
Vested and issued   (1,500)
Forfeited   (56,750)
Total   605,000 
Comprised of:     
Vested restricted shares as of March 31, 2024   12,500 
Unvested restricted shares as of March 31, 2024   592,500 

 


21

 

 

BIOSIG TECHNOLOGIES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024

(unaudited)

 

On March 1, 2024, the Company granted 500,000 shares of its common stock to a key consultant, vesting in substantially equal monthly installments over one year, for services rendered, valued at $352,550.

 

Stock based compensation expense related to restricted stock grants was $(80,047) and $104,704 for the three months ended March 31, 2024 and 2023, respectively. The $(80,047) for the three months ended March 31, 2024 was the result of canceled unvested restricted stock units of terminated employees. As of March 31, 2024, the stock-based compensation relating to restricted stock of $634,367 remains unamortized.

 

ViralClear Pharmaceuticals, Inc.

 

2019 Long-Term Incentive Plan

 

On September 24, 2019, ViralClear’s Board of Directors approved the 2019 Long-Term Incentive Plan (as subsequently amended, the “ViralClear Plan”). The ViralClear Plan was approved by BioSig as ViralClear’s majority stockholder. The ViralClear Plan provides for the issuance of options, stock appreciation rights, restricted stock and restricted stock units to purchase up to 4,000,000 shares of ViralClear’s common stock to officers, directors, employees and consultants of the ViralClear. Under the terms of the ViralClear Plan, ViralClear may issue Incentive Stock Options as defined by the Internal Revenue Code to employees of ViralClear only and nonqualified options. The Board of Directors of ViralClear or a committee thereof (the “Administrator”) administers the ViralClear Plan and determines the exercise price, vesting and expiration period of the grants under the ViralClear Plan.

 

However, the exercise price of an Incentive Stock Option should not be less than 110% of fair market value of the common stock at the date of the grant for a 10% or more stockholder and 100% of fair market value for a grantee who is not 10% stockholder. The fair market value of the common stock is determined based on the quoted market price or in absence of such quoted market price, by the Administrator in good faith.

 

Additionally, the vesting period of the grants under the ViralClear Plan will be determined by the Administrator, in its sole discretion, with an expiration period of not more than ten years. There are 2,650,071 shares remaining available for future issuance of awards under the terms of the ViralClear Plan.

 

ViralClear Options

 

The following table presents information related to stock options at March 31, 2024:

 

Options Outstanding   Options Exercisable 
        Weighted     
        Average   Exercisable 
Exercise   Number of   Remaining Life   Number of 
Price   Options   In Years   Options 
$5.00    25,000    0.25    25,000 

 

The fair value of all options vesting during the three months ended March 31, 2024 of $0; and $0, respectively, was charged to current period operations. Unrecognized compensation expense of $0 at March 31, 2024 will be expensed in future periods.

 

22

 

 

BIOSIG TECHNOLOGIES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024

(unaudited)

 

Warrants (ViralClear)

 

The following table presents information related to warrants (ViralClear) at March 31, 2024:

 

Exercise   Number   Expiration
Price   Outstanding   Date
$5.00    473,772   November 2027
 10.00    6,575   May 2025
      480,347    

 

Restricted stock units (ViralClear)

 

The following table summarizes the restricted stock activity for the three months ended March 31, 2024:

 

Restricted shares outstanding at January 1, 2024:   1,078,679 
Forfeited   (240,000)
Total restricted shares outstanding at March 31, 2024:   838,679 
      
Comprised of:     
Vested restricted shares as of March 31, 2024   678,679 
Unvested restricted shares as of March 31, 2024   160,000 
Total   838,679 

 

Stock based compensation expense related to restricted stock unit grants of ViralClear was $0 and $14,535 for the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, the stock-based compensation relating to restricted stock of $0 remains unamortized.

 

BioSig AI Sciences, Inc.

 

Warrants (BioSig AI)

 

The following table summarizes information with respect to outstanding warrants to purchase common stock of BioSig AI at March 31, 2024:

 

Exercise   Number   Expiration
Price   Outstanding   Date
$1.00    130,500   June-July 2028

 

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 March 31, 2024 and December 31, 2023, the Company had a majority interest in ViralClear of 69.08%.

 

On July 2, 2020, the Company formed an additional subsidiary, now known as BioSig AI Sciences, Inc., to pursue clinical needs of cardiac and neurological disorders through recordings and analyses of action potential. BioSig AI aims to contribute to the advancements of AI-based diagnoses therapies. In June and July 2023, BioSig AI sold 2,205,000 shares of its common stock for net proceeds of $1,971,277 to fund initial operations.

 

As of March 31, 2024 and December 31, 2023, the Company had a majority interest in BioSig AI of 84.5%.

 

23

 

 

BIOSIG TECHNOLOGIES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 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 March 31, 2024 (000’s):

  

ViralClear Pharmaceuticals,

Inc.

(000’s)

  

BioSig AI Sciences, Inc.

(000’s)

  

Total

(000’s)

 
Net loss  $(41)  $(3)  $(44)
Average Non-Controlling interest percentage of losses   32%   -%   30%
Net loss attributable to non-controlling interest  $(13)  $(0)  $(13)

 

Net loss attributable to the non-controlling interest for the three months ended March 31, 2023 (000’s):

 

  

ViralClear Pharmaceuticals,

Inc.

(000’s)

  

BioSig AI Sciences, Inc.

(000’s)

  

Total

(000’s)

 
Net loss  $(161)  $-   $(161)
Average Non-Controlling interest percentage of profit/losses   31%   0%   31%
Net loss attributable to non-controlling interest  $(50)  $-   $(50)

 

The following table summarizes the changes in non-controlling interest for the three months ended March 31, 2024 (000’s):

  

ViralClear Pharmaceuticals,

Inc.

(000’s)

  

BioSig AI Sciences, Inc.

(000’s)

  

Total

(000’s)

 
Balance, January 1, 2024  $(158)  $184   $26 
Net loss attributable to non-controlling interest   (13)   -    (13)
Balance, March 31, 2024  $(171)  $184   $13 

 

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 1% or 2% royalty payment on net sales of licensed products, as defined. At March 31, 2024 and December 31, 2023, accounts payable due under the contract was $4.

 

24

 

 

BIOSIG TECHNOLOGIES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024

(unaudited)

 

Patent and Know-How License Agreement EP Software Agreement

 

On November 20, 2019, the Company entered into a patent and know-how license agreement (the “EP Software Agreement”) with Mayo Foundation for Medical Education and Research (“Mayo”). The EP Software Agreement grants to the Company an exclusive worldwide license, with the right to sublicense, within the field of electrophysiology software and under certain patent rights as described in the EP Software Agreement (the “Patent Rights”), to make, have made, use, offer for sale, sell and import licensed products and a non-exclusive license to the Company to use the research and development information, materials, technical data, unpatented inventions, trade secrets, know-how and supportive information of Mayo to develop, make, have made, use, offer for sale, sell, and import licensed products. The EP Software Agreement will expire upon the later of either (a) the expiration of the Patent Rights or (b) the 10th anniversary of the date of the first commercial sale of a licensed product, unless earlier terminated by Mayo for the Company’s failure to cure a material breach of the EP Software Agreement, the Company’s or a sublicensee’s commencement of any action or proceedings against Mayo or its affiliates other than for an uncured material breach of the EP Software Agreement by Mayo, or insolvency of the Company.

 

In connection with the EP Software Agreement, the Company agreed to make earned royalty payments to Mayo in connection with the Company’s sales of the licensed products to third parties and sublicense income received by the Company and to make milestone payments of up to $625,000 in aggregate. At March 31, 2024 and December 31, 2023, accounts payable due under the contract was $0.

 

Amended and Restated Patent and Know-How License Agreement Tools Agreement

 

On November 20, 2019, the Company entered into an amended and restated patent and know-how license agreement (the “Tools Agreement”) with Mayo. The Tools Agreement contains terms of license grant substantially identical to the EP Software Agreement, although it is for different patent rights and covers the field of electrophysiology systems. In June 2021, patent rights were issued (“Valid Claim”) as defined whereby the Company paid milestone one of $75,000 during the 2021 year.

 

In connection with the Tools Agreement, the Company agreed to pay Mayo an upfront consideration of $100,000. The Company also agreed to make earned royalty payments to Mayo in connection with the Company’s sales of the licensed products to third parties and sublicense income received by the Company and to make milestone payments of up to $550,000 in aggregate. At March 31, 2024 and December 31, 2023, accounts payable due under the contract was $0.

 

ViralClear Patent and Know-How License Agreement

 

On November 20, 2019, the Company’s majority-owned subsidiary, ViralClear, entered into a patent and know-how license agreement (the “ViralClear Agreement”) with Mayo. The ViralClear Agreement contains terms of license grant substantially identical to the EP Software Agreement and the Tools Agreement, although it is for different patent rights and covers the field of stimulation and electroporation for hypotension/syncope management, renal and non-renal denervation for hypertension treatment, and for use in treatment of arrhythmias in the autonomic nervous system.

 

In connection with the ViralClear Agreement, ViralClear agreed to make earned royalty payments to Mayo in connection with ViralClear’s sales of the licensed products to third parties and sublicense income received by the Company and to make milestone payments of up to $700,000 in aggregate. In June 2021, patent rights were issued (“Valid Claim”) as defined whereby the Company paid milestone one of $75,000 during the 2021 year. At March 31, 2024 and December 31, 2023, accounts payable due under the contract was $0.

 

Trek Therapeutics, PBC

 

In the event of sublicensing, sale, transfer, assignment or similar transaction, ViralClear agreed to pay Trek 10% of the consideration received.

 

As part of the acquired assets, ViralClear received an assignment and licensing rights agreement from Trek with a third-party vendor regarding certain formulas and compounds usage. The agreement calls for milestone payments upon marketing authorization (as amended and defined with respect of product in a particular jurisdiction in the territory, the receipt of all approvals from the relevant regulatory authority necessary to market and sell such product in any such jurisdiction, excluding any pricing approval or reimbursement authorization) in any first and second country of $10 million and $5 million, respectively, in addition to 6% royalty payments. At March 31, 2024 and December 31, 2023, accounts payable due under the contract was $0.

 

25

 

 

BIOSIG TECHNOLOGIES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 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 $30,000. At March 31, 2024 December 31, 2023, accounts payable due under the contract was $90,000.

 

Defined Contribution Plan

 

Effective January 1, 2019, the Company established a qualified defined contribution plan (the “401(k) Plan”) pursuant to Section 401(k) of the Code, whereby all eligible employees may participate. Participants may elect to defer a percentage of their annual pretax compensation to the 401(k) plan, subject to defined limitations. The Company is required to make contributions to the 401(k) Plan equal to 3 percent of each participant’s eligible compensation, subject to limitations under the Code. For the three months ended March 31, 2024 and 2023, the Company charged operations $21,694 and $65,919, respectively, for contributions under the 401(k) Plan.

 

Purchase commitments.

 

As of March 31, 2024, the Company had aggregate purchase commitments of approximately $1,759,385 for future services or products, some of which are subject to modification or cancellations.

 

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 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, 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 $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 at the end of the restricted period under the terms of a restricted stock award agreement, and is seeking $144,000 in damages and compensation for damages reasonably believed to exceed $50,000. The Company’s intent is to contest the allegations vigorously and, as of the date of this report, is unable to provide an evaluation of the outcome of the litigation within the probate or remote range or to provide an estimate of the amount of or a range of potential loss that might be incurred by the Company.

 

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.

 

26

 

 

BIOSIG TECHNOLOGIES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 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), NeuroClear Technologies, Inc. and ViralClear Pharmaceuticals, Inc.

 

Information concerning the operations of the Company’s reportable segments is as follows:

  

Three Months Ended

March 31,
2024

(000’s)

  

Three Months Ended

March 31,
2023

(000’s)

 
Revenues (from external customers)          
BioSig  $14   $5 
ViralClear   -    - 
BioSig AI Sciences   -    - 
Revenues  $14   $5 

 

  

Three Months

Ended

March 31,
2024

(000’s)

  

Three Months

Ended

March 31,
2023

(000’s)

 
Operating Expenses:          
BioSig  $3,407   $7,230 
ViralClear   41    161 
BioSig AI Sciences   3    - 
Operating Expenses  $3,451   $7,391 

 

  

Three Months Ended

March 31,
2024

(000’s)

  

Three Months Ended

March 31,
2023

(000’s)

 
Loss from Operations          
BioSig  $(3,391)  $(7,225)
ViralClear   (41)   (161)
BioSig AI Sciences   (3)   - 
Loss from Operations  $(3,437)  $(7,386)

 

27

 

 

BIOSIG TECHNOLOGIES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024

(unaudited)

 

  

March 31,
2024

(000’s)

  

December 31,
2023

(000’s)

 
Total Assets          
BioSig  $821   $485 
ViralClear   (542)   - 
BioSig AI Sciences   1,310    1,313 
Total Assets  $1,589   $1,798 

 

NOTE 14 RELATED PARTY TRANSACTIONS

 

Accounts payable and accrued expenses include due to related parties comprised primarily director fees and travel reimbursements. Due to related parties as of March 31, 2024 and December 31, 2023 was $20,000 and $30,000, respectively.

 

On March 1, 2024, the Company issued 500,000 shares of common stock to Frederick D Hrkac, Chief Executive Officer and Chairman of the Board of Directors in exchange for consulting services with a fair value of $352,550, pursuant to a consulting agreement dated March 1, 2024.

 

On March 7, 2024, the company issued a promissory note to a significant shareholder for $500,000 (See Note 8.)

 

NOTE 15 SUBSEQUENT EVENTS

 

On April 1, 2024, the Company granted 200,000 restricted stock units for shares of its common stock to employees, vesting in substantially equal monthly installments over one year.

 

On April 1, 2024, the Company issued 41,667 shares of its common stock for vested restricted stock units.

 

On April 16, 2024, the Company issued 278,000 shares of its common stock to consultants for services rendered valued at $419,780.

 

On May 1, 2024, the Company granted 200,000 restricted stock units for shares of its common stock to employees of which 150,000 shares were fully vested at the time of grant and 50,000 shares vest monthly over one year in substantially equal monthly installments.

 

On May 1, 2024, the Company issued 58,333 shares of its common stock for vested restricted stock units.

 

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).

 

28

 

 

ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

This Managements Discussion and Analysis of Financial Condition and Results of Operations includes a number of forward-looking statements that reflect Managements 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,” “estimateand 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).

 

Our owned patent portfolio now includes 36 (issued/allowed) issued utility patents (24 utility patents where BioSig is at least one of the applicants). Twenty five 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 (25 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.

 

29

 

 

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.

 

The Company appealed the foregoing determinations. The requested hearing before the Hearings Panel was held on May 7, 2024 and results are pending as of May 17, 2024.

 

On May 6, 2024, the Company received a letter from the Staff stating that the Company has regained compliance with the bid price requirements in Listing Rule 5550(a)(2) because the bid price of the common stock closed at or above $1.00 per share for a period of 20 consecutive business days, from April 8, 2024 to May 3, 2024.

 

Delisting from Nasdaq Stock Market could negatively impact the Company’s ability to raise additional financing to fund future operations.

 

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 8).

 

Lack of funding, workforce reductions, resignations 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.

 

30

 

 

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, will continue to serve as a director and acting chief financial officer.

 

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.

 

Currently, the Company has 8 employees and 4 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 (000s)

 

We anticipate that our results of operations will fluctuate for the foreseeable future due to several factors, such as the progress of our research and development and commercialization efforts, the timing and outcome of future regulatory submissions and uncertainty around the current pandemic. Due to these uncertainties, accurate predictions of future operations are difficult or impossible to make.

 

Three Months Ended March 31, 2024 Compared to Three Months Ended March 31, 2023 (000s)

 

Revenues and Cost of Goods Sold. Revenue for the three months ended March 31, 2024 was $14, comprised of recognized service revenue, as compared to $5, comprised of recognized service revenue for the three months ended March 31, 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 March 31, 2024 were $238, a decrease of $824, or 77.6%, from $1,062 for the three months ended March 31, 2023. The decrease is primarily due to decreases in payroll, consulting, Data/AI development and research and clinical studies and design work to $213 for the three months ended March 31, 2024 as compared to $1,001 for the three months ended March 31, 2023 primarily in the BioSig Technologies segment, a decrease of $788 or 78.7%.

 

31

 

 

Research and development expenses were comprised of the following:

 

Three months ended:

 

  

March 31,

2024

  

March 31,

2023

 
Salaries and equity compensation  $173   $798 
Consulting expenses   -    7 
Research and clinical studies and design work   40    159 
Data/AI development   -    37 
Regulatory   2    12 
Travel, supplies, other   23    49 
Total  $238   $1,062 

 

Stock based compensation for research and development personnel was $(58) and $90 for the three months ended March 31, 2024 and 2023, respectively.

 

General and Administrative Expenses. General and administrative expenses for the three months ended March 31, 2024 were $2882, a decrease of $3,363 or 53.9%, from $6,245 incurred in the three months ended March 31, 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 decreased to $541 in the current period from $2,086 for the three months ended March 31, 2023, a decrease of $1,545, or 74.1%. The decrease was primarily due to reduced staff in commercialization, sales and general and administration in the BioSig Technologies segment. We incurred $1,119 in stock-based compensation in connection with the vesting of stock and stock options issued to board members, officers, employees and consultants for the three months ended March 31, 2024 as compared to $2,044 in stock-based compensation for the same period in 2023.

 

Professional services for the three months ended March 31, 2024 totaled $262, a decrease of $160, or 37.9%, over the $422 recognized for the three months ended March 31, 2023. Of professional services, legal fees totaled $158 for the three months ended March 31, 2024; a decrease of $109, or 40.8%, from $267 incurred for the three months ended March 31, 2023. The decrease in legal fees are primarily due to lower costs incurred in 2024 for contract work and patent filings for the BioSig Technologies segment as compared to the three months ended March 31, 2023. Accounting fees incurred in the three months ended March 31, 2024 amounted to $49, a decrease of $27, or 35.5%, from $76 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 three months ended March 31, 2024 were $225 as compared to $945 incurred for the three months ended March 31, 2023, a decrease of $720, or 76.2%. The decrease primarily related to a reduction in investor relations, marketing and consulting during the three months ended March 31, 2024 as compared to the same period, last year.

 

Travel, meals and entertainment costs for the three months ended March 31, 2024 were $29, a decrease of $170, or 85.4%, from $199 incurred in the three months ended March 31, 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 March 31, 2024 and 2023 both totaled $92.

 

Impairment of Long Term Assets. During the three months ended March 31, 2024, the Company r