UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
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☒
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended March 31, 2018
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☐
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TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
Commission file number: 000-55473
BIOSIG TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware
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26-4333375
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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12424 Wilshire Blvd, Suite 745
Los Angeles, CA 90025
(Address of principal executive offices) (zip code)
(512) 329-2643
(Registrant’s telephone number, including area code)
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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post 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
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☐
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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Smaller reporting company
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☒
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Emerging growth company
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☒
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of May 4, 2018, there were 34,619,071 shares of registrant’s common stock outstanding.
PART I.
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FINANCIAL INFORMATION
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ITEM 1.
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3
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4
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5
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6
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7-18
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ITEM 2.
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19-24
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ITEM 3.
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24
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ITEM 4.
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25
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PART II.
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OTHER INFORMATION
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ITEM 1.
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26
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ITEM 1A.
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26
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ITEM 2.
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26
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ITEM 3.
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26
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ITEM 4.
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26
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ITEM 5.
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26
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ITEM 6.
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27
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28
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PART 1 – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BIOSIG TECHNOLOGIES, INC.
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March 31,
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December 31,
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2018
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|
2017
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(unaudited)
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ASSETS
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Current assets:
|
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|
|
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Cash
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$
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1,035,100
|
|
|
$
|
1,547,579
|
|
Prepaid expenses
|
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119,111
|
|
|
|
116,938
|
|
Total current assets
|
|
|
1,154,211
|
|
|
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1,664,517
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|
|
|
|
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Property and equipment, net
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19,457
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18,716
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Other assets:
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Deposits
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22,477
|
|
|
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17,084
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|
|
|
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Total assets
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$
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1,196,145
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$
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1,700,317
|
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|
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LIABILITIES AND STOCKHOLDERS’ DEFICIT
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Current liabilities:
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Accounts payable and accrued expenses, including $7,236 and $27,375 to related parties as of March 31, 2018 and December 31, 2017, respectively
|
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$
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338,811
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|
$
|
473,098
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Dividends payable
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482,636
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447,901
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Warrant liability
|
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|
-
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|
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2,358,240
|
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Derivative liability
|
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|
-
|
|
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685,922
|
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Total current liabilities
|
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821,447
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3,965,161
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Series C Preferred Stock, 965 and 985 shares issued and outstanding; liquidation preference of $965,000 and $985,000 as of March 31, 2018 and December 31, 2017, respectively
|
|
|
965,000
|
|
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|
985,000
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|
|
|
|
|
|
|
|
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Stockholders’ deficit
|
|
|
|
|
|
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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 Preferred Stock
|
|
|
|
|
|
|
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Series D Preferred Stock, $0.001 par value, 687 and 1,334 shares issued and outstanding; liquidation preference of $1,030,500 and $2,001,000 as of March 31, 2018 and December 31, 2017, respectively
|
|
|
1
|
|
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|
1
|
|
Series E Preferred Stock, $0.001 par value, 1,000 and 0 shares issued and outstanding; liquidation preference of $1,500,000 and $0 as of March 31, 2018 and December 31, 2017, respectively
|
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|
1
|
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-
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Common stock, $0.001 par value, authorized 200,000,000 shares, 30,497,707 and 29,321,204 issued and outstanding as of March 31, 2018 and December 31, 2017, respectively
|
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30,498
|
|
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29,321
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Additional paid in capital
|
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55,381,386
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|
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53,215,635
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Common stock subscription
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115,470
|
|
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29,985
|
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Accumulated deficit
|
|
|
(56,117,658
|
)
|
|
|
(56,524,786
|
)
|
Total stockholders’ deficit
|
|
|
(590,302
|
)
|
|
|
(3,249,844
|
)
|
|
|
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|
|
|
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Total liabilities and stockholders’ deficit
|
|
$
|
1,196,145
|
|
|
$
|
1,700,317
|
|
|
|
|
|
|
|
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See the accompanying notes to the unaudited condensed financial statements
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BIOSIG TECHNOLOGIES, INC.
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CONDENSED STATEMENTS OF OPERATIONS
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(unaudited)
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Three months ended March 31,
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2018
|
|
|
2017
|
|
Operating expenses:
|
|
|
|
|
|
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Research and development
|
|
$
|
862,420
|
|
|
$
|
1,338,604
|
|
General and administrative
|
|
|
1,771,796
|
|
|
|
1,557,341
|
|
Depreciation
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2,903
|
|
|
|
3,069
|
|
Total operating expenses
|
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|
2,637,119
|
|
|
|
2,899,014
|
|
|
|
|
|
|
|
|
|
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Loss from operations
|
|
|
(2,637,119
|
)
|
|
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(2,899,014
|
)
|
|
|
|
|
|
|
|
|
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Other income (expense):
|
|
|
|
|
|
|
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Loss on change in fair value of derivatives
|
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|
-
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|
|
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(373,611
|
)
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Interest income
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85
|
|
|
|
-
|
|
|
|
|
|
|
|
|
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Loss before income taxes
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|
|
(2,637,034
|
)
|
|
|
(3,272,625
|
)
|
|
|
|
|
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Income taxes (benefit)
|
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|
-
|
|
|
|
-
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|
|
|
|
|
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Net loss
|
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(2,637,034
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)
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(3,272,625
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)
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|
|
|
|
|
|
|
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Preferred stock dividend
|
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|
(305,046
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)
|
|
|
(23,745
|
)
|
|
|
|
|
|
|
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NET LOSS AVAILABLE TO COMMON STOCKHOLDERS
|
|
$
|
(2,942,080
|
)
|
|
$
|
(3,296,370
|
)
|
|
|
|
|
|
|
|
|
|
Net loss per common share, basic and diluted
|
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$
|
(0.09
|
)
|
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$
|
(0.14
|
)
|
|
|
|
|
|
|
|
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Weighted average number of common shares outstanding, basic and diluted
|
|
|
29,944,445
|
|
|
|
23,051,872
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|
|
|
|
|
|
|
|
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|
See the accompanying notes to the unaudited condensed financial statements
|
|
BIOSIG TECHNOLOGIES, INC.
|
|
CONDENSED STATEMENT OF STOCKHOLDERS’ DEFICIT
|
|
THREE MONTHS ENDED MARCH 31, 2018
|
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Additional
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|
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|
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Series D Preferred stock
|
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|
Series E Preferred stock
|
|
|
Common stock
|
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Paid in
|
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Common stock
|
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Accumulated
|
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Shares
|
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Amount
|
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Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Subscription
|
|
|
Deficit
|
|
|
Total
|
|
Balance, December 31, 2017
|
|
|
1,334
|
|
|
$
|
1
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
29,321,204
|
|
|
$
|
29,321
|
|
|
$
|
53,215,635
|
|
|
$
|
29,985
|
|
|
$
|
(56,524,786
|
)
|
|
$
|
(3,249,844
|
)
|
Reclassify fair value of derivative and warrant liabilities to equity upon adoption of ASU 2017-11
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,044,162
|
|
|
|
3,044,162
|
|
Common stock issued for services
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
100,000
|
|
|
|
100
|
|
|
|
141,900
|
|
|
|
-
|
|
|
|
-
|
|
|
|
142,000
|
|
Sale of common stock
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
200,000
|
|
|
|
200
|
|
|
|
299,785
|
|
|
|
(29,985
|
)
|
|
|
-
|
|
|
|
270,000
|
|
Common stock issued upon conversion of Series C Preferred Stock at $1.50 per share
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
13,334
|
|
|
|
13
|
|
|
|
19,987
|
|
|
|
-
|
|
|
|
-
|
|
|
|
20,000
|
|
Common stock issued settlement of Series C Preferred Stock accrued dividends at $1.25 per share
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,595
|
|
|
|
7
|
|
|
|
8,269
|
|
|
|
-
|
|
|
|
-
|
|
|
|
8,276
|
|
Common stock issued upon conversion of Series D Preferred Stock at $1.50 per share
|
|
|
(647
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
647,000
|
|
|
|
647
|
|
|
|
(647
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Common stock issued settlement of Series D Preferred Stock accrued dividends at $1.25 per share
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
209,574
|
|
|
|
210
|
|
|
|
261,825
|
|
|
|
-
|
|
|
|
-
|
|
|
|
262,035
|
|
Sale of Series E Preferred stock
|
|
|
-
|
|
|
|
-
|
|
|
|
1,000
|
|
|
|
1
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,492,968
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,492,969
|
|
Common stock subscription received
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
115,470
|
|
|
|
-
|
|
|
|
115,470
|
|
Stock based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
246,710
|
|
|
|
-
|
|
|
|
-
|
|
|
|
246,710
|
|
Preferred stock dividend
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(305,046
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(305,046
|
)
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,637,034
|
)
|
|
|
(2,637,034
|
)
|
Balance, March 31, 2018 (unaudited)
|
|
|
687
|
|
|
$
|
1
|
|
|
|
1,000
|
|
|
$
|
1
|
|
|
|
30,497,707
|
|
|
$
|
30,498
|
|
|
$
|
55,381,386
|
|
|
$
|
115,470
|
|
|
$
|
(56,117,658
|
)
|
|
$
|
(590,302
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See the accompanying notes to the unaudited condensed financial statements
|
|
BIOSIG TECHNOLOGIES, INC.
|
|
CONDENSED STATEMENTS OF CASH FLOWS
|
|
(unaudited)
|
|
|
|
|
|
Three months ended March 31,
|
|
|
|
2018
|
|
|
2017
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
Net loss
|
|
$
|
(2,637,034
|
)
|
|
$
|
(3,272,625
|
)
|
Adjustments to reconcile net loss to cash used in operating activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
2,903
|
|
|
|
3,069
|
|
Change in derivative liabilities
|
|
|
-
|
|
|
|
373,611
|
|
Equity based compensation
|
|
|
388,710
|
|
|
|
560,746
|
|
Fair value of issued warrant to acquire research and development
|
|
|
-
|
|
|
|
543,927
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Prepaid expenses
|
|
|
(2,173
|
)
|
|
|
(27,514
|
)
|
Security deposit
|
|
|
(5,393
|
)
|
|
|
-
|
|
Accounts payable
|
|
|
(134,714
|
)
|
|
|
209,466
|
|
Deferred rent payable
|
|
|
427
|
|
|
|
(521
|
)
|
Net cash used in operating activities
|
|
|
(2,387,274
|
)
|
|
|
(1,609,841
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Purchase of property and equipment
|
|
|
(3,644
|
)
|
|
|
(1,620
|
)
|
Net cash used in investing activity
|
|
|
(3,644
|
)
|
|
|
(1,620
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Proceeds from sale of common stock
|
|
|
270,000
|
|
|
|
1,799,692
|
|
Proceeds from sale of Series E preferred stock
|
|
|
1,492,969
|
|
|
|
-
|
|
Proceeds from common stock subscription
|
|
|
115,470
|
|
|
|
-
|
|
Net cash provided by financing activities
|
|
|
1,878,439
|
|
|
|
1,799,692
|
|
|
|
|
|
|
|
|
|
|
Net (decrease) increase in cash and cash equivalents
|
|
|
(512,479
|
)
|
|
|
188,231
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of the period
|
|
|
1,547,579
|
|
|
|
1,055,895
|
|
Cash and cash equivalents, end of the period
|
|
$
|
1,035,100
|
|
|
$
|
1,244,126
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
|
|
|
Cash paid during the period for interest
|
|
$
|
-
|
|
|
$
|
-
|
|
Cash paid during the period for income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Non cash investing and financing activities:
|
|
|
|
|
|
|
|
|
Common stock issued upon conversion of Series C Preferred Stock and accrued dividends
|
|
$
|
28,276
|
|
|
$
|
-
|
|
Common stock issued upon conversion of Series D Preferred Stock and accrued dividends
|
|
$
|
262,035
|
|
|
$
|
-
|
|
Reclassify fair value of derivative and warrant liabilities to equity upon adoption of ASU 2017-11
|
|
$
|
3,044,162
|
|
|
$
|
-
|
|
Accrual of dividend payable charged to additional paid in capital
|
|
$
|
305,046
|
|
|
$
|
23,745
|
|
|
|
|
|
|
|
|
|
|
See the accompanying notes to the unaudited condensed financial statements
|
|
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2018
(unaudited)
NOTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION
BioSig Technologies Inc. (the “Company”) was initially incorporated on February 24, 2009 under the laws of the State of Nevada and subsequently re-incorporated in the state of Delaware in 2011. The Company is principally devoted to improving the quality of cardiac recordings obtained during EP studies and catheter ablation procedures. The Company has not generated any revenue to date and consequently its operations are subject to all risks inherent in the establishment of a new business enterprise.
The unaudited condensed interim 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 balance sheet as of December 31, 2017 has been derived from audited financial statements.
Operating results for the three months ended March 31, 2018 are not necessarily indicative of results that may be expected for the year ending December 31, 2018. These condensed financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2017 filed with the Company’s Form 10-K/A with the Securities and Exchange Commission on March 26, 2018.
NOTE 2 – GOING CONCERN AND MANAGEMENT’S LIQUIDITY PLANS
As of March 31, 2018, the Company had cash of $1,035,100 and working capital of $332,764. The Company raised approximately $1,500,000 through the sale of Series E preferred stock and warrants and $385,000 through the sale of common stock and warrants during the three months ended March 31, 2018 and approximately $4,675,000 subsequent to March 31, 2018 (See Note 11). During the three months ended March 31, 2018, the Company used net cash in operating activities of $2,387,274. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management believes that the Company has sufficient funds to meet its research and development and other funding requirements for at least the next 6 months.
The Company’s primary source of operating funds since inception has been cash proceeds from private placements of common and preferred stock. The Company has experienced net losses and negative cash flows from operations since inception and expects these conditions to continue for the foreseeable future. The Company has stockholders’ deficiencies at March 31, 2018 and requires additional financing to fund future operations. Further, the Company does not have any commercial products available for sale and there is no assurance that if approval of their products is received that the Company will be able to generate cash flow to fund operations. In addition, there can be no assurance that the Company’s research and development will be successfully completed or that any product will be approved or commercially viable.
Accordingly, the accompanying 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 financial statements do not necessarily purport to represent realizable or settlement values. The condensed financial statements do not include any adjustment that might result from the outcome of this uncertainty.
NOTE 3 –SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of estimates
The preparation of financial statements in conformity with Generally Accepted Accounting Principles 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the recoverability and useful lives of long-lived assets, the fair value of the Company’s stock, stock-based compensation and the valuation allowance related to deferred tax assets. Actual results may differ from these estimates.
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2018
(unaudited)
Fair Value of Financial Instruments
Accounting Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”) requires disclosure of the fair value of certain financial instruments. The carrying value of cash and cash equivalents, accounts payable and accrued liabilities as reflected in the balance sheets, approximate fair value because of the short-term maturity of these instruments. All other significant financial assets, financial liabilities and equity instruments of the Company are either recognized or disclosed in the financial statements together with other information relevant for making a reasonable assessment of future cash flows, interest rate risk and credit risk. Where practicable the fair values of financial assets and financial liabilities have been determined and disclosed; otherwise only available information pertinent to fair value has been disclosed.
The Company follows Accounting Standards Codification subtopic 820-10, Fair Value Measurements and Disclosures (“ASC 820-10”) and Accounting Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”), which permits entities to choose to measure many financial instruments and certain other items at fair value.
Derivative Instrument Liability
The Company accounts for derivative instruments in accordance with ASC 815, which establishes accounting and reporting standards for derivative instruments and hedging activities, including certain derivative instruments embedded in other financial instruments or contracts and requires recognition of all derivatives on the balance sheet at fair value, regardless of hedging relationship designation. Accounting for changes in fair value of the derivative instruments depends on whether the derivatives qualify as hedge relationships and the types of relationships designated are based on the exposures hedged. At March 31, 2018 and December 31, 2017, the Company did not have any derivative instruments that were designated as hedges.
At March 31, 2018 and December 31, 2017, the Company had outstanding preferred stock and warrants that contained embedded derivatives. These embedded derivatives include certain conversion features and reset provisions (See Note 6 and Note 7).
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 $862,420 and $1,338,604 for the three months ended March 31, 2018 and 2017, 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 year. 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, 2018 and 2017 excludes potentially dilutive securities when their inclusion would be anti-dilutive, or if their exercise prices were greater than the average market price of the common stock during the period.
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2018
(unaudited)
Potentially dilutive securities excluded from the computation of basic and diluted net income (loss) per share are as follows:
|
|
March 31,
2018
|
|
|
March 31,
2017
|
|
Series C convertible preferred stock
|
|
|
643,333
|
|
|
|
713,333
|
|
Series D convertible preferred stock
|
|
|
687,000
|
|
|
|
-
|
|
Series E convertible preferred stock
|
|
|
1,000,000
|
|
|
|
-
|
|
Options to purchase common stock
|
|
|
8,230,319
|
|
|
|
8,245,190
|
|
Warrants to purchase common stock
|
|
|
12,237,628
|
|
|
|
10,419,655
|
|
Totals
|
|
|
22,798,280
|
|
|
|
19,378,178
|
|
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. For employees and directors, the fair value of the award is measured on the grant date and for non-employees, the fair value of the award is generally re-measured on vesting dates and interim financial reporting dates until the service period is complete. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period.
As of March 31, 2018, the Company had 8,230,319 options outstanding to purchase shares of common stock, of which 7,168,319 were vested.
As of December 31, 2017, there were outstanding stock options to purchase 8,510,319 shares of common stock, 7,347,486 shares of which were vested.
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.
Deferred taxes are classified as non-current.
Registration Rights
On February 16, 2018, in connection with the Company’s private placement of Series E Preferred Stock and warrants, the Company also entered into a registration rights agreement (the “Registration Rights Agreement”) whereby the Company agreed to file a registration statement with the Securities and Exchange Commission (the “SEC”) within 90 days of the closing of the transactions contemplated by the Purchase Agreement (the “Filing Date”) covering the resale of (a) all shares of Common Stock Issuable upon conversion of the Preferred Shares, (b) all shares of Common Stock issuable upon exercise of the Warrants, (c) all other shares of Common Stock issued pursuant to any transaction documents which have been, or which may, from time to time be issued or become issuable to the Investors under the Transaction Documents (without regard to any limitation or restriction on purchases), and (d) any securities issued or then issuable upon any stock split, dividend or other distribution, recapitalization or similar event (“Registrable Securities”), not then registered. The Company will use its reasonable best efforts to keep the registrations statement effective pursuant to Rule 415 under the Securities Act until the earlier of (i) the date on which the Investors shall have sold all the Registrable Securities covered thereby and (ii) that date that all Registrable Securities may be sold pursuant to Rule 144 without any public information requirement or volume or manner of sale limitations. The Company has estimated the liability under the registration rights agreement at $-0- as of March 31, 2018.
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2018
(unaudited)
Adoption of Accounting Standards
In July 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815). The amendments in Part I of this Update change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features.
When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. For freestanding equity classified financial instruments, the amendments require entities that present earnings per share (EPS) in accordance with Topic 260 to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. Convertible instruments with embedded conversion options that have down round features are now subject to the specialized guidance for contingent beneficial conversion features (in Subtopic 470-20, Debt—Debt with Conversion and Other Options), including related EPS guidance (in Topic 260). The amendments in Part II of this Update recharacterize the indefinite deferral of certain provisions of Topic 480 that now are presented as pending content in the Codification, to a scope exception.
Those amendments do not have an accounting effect. For public business entities, the amendments in Part I of this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted for all entities, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period.
On January 1, 2018, the Company adopted ASU 2017-11 and according reclassified the fair value of the reset provisions embedded in previously issued Series C Preferred stock, Series D Preferred stock and certain warrants with embedded anti-dilutive provisions from liability to equity in aggregate of $3,044,162.
Recent Accounting Pronouncements
There are 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.
Subsequent Events
The Company evaluates events that have occurred after the balance sheet date but before the financial statements are issued. Based upon the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the condensed financial statements, except as disclosed.
NOTE 4 – PROPERTY AND EQUIPMENT
Property and equipment as of March 31, 2018 and December 31, 2017 is summarized as follows:
|
|
March 31,
2018
|
|
|
December 31,
2017
|
|
Computer equipment
|
|
$
|
90,703
|
|
|
$
|
87,059
|
|
Furniture and fixtures
|
|
|
12,975
|
|
|
|
12,975
|
|
Subtotal
|
|
|
103,678
|
|
|
|
100,034
|
|
Less accumulated depreciation
|
|
|
(84,221
|
)
|
|
|
(81,318
|
)
|
Property and equipment, net
|
|
$
|
19,457
|
|
|
$
|
18,716
|
|
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2018
(unaudited)
Property and equipment are stated at cost and depreciated using the straight-line method over their estimated useful lives of 3 to 5 years. When retired or otherwise disposed, the related carrying value and accumulated depreciation are removed from the respective accounts and the net difference less any amount realized from disposition, is reflected in earnings.
Depreciation expense was $2,903 and $3,069 for the three months ended March 31, 2018 and 2017, respectively.
NOTE 5 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses at March 31, 2018 and December 31, 2017 consist of the following:
|
|
March 31,
2018
|
|
|
December 31,
2017
|
|
Accrued accounting and legal
|
|
$
|
151,745
|
|
|
$
|
93,595
|
|
Accrued reimbursements
|
|
|
10,510
|
|
|
|
2,600
|
|
Accrued consulting
|
|
|
12,650
|
|
|
|
109,059
|
|
Accrued research and development expenses
|
|
|
148,932
|
|
|
|
246,030
|
|
Accrued office and other
|
|
|
644
|
|
|
|
7,912
|
|
Deferred rent
|
|
|
997
|
|
|
|
569
|
|
Accrued settlement related to arbitration
|
|
|
13,333
|
|
|
|
13,333
|
|
|
|
$
|
338,811
|
|
|
$
|
473,098
|
|
NOTE 6 – SERIES C 9% CONVERTIBLE PREFERRED STOCK
On January 9, 2013, the Board of Directors authorized the issuance of up to 4,200 shares of 9% Series C Convertible Preferred Stock (the “Series C Preferred Stock”).
The Series C Preferred Stock is entitled to preference over holders of junior stock upon liquidation in the amount of $1,000 plus any accrued and unpaid dividends; entitled to dividends as a preference to holders of junior stock at a rate of 9% per annum of the stated value of $1,000 per share, payable quarterly beginning on September 30, 2013 and are cumulative. The holders of the Series C Preferred Stock vote together with the holders of our common stock on an as-converted basis, but may not vote the Series C Preferred Stock in excess of the beneficial ownership limitation of the Series C Preferred Stock. The beneficial ownership limitation is 4.99% of our then outstanding shares of common stock following such conversion or exercise, which may be increased to up to 9.99% of our then outstanding shares of common stock following such conversion or exercise upon the request of an individual holder. The beneficial ownership limitation is determined on an individual holder basis, such that the as-converted number of shares of one holder is not included in the shares outstanding when calculating the limitation for a different holder.
In connection with the sale of the Series C preferred stock, the Company issued an aggregate of 1,330,627 warrants to purchase the Company’s common stock at $2.61 per share expiring five years from the initial exercise date. The warrants contain full ratchet anti-dilution price protection upon the issuance of equity or equity-linked securities at an effective common stock purchase price of less than $2.61 per share as well as other customary anti-dilution protection. The warrants are exercisable for cash; or if at any time after six months from the issuance date, there is no effective registration statement registering the resale, or no current prospectus available for the resale, of the shares of common stock underlying the warrants, the warrants may be exercised by means of a “cashless exercise”.
As a result of an amendment to the conversion price of our Series C Preferred Stock, the full-ratchet anti-dilution protection provision of the warrants decreased the exercise price of the warrants from $2.61 per share to $1.50 per share and increased the aggregate number of shares issuable under the warrants to 2,315,301.
In February 2018, the Company issued 9,919 shares of its common stock in exchange for 10 shares of the Company’s Series C Preferred Stock and accrued dividends.
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2018
(unaudited)
In March 2018, the Company issued 10,010 shares of its common stock in exchange for 10 shares of the Company’s Series C Preferred Stock and accrued dividends.
Series C Preferred Stock issued and outstanding totaled 965 and 985 as of March 31, 2018 and December 31, 2017, respectively. As of March 31, 2018 and December 31, 2017, the Company has accrued $432,660 and $419,283 dividends payable on the Series C Preferred Stock.
NOTE 7 – WARRANT AND DERIVATIVE LIABILITIES
Series C 9% Convertible Preferred Stock and related warrants
At the time of issuance and until March 31, 2015, the Company determined that the anti-dilutive provisions embedded in the Series C Preferred Stock and related warrants (see Note 6) did not meet the defined criteria of a derivative in such that the net settlement requirement of delivery of common shares does not meet the “readily convertible to cash” as described in Accounting Standards Codification 815 and therefore bifurcation was not required. There was no established market for the Company’s common stock. As of March 31, 2015, the Company determined a market had been established for the Company’s common stock and accordingly, reclassified from equity to liability treatment the fair value of the embedded reset provisions of the Series C Preferred Stock and warrants of $1,242,590 and $4,097,444, respectively.
The Company valued the reset provisions of the Series C Preferred Stock and warrants in accordance with ASC 470-20 using the Multinomial Lattice pricing model and the following assumptions: estimated contractual terms, a risk free interest rate of 0.56% to 0.89%, a dividend yield of 0%, and volatility of 141%.
Series D Convertible Preferred Stock and related warrants
At issuance, the Company determined that certain anti-dilutive provisions embedded in the Series D Preferred Stock and related warrants (see Note 8) met the defined criteria of a derivative and accordingly, reclassified from equity to liability the determined fair value of the embedded reset provisions of the Series D Preferred Stock and warrants of $397,162 and $652,054, respectively.
The Company valued the reset provisions of the Series D Preferred Stock and warrants in accordance with ASC 470-20 using the Multinomial Lattice pricing model and the following assumptions: estimated contractual terms, a risk free interest rate of 1.74%, a dividend yield of 0%, and volatility of 130%.
At December 31, 2017, the Company marked to market the fair value of the reset provisions of the Preferred Stock and warrants and determined fair values of $685,922 and $2,358,240, respectively. The fair values of the embedded derivatives were determined using the Multinomial Lattice pricing model and the following assumptions: estimated contractual term of 1.43 to 3.36 years, a risk free interest rate of 1.39% to 1.89%, a dividend yield of 0%, and volatility of 131%.
On January 1, 2018, the Company adopted ASU 2017-11 and according reclassified the fair value of the reset provisions embedded in previously issued Series C Preferred stock, Series D Preferred stock and certain warrants with embedded anti-dilutive provisions from liability to equity in aggregate of $3,044,162.
NOTE 8 – STOCKHOLDER EQUITY
Preferred stock
The Company is authorized to issue 1,000,000 shares of $0.001 par value preferred stock. As of March 31, 2018 and December 31, 2017, the Company has authorized 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 and (2018) 1,000 shares of Series E Preferred Stock. As of March 31, 2018 and December 31, 2017, there were no outstanding shares of Series A and Series B preferred stock.
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2018
(unaudited)
Series C Preferred Stock
In February 2018, the Company issued 9,919 shares of its common stock in exchange for 10 shares of the Company’s Series C Preferred Stock and accrued dividends.
In March 2018, the Company issued 10,010 shares of its common stock in exchange for 10 shares of the Company’s Series C Preferred Stock and accrued dividends.
Series D Preferred Stock
In January 2018, the Company issued an aggregate of 235,911 shares of its common stock in exchange for 180 shares of the Company’s Series D Preferred Stock and accrued dividends.
In February 2018, the Company issued an aggregate of 131,432 shares of its common stock in exchange for 100 shares of the Company’s Series D Preferred Stock and accrued dividends.
In March 2018, the Company issued an aggregate of 489,231 shares of its common stock in exchange for 367 shares of the Company’s Series D Preferred Stock and accrued dividends.
Series E Preferred Stock
On February 16, 2018, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional accredited investors (the “Investors”), pursuant to which the Company sold to the Investors an aggregate of 1,000 shares (the “Preferred Shares”) of its Series E Preferred Stock, par value $0.001 per share, and warrants to purchase an aggregate of 500,000 shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”), at an exercise price of $1.75 per share (the “Warrants”), in exchange for aggregate consideration of $1,492,969, net of transaction expenses of $7,031 (the “Transaction”).
The Purchase Agreement contains representations and warranties of the Company and the Investors that are typical for transactions of this type. The Purchase Agreement also contains covenants on the part of the Company that are typical for transactions of this type. For a period of twelve months after the closing date of Transaction, the Investors are entitled to a right of first refusal (the “ROFR”) with respect to subsequent sales of securities by the Company (other than with respect to issuances of Excluded Securities (as defined in the Purchase Agreement)) Pursuant to the ROFR, each Investor will have the opportunity to elect to purchase its pro rata portion of thirty percent (30%) of any securities being offered by the Company in the subsequent offering.
In connection with the entry into the Purchase Agreement, the Investors and the Company also entered into a registration rights agreement (the “Registration Rights Agreement”) whereby the Company agreed to file a registration statement with the Securities and Exchange Commission (the “SEC”) within 90 days of the closing of the transactions contemplated by the Purchase Agreement (the “Filing Date”) covering the resale of (a) all shares of Common Stock Issuable upon conversion of the Preferred Shares, (b) all shares of Common Stock issuable upon exercise of the Warrants, (c) all other shares of Common Stock issued pursuant to any transaction documents which have been, or which may, from time to time be issued or become issuable to the Investors under the Transaction Documents (without regard to any limitation or restriction on purchases), and (d) any securities issued or then issuable upon any stock split, dividend or other distribution, recapitalization or similar event (“Registrable Securities”), not then registered. The Company will use its reasonable best efforts to keep the registrations statement effective pursuant to Rule 415 under the Securities Act until the earlier of (i) the date on which the Investors shall have sold all the Registrable Securities covered thereby and (ii) that date that all Registrable Securities may be sold pursuant to Rule 144 without any public information requirement or volume or manner of sale limitations.
The Warrants are exercisable immediately and expire on August 16, 2021, and have an exercise price of $1.75 per share. The Warrants include a “full ratchet” anti-dilution adjustment in the event that the Company issues any common stock or common stock equivalent at a per share price lower than the applicable exercise price then in effect.
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2018
(unaudited)
In connection with its entry into the Purchase Agreement, on February 14, 2018, the Company entered into a consent agreement (the “Consent”) with the holders of the Company’s Series D Convertible Preferred Stock (the “Series D Holders”). Pursuant to the Consent, the Series D Holders consented to the Transaction and are entitled at any time on or before April 17, 2018, to elect to receive the more favorable terms of the Transaction. In consideration for their entry into the Consent, the Company issued to the Series D Holders warrants to purchase up to an aggregate of 100,000 shares of Common Stock (the “Consent Warrants”). The Consent Warrants are exercisable immediately and expire on February 14, 2021, and have an exercise price of $1.50 per share. The Consent Warrants include a “full ratchet” anti-dilution adjustment in the event that the Company issues any common stock or common stock equivalent at a per share price lower than the applicable exercise price then in effect.
Common stock
The Company is authorized to issue 200,000,000 shares of $0.001 par value common stock. As of March 31, 2018 and December 31, 2017, the Company had 30,497,707 and 29,321,204 shares issued and outstanding, respectively.
During the three months ended March 31, 2018, the Company issued 100,000 shares of its common stock for services totaling $142,000 ($1.42 per share).
During the three months ended March 31, 2018, the Company entered into securities purchase agreements with investors pursuant to which the Company issued 180,000 shares of common stock and 90,000 warrants for aggregate proceeds of $270,000.
During the three months ended March 31, 2018, the Company issued 20,000 shares of common stock and 10,000 warrants for a previously received common stock subscription of $29,985.
NOTE 9 – OPTIONS AND WARRANTS
Options
On October 19, 2012, the Company’s Board of Directors approved the 2012 Equity Incentive Plan (“the “Plan) and terminated the Long-Term Incentive Plan (the “2011 Plan”). The Plan provides for the issuance of options to purchase up to 15,186,123 (as amended) shares of the Company’s common stock to officers, directors, employees and consultants of the Company (as amended). 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.
The following table presents information related to stock options at March 31, 2018:
Options Outstanding
|
|
|
Options Exercisable
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
Exercisable
|
|
Exercise
|
|
|
Number of
|
|
|
Remaining Life
|
|
|
Number of
|
|
Price
|
|
|
Options
|
|
|
In Years
|
|
|
Options
|
|
$
|
1.01-2.00
|
|
|
|
3,545,540
|
|
|
|
7.2
|
|
|
|
2,483,540
|
|
|
2.01-3.00
|
|
|
|
4,384,779
|
|
|
|
3.4
|
|
|
|
4,384,779
|
|
|
3.01-4.00
|
|
|
|
300,000
|
|
|
|
7.0
|
|
|
|
300,000
|
|
|
|
|
|
|
8,230,319
|
|
|
|
5.2
|
|
|
|
7,168,319
|
|
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2018
(unaudited)
A summary of the stock option activity and related information for the 2012 Plan for the three months ended March 31, 2018 is as follows:
|
|
|
|
|
|
|
|
Weighted-Average
|
|
|
|
|
|
|
|
|
|
Weighted-Average
|
|
|
Remaining
|
|
|
Aggregate
|
|
|
|
Shares
|
|
|
Exercise Price
|
|
|
Contractual Term
|
|
|
Intrinsic Value
|
|
Outstanding at December 31, 2017
|
|
|
8,510,319
|
|
|
$
|
2.11
|
|
|
|
5.2
|
|
|
$
|
27,045
|
|
Grants
|
|
|
50,000
|
|
|
$
|
1.42
|
|
|
|
10.0
|
|
|
$
|
-
|
|
Exercised
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canceled
|
|
|
(330,000
|
)
|
|
|
1.66
|
|
|
|
|
|
|
|
|
|
Outstanding at March 31, 2018
|
|
|
8,230,319
|
|
|
$
|
2.12
|
|
|
|
5.2
|
|
|
$
|
158,930
|
|
Exercisable at March 31, 2018
|
|
|
7,168,319
|
|
|
$
|
2.20
|
|
|
|
4.7
|
|
|
$
|
104,305
|
|
The aggregate intrinsic value in the preceding tables represents the total pretax intrinsic value, based on options with an exercise price less than the Company’s stock price of $1.57 as of March 31, 2018, which would have been received by the option holders had those option holders exercised their options as of that date.
Option valuation models require the input of highly subjective assumptions. The fair value of stock-based payment awards was estimated using the Black-Scholes option model with a volatility figure derived from an index of historical stock prices of comparable entities until sufficient data exists to estimate the volatility using the Company’s own historical stock prices. Management determined this assumption to be a more accurate indicator of value. The Company accounts for the expected life of options based on the contractual life of options for non-employees.
For employees, the Company accounts for the expected life of options in accordance with the “simplified” method, which is used for “plain-vanilla” options, as defined in the accounting standards codification. The risk-free interest rate was determined from the implied yields of U.S. Treasury zero-coupon bonds with a remaining life consistent with the expected term of the options. The fair value of stock-based payment awards during the three months ended March 31, 2018 and 2017 was estimated using the Black-Scholes pricing model.
On February 15, 2018, the Company granted 50,000 options to purchase the Company stock in connection with the services rendered at the exercise price of $1.42 per share for a term of ten years with vesting immediately.
The following assumptions were used in determining the fair value of employee options for the three months ended March 31, 2018:
Risk-free interest rate
|
|
|
2.65
|
%
|
Dividend yield
|
|
|
0
|
%
|
Stock price volatility
|
|
|
94.10
|
%
|
Expected life
|
|
5 years
|
|
Weighted average grant date fair value
|
|
$
|
1.01
|
|
The fair value of all options vesting during the three months ended March 31, 2018 and 2017 of $246,710 and $42,984, respectively, was charged to current period operations. Unrecognized compensation expense of $783,894 and $979,812 at March 31, 2018 and December 31, 2017, respectively, will be expensed in future periods.
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2018
(unaudited)
The following table summarizes information with respect to outstanding warrants to purchase common stock of the Company at March 31, 2018:
Exercise
|
|
|
Number
|
|
Expiration
|
Price
|
|
|
Outstanding
|
|
Date
|
$
|
0.001
|
|
|
|
383,320
|
|
January 2020
|
$
|
1.50
|
|
|
|
7,615,982
|
|
February 2018 to May 2021
|
$
|
1.75
|
|
|
|
500,000
|
|
August 2021
|
$
|
1.84
|
|
|
|
35,076
|
|
January 2020
|
$
|
1.95
|
|
|
|
1,689,026
|
|
October 2018 to September 2019
|
$
|
2.00
|
|
|
|
100,000
|
|
August 2018
|
$
|
2.02
|
|
|
|
30,755
|
|
January 2020
|
$
|
2.50
|
|
|
|
100,000
|
|
August 2018
|
$
|
2.75
|
|
|
|
228,720
|
|
August 2019 to September 2019
|
$
|
3.67
|
|
|
|
214,193
|
|
December 2018 to January 2019
|
$
|
3.75
|
|
|
|
1,340,556
|
|
April 2019 to March 2020
|
|
|
|
|
|
12,237,628
|
|
|
On January 5, 2018, the Company issued 100,000 warrants to purchase the Company’s common stock at $1.50 per share, expiring on January 5, 2021, in connection with the sale of the Company’s common stock.
On February 14, 2018, the Company entered into a consent agreement with the holders of the Company’s Series D Convertible Preferred Stock. Pursuant to the consent, the Series D Holders consented to the Series E Preferred Stock transaction and are entitled at any time on or before April 17, 2018, to elect to receive the more favorable terms of the transaction. In consideration for their entry into the consent, the Company issued to the Series D Holders warrants to purchase up to an aggregate of 100,000 shares of common stock. The consent warrants are exercisable immediately and expire on February 14, 2021, and have an exercise price of $1.50 per share. The warrants contain certain anti-dilutive provisions (see Note 8).
On February 16, 2018, the Company issued an aggregate of 500,000 warrants to purchase the Company’s common stock at $1.75 per share, expiring on August 16, 2021, in connection with the sale of the Company’s Series E preferred stock. The warrants contain certain anti-dilutive provisions (see Note 8).
A summary of the warrant activity for the three months ended March 31, 2018 is as follows:
|
|
|
|
|
|
|
|
Weighted-Average
|
|
|
|
|
|
|
|
|
|
Weighted-Average
|
|
|
Remaining
|
|
|
Aggregate
|
|
|
|
Shares
|
|
|
Exercise Price
|
|
|
Contractual Term
|
|
|
Intrinsic Value
|
|
Outstanding at December 31, 2017
|
|
|
12,789,086
|
|
|
$
|
1.82
|
|
|
|
1.7
|
|
|
$
|
551,636
|
|
Grants
|
|
|
700,000
|
|
|
$
|
1.68
|
|
|
|
3.0
|
|
|
|
-
|
|
Exercised
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expired
|
|
|
(1,251,458
|
)
|
|
$
|
1.50
|
|
|
|
-
|
|
|
|
-
|
|
Outstanding at March 31, 2018
|
|
|
12,237,628
|
|
|
$
|
1.85
|
|
|
|
1.7
|
|
|
$
|
1,134,548
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested and expected to vest at March 31, 2018
|
|
|
12,237,628
|
|
|
$
|
1.85
|
|
|
|
1.7
|
|
|
$
|
1,134,548
|
|
Exercisable at March 31, 2018
|
|
|
12,237,628
|
|
|
$
|
1.85
|
|
|
|
1.7
|
|
|
$
|
1,134,548
|
|
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2018
(unaudited)
NOTE 10 – FAIR VALUE MEASUREMENT
The Company adopted the provisions of Accounting Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”). ASC 825-10 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. ASC 825-10 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 825-10 establishes three levels of inputs that may be used to measure fair value:
Level 1 – Quoted prices in active markets for identical assets or liabilities.
Level 2 – Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 – Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.
All items required to be recorded or measured on a recurring basis are based upon level 3 inputs.
To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed and is determined based on the lowest level input that is significant to the fair value measurement.
Upon adoption of ASC 825-10, there was no cumulative effect adjustment to beginning retained earnings and no impact on the financial statements.
The carrying value of the Company’s cash and cash equivalents, accounts payable and other current assets and liabilities approximate fair value because of their short-term maturity.
As of March 31, 2018 and December 31, 2017, the Company did not have any items that would be classified as level 1 or 2 disclosures.
As of March 31, 2018 and December 31, 2017, the Company did not have any derivative instruments that were designated as hedges.
The following table provides a summary of changes in fair value of the Company’s level 3 financial liabilities as of March 31, 2018:
|
|
Warrant
Liability
|
|
|
Derivative
|
|
Balance, December 31, 2017
|
|
$
|
2,358,240
|
|
|
$
|
685,922
|
|
Total (gains) losses
|
|
|
|
|
|
|
|
|
Transfers out due to the adoption of ASU 2017-11 effective January 1, 2018
|
|
|
(2,358,240
|
)
|
|
|
(685,922
|
)
|
Balance, March 31, 2018
|
|
$
|
-
|
|
|
$
|
-
|
|
BIOSIG TECHNOLOGIES, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2018
(unaudited)
NOTE 11 – SUBSEQUENT EVENTS
In April 2018, the Company issued an aggregate of 577,339 shares of its common stock in exchange for 454 shares of the Company’s Series D Preferred Stock and accrued dividends.
In April 2018, the Company issued an aggregate of 351,021 shares of its common stock in exchange for 370 shares of the Company’s Series C Preferred Stock and accrued dividends.
On April 30, 2018 the Company entered into a Unit Purchase Agreement (the “Purchase Agreement”) with certain accredited investors (the “Investors”), pursuant to which the Company sold to the Investors an aggregate of 3,193,004 shares of the Company’s common stock and warrants to purchase an aggregate of 1,596,506 shares of the Company’s common stock, at an exercise price of $1.75 per share, in exchange for aggregate consideration of $4,789,502, net of transaction expenses of approximately $1,000 (the “April 2018 private placement”), of which $115,470 was received as common stock subscriptions as of March 31, 2018.
In connection with the April 2018 private placement, the Company issued additional warrants to purchase an aggregate of 83,334 shares of the Company’s common stock, at an exercise price of $1.50 per share to the Series E holders. In addition, 500,000 warrants to purchase the Company’s common stock at an exercise price of $1.75 per share previously issued to the Series E holders were reset to an exercise price of $1.50 per share.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Management’s Discussion and Analysis of Financial Condition and Results of Operations includes a number of forward-looking statements that reflect Management’s current views with respect to future events and financial performance. You can identify these statements by forward-looking words such as “may,” “will,” “expect,” “anticipate,” “believe,” “estimate” and “continue,” or similar words. Those statements include statements regarding the intent, belief or current expectations of us and members of our management team as well as the assumptions on which such statements are based. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risk and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements.
Readers are urged to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the Securities and Exchange Commission. Important factors currently known to Management could cause actual results to differ materially from those in forward-looking statements. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in the future operating results over time. We believe that our assumptions are based upon reasonable data derived from and known about our business and operations. No assurances are made that actual results of operations or the results of our future activities will not differ materially from our assumptions. Factors that could cause differences include, but are not limited to, expected market demand for our products, fluctuations in pricing for materials, and competition.
Business Overview
We are a development stage medical device company developing a proprietary biomedical signal processing technology platform to extract information from physiologic signals. Our initial emphasis is on providing intracardiac signal information to electrophysiologists during EP studies and catheter ablation of AF and VT. Our first product is the PURE (Precise Uninterrupted Real-time evaluation of Electrograms) EP™ System, a surface electrocardiogram and intracardiac multichannel recording and analysis system that acquires, processes and displays electrocardiograms and electrograms required during electrophysiology studies and catheter ablation procedures.
The PURE EP System is designed to assist electrophysiologists in making clinical decisions in real-time by providing information that, we believe, is not always easily obtained, if at all, from any other equipment presently used in electrophysiology labs. The PURE EP System’s ability to minimize noise and artifacts and acquire high fidelity cardiac signals will potentially increase these signals’ diagnostic value, and therefore offer improved accuracy and efficiency of the EP studies and related procedures. We are developing signal processing tools within the PURE EP System. We believe that these will assist electrophysiologists in further differentiating true signals from noise and will provide guidance in identifying ablation targets.
Catheter ablation for many arrhythmias have high success rates; however, more complex or long-standing examples of the disease often require multiple procedures (each typically lasting from 3-6 hours), evidencing the need for additional research and technology to diagnose and treat these cases. Consequently, ablating AF and VT has been regarded as being extremely difficult. Therefore, access to these procedures has traditionally been limited to being performed by only the most well-trained cardiologists; however, advancements in new technologies and techniques show a strong growth rate for these procedures.
Our overall goal is to establish our proprietary biomedical signal processing technology as a new platform in the electrophysiology market that will have the following advantages over the electrophysiology recording systems currently available on the market:
●
|
Precise, uninterrupted, real-time evaluations of electrograms (PURE EP™);
|
●
|
Higher quality cardiac signal acquisition for accurate and more efficient electrophysiology studies and catheter ablation procedures to help reduce costs and length of procedures;
|
●
|
Reliable display of information to better determine precise ablation targets, strategy and end point of procedures with the objective of reducing the need for multiple procedures;
|
●
|
A device that can be fully integrated into existing electrophysiology lab environments.
|
If we are able to develop our product as designed, we believe that the PURE EP System and its signal processing tools will contribute to an increase in the number of procedures performed in each electrophysiology lab and possibly improved patient outcomes.
Our significant recent achievements to date include:
●
|
On January 9, 2018, we announced that we have partnered with Charles Austin and JK Advisors in preparation of the commercial launch of our PURE EP System.
|
|
On January 10, 2018, Dr. Asirvatham and his team performed our eleventh pre-clinical study at Mayo Clinic in Rochester, Minnesota.
|
●
|
On February 22, 2018, we announced that we have partnered with Focus Marketing to assist our commercial team in preparation of our launch of our PURE EP System.
|
●
|
On March 20, 2018, we announced that we have formed an Advisory Board to advise the leadership of BioSig on a range of subjects, including strategy, marketing, government affairs, partnerships, mergers and acquisitions, intellectual property, and capital markets.
|
●
|
On March 28, 2018, we announced that we have filed our 510(k) application to the U.S. Food and Drug Administration (FDA) for our first product, PURE EP™ System.
|
We have conducted a total of twelve pre-clinical studies to date with the PURE EP™ System prototype. We conducted our first three pre-clinical studies in 2015 at Mayo Clinic in Rochester, Minnesota. We have continued additional pre-clinical studies as part of an advanced research program since June 2016 at Mayo Clinic in Rochester, Minnesota. We also conducted one pre-clinical study at the Mount Sinai Hospital in New York, NY with emphasis on the VT model.
In the third quarter of 2017, in collaboration with Health Research International, we conducted a detailed survey of U.S. electrophysiologists to gather opinions on the main features of the PURE EP System.
We intend to continue further pre-clinical studies at Mayo Clinic and we intend to conduct a pre-clinical study at the Cardiac Arrhythmia Center at the University of California at Los Angeles. We intend to conduct further pre-clinical studies, and research studies. The main objective of these studies is to
evaluate various findings and to demonstrate the preclinical potential of the PURE EP System.
We have initiated technology development with Minnetronix, a medical technology and innovation company, and engaged Quintain Project Solutions LLC as the manufacturing project management leader for the PURE EP System – implementing steps for obtaining 510(k) clearance from the U.S. Food and Drug Administration for the PURE EP System.
We believe that by the conclusion of 2018, we will have obtained 510(k) marketing clearance from the FDA and will be able to commence marketing and commercialization of the PURE EP System. Our ability to achieve the aforementioned milestones will be principally determined by our ability to obtain necessary financing and regulatory approvals, among other factors.
We have chosen and are working with the National Standards Authority of Ireland (NSAI) as our Notified Body to obtain the CE Mark. CE marking is a mandatory approval for medical devices sold in Europe and Canada. We plan on submitting for CE Mark in 2019.
Because we are a development stage company, with our initial product under development, we currently do not have any customers. We anticipate that our initial customers will be hospitals and other health care facilities that operate electrophysiology labs.
Results of Operations
We anticipate that our results of operations will fluctuate for the foreseeable future due to several factors, such as the progress of our research and development efforts and the timing and outcome of regulatory submissions. Due to these uncertainties, accurate predictions of future operations are difficult or impossible to make.
Three Months Ended March 31, 2018 Compared to Three Months Ended March 31, 2017
Revenues and Cost of Goods Sold. We had no revenues or cost of goods sold during the three months ended March 31, 2018 and 2017.
Research and Development Expenses. Research and development expenses for the three months ended March 31, 2018 were $862,420, a decrease of $476,184, or 35.6%, from $1,338,604 for the three months ended March 31, 2017. This decrease is primarily due acquired research and development as we develop our proprietary technology platform in 2017 of $543,927, net with additional personnel and outside design costs. Research and development expenses were comprised of the following:
Three months ended:
|
|
March 31,
2018
|
|
|
March 31,
2017
|
|
Salaries and equity compensation
|
|
$
|
287,849
|
|
|
$
|
260,722
|
|
Consulting expenses
|
|
|
131,601
|
|
|
|
91,545
|
|
Clinical studies and design work
|
|
|
419,325
|
|
|
|
396,301
|
|
Acquired research and development
|
|
|
-
|
|
|
|
543,927
|
|
Travel, supplies, other
|
|
|
23,645
|
|
|
|
46,109
|
|
Total
|
|
$
|
862,420
|
|
|
$
|
1,338,604
|
|
Stock based compensation for research and development personnel was $98,589 and $13,104 for the three months ended March 31, 2018 and 2017, respectively.
General and Administrative Expenses. General and administrative expenses for the three months ended March 31, 2018 were $1,771,796, an increase of $214,455, or 13.8%, from $1,557,341 incurred in the three months ended March 31, 2017. This increase is primarily due to an increase in employees in the current period as compared to the same period in the prior year and additional service provider fees paid.
Payroll related expenses increased to $534,627 in the current period from $279,580 for the three months ended March 31, 2017, an increase of $255,047. The increase was due to added staff in 2018 for commercialization, support personnel and a full time Chief Financial Officer in 2018. We incurred $290,121 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, 2018 as compared to $547,642 in stock based compensation for the same period in 2017.
Professional services for the three months ended March 31, 2018 totaled $208,922, an increase of $126,371, or 153.1%, over the $82,551 recognized for the three months ended March 31, 2017. Of professional services, legal fees totaled $161,922 for the three months ended March 31, 2018, an increase of $119,371, or 280.5%, from $42,551 incurred for the three months ended March 31, 2017. Accounting fees incurred in the three months ended March 31, 2018 amounted to $47,000, an increase of $7,000, or 17.5%, from $40,000 incurred in same period last year. The increase in legal fees was primarily due registration statements and patent filing and research costs in 2018.
Consulting, public and investor relations fees for the three months ended March 31, 2018 were $532,050 as compared to $493,666 incurred for the three months ended March 31, 2017. The increase in consulting and investor relations fees during the three months ended March 31, 2018 relate to our continued efforts to develop our recognition throughout the medical industry in an effective manner.
Travel, meals and entertainment costs for the three months ended March 31, 2018 were $90,921, an increase of $26,661, or 41.5%, from $64,260 incurred in the three months ended March 31, 2017. Travel, meals and entertainment costs include travel related to business development and financing. Rent for the three months ended March 31, 2018 totaled $34,853, an increase of $3,203 or 10.1%, from $31,650 incurred in three months ended March 31, 2017.
Depreciation Expense. Depreciation expense for the three months ended March 31, 2018 totaled $2,903 a decrease of $166, or 5.4%, over the expense of $3,069 incurred in the three months ended March 31 2017, as a result of the aging of office computers and other equipment.
Loss on change in fair values of derivatives. Beginning in March 2015, we were required to estimate the fair value of the embedded beneficial conversion features of our issued Series C and Series D Preferred Stock and certain warrants with reset (anti-dilution) provisions. During the three months ended March 31, 2017, we incurred a loss on change in fair values of these derivatives of $373,611. On January 1, 2018, we adopted ASU 2017-11 and according reclassified the fair value of the reset provisions embedded in previously issued Series C Preferred stock, Series D Preferred stock and certain warrants with embedded anti-dilutive provisions from liability to equity in aggregate of $3,044,162 and are no longer required to treat certain embedded beneficial conversion features or reset (anti-dilution) provisions as liabilities.
Preferred Stock Dividend. Preferred stock dividend for the three months ended March 31, 2018 totaled $305,046, an increase of $281,301, or 1,184.7% from $23,745 incurred during the three months ended March 31, 2017. Preferred stock dividends are primarily related to the issuance of our Series C, D and E Preferred Stock from 2013 through 2018. The significant increase in 2018 as compared to 2017 is the result of conversions of the Series D Preferred Stock and the payment, upon conversion, of a required minimum dividend of $270 per share of Series D Preferred Stock for the first three years of issuance.
Net Loss available to common shareholders. As a result of the foregoing, net loss available to common shareholders for the three months ended March 31, 2018 was $2,942,080 compared to a net loss of $3,296,370 for the three months ended March 31, 2017.
Liquidity and Capital Resources
Three Months Ended March 31, 2018 Compared to three Months Ended March 31, 2017
As of March 31, 2018, we had a working capital of $332,764, comprised of cash of $1,035,100 and prepaid expenses of $119,111, which was offset by $338,811 of accounts payable and accrued expenses and accrued dividends on preferred stock issuances of $482,636. For the three months ended March 31, 2018, we used $2,387,274 of cash in operating activities and $3,644 of cash in investing activities.
Cash provided by financing activities totaled $1,878,439, comprised of proceeds from the sale of our common stock and receipt of common stock subscriptions of $385,470 and the sale of our Series E preferred stock of $1,492,969. In the comparable period in 2017, our aggregate cash provided by financing activities totaled $1,799,692 comprised proceeds from the sale of our common stock. At March 31, 2018, we had cash of $1,035,100 compared to $1,547,579 at December 31, 2017. Our cash is held in bank deposit accounts. At March 31, 2018 and December 31, 2017, we had no convertible debentures outstanding.
Cash used in operations for the three months ended March 31, 2018 and 2017 was $2,387,274 and $1,609,841, respectively, which represent cash outlays for research and development and general and administrative expenses in such periods. The increase in cash outlays principally resulted from additional in operating costs and general and administrative expenses and a decrease of our outstanding accounts payable by $134,714.
We used $3,644 cash for investing activities for the three months ended March 31, 2018, compared to $1,620 for the three months ended March 31, 2017. For both periods, we purchased computer and other equipment.
In their report dated February 27, 2018, our independent registered public accounting firm stated at December 31, 2017, there is substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is an issue raised due to our net losses and negative cash flows from operations since inception and our expectation that these conditions will continue for the foreseeable future. In addition, we will require additional financing to fund future operations.
Further, we do not have any commercial products available for sale and have not generated revenues to date, and there is no assurance that, if approval of our products is received, we will be able to generate cash flow to fund operations. In addition, there can be no assurance that our research and development will be successfully completed or that any product will be approved or commercially viable. Our ability to continue as a going concern is subject to our ability to obtain necessary funding from outside sources, including obtaining additional funding from the sale of our securities, obtaining loans from various financial institutions or being awarded grants from government agencies, where possible. Our continued net operating losses increase the difficulty in meeting such goals and there can be no assurances that such methods will prove successful.
We expect to incur losses from operations for the near future. We expect to incur increasing research and development expenses, including expenses related to clinical trials. We expect that our general and administrative expenses will increase in the future as we expand our business development, add infrastructure and incur additional costs related to being a public company, including incremental audit fees, investor relations programs and increased professional services.
Our future capital requirements will depend on a number of factors, including the progress of our research and development of product candidates, the timing and outcome of regulatory approvals, the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims and other intellectual property rights, the status of competitive products, the availability of financing and our success in developing markets for our product candidates. We believe our existing cash will not be sufficient to fund our operating expenses and capital equipment requirements. We anticipate we will need approximately $8 million in addition to our current cash on hand to fund our operating expenses and capital equipment requirements for the next 12 months.
We will have to raise additional funds to continue our operations and, while we have been successful in doing so in the past, there can be no assurance that we will be able to do so in the future. Our continuation as a going concern is dependent upon our ability to obtain necessary additional funds to continue operations and the attainment of profitable operations.
Future financing may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses or experience unexpected cash requirements that would force us to seek alternative financing. Furthermore, if we issue additional equity or debt securities, existing holders of our securities may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our securities.
If additional financing is not available or is not available on acceptable terms, we may be required to delay, reduce the scope of or eliminate our research and development programs, reduce our commercialization efforts or obtain funds through arrangements with collaborative partners or others that may require us to relinquish rights to certain product candidates that we might otherwise seek to develop or commercialize independently.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
Transactions with Related Parties
The Company’s President and shareholders have advanced funds to the Company for working capital purposes since the Company’s inception in February 2009. No formal repayment terms or arrangements exist and the Company is not accruing interest on these advances. The net amount of outstanding advances at March 31, 2018 and December 31, 2017 was $-0-.
At March 31, 2018 and December 31, 2017, the Company had reimbursable travel and other related expenses due related parties of $7,236 and $27,375, respectively.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses. We evaluate our estimates and judgments on an ongoing basis. We base our estimates on historical experience and on assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our financial statements.
Research and Development.
We account for research and development costs in accordance with the Accounting Standards Codification subtopic 730-10, Research and Development (“ASC 730-10”). Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and 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.
Stock Based Compensation.
All stock-based payments to employees and to nonemployee directors for their services as directors consisted of grants of restricted stock and stock options, which are measured at fair value on the grant date and recognized in the statements of operations as compensation expense over the relevant vesting period. Restricted stock payments and stock-based payments to nonemployees are recognized as an expense over the period of performance.
Such payments are measured at fair value at the earlier of the date a performance commitment is reached or the date performance is completed. In addition, for awards that vest immediately and are non-forfeitable, the measurement date is the date the award is issued.
On October 29, 2014, our common stock commenced trading on OTCQB under the symbol “BSGM.” Fair value is typically determined by the closing price of our common stock on the date of the award.
Income Taxes.
Deferred income tax assets and liabilities are determined based on the estimated future tax effects of net operating loss and credit carryforwards and temporary differences between the tax basis of assets and liabilities and their respective financial reporting amounts measured at the current enacted tax rates. We record an estimated valuation allowance on our deferred income tax assets if it is not more likely than not that these deferred income tax assets will be realized. We recognize a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not required under Regulation S-K for “smaller reporting companies.”
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As required under Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2018. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of March 31, 2018 were not effective, for the same reasons as previously disclosed under Item 9A. “Controls and Procedures” in our Annual Report on Form 10-K for our fiscal year ended December 31, 2017.
Changes in Internal Controls over Financial Reporting
There have been no changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) and 15d-(f) of the Exchange Act) that occurred during the last fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
Not required under Regulation S-K for “smaller reporting companies.”
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On January 5, 2018, we consummated one closing under the Unit Purchase Agreement, dated April 6, 2017, by and among certain accredited investors (as defined by Rule 501 under the Securities Act of 1933, as amended), pursuant to which we issued 200,000 shares of our common stock and 100,000 warrants to purchase one share of our common stock, exercisable at a price of $1.50 per share and expiring January 5, 2021, in exchange for aggregate consideration of $299,985, net of $15 in expenses. The securities sold in this offering were not registered under the Securities Act of 1933, as amended, or the securities laws of any state, and were offered and sold in reliance on the exemption from registration under the Securities Act of 1933, as amended, provided by Section 4(2) and Regulation D (Rule 506) under the Securities Act of 1933, as amended.
On February 16, 2018, we entered into a Securities Purchase Agreement with certain institutional accredited investors, pursuant to which we sold to the Investors an aggregate of 1,000 shares of our its Series E Preferred Stock, par value $0.001 per share, and warrants to purchase an aggregate of 500,000 shares of our common stock, par value $0.001 per share, at an exercise price of $1.75 per share, in exchange for aggregate consideration of $1,492,969, net of transaction expenses of $7,031. The securities sold in this offering were not registered under the Securities Act of 1933, as amended, or the securities laws of any state, and were offered and sold in reliance on the exemption from registration under the Securities Act of 1933, as amended, provided by Section 4(2) and Regulation D (Rule 506) under the Securities Act of 1933, as amended.
On April 30, 2018, we entered into a Unit Purchase Agreement (the “Purchase Agreement”) with certain accredited investors (the “Investors”), pursuant to which the Company sold to the Investors an aggregate of 3,193,004 shares of the Company’s common stock and warrants to purchase an aggregate of 1,596,506 shares of the Company’s common stock, at an exercise price of $1.75 per share, in exchange for aggregate consideration of $4,789,502, net of transaction expenses of approximately $1,000 (the “April 2018 private placement”), of which $115,470 was received as common stock subscriptions as of March 31, 2018. The securities sold in this offering were not registered under the Securities Act of 1933, as amended, or the securities laws of any state, and were offered and sold in reliance on the exemption from registration under the Securities Act of 1933, as amended, provided by Section 4(2) and Regulation D (Rule 506) under the Securities Act of 1933, as amended.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
31.01
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31.02
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32.01
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101 INS
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XBRL Instance Document
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101 SCH
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XBRL Taxonomy Extension Schema Document
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101 CAL
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XBRL Taxonomy Calculation Linkbase Document
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101 DEF
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XBRL Taxonomy Extension Definition Linkbase Document
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101 LAB
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XBRL Taxonomy Labels Linkbase Document
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101 PRE
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XBRL Taxonomy Presentation Linkbase Document
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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BIOSIG TECHNOLOGIES, INC.
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Date: May 4, 2018
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By:
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/s/ KENNETH L. LONDONER
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Kenneth L. Londoner
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Chairman and Chief Executive Officer (Principal Executive Officer)
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Date: May 4, 2018
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By:
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/s/ STEVEN CHAUSSY
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Steven Chaussy
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Chief Financial Officer (Principal Accounting Officer)
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