UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 10-Q

 


 

(Mark One)

 

 

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

 

For the quarterly period ended June 30, 2022

 

 

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

 

For the transition period from to

 

Commission file number: 001-38659

 

BIOSIG TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware

 

26-4333375

(State or other jurisdiction of incorporation

or organization)

 

(IRS Employer Identification No.)

 

 

 

55 Greens Farms Road, 1st Floor

Westport, CT

 

06880

(Address of principal executive office)

 

(Zip Code)

 

 

 

(203) 409-5444

(Registrant’s telephone number, including area code)

 

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001 per share

BSGM

The NASDAQ Capital Market

 

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

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

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

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

Emerging growth company

 

 

 

 

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

 

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

 

As of August 15, 2022, there were 44,814,380 shares of registrant’s common stock outstanding.

 

 

 

 

TABLE OF CONTENTS

 

PART I.          FINANCIAL INFORMATION

 

 

 

 

 

 

 

 

ITEM 1.

Financial Statements

 

 

 

 

 

 

 

 

 

Condensed consolidated balance sheets as of June 30, 2022 (unaudited) and December 31, 2021

 

3

 

 

 

 

 

 

 

Condensed consolidated statements of operations for the three and six months ended June 30, 2022 and 2021 (unaudited)

 

4

 

 

 

 

 

 

 

Condensed consolidated statement of changes in equity for the three and six months ended June 30, 2022 (unaudited)

 

5

 

 

 

 

 

 

 

Condensed consolidated statement of changes in equity for the three and six months ended June 30, 2021 (unaudited)

 

6

 

 

 

 

 

 

 

Condensed consolidated statements of cash flows for the six months ended June 30, 2022 and 2021 (unaudited)

 

7

 

 

 

 

 

 

 

Notes to condensed consolidated financial statements (unaudited)

 

8-28

 

 

 

 

 

 

ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

29-39

 

ITEM 3.

Quantitative and Qualitative Disclosures about Market Risk

 

39

 

ITEM 4.

Controls and Procedures

 

39

 

 

 

 

 

PART II.          OTHER INFORMATION

 

 

 

 

 

 

 

 

ITEM 1.

Legal Proceedings

 

40

 

ITEM 1A.

Risk Factors

 

40

 

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

41

 

ITEM 3.

Defaults Upon Senior Securities

 

41

 

ITEM 4.

Mine Safety Disclosures

 

41

 

ITEM 5.

Other Information

 

41

 

ITEM 6.

Exhibits

 

42

 

 

 

 

 

 

SIGNATURES

 

43

 

 

 

 

 

 

PART I FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

BIOSIG TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Par Value and Share Amounts)

 

   

June 30,

   

December 31,

 
   

2022

   

2021

 
   

(unaudited)

         

ASSETS

               

Current assets:

               

Cash

  $ 5,077     $ 11,659  

Inventory

    2,026       1,881  

Prepaid expenses and vendor deposits

    633       354  

Total current assets

    7,736       13,894  
                 

Property and equipment, net

    596       652  
                 

Right-to-use assets, net

    898       604  
                 

Other assets:

               

Patents, net

    317       326  

Trademarks

    1       1  

Deposits

    42       42  
                 

Total assets

  $ 9,590     $ 15,519  
                 

LIABILITIES AND EQUITY

               

Current liabilities:

               

Accounts payable and accrued expenses, including $104 and $86 to related parties as of June 30, 2022 and December 31, 2021, respectively

  $ 1,451     $ 2,179  

Deferred revenue, short term

    21       32  

Dividends payable

    86       82  

Lease liability, short term

    341       283  

Total current liabilities

    1,899       2,576  
                 

Deferred revenue, long term

    -       5  

Lease liability, long term

    609       373  

Total long-term liabilities

    609       378  
                 

Total liabilities

    2,508       2,954  
                 

Commitments and contingencies (Note 10)

               
                 

Series C 9% Convertible Preferred Stock, $0.001 par value, $1,000 stated value, authorized 4,200 shares, 105 shares issued and outstanding: liquidation preference of $105 as of June 30, 2022 and December 31, 2021

    105       105  
                 

Equity:

               

Preferred stock, $0.001 par value, authorized 1,000,000 shares, designated 200 shares of Series A, 600 shares of Series B, 4,200 shares of Series C, 1,400 shares of Series D, 1,000 shares of Series E, 200,000 shares of Series F Preferred Stock, none issued

    -       -  

Common stock, $0.001 par value, authorized 200,000,000 shares, 44,811,880 and 35,567,180 issued and outstanding as of June 30, 2022 and December 31, 2021, respectively

    45       36  

Additional paid in capital

    209,456       201,127  

Accumulated deficit

    (202,644 )     (188,922 )

Total stockholders' equity attributable to BioSig Technologies, Inc.

    6,857       12,241  

Non-controlling interest

    120       219  

Total equity

    6,977       12,460  
                 

Total liabilities and equity

  $ 9,590     $ 15,519  

 

See the accompanying notes to the unaudited condensed consolidated financial statements

 

3

 

BIOSIG TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands, Except Par Value and Share Amounts)

(unaudited)

 

   

Three months ended June 30,

   

Six months ended June 30,

 
   

2022

   

2021

   

2022

   

2021

 

Revenue:

                               

Product sales

  $ -     $ 199     $ -     $ 314  

Service

    8       8       16       11  

Total revenue

    8       207       16       325  
                                 

Cost of goods sold

    -       62       -       161  
                                 

Gross profit

    8       145       16       164  
                                 

Operating expenses:

                               

Research and development

    1,351       1,667       2,968       2,933  

General and administrative

    4,302       6,480       10,703       13,751  

Depreciation and amortization

    71       49       126       91  

Total operating expenses

    5,724       8,196       13,797       16,775  
                                 

Loss from operations

    (5,716 )     (8,051 )     (13,781 )     (16,611 )
                                 

Other income (expense):

                               

Interest income, net

    -       -       -       1  
                                 

Loss before income taxes

    (5,716 )     (8,051 )     (13,781 )     (16,610 )
                                 

Income taxes (benefit)

    -       -       -       -  
                                 

Net loss

    (5,716 )     (8,051 )     (13,781 )     (16,610 )
                                 

Non-controlling interest

    (43 )     350       59       590  
                                 

Net loss attributable to BioSig Technologies, Inc.

    (5,759 )     (7,701 )     (13,722 )     (16,020 )
                                 

Preferred stock dividend

    (3 )     (3 )     (5 )     (5 )

Preferred stock deemed dividend

    (108 )     -       (108 )     -  
                                 

NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS

  $ (5,870 )   $ (7,704 )   $ (13,835 )   $ (16,025 )
                                 

Net loss per common share, basic and diluted

  $ (0.15 )   $ (0.24 )   $ (0.36 )   $ (0.50 )
                                 

Weighted average number of common shares outstanding, basic and diluted

    39,823,034       32,169,191       37,920,734       31,878,283  

 

See the accompanying notes to the unaudited condensed consolidated financial statements

 

4

 

BIOSIG TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

THREE AND SIX MONTHS ENDED JUNE 30, 2022

(In Thousands, Except Par Value and Share Amounts)

 

   

Common stock

   

Additional

Paid in

   

Accumulated

   

Non-controlling

         
   

Shares

   

Amount

   

Capital

   

Deficit

   

Interest

   

Total

 

Balance, December 31, 2021

    35,567,180     $ 36     $ 201,127     $ (188,922 )   $ 219     $ 12,460  

Common stock issued for services

    1,312,500       1       1,600       -       -       1,601  

Change in fair value of modified options

    -       -       15       -       -       15  

Sale of common stock and warrants, net transactional costs of $3

    2,613,130       2       3,000       -       -       3,002  

Stock based compensation

    66,249       *       500       -       (101 )     399  

Preferred stock dividend

    -       -       (2 )     -       -       (2 )

Net loss

    -       -       -       (7,963 )     (102 )     (8,065 )

Balance, March 31, 2022 (unaudited)

    39,559,059       39       206,240       (196,885 )     16       9,410  

Common stock issued for services

    567,500       1       482       -       -       483  

Sale of common stock under At-the-market offering, net of transaction expenses of $46

    322,404       *       302       -       -       302  

Sale of common stock, net transactional costs of $438

    4,341,667       5       2,813       -       -       2,818  

Issuance of subsidiary stock in settlement of debt to parent

    -       -       (292 )             292       -  

Stock based compensation

    21,250       *       (86 )     -       (231 )     (317 )

Accretion of deemed preferred stock dividend

    -       -       108       -       -       108  

Deemed preferred stock dividend

    -       -       (108 )     -       -       (108 )

Preferred stock dividend

    -       -       (3 )     -       -       (3 )

Net loss

    -       -       -       (5,759 )     43       (5,716 )

Balance, June 30, 2022 (unaudited)

    44,811,880     $ 45     $ 209,456     $ (202,644 )   $ 120     $ 6,977  

 

See the accompanying notes to the unaudited condensed consolidated financial statements

 

5

 

BIOSIG TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

THREE AND SIX MONTHS ENDED JUNE 30, 2021

(In Thousands, Except Par Value and Share Amounts)

 

   

Common stock

   

Additional

Paid in

   

Accumulated

   

Non-controlling

         
   

Shares

   

Amount

   

Capital

   

Deficit

   

Interest

   

Total

 

Balance, December 31, 2020

    30,764,792     $ 31     $ 181,344     $ (157,005 )   $ 802     $ 25,172  

Common stock issued for services

    406,692       *       1,777       -       -       1,777  

Common stock issued upon exercise of options at $2.96 per share

    9,375       *       28       -       -       28  

Sale of common stock under At-the-market offering, net of transaction expenses of $40

    251,720       *       1,300       -       -       1,300  

Stock based compensation

    682,202       1       721       -       20       742  

Preferred stock dividend

    -       -       (2 )     -       -       (2 )

Net loss

    -       -       -       (8,319 )     (240 )     (8,559 )

Balance, March 31, 2021 (unaudited)

    32,114,781       32       185,168       (165,324 )     582       20,458  

Common stock issued for services

    36,948       *       140       -       -       140  

Change in fair value of modified options

    -       -       313       -       8       321  

Stock based compensation

    53,750       *       1,518       -       134       1,652  

Preferred stock dividend

    -       -       (3 )     -       -       (3 )

Net loss

    -       -       -       (7,701 )     (350 )     (8,051 )

Balance, June 30, 2021 (unaudited)

    32,205,479     $ 32     $ 187,136     $ (173,025 )   $ 374     $ 14,517  

 

See the accompanying notes to the unaudited condensed consolidated financial statements

 

6

 

BIOSIG TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands, Except Par Value and Share Amounts)

(unaudited)

 

   

Six months ended June 30,

 
   

2022

   

2021

 

CASH FLOWS FROM OPERATING ACTIVITIES:

               

Net loss

  $ (13,781 )   $ (16,610 )

Adjustments to reconcile net loss to cash used in operating activities:

               

Depreciation and amortization

    126       91  

Non-cash lease expense

    166       230  

Equity based compensation

    2,166       4,311  

Change in fair value of modified options

    15       321  

Changes in operating assets and liabilities:

               

Accounts receivable

    -       (199 )

Inventory

    (145 )     37  

Prepaid expenses and other

    (277 )     (209 )

Deferred revenue

    (16 )     53  

Accounts payable and accrued expenses

    (731 )     (1,693 )

Operating lease liabilities

    (167 )     (242 )

Net cash used in operating activities

    (12,644 )     (13,910 )
                 

CASH FLOWS FROM INVESTING ACTIVITIES:

               

Purchase of property and equipment

    (60 )     (182 )

Net cash used in investing activity

    (60 )     (182 )
                 

CASH FLOWS FROM FINANCING ACTIVITIES:

               

Proceeds from sale of common stock, net of issuance costs

    5,820       -  

Proceeds from sale of common stock under a At-the-market offering, net of issuance costs

    302       1,300  

Proceeds from exercise of options

    -       28  

Net cash provided by financing activities

    6,122       1,328  
                 

Net decrease in cash and cash equivalents

    (6,582 )     (12,764 )
                 

Cash, beginning of the period

    11,659       28,268  

Cash, end of the period

  $ 5,077     $ 15,504  
                 

Supplemental disclosures of cash flow information:

               

Cash paid during the period for interest

  $ -     $ -  

Cash paid during the period for income taxes

  $ -     $ -  
                 

Noncash investing and financing activities:

               

Dividend payable on preferred stock charged to additional paid in capital

  $ 5     $ 5  

Series C convertible preferred stock deemed dividend

  $ 108     $ -  

Record right-to-use assets and related lease liability

  $ 502     $ 218  

 

See the accompanying notes to the unaudited condensed consolidated financial statements

 

7

 

BIOSIG TECHNOLOGIES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022

(unaudited)

 

NOTE 1 NATURE OF OPERATIONS AND BASIS OF PRESENTATION

 

Business and organization

 

BioSig Technologies, Inc. was initially incorporated on February 24, 2009 under the laws of the State of Nevada and subsequently re-incorporated in the state of Delaware in 2011. The Company is principally devoted to improving the standard care in electrophysiology with our PURE EP System’s enhanced signal acquisition, digital signal processing, and analysis during ablation of cardiac arrhythmias. The Company has generated minimal revenue to date and consequently its operations are subject to all risks inherent in business enterprises in early commercialization stage.

 

On November 7, 2018, the Company formed a subsidiary under the laws of the State of Delaware originally under the name of NeuroClear Technologies, Inc. which was renamed to ViralClear Pharmaceuticals, Inc. (“ViralClear”) in March 2020. The subsidiary was established to pursue additional applications of the PURE EP™ signal processing technology outside of cardiac electrophysiology, and subsequently in 2020, was repurposed to develop merimepodib, a broad-spectrum anti-viral agent that showed potential for the treatment of COVID-19. Since late 2020, ViralClear has been realigned with its original objective of pursuing additional applications of the PURE EP™ signal processing technology outside of cardiac electrophysiology.

 

As of June 30, 2022, the Company had a majority interest in ViralClear of 69.08%.

 

On July 2, 2020, the Company formed an additional subsidiary, NeuroClear Technologies, Inc., a Delaware corporation.

 

The unaudited condensed consolidated financial statements include the accounts of BioSig Technologies, Inc., its wholly owned subsidiary, NeuroClear Technologies, Inc. and its majority owned subsidiary, ViralClear Pharmaceuticals, Inc. as the “Company” or “BioSig”.

 

The unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

 

The condensed consolidated balance sheet as of December 31, 2021 has been derived from audited financial statements.

 

Operating results for the three and six months ended June 30, 2022 are not necessarily indicative of results that may be expected for the year ending December 31, 2022. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2021 filed with the Company’s Form 10-K with the Securities and Exchange Commission on March 31, 2022.

 

COVID-19

 

On March 11, 2020, the World Health Organization declared a pandemic related to the rapidly spreading coronavirus (COVID-19) outbreak, which has led to a global health emergency. The full public-health impact of the ongoing pandemic is currently indeterminable and rapidly evolving, and the related health crisis has adversely affected and may continue to adversely affect the global economy, resulting in delays to our commercialization objectives of the PURE EP Systems into 2022.

 

8

 

BIOSIG TECHNOLOGIES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022

(unaudited)

 

NOTE 2 GOING CONCERN AND MANAGEMENTS LIQUIDITY PLANS

 

As of June 30, 2022, the Company had cash of $5.1 million and working capital of $5.8 million. During the six months ended June 30, 2022, the Company used net cash in operating activities of $12.6 million. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

 

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

 

The Company’s plans include the continued commercialization of the PURE EP System and other applications of our core technology and raising capital through the sale of additional equity securities, debt or capital inflows from strategic partnerships. The Company’s strategic shift from a focus on technology development to commercialization will allow the Company to significantly reduce operating expenses.

 

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

 

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

 

NOTE 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Use of Estimates

 

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

 

Revenue Recognition

 

The Company derives its revenue primarily from the sale of its medical device, the PURE EP™ System, and well as related support and maintenance services and software upgrades in connection with the system.

 

The Company recognizes revenue in accordance with Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers (“ASC 606”). The core principle of ASC 606 is that an entity recognizes revenue to depict

the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

 

The Company determines revenue recognition through the following five steps:

 

 

Identify the contract with the customer;

 

 

Identify the performance obligations in the contract;

 

 

Determine the transaction price;

 

 

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

 

 

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

 

9

 

BIOSIG TECHNOLOGIES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022

(unaudited)

 

Performance obligations are the unit of accounting for revenue recognition and generally represent the distinct goods or services that are promised to the customer. If the Company determines that it has not satisfied a performance obligation, it will defer recognition of the revenue until the performance obligation is deemed to be satisfied. Once the PURE EP system is delivered, installed, and accepted by the customer, our performance obligation is recognized. Support, maintenance, and software upgrades are performance obligations over a defined period and are recognized ratably over the contractual service period. Customers typically purchase these services with the initial sale of the PURE EP System and do not have the right to terminate their contracts unless we fail to perform material obligations.

 

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

 

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

 

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

 

A reconciliation of contract liabilities with customers for the six months ended June 30, 2022 and 2021, are presented below:

 

Six months ended June 30, 2022:

 

   

Balance at

December 31, 2021

(000’s)

   

Consideration Received

(000’s)

   

Recognized in Revenue

(000’s)

   

Balance at

June 30, 2022

(000’s)

 

Product revenue

  $ -     $ -     $ -     $ -  

Service revenue

    37       -       (16

)

    21  

Total

  $ 37     $ -     $ (16

)

  $ 21  

 

Six months ended June 30, 2021:

 

   

Balance at

December 31, 2020

(000’s)

   

Consideration Received

(000’s)

   

Recognized in Revenue

(000’s)

   

Balance at

June 30, 2021

(000’s)

 

Product revenue

  $ -     $ 314     $ (314

)

  $ -  

Service revenue

    -       64       (11

)

    53  

Total

  $ -     $ 378     $ (325

)

  $ 53  

 

10

 

BIOSIG TECHNOLOGIES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022

(unaudited)

 

The table below summarizes our deferred revenue as of June 30, 2022 and December 31, 2021:

 

   

June 30, 2022

(000’s)

   

December 31, 2021

(000’s)

 

Deferred revenue-current

  $ 21     $ 32  

Deferred revenue-noncurrent

    -       5  

Total deferred revenue

  $ 21     $ 37  

 

The Company had one customer which accounted for approximately 100% of their revenue in the three and six months ended June 30, 2022.

 

The Company had one customer which accounted for approximately 96% of our revenue in the three months ended June 30, 2021 and two customers which accounted for approximately 61% and 39% of our revenue in the six months ended June 30, 2021.

 

The Company utilized one contract manufacturer for the manufacture and supply of the PURE EP system for the three and six months ended June 30, 2022 and 2021.

 

Cost of Goods Sold

 

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

 

Allowance for Doubtful Accounts

 

The Company adjusts accounts receivable down to net realizable value with its allowance methodology. In determining the allowance for doubtful accounts for estimated losses, aged receivables are analyzed periodically by management. Each identified receivable is reviewed based upon historical collection experience, financial condition of the customer and the status of any open or unresolved issues with the customer preventing the payment thereof. Corrective action, if necessary, is taken by the Company to resolve open issues related to unpaid receivables. The allowance for doubtful accounts was $0 at June 30, 2022 and December 31, 2021. The Company believes that its reserve is adequate, however results may differ in future periods. For the three and six months ended June 30, 2022 and 2021, bad debt expense totaled $0.

 

Concentrations of Credit Risk

 

Financial instruments and related items, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents. The Company places its cash and temporary cash investments with credit quality institutions. At times, such amounts may be in excess of the FDIC insurance limit. At June 30, 2022 and December 31, 2021, deposits in excess of FDIC limits were $4.6 million and $11.2 million, respectively.

 

Fair Value of Financial Instruments

 

Accounting Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”) requires disclosure of the fair value of certain financial instruments. The carrying value of cash, accounts payable and accrued liabilities as reflected in the balance sheets, approximate fair value because of the short-term maturity of these instruments. All other significant financial assets, financial liabilities and equity instruments of the Company are either recognized or disclosed in the financial statements together with other information relevant for making a reasonable assessment of future cash flows, interest rate risk and credit risk. Where practicable the fair values of financial assets and financial liabilities have been determined and disclosed; otherwise only available information pertinent to fair value has been disclosed.

 

11

 

BIOSIG TECHNOLOGIES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022

(unaudited)

 

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

 

Inventory

 

The inventory is comprised of raw materials and finished goods available for sale and are stated at the lower of cost or net realizable value using specific identification method for serial numbered inventory and first-in, first-out method for all other inventory for valuation. The inventory at June 30, 2022 and December 31, 2021, inventory was comprised of the following:

 

   

June 30, 2022

(000’s)

   

December 31, 2021

(000’s)

 

Raw materials

  $ 176     $ -  

Finished goods

    1,850       1,881  

Total inventory

  $ 2,026     $ 1,881  

 

Prepaid Expenses and Vendor Deposits

 

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

 

Leases

 

The Company determines if a contractual arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, current operating lease liabilities, and noncurrent operating lease liabilities on the Company’s consolidated balance sheet. The Company evaluates and classifies leases as operating or finance leases for financial reporting purposes. The classification evaluation begins at the commencement date and the lease term used in the evaluation includes the non-cancellable period for which the Company has the right to use the underlying asset, together with renewal option periods when the exercise of the renewal option is reasonably certain and failure to exercise such option which result in an economic penalty. All the Company’s real estate leases are classified as operating leases. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term.

 

The lease payments included in the present value are fixed lease payments. As most of the Company’s leases do not provide an implicit rate, the Company estimates its collateralized incremental borrowing rate, based on information available at the commencement date, in determining the present value of lease payments. The Company applies the portfolio approach in applying discount rates to its classes of leases. The operating lease ROU assets include any payments made before the commencement date. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company does not currently have subleases. The Company does not currently have residual value guarantees or restrictive covenants in its leases.

 

Property and Equipment

 

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

 

12

 

BIOSIG TECHNOLOGIES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022

(unaudited)

 

Impairment of Long-lived Assets

 

The Company recognizes an impairment of long-lived assets used in operations, other than goodwill, when events or circumstances indicate that the asset might be impaired and the estimated undiscounted cash flows to be generated by those assets over their remaining lives are less than the carrying amount of those items. The net carrying value of assets not recoverable is reduced to fair value, which is typically calculated using the discounted cash flow method. The Company did not recognize and record any impairments of long-lived assets used in operations during the three and six months ended June 30, 2022 and 2021.

 

Research and Development Costs

 

The Company accounts for research and development costs in accordance with the Accounting Standards Codification subtopic 730-10, Research and Development (“ASC 730-10”). Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and developments costs are expensed when the contracted work has been performed or as milestone results have been achieved. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred. The Company incurred research and development expenses of $1.4 million and $3.0 million for the three and six months ended June 30, 2022; $1.7 million and $2.9 million for the three and six months ended June 30, 2021, respectively.

 

Net Income (loss) Per Common Share

 

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

 

The computation of basic and diluted loss per share as of June 30, 2022 and 2021 excludes potentially dilutive securities when their inclusion would be anti-dilutive, or if their exercise prices were greater than the average market price of the common stock during the period.

 

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

 

   

June 30, 2022

   

June 30, 2021

 

Series C convertible preferred stock

    257,524       52,028  

Options to purchase common stock

    5,023,484       4,004,622  

Warrants to purchase common stock

    3,649,123       887,262  

Restricted stock units to acquire common stock

    111,250       292,250  

Totals

    9,041,381       5,236,162  

 

Stock Based Compensation

 

The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award as measured on the grant date. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period.

 

13

 

BIOSIG TECHNOLOGIES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022

(unaudited)

 

Income Taxes

 

The Company follows Accounting Standards Codification subtopic 740-10, Income Taxes (“ASC 740-10”) for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability during each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change. Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods.

 

Patents, Net

 

The Company capitalizes certain initial asset costs in connection with patent applications including registration, documentation and other professional fees associated with the application. Patent costs incurred prior to the Company’s U.S. Food and Drug Administration (“FDA”) 510(k) application on March 28, 2018 were charged to research and development expense as incurred. Commencing upon first in-man trials on February 18 and 19, 2019, capitalized costs are amortized to expense using the straight-line method over the lesser of the legal patent term or the estimated life of the product of 20 years. During the three and six months ended June 30, 2022, the Company recorded amortization of $4,752 and $9,503; and $4,752 and $9,503 for the three and six months ended June 30, 2021 to current period operations, respectively.

 

Warranty

 

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

 

Non-controlling Interest

 

The Company’s non-controlling interest represents the non-controlling shareholders ownership interests related to the Company’s subsidiary, ViralClear. The Company reports its non-controlling interest in subsidiaries as a separate component of equity in the unaudited condensed consolidated balance sheets and reports both net loss attributable to the non-controlling interest and net loss attributable to the Company’s common shareholders on the face of the unaudited condensed consolidated statements of operations. The Company’s equity interest in ViralClear is 69.08% and the non-controlling stockholders’ interest is 30.92% as of June 30, 2022. This is reflected in the unaudited condensed consolidated statements of changes in equity.

 

Segment Information

 

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision-making group, in making decisions how to allocate resources and assess performance. The information disclosed herein represents all of the material financial information related to the Company’s principal operating segments. (See Note 11 – Segment Reporting).

 

Recent Accounting Pronouncements

 

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

 

14

 

BIOSIG TECHNOLOGIES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022

(unaudited)

 

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

 

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

 

NOTE 4 PROPERTY AND EQUIPMENT

 

Property and equipment as of June 30, 2022 and December 31, 2021 is summarized as follows:

 

   

June 30, 2022

(000’s)

   

December 31, 2021

(000’s)

 

Computer equipment

  $ 392     $ 383  

Furniture and fixtures

    88       88  

Manufacturing equipment

    304       286  

Testing/Demo equipment

    178       145  

Leasehold improvements

    79       79  

Total

    1,041       981  

Less accumulated depreciation

    (445

)

    (329

)

Property and equipment, net

  $ 596     $ 652  

 

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

 

Depreciation expense was $66,243 and $116,625 for three and six months ended June 30, 2022 and $45,113 and $81,947 for the three and six months ended June 30, 2021, respectively

 

NOTE 5 RIGHT TO USE ASSETS AND LEASE LIABILITY

 

On April 4, 2022, the Company entered into a Seventh Amendment to the Office Lease at 12424 Wilshire Blvd in Los Angeles dated August 9, 2011 (the “Seventh Amendment”) – it is the Fifth Extended Term with respect to Suite 745 and the Expansion Term with respect to Suite 740 which is from July 1, 2022 until July 31, 2025 with a fixed monthly rent beginning at $14,124 and escalating yearly to $15,130 in the final year. The security deposit remains unchanged at $27,404.

 

The Company determined that the Seventh Amendment was a lease modification and accordingly reassessed the lease classification, remeasured the lease liability and adjusted the right-to-use asset. At April 4, 2022, the Company removed the remaining right-to-use net assets of $42,312 and related lease liability of $40,564 and recorded right-to-use assets and related lease liability of $502,445.

 

As of June 30, 2022 and December 31, 2021, the Company had outstanding four leases with aggregate payments of $32,143 per month, expiring through July 31, 2025.

 

15

 

BIOSIG TECHNOLOGIES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022

(unaudited)

 

Right to use assets is summarized below:

 

   

June 30, 2022

(000’s)

   

December 31, 2021

(000’s)

 

Right to use asset

  $ 1,087     $ 803  

Less accumulated amortization

    (189

)

    (199

)

Right to use assets, net

  $ 898     $ 604  

 

During the three and six months ended June 30, 2022, the Company recorded $108,612 and $216,346 and $126,638 and $245,239 for the three and six months ended June 30, 2021 as lease expense to current period operations, respectively.

 

Lease liability is summarized below:

 

   

June 30, 2022

(000’s)

   

December 31, 2021

(000’s)

 

Total lease liability

  $ 950     $ 656  

Less: short term portion

    (341

)

    (283

)

Long term portion

  $ 609     $ 373  

 

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

 

Year ended December 31, 2022

  $ 181  

Year ended December 31, 2023

    393  

Year ended December 31, 2024

    370  

Year ended December 31, 2025

    106  

Total

    1,050  

Less: Present value discount

    (100

)

Lease liability

  $ 950  

 

Lease expense for the three months ended June 30, 2022 and 2021 was comprised of the following:

 

   

June 30, 2022

(000’s)

   

June 30, 2021

(000’s)

 

Operating lease expense

  $ 81     $ 119  

Short-term lease expense

    9       8  

Variable lease expense

    19       -  

Total

  $ 109     $ 127  

 

Lease expense for the six months ended June 30, 2022 and 2021 was comprised of the following:

 

   

June 30, 2022

(000’s)

   

June 30, 2021

(000’s)

 

Operating lease expense

  $ 166     $ 230  

Short-term lease expense

    18       15  

Variable lease expense

    32       -  

Total

  $ 216     $ 245  

 

16

 

BIOSIG TECHNOLOGIES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022

(unaudited)

 

NOTE 6 ACCOUNTS PAYABLE AND ACCRUED EXPENSES

 

Accounts payable and accrued expenses at June 30, 2022 and December 31, 2021 consist of the following:

 

   

June 30, 2022

(000’s)

   

December 31, 2021

(000’s)

 

Accrued accounting and legal

  $ 341     $ 204  

Accrued reimbursements and travel

    39       56  

Accrued consulting

    99       264  

Accrued research and development expenses

    162       367  

Accrued product purchases

    -       1  

Accrued marketing

    177       38  

Accrued office and other

    51       84  

Accrued payroll

    569       552  

Accrued settlement related to arbitration

    13       613  
    $ 1,451     $ 2,179  

 

NOTE 7 STOCKHOLDERS EQUITY

 

Preferred stock

 

The Company is authorized to issue 1,000,000 shares of $0.001 par value preferred stock. As of June 30, 2022 and December 31, 2021, the Company has designated 200 shares of Series A preferred stock, 600 shares of Series B preferred stock, 4,200 shares of Series C Preferred Stock, 1,400 shares of Series D Preferred Stock, 1,000 shares of Series E Preferred Stock and 200,000 shares of Series F Preferred Stock. As of June 30, 2022 and December 31, 2021, there were no outstanding shares of Series A, Series B, Series D, Series E and Series F preferred stock.

 

Series C Preferred Stock

 

As of June 30, 2022 and December 31, 2021, the Company had 105 shares of Series C Preferred stock issued and outstanding. During the six months ended June 30, 2022, the conversion price of the Series C Preferred stock was reset from $2.27 per share to $0.75 per share. As such, the Company recorded a noncash deemed dividend of $107,953 during the six months ended June 30, 2022.

 

Common stock

 

The Company is authorized to issue 200,000,000 shares of $0.001 par value common stock. As of June 30, 2022 and December 31, 2021, the Company had 44,811,880 and 35,567,180 shares issued and outstanding, respectively.

 

During the six months ended June 30, 2022, the Company issued 1,880,000 shares of common stock for services at a fair value of $2,083,500.

 

During the six months ended June 30, 2022, the Company issued an aggregate of 87,499 shares of its common stock for vested restricted stock units.

 

Sale of common stock

 

On March 21, 2022, the Company entered into a securities purchase agreement with several institutional and accredited investors, pursuant to which the Company sold in a registered direct offering an aggregate of 2,613,130 shares of the Company’s common stock, at an offering price of $1.15 per share and warrants to purchase up to 2,613,130 shares of common stock at an exercise price of $1.40 per share, that are exercisable six months after the date of issuance and will expire three and one-half years following the date of issuance, for gross proceeds of approximately $3.0 million, net of expenses of approximately $3,000.

 

17

 

BIOSIG TECHNOLOGIES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022

(unaudited)

 

On June 24, 2022, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Laidlaw & Company (UK) Ltd. (the “Underwriter”), which was amended and restated on June 28, 2022 (the “Amended and Restated Underwriting Agreement”), relating to a best-efforts public offering (the “June 2022 Offering”) of 4,341,667 shares of the Company’s common stock. The public offering price of the common stock was $0.75 per share. After the underwriting discounts, which includes a reduced discount with respect to certain Company-introduced investors, and offering expenses, the Company received net proceeds from the offering of approximately $2,818,000.

 

Pursuant to the Amended and Restated Underwriting Agreement, the Company issued to the Underwriter, or its designees warrants to purchase up to an aggregate 217,083 shares of common stock, or 5% of the number of common stock sold in the offering. The underwriter warrants are exercisable following the date of issuance and ending five years from the date of the execution of the Underwriting Agreement, at a price per share equal to $0.90 per share (120% of the public offering price per share) and are exercisable on a “cashless” basis. The Company also agreed to reimburse the Underwriter for certain of their out-of-pocket expenses incurred in connection with the offering, including, among other things, the reasonable fees and expenses of counsel, which fees and expenses may not exceed $125,000.

 

ATM Sales Agreement

 

On May 17, 2022, the Company entered into an ATM Sales Agreement (the “Sales Agreement”) with Virtu Americas LLC to act as the Company’s sales agent or principal (“Agent”), with respect to the issuance and sale of up to $10.0 million of the Company’s shares of common stock, from time to time in an at-the-market public offering.

 

Upon delivery of a placement notice and subject to the terms and conditions of the Sales Agreement, Virtu Americas LLC may sell the common stock by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended. The Company may sell the common stock in amounts and at times to be determined by the Company from time to time subject to the terms and conditions of the Sales Agreement, but it has no obligation to sell any of the common stock under the Sales Agreement. The Company or Virtu Americas LLC may suspend or terminate the offering of common stock upon notice to the other party and subject to other conditions. Virtu Americas LLC will act as sales agent on a commercially reasonable efforts basis consistent with its normal trading and sales practices and applicable state and federal law, rules and regulations and the rules of Nasdaq.

 

The Company will pay Agent a commission of up to 3.0% of the gross proceeds from the sale of the common stock pursuant to the Sales Agreement.

 

The offering of common stock pursuant to the Sales Agreement will terminate upon the earlier of (i) the sale of all common stock subject to the Sales Agreement or (ii) termination of the Sales Agreement in accordance with its terms.

 

The common stock was sold and issued pursuant the Company’s shelf registration statement on Form S-3 (File No. 333-251859), which was previously declared effective by the Securities and Exchange Commission, and a related prospectus.

 

From May 19, 2022 through June 15, 2022, the Company sold 322,404 shares of its common stock through the Sales Agreement for net proceeds of $302,192, after transactional costs of $46,065.

 

18

 

BIOSIG TECHNOLOGIES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022

(unaudited)

 

NOTE 8 OPTIONS, RESTRICTED STOCK UNITS AND WARRANTS

 

BioSig Technologies, Inc.

 

2012 Equity Incentive Plan

 

On October 19, 2012, the Board of Directors of BioSig Technologies, Inc. approved the 2012 Equity Incentive Plan (the “Plan”) and terminated the Long-Term Incentive Plan (the “2011 Plan”). The Plan (as amended) provides for the issuance of options, stock appreciation rights, restricted stock and restricted stock units to purchase up to 14,474,450 shares of the Company’s common stock to officers, directors, employees and consultants of the Company. Under the terms of the Plan the Company may issue Incentive Stock Options as defined by the Internal Revenue Code to employees of the Company only and nonstatutory options. The Board of Directors of the Company or a committee thereof administers the Plan and determines the exercise price, vesting and expiration period of the grants under the Plan.

 

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

 

Additionally, the vesting period of the grants under the Plan will be determined by the administrator, in its sole discretion, with an expiration period of not more than ten years. There are 1,006,023 shares remaining available for future issuance of awards under the terms of the Plan as of June 30, 2022.

 

Options

 

Option valuation models require the input of highly subjective assumptions. The fair value of stock-based payment awards was estimated using the Black-Scholes option model with a volatility figure derived from historical stock prices of the Company. The Company accounts for the expected life of options using the based on the contractual life of options for non-employees.

 

For employees, the Company accounts for the expected life of options in accordance with the “simplified” method, which is used for “plain-vanilla” options, as defined in the accounting standards codification. The risk-free interest rate was determined from the implied yields of U.S. Treasury zero-coupon bonds with a remaining life consistent with the expected term of the options.

 

During the six months ended June 30, 2022, the Company granted an aggregate of 1,185,000 options to officers, directors and key consultants.

 

The following table presents information related to stock options at June 30, 2022:

 

 

Options Outstanding

 

 

Options Exercisable

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average

 

 

Exercisable

 

 

Exercise

 

 

Number of

 

 

Remaining Life

 

 

Number of

 

 

Price

 

 

Options

 

 

In Years

 

 

Options

 

 

$

Under 1.00

 

 

 

155,000

 

 

 

9.9

 

 

 

50,000

 

   

1.00-1.99

     

1,030,000

     

9.7

     

32,500

 

 

 

2.00-2.99

 

 

 

975,375

 

 

 

8.4

 

 

 

549,375

 

 

 

3.00-3.99

 

 

 

462,466

 

 

 

4.4

 

 

 

404,132

 

 

 

4.00-4.99

 

 

 

1,467,916

 

 

 

5.2

 

 

 

1,163,607

 

 

 

5.00-5.99

 

 

 

156,132

 

 

 

6.6

 

 

 

128,628

 

 

 

6.00-6.99

 

 

 

396,542

 

 

 

5.0

 

 

 

359,352

 

 

 

7.00-7.99

 

 

 

186,720

 

 

 

5.3

 

 

 

178,387

 

 

 

Over 8.00

 

 

 

193,333

 

 

 

7.4

 

 

 

181,236

 

 

 

 

 

 

 

5,023,484

 

 

 

6.9

 

 

 

3,047,217

 

 

19

 

BIOSIG TECHNOLOGIES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022

(unaudited)

 

A summary of the stock option activity and related information for the Plan for the six months ended June 30, 2022 is as follows:

 

                   

Weighted-Average

         
           

Weighted-Average

   

Remaining

   

Aggregate

 
   

Shares

   

Exercise Price

   

Contractual Term

   

Intrinsic Value

 

Outstanding at December 31, 2021

    4,568,484     $ 4.57       6.9     $ -  

Grants

    1,185,000     $ 1.23       10.0     $ -  

Forfeited/expired

    (730,000

)

  $ 4.93                  

Outstanding at June 30, 2022

    5,023,484     $ 3.72       6.9     $ -  

Exercisable at June 30, 2022

    3,047,217     $ 4.65       5.6     $ -  

 

The aggregate intrinsic value in the preceding tables represents the total pretax intrinsic value, based on options with an exercise price less than the stock price of BioSig Technologies, Inc. of $0.658 as of June 30, 2022, which would have been received by the option holders had those option holders exercised their options as of that date.

 

On February 7, 2022, the Company granted an aggregate of 100,000 options to purchase the company’s common stock in connection with the services rendered at the exercise price of $1.72 per share for a term of ten years with vesting on the quarterly for one year.

 

On February 17, 2022, the Company granted an aggregate of 66,000 options to purchase the company’s common stock in connection with the services rendered at the exercise price of $1.58 per share for a term of ten years with one-third vesting on the one-year anniversary and two-thirds vesting quarterly thereafter beginning February 17, 2023 for two years.

 

On March 15, 2022, the Company granted an aggregate of 70,000 options to purchase the company’s common stock in connection with the services rendered at the exercise price of $1.28 per share for a term of ten years with one-third vesting on the one-year anniversary and two-thirds vesting quarterly thereafter beginning March 15, 2023 for two years.

 

On March 30, 2022, the Company granted 350,000 options to purchase the company’s common stock in connection with the services rendered at the exercise price of $1.30 per share for a term of ten years with one-third vesting on the one-year anniversary and two-thirds vesting quarterly thereafter beginning March 30, 2023 for two years.

 

On April 13, 2022, the Company granted an aggregate of 444,000 options to purchase the company’s common stock in connection with the services rendered at the exercise price of $1.14 per share for a term of ten years with one-third vesting on the one-year anniversary and two-thirds vesting quarterly thereafter beginning April 13, 2023 for two years.

 

On May 12, 2022, the Company granted 50,000 options to purchase the company’s common stock in connection with the addition of a new board member at the exercise price of $0.82 per share for a term of ten years with half vesting immediately and half vesting April 22, 2023.

 

On May 16, 2022, the Company granted 50,000 options to purchase the company’s common stock in connection with the addition of a new board member at the exercise price of $0.87 per share for a term of ten years with half vesting immediately and half vesting May 2, 2023.

 

On June 15, 2022, the Company granted an aggregate of 55,000 options to purchase the company’s common stock in connection with the services rendered at the exercise price of $0.89 per share for a term of ten years with one-third vesting on the one-year anniversary and two-thirds vesting quarterly thereafter beginning June 15, 2023 for two years.

 

20

 

BIOSIG TECHNOLOGIES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022

(unaudited)

 

The following assumptions were used in determining the fair value of options during the six months ended June 30, 2022:

 

Risk-free interest rate

    1.17% - 3.39

%

Dividend yield

    0

%

Stock price volatility

    83.83% to 92.93

%

Expected life

 

5.5 to 10 years

 

Weighted average grant date fair value

  $ 0.86  

 

On March 16, 2022, in connection with the termination of a Company executive, the Company extended the life of 100,000 previously issued options from the contractual 90 days from termination of service to the earlier of the initial life or March 16, 2024. The change in estimated fair value of the modified options of $15,181 was charged to current period operations.

 

The following assumptions were used in determining the change in fair value of the modified options at March 16, 2022:

 

Risk-free interest rate

    0.44% - 1.95

%

Dividend yield

    0

%

Stock price volatility

    83.86

%

Expected life

 

0.25 – 2 years

 

 

The fair value of all options vesting during the three and six months ended June 30, 2022 of $356,394 and $1,006,386 and $613,806 and $1,190,692 for the three and six months ended June 30, 2021, respectively, was charged to current period operations. Unrecognized compensation expense of $2,600,031 at June 30, 2022 which the Company expects to recognize over a weighted average period of 1.06 years.

 

Warrants

 

The following table summarizes information with respect to outstanding warrants to purchase common stock of BioSig Technologies, Inc. at June 30, 2022:

 

 

Exercise

   

Number

 

Expiration

 

Price

   

Outstanding

 

Date

  $ 0.90       217,083  

June 2027

  $ 1.40       2,613,130  

September 2025

  $ 4.80       250,000  

February 2025 to July 2026

  $ 6.16       568,910  

November 2027

            3,649,123    

 

On March 21, 2022, the Company issued warrants to purchase 2,613,130 shares of its common stock at an exercise price of $1.40 per share, that are exercisable six months after the date of issuance and will expire three and one-half years following the date of issuance in connection with the sale of the Company’s common stock.

 

On June 29, 2022, the Company issued warrants to purchase 217,083 shares of common stock at an exercise price of $0.90 per share and will expire five years following the date of the execution of the Underwriting Agreement in connection with the sale of common stock in the June 2022 Offering.

 

21

 

BIOSIG TECHNOLOGIES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022

(unaudited)

 

A summary of the warrant activity for the six months ended June 30, 2022 is as follows:

 

 

 

Shares

 

 

Weighted-Average Exercise Price

 

 

Weighted-Average Remaining Contractual Term

 

 

Aggregate Intrinsic Value

 

Outstanding at December 31, 2021

 

 

818,910

 

 

$

5.74

 

 

 

5.3

 

 

$

-

 

Issued

 

 

2,830,213

 

 

$

1.36

 

 

 

3.4

 

 

 

-

 

Outstanding at June 30, 2022

 

 

3,649,123

 

 

$

2.35

 

 

 

3.7

 

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vested and expected to vest at June 30, 2022

 

 

3,649,123

 

 

$

2.35

 

 

 

3.7

 

 

$

-

 

Exercisable at June 30, 2022

 

 

1,035,993

 

 

$

4.73

 

 

 

4.8

 

 

$

-

 

 

The aggregate intrinsic value in the preceding tables represents the total pretax intrinsic value, based on options with an exercise price less than the company’s stock price of $0.658 of June 30, 2022, which would have been received by the option holders had those option holders exercised their options as of that date.

 

Restricted Stock Units

 

The following table summarizes the restricted stock activity for the six months ended June 30, 2022:

 

Restricted shares issued as of December 31, 2021

    141,250  

Granted

    87,500  

Vested and issued

    (87,499

)

Forfeited

    (30,001

)

Vested restricted shares as of June 30, 2022

    -  

Unvested restricted shares as of June 30, 2022

    111,250  

 

On March 8, 2022, the Company granted an aggregate of 37,500 restricted stock units for services with 12,500 vesting upon achievement of certain performance conditions and 25,000 vesting quarterly for one year.

 

On May 6, 2022, the Company granted 50,000 restricted stock units for services vesting one year from the date of issuance.

 

Stock based compensation expense related to restricted stock grants was $71,787 and $141,541 for the three and six months ended June 30, 2022 and $610,995 and $710,115 for the three and six months ended June 30, 2021, respectively. As of June 30, 2022, the stock-based compensation relating to restricted stock of $154,125 remains unamortized.

 

ViralClear Pharmaceuticals, Inc.

 

2019 Long-Term Incentive Plan

 

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

 

22

 

BIOSIG TECHNOLOGIES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022

(unaudited)

 

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

 

Additionally, the vesting period of the grants under the ViralClear Plan will be determined by the administrator, in its sole discretion, with an expiration period of not more than ten years. There are 2,415,074 shares remaining available for future issuance of awards under the terms of the ViralClear Plan.

 

ViralClear Options

 

The following table presents information related to stock options at June 30, 2022:

 

 

Options Outstanding

   

Options Exercisable

 
                 

Weighted

         
                 

Average

   

Exercisable

 
 

Exercise

   

Number of

   

Remaining Life

   

Number of

 
 

Price

   

Options

   

In Years

   

Options

 
  $ 5.00       125,000       0.5       91,664  

 

The fair value of the stock-based payment awards was estimated using the Black-Scholes option model with a volatility figure derived from an index of historical stock prices of comparable entities with the market value of stock price based on recent sales. The Company accounts for the expected life of options in accordance with the “simplified” method, which is used for “plain-vanilla” options, as defined in the accounting standards codification. The risk-free interest rate was determined from the implied yields of U.S. Treasury zero-coupon bonds with a remaining life consistent with the expected term of the options.

 

The fair value of all options vesting during the three and six months ended June 30, 2022 of $0 and $36,520 and $36,521 and $73,041 for the three and six months ended June 30, 2021, respectively, was charged to current period operations. Unrecognized compensation expense of $0 at June 30, 2022 will be expensed in future periods.

 

Warrants (ViralClear)

 

The following table presents information related to warrants (ViralClear) at June 30, 2022:

 

 

Exercise

   

Number

 

Expiration

 

Price

   

Outstanding

 

Date

  $ 5.00       473,772  

November 2027

    10.00       6,575  

May 2025

            480,347    

 

Restricted stock units (ViralClear)

 

The following table summarizes the restricted stock activity for the six months ended June 30, 2022:

 

Restricted shares outstanding at December 31, 2021:

    1,318,679  

Forfeited

    (240,000

)

Total restricted shares outstanding at June 30, 2022:

    1,078,679  
         

Comprised of:

       

Vested restricted shares as of June 30, 2022

    678,679  

Unvested restricted shares as of June 30, 2022

    400,000  

Total

    1,078,679  

 

23

 

BIOSIG TECHNOLOGIES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022

(unaudited)

 

Stock based compensation expense related to restricted stock unit grants of ViralClear was $(744,767) and $(1,101,163) for the three and six months ended June 30, 2022 and $391,881 and $421,032 for the three and six months ended June 30, 2021, respectively. As of June 30, 2022, the stock-based compensation relating to restricted stock of $87,210 remains unamortized.

 

NOTE 9 NON-CONTROLLING INTEREST

 

On November 7, 2018, the Company formed a subsidiary, now known as ViralClear, to pursue additional applications of the PURE EP™ signal processing technology outside of cardiac electrophysiology, and subsequently in 2020, was repurposed to develop merimepodib, a broad-spectrum anti-viral agent that showed potential for the treatment of COVID-19. Since late 2020, ViralClear has been realigned with its original objective of pursuing additional applications of the PURE EP™ signal processing technology outside of cardiac electrophysiology.

 

As of June 30, 2022 and December 31, 2021, the Company had a majority interest in ViralClear of 69.08% and 68.44%, respectively.

 

A reconciliation of the ViralClear Pharmaceuticals, Inc. non-controlling loss attributable to the Company:

 

Net profit attributable to the non-controlling interest for the three months ended June 30, 2022 (000’s):

 

Net income

  $ 137  

Average Non-controlling interest percentage of profit/losses

    31.3

%

Net income attributable to the non-controlling interest

  $ 43  

 

Net loss attributable to the non-controlling interest for the three months ended June 30, 2021 (000’s):

 

Net loss

  $ (1,167

)

Average Non-controlling interest percentage of profit/losses

    30.0

%

Net loss attributable to the non-controlling interest

  $ (350

)

 

Net loss attributable to the non-controlling interest for the six months ended June 30, 2022 (000’s):

 

Net loss

  $ (185

)

Average Non-controlling interest percentage of profit/losses

    31.9

%

Net loss attributable to the non-controlling interest

  $ (59

)

 

Net loss attributable to the non-controlling interest for the six months ended June 30, 2021 (000’s):

 

Net loss

  $ (1,971

)

Average Non-controlling interest percentage of profit/losses

    29.9

%

Net loss attributable to the non-controlling interest

  $ (590

)

 

The following table summarizes the changes in non-controlling interest for the six months ended June 30, 2022 (000’s):

 

Balance, December 31, 2021

  $ 219  

Allocation of equity to non-controlling interest due to subsidiary shares issued in settlement of debt to parent

    292  

Allocation of equity to non-controlling interest due to equity-based compensation issued

    (332

)

Net loss attributable to non-controlling interest

    (59

)

Balance, June 30, 2022

  $ 120  

 

24

 

BIOSIG TECHNOLOGIES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022

(unaudited)

 

NOTE 10 COMMITMENTS AND CONTINGENCIES

 

Licensing agreements

 

Master Services Agreement

 

On January 1, 2022, the Company entered into a master services agreement with Access Strategy Partners Incorporated (“ASPI”) whereby ASPI will provide commercial executives assigned with specific customer targets and develop sales and marketing plans that are mutually agreed to between ASPI and the Company and assist in their execution. The agreement expires two years from the effective date, with an addition one year extension option.

 

The Company is obligated to pay ASPI: i) a monthly service fee of $40,000 and ii) 10% commission on all New Account revenue, as defined, on a quarterly basis.

 

2017 Know-How License Agreement

 

On March 15, 2017, the Company entered into a know-how license agreement with Mayo Foundation for Medical Education and Research whereby the Company was granted an exclusive license, with the right to sublicense, certain know how and patent applications in the field of signal processing, physiologic recording, electrophysiology recording, electrophysiology software and autonomics to develop, make and offer for sale. The agreement expires in ten years from the effective date.

 

The Company is obligated to pay to Mayo Foundation a 1% or 2% royalty payment on net sales of licensed products, as defined.

 

Patent and Know-How License Agreement EP Software Agreement

 

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

 

In connection with the EP Software Agreement, the Company agreed to make earned royalty payments to Mayo in connection with the Company’s sales of the licensed products to third parties and sublicense income received by the Company and to make milestone payments of up to $625,000 in aggregate.

 

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

 

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

 

In connection with the Tools Agreement, the Company agreed to pay Mayo an upfront consideration of $100,000. The Company also agreed to make earned royalty payments to Mayo in connection with the Company’s sales of the licensed products to third parties and sublicense income received by the Company and to make milestone payments of up to $550,000 in aggregate.

 

25

 

BIOSIG TECHNOLOGIES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022

(unaudited)

 

ViralClear Patent and Know-How License Agreement

 

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

 

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

 

Trek Therapeutics, PBC

 

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

 

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

 

Defined Contribution Plan

 

Effective January 1, 2019, the Company established a qualified defined contribution plan (the “401(k) Plan”) pursuant to Section 401(k) of the Code, whereby all eligible employees may participate. Participants may elect to defer a percentage of their annual pretax compensation to the 401(k) plan, subject to defined limitations. The Company is required to make contributions to the 401(k) Plan equal to 3 percent of each participant’s eligible compensation, subject to limitations under the Code. For the three and six months ended June 30, 2022, the Company charged operations $67,888 and $135,528 and $56,962 and $128,427 for the three and six months ended June 30, 2021, respectively, for contributions under the 401(k) Plan.

 

Purchase commitments

 

As of June 30, 2022, the Company had aggregate purchase commitments of approximately $2,268,011 for future services or products, some of which are subject to modification or cancellations.

 

Litigation

 

The Company is subject at times to other legal proceedings and claims, which arise in the ordinary course of its business. Although occasional adverse decisions or settlements may occur, the Company believes that the final disposition of such matters should not have a material adverse effect on its financial position, results of operations or liquidity.

 

NOTE 11 SEGMENT REPORTING

 

In accordance with ASC 280-10, the Company reports segment information based on the “management” approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company’s reportable segments. The Company has three reportable segments: BioSig Technologies, Inc. (parent), NeuroClear Technologies, Inc. and ViralClear Pharmaceuticals, Inc.

 

26

 

BIOSIG TECHNOLOGIES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022

(unaudited)

 

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

 

   

Three Months Ended June 30, 2022

(000's)

   

Three Months Ended June 30, 2021

(000's)

   

Six Months Ended June 30, 2022

(000's)

   

Six Months Ended June 30, 2021

(000's)

 

Revenues (from external customers)

                               

 BioSig

  $ 8     $ 207     $ 16     $ 325  

 ViralClear

    -       -       -       -  

 NeuroClear

    -       -       -       -  
    $ 8     $ 207     $ 16     $ 325  

 

   

Three Months Ended June 30, 2022

(000's)

   

Three Months Ended June 30, 2021

(000's)

   

Six Months Ended June 30, 2022

(000's)

   

Six Months Ended June 30, 2021

(000's)

 

Operating Expenses:

                               

BioSig

  $ 5,862     $ 7,026     $ 13,611     $ 14,800  

ViralClear

    (137 )     1,166       185       1,971  

NeuroClear

    (1 )     4       1       4  
    $ 5,724     $ 8,196     $ 13,797     $ 16,775  

 

 

   

Three Months Ended June 30, 2022

(000's)

   

Three Months Ended June 30, 2021

(000's)

   

Six Months Ended June 30, 2022

(000's)

   

Six Months Ended June 30, 2021

(000's)

 

Loss from Operations

                               

BioSig

  $ (5,854 )   $ (6,881 )   $ (13,595 )   $ (14,635 )

ViralClear

    137       (1,166 )     (185 )     (1,971 )

NeuroClear

    1       (4 )     (1 )     (4 )
    $ (5,716 )   $ (8,051 )   $ (13,781 )   $ (16,610 )

 

   

June 30, 2022

(000’s)

   

December 31, 2021

(000’s)

 

Total Assets

               

BioSig

  $ 8,754     $ 13,595  

ViralClear

    836       1,924  

NeuroClear

    -       -  
    $ 9,590     $ 15,519  

 

NOTE 12 RELATED PARTY TRANSACTIONS

 

Accrued expenses related primarily to travel reimbursements, director fees and accrued compensation due related parties as of June 30, 2022 and December 31, 2021 was $104,026 and $86,208, respectively.

 

During the three and six months ended June 30, 2022 and 2021, the Company’s Chief Financial Officer guaranteed issued corporate credit cards for no consideration.

 

27

 

BIOSIG TECHNOLOGIES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022

(unaudited)

 

NOTE 13 SUBSEQUENT EVENTS

 

Equity Transactions

 

On July 6, 2022, the Company issued 2,500 shares of its common stock for vested restricted stock units.

 

On July 15, 2022, the Company granted 150,000 shares of restricted common stock vesting in equal monthly installments over six months for services valued at $95,400.

 

Sales-type Lease

 

On July 1, 2022, the Company entered a lease for our Pure EP system at a rate of $4,333 per month. The term of the lease is for 30 months with an option provided to extend for an addition one year. The lease also has an option to purchase at the end of the lease at the fair market value.

 

The Company determined the lease meets the criteria of a sales-type lease whereby the present value of the future expected revenue, cost of sales and profit and loss are recognized at the lease inception.

 

 

28

 

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

 

This Managements Discussion and Analysis of Financial Condition and Results of Operations includes a number of forward-looking statements that reflect Managements current views with respect to future events and financial performance. You can identify these statements by forward-looking words such as may, will, expect, anticipate, believe, estimate and continue, or similar words. Those statements include statements regarding the intent, belief or current expectations of us and members of our management team as well as the assumptions on which such statements are based. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risk and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements.

 

Readers are urged to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the Securities and Exchange Commission. Important factors currently known to Management could cause actual results to differ materially from those in forward-looking statements. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in the future operating results over time. We believe that our assumptions are based upon reasonable data derived from and known about our business and operations. No assurances are made that actual results of operations or the results of our future activities will not differ materially from our assumptions. Factors that could cause differences include, but are not limited to, expected market demand for our products, fluctuations in pricing for materials, and competition.

 

Business Overview

 

BioSig Technologies, Inc.

 

We are a medical technology company that is commercializing our PURE EP™ System which is an advanced signal acquisition and processing platform designed to provide essential diagnostic signals with high clinical value in all types of cardiac catheter ablations. PURE EP™ is designed to address long-standing limitations that slow and disrupt cardiac catheter ablation procedures, such as environmental lab noise, signal saturation, slow signal recovery, and inaccurate display of fractionated potentials.

 

Cardiac catheter ablation is a procedure that involves delivery of energy through the tip of a catheter that scars or destroys heart tissue to correct heart rhythm disturbances (arrhythmias). In August 2018, we received 510(k) clearance from the U.S. Food and Drug Administration (the “FDA”) to market our PURE (Precise Uninterrupted Real-time evaluation of Electrograms) EP™ System.

 

PURE EP™ is a signal processing platform that combines advanced hardware and software to address known challenges associated to signal acquisition, to enable electrophysiologists to see more signals and analyze them in real-time. The device aims to minimize noise and artifacts from cardiac recordings and acquire high-fidelity cardiac signals. Improving fidelity of acquired cardiac signals may potentially increase the diagnostic value of these signals, thereby possibly improving accuracy and efficiency of the EP studies and ablation procedures.

 

PURE EP™’s initial focus is on improving intracardiac signal acquisition and enhancing diagnostic information for catheter ablation procedures for complex arrhythmias like ventricular tachycardia (“VT”), a potentially life-threatening arrhythmia, and atrial fibrillation (“AF”), the most common cardiac arrhythmia associated with a fivefold risk of stroke.

 

Clinical data acquired by the PURE EP™ System in a multi-center study at Texas Cardiac Arrhythmia Institute at St. David’s Medical Center in Austin, Texas, Mayo Clinic in Jacksonville, Florida, and Massachusetts General Hospital in Boston, Massachusetts was published in September 2021 in the Journal of Cardiovascular Electrophysiology and is available electronically with open access via the Wiley Online Library. Study results showed 93% consensus across the blinded reviewers with a 75% overall improvement in intracardiac signal quality and confidence in interpreting PURE EP™ signals over conventional sources. AF accounted for over 40% of enrollments.

 

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We continue to install PURE EP™ Systems at centers of excellence for clinical evaluation under our market development plan. The PURE EP™ System has been utilized at numerous institutions, including Mayo Clinic campuses in Arizona, Florida and Minnesota; the University of Pennsylvania Hospital in Philadelphia, Pennsylvania; Overland Park Regional Medical System in Overland Park, Kansas; Deborah Heart and Lung Center in Browns Mills, New Jersey; St. Elizabeth’s Medical Center in Boston, Massachusetts; Medical City Heart Hospital in Dallas, Texas; Beth Israel Deaconess Medical Center (BIDMC) in Boston, Massachusetts, a teaching hospital of Harvard Medical School; Methodist Hospital in San Antonio, Texas; Houston Methodist Hospital; Medical City North Hills in North Richland Hills; Cleveland Clinic; and Westside Regional Medical Center in Plantation, Florida.

 

To date, more than 2,500 patient procedures have been conducted with the PURE EP™ System by more than 75 electrophysiologists across seventeen different clinical sites in the United States.

 

In addition to clinical evaluation, we have conducted pre-clinical evaluation with the PURE EP™ System under several protocols. At Mayo Clinic in Rochester, Minnesota, we have performed twenty-seven experiments (including novel research programs such as Artificial Intelligence, or AI, and repolarization) in various animal models; we also conducted a pre-clinical study at the Mount Sinai Hospital in New York, New York, with an emphasis on the VT model; and six experiments to date during a study at the University of Pennsylvania. We intend to continue additional research and development studies with our technology at Mayo Clinic and other national centers.

 

 

In September 2021, we announced that we entered into a manufacturing and professional services agreement with Plexus Corp (“Plexus”) (Nasdaq: PLXS). Under the terms of the agreement, Plexus will manufacture the PURE EP™ System.

 

In December 2020, we announced that three PURE EP™ Systems were contracted for purchase by St. David’s Healthcare in Austin, Texas and were subsequently sold in February 2021. We also sold three PURE EP™ Systems to Mayo Foundation for Medical Education and Research in 2021 for use in Mayo Clinic campuses in Rochester, Minnesota, Jacksonville, Florida and Phoenix, Arizona.

 

On July 1, 2022, we entered into our first national purchasing agreement with HCA Management Services, L.P. whereby Kansas City Heart Institute at Overland Park Regional Medical Center in Kansas City, Missouri has acquired our technology under the terms of the new agreement with a 30-month lease of the system. The agreement represents the first commercial adoption since we announced the national launch of our PURE EP™ System supported by our new commercial structure and clinical support teams.

 

In January 2022, we were awarded U.S. patent claims for our PURE EP™ noise-filtering technology which address computer-implemented systems and methods for filtering noise from input cardiac signals. We now have 49 worldwide patents owned or controlled by us covering our novel technology for arrhythmia care and electroporation.

 

ViralClear Pharmaceuticals, Inc.

 

ViralClear Pharmaceuticals, Inc. (“ViralClear”) is a majority-owned subsidiary of the Company originally known as NeuroClear Technologies, Inc. The subsidiary was established November 2018 to pursue additional applications of the PURE EP™ signal processing technology outside of EP. In March 2020, it was renamed ViralClear to develop merimepodib, a broad-spectrum anti-viral agent that showed potential to treat COVID-19. We currently do not intend to further develop merimepodib. Since late 2020, ViralClear has been realigned with its original objective of pursuing additional applications of the PURE EP™ signal processing technology outside of cardiac electrophysiology. As of June 30, 2022, the Company retains 69.08% ownership of ViralClear.

 

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Results of Operations (000s)

 

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

 

Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021 (000s)

 

Revenues and Cost of Goods Sold. Revenue for the three months ended June 30, 2022 totaled $8 comprised of service revenue as compared to $207 for the three months ended June 30, 2021 comprised of product sales of $199 and recognized service revenue of $8.

 

We derive our revenue primarily from the sale of our medical device, PURE EP system, as well as related support and maintenance services and software upgrades in connection with the system.

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