Business context and reporting period
The supplied filing is BioSig Technologies, Inc.’s unaudited Form 10-Q for the quarter ended June 30, 2017, filed August 10, 2017. This is not a Streamex Corp. filing. BioSig is a development-stage medical-device company developing the PURE EP System for cardiac electrophysiology recording. It had no commercial products or revenue.
Financial results and position
- Revenue: $0 for the three and six months ended June 30, 2017 and comparable 2016 periods. Gross margin is not meaningful because there were no sales or cost of goods sold.
- Net loss: $3.08 million for Q2 2017 versus $6.09 million in Q2 2016; $6.35 million for the first half versus $8.68 million in first-half 2016. Loss available to common shareholders was $3.10 million and $6.40 million, respectively.
- Operating expenses: $3.02 million in Q2, down from $5.54 million; $5.92 million in the first half, down from $7.85 million. First-half R&D increased 70% to $2.68 million, while G&A fell 48% to $3.23 million, largely reflecting lower stock-based compensation. R&D included $543,927 of acquired research and development related to Mayo Foundation warrants.
- Cash flow: Operating cash use was $3.45 million in first-half 2017 versus $2.77 million in first-half 2016. Financing provided $3.28 million, mainly from equity and warrant sales; investing used $1,620. Cash declined to $880,659 from $1.06 million at year-end 2016.
- Liquidity and liabilities: Current assets were $1.06 million and current liabilities $4.27 million, a $3.21 million working-capital deficit. Excluding $2.64 million of warrant and derivative liabilities, the deficit was $569,002. Accounts payable and accrued expenses rose to $1.24 million from $373,103. The company reported no convertible debentures outstanding.
- Capital structure: Stockholders’ deficit was $4.17 million. Common shares outstanding increased to 25.63 million from 22.59 million at December 31, 2016. Series C preferred stock carries a cumulative 9% dividend and conversion and anti-dilution provisions.
Material changes and unusual items
Lower reported losses year over year partly reflect substantially reduced stock-based compensation and lower losses on derivative fair-value changes; these are not evidence of revenue generation. First-half R&D spending rose with clinical studies, design work, and the Mayo license. The company issued 2.15 million common shares for approximately $3.04 million net proceeds during the first half, along with warrants. Warrant and derivative liabilities are Level 3 fair-value estimates and totaled $2.36 million and $279,379, respectively, at June 30.
Outlook, risks and contingencies
- Management expected to have FDA 510(k) marketing clearance in the second half of 2017 and then begin commercialization; timing depended on financing and regulatory approvals. This was a forward-looking expectation, not an achieved milestone in the filing.
- Management stated cash was expected to cover research and development and other needs for at least four months, and estimated approximately $4 million of additional funding would be needed for the next 12 months. The filing says substantial doubt exists about the company’s ability to continue as a going concern; further financing is necessary and not assured.
- Failure to obtain financing could require delaying or reducing development or commercialization, or relinquishing product rights. Future equity financing could further dilute shareholders.
- Management reported disclosure controls and procedures were not effective as of June 30, 2017. No material change in internal control over financial reporting was reported during the quarter.
- The Mayo Foundation license runs for ten years and requires royalties of 1% or 2% of net sales of licensed products. The filing reported no legal proceedings.
- After quarter-end, the company reported approximately $507,000 of additional subscriptions/proceeds through August 1, 2017, including $346,227 on August 1.
Important facts for investors to verify
- Confirm the filing identity: the document is for BioSig Technologies, Inc., not Streamex Corp.
- Check subsequent FDA 510(k) progress and whether commercialization occurred as anticipated.
- Verify cash runway, financing raised after August 1, 2017, and the terms and dilution from equity and warrants.
- Review the going-concern disclosure, ineffective controls, and the status of any remedial actions.
- Assess the assumptions and potential balance-sheet effects of the Level 3 warrant and derivative valuations and Series C preferred-stock terms.