BioSig Technologies, Inc. — Form 10-Q Summary
Entity note: The supplied filing is for BioSig Technologies, Inc., not Streamex Corp. It covers the unaudited quarter ended March 31, 2016, with comparisons to the three months ended March 31, 2015 where applicable.
Business context
BioSig is a development-stage medical-device company developing the PURE EP System, intended to improve cardiac signal recording during electrophysiology studies and ablation procedures. It had no commercial product, customers, or revenue as of the reporting period.
Financial performance and liquidity
| Metric | Q1 2016 | Q1 2015 / comparison |
|---|---|---|
| Revenue and cost of goods sold | $0 | $0 |
| Research and development | $372,426 | $302,079; up 23.3% |
| General and administrative | $1,939,148 | $2,746,853; down 29.4% |
| Total operating expenses | $2,314,482 | $3,051,792 |
| Net loss | $2,582,907 | $3,052,906 |
| Net loss available to common stockholders | $2,615,151 | $3,132,301 |
| Basic and diluted loss per share | $0.15 | $0.26 |
| Cash used in operating activities | $1,167,621 | $1,219,982 |
| Cash at period end | $137,613 | $953,234 at Dec. 31, 2015 |
Margins are not meaningful because the company reported no revenue. The lower net loss principally reflected reduced general and administrative expense, including lower stock-based compensation; research and development spending increased. A $268,425 loss from changes in fair value of embedded derivatives was recorded in Q1 2016. Stock-based compensation was $1,119,319.
At March 31, 2016, current assets were $148,904 and current liabilities were $2,758,293, resulting in a $2,609,389 working-capital deficit. Total assets were $192,016; stockholders’ deficit was $3,962,277. Current liabilities included $1,878,986 of warrant liability, $283,857 of derivative liability, and $367,287 of preferred dividends payable. The company reported no convertible debentures outstanding. No conventional debt balance is clearly identified in the filing.
Operating cash outflow was partly offset by $352,000 in proceeds from common-stock sales; there was no investing cash flow. Cash fell by $815,621 during the quarter. The filing states that the company had a substantial going-concern doubt and would need additional financing.
Material changes, outlook, and risks
- Compared with Q1 2015, operating expenses declined by about 24%, while R&D increased and G&A decreased. The company attributed the G&A decrease mainly to lower stock-based compensation.
- In April 2016, the company raised approximately $1.99 million net through private placements of common stock and warrants. Management said this provided funds for at least six months of R&D and other needs, but also estimated that approximately $2 million beyond cash on hand would be needed for the next 12 months.
- Management expected operating losses and negative operating cash flows to continue, with R&D and clinical-study costs expected to rise. It anticipated pursuing FDA 510(k) clearance and targeted clearance in the first half of 2017; timing depended on financing, regulatory approvals, and other factors.
- Key risks include continued reliance on external financing, possible dilution or senior securities from future financings, development and regulatory uncertainty, and the absence of commercial revenue. The filing says failure to obtain financing could require delaying or reducing development programs.
- Series C preferred stock carries a 9% cumulative dividend, conversion and anti-dilution provisions, and potential redemption or increased-dividend rights upon specified triggering events. Warrant and derivative liabilities are Level 3 fair-value measurements sensitive to stock price and volatility.
- Management concluded disclosure controls were effective at a reasonable assurance level; no material change in internal control over financial reporting was reported. The filing reported no legal proceedings.
Investor facts to verify
- Whether April’s financing proceeds and management’s stated funding runway are sufficient to meet cash needs, given the going-concern warning and projected additional financing requirement.
- Actual cash burn and spending trends, particularly R&D growth, stock-based compensation, and other non-cash charges.
- Progress, costs, and timing of PURE EP development, pre-clinical research, and FDA 510(k) submission and clearance.
- The potential dilution and cash or redemption consequences of Series C preferred stock, warrants, and derivative provisions.
- The filing reports 17,355,562 common shares outstanding at March 31, 2016 and 18,961,906 as of May 2, 2016; verify subsequent share-count changes and the effect of outstanding options and warrants.