Business Context and Reporting Period
This Form 8-K Current Report was filed by BioSig Technologies, Inc. on August 13, 2018 (with a signature date of August 16, 2018). The filing reports the consummation of a private placement offering and other equity-related events occurring between August 13, 2018, and August 16, 2018. The company is incorporated in Delaware and headquartered in Los Angeles, California.
Key Financial Metrics and Capital Raise
- Private Placement Proceeds: Approximately $2,839,226 raised from the sale of 1,234,321 shares of Common Stock and accompanying warrants.
- Share Price: Investor Shares were sold at $2.28 per share, bundled with one Series A Warrant and one Series B Warrant.
- Warrant Details:
- Series A Warrants: 617,172 shares covered; 9-month term; exercise price of $1.50 per share.
- Series B Warrants: 617,172 shares covered; 3-year term; exercise price of $2.74 per share.
- Placement Agent Compensation: Approximately $150,035 in cash fees plus warrants to purchase 285,172 shares (142,586 Series A and 142,586 Series B).
- Other Equity Proceeds (Since July 1, 2018):
- Option exercises: $454,000.
- Warrant exercises: $1,299,790.
- Total Aggregate Proceeds: Approximately $4.6 million (combining the Private Placement and recent option/warrant exercises).
Material Changes and Use of Proceeds
The primary material change is the issuance of new equity securities to accredited investors. The filing explicitly states the following restrictions and uses for the Private Placement proceeds:
- Permitted Uses: General corporate purposes, growth initiatives, and capital expenditures.
- Prohibited Uses: Repayment of debt, redemption or repurchase of equity securities, or settlement of claims/actions against the Company.
- Listing Requirement: The Company agreed to use commercially reasonable efforts to list its Common Stock on a national securities exchange or automated quotation system as soon as reasonably practicable.
Outlook, Risks, and Contingencies
Management Commentary and Covenants: The Company covenanted to maintain sufficient authorized shares to cover the Private Placement and future issuances. The Purchase Agreement includes standard representations, warranties, and indemnification provisions for investors regarding breaches or third-party claims.
Risks and Contingencies:
- Dilution Limits: Investors are restricted from exercising warrants if it would cause them to beneficially own more than 4.99% of outstanding shares (increasable to 9.99% with 61 days' notice).
- Anti-Dilution: Warrant exercise prices and share counts are subject to adjustment for dividends, stock splits, or combinations.
- Change of Control: Warrant holders have rights to receive successor securities or additional consideration in the event of a fundamental transaction or change of control.
- Regulatory Status: Securities were sold unregistered under Section 4(a)(2) and Regulation D (Rule 506) exemptions.
Investor Verification Checklist
- Verify the actual listing status of BioSig Technologies' Common Stock on a national exchange or OTC market post-closing.
- Confirm the total number of authorized shares to ensure compliance with the covenant to cover future issuances.
- Review the full text of the Securities Purchase Agreement (Exhibit 10.1) for specific representations and warranties.
- Monitor the exercise of the 1.23 million new shares and 1.23 million new warrants to assess potential dilution impact.
- Check for any subsequent filings regarding the use of the $4.6 million in aggregate proceeds to ensure adherence to the "no debt repayment" covenant.