Streamex Corp. quarterly report, Q3 FY2023

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Filing identity and reporting period

The supplied filing is BioSig Technologies, Inc.’s unaudited Form 10-Q for the quarter and nine months ended September 30, 2023, filed November 14, 2023. It does not identify Streamex Corp.; verify that this is the intended filing. Unless noted otherwise, financial amounts below are in thousands of dollars.

Business context

BioSig develops and commercializes the PURE EP Platform, a cardiac electrophysiology signal-processing medical device. The company reports minimal revenue to date and also has majority-owned subsidiaries ViralClear and BioSig AI. Management describes a shift toward commercialization and cost reduction; ViralClear is developing a nerve-recording platform, while BioSig AI is pursuing AI applications for cardiac and neurological disorders.

Financial performance and position

  • Revenue: Q3 revenue was $1, versus $135 in Q3 2022. Nine-month revenue was $6, versus $151. There were no product sales in either 2023 period; the reported revenue was service revenue. One customer represented all Q3 revenue.
  • Profit and margins: Q3 operating loss was $4,051 and net loss was $4,050; net loss attributable to BioSig common shareholders was $4,569, or $0.06 per share. For nine months, operating loss was $22,345, net loss was $22,562, and loss attributable to common shareholders was $22,999, or $0.33 per share. Reported gross profit was $1 for Q3 and $6 for nine months, each stated as a 100% margin; given the very small revenue base, those percentages are not indicative of a meaningful operating margin.
  • Expenses: Q3 R&D was $1,145, down 33.9%, and G&A was $2,815, down 41.0%, year over year. Nine-month R&D was $3,916, down 16.7%; G&A was $18,167, up 17.4%, reflecting, among other items, a $1,307 inventory allowance and higher stock-based compensation.
  • Cash flow and liquidity: Nine-month operating cash use was $14,371, compared with $17,591 in 2022; investing cash use was $182. Financing provided $14,585, chiefly from common-stock and warrant sales and BioSig AI stock sales. Cash at September 30 was $389, versus $357 at December 31, 2022. Working capital deficit was $2,860.
  • Balance sheet and debt: Total assets were $3,154 and total liabilities $4,104, with total deficit equity of $1,055 at September 30. Accounts payable and accrued expenses were $3,470. Lease liabilities totaled $532 ($339 current and $193 long term). Management reported no convertible debentures outstanding.
  • Capital structure: Common shares outstanding rose to 79.2 million at September 30 from 54.6 million at year-end 2022; the filing reports 88.1 million as of November 13, 2023. The nine-month financing included issuance of 15.0 million shares and warrants to purchase 7.5 million shares in PIPE transactions.

Material changes and unusual items

  • Nine-month common-shareholder loss increased to $22,999 from $20,226, despite lower R&D and reduced operating cash use. G&A increased, including from the inventory write-down and stock-based compensation.
  • The company recorded a $1,307 inventory reserve for aged product; net inventory fell to $219 from $1,477 at year-end 2022. Vendor deposits included in other assets increased to $643 from zero.
  • ViralClear reported subsidiary income in 2023, which affected non-controlling-interest allocations. ViralClear stock-based compensation included a large negative expense/credit; understand its accounting effect when comparing results.
  • BioSig AI raised approximately $1.97 million net in June and July 2023 by selling subsidiary shares, reducing BioSig’s ownership to approximately 84.5%.
  • After quarter-end, the company disclosed a November registered direct offering that closed with approximately $2.5 million gross proceeds, alongside substantial warrants and placement-agent compensation. It also reported additional post-quarter equity sales and share issuances for services.

Outlook, risks, and contingencies

  • Going concern: Management says substantial doubt exists about the company’s ability to continue as a going concern. It expects continuing losses and negative operating cash flows, requires additional financing, and gives no assurance that financing or sufficient commercial cash flow will be available.
  • Commercial outlook: Management plans continued PURE EP commercialization and development of other technology applications, while expecting future marketing, commercialization, R&D, and public-company costs. The filing gives no specific revenue, earnings, or cash-flow guidance.
  • Nasdaq listing: BioSig received notice that it failed the $1 minimum-bid-price requirement. The stated initial compliance period ran through March 4, 2024; failure to regain compliance could lead to delisting, subject to possible additional time and eligibility conditions.
  • Dilution and preferred stock: Further equity or debt financing may dilute existing holders. Series C preferred stock has triggering events that could require redemption, which the company says it may be unable to meet. Warrants, options, and restricted stock add potential dilution.
  • Commitments and other risks: The company reported approximately $2.55 million of purchase commitments, some modifiable or cancellable, and an ongoing $40,000 monthly master-services fee under its ASPI agreement. COVID-19 and geopolitical and capital-market volatility may impair commercialization or access to financing. The filing says no off-balance-sheet arrangements and no known legal matters expected to have a material adverse effect.
  • Controls: Management concluded disclosure controls were not effective. It also described a material weakness in stock-based compensation accounting identified as of December 31, 2022 and ongoing remediation; it had not yet concluded remediation was complete.

Important facts for investors to verify

  1. Confirm the filing is intended for BioSig Technologies, Inc., not Streamex Corp.
  2. Review cash burn, near-term obligations, financing needs, and the company’s going-concern disclosures.
  3. Check post-quarter financing proceeds, transaction costs, warrant terms, and resulting dilution.
  4. Track Nasdaq bid-price compliance and any subsequent listing notices or reverse-split actions.
  5. Assess the basis and commercial implications of the $1.307 million inventory reserve and the very low reported sales.
  6. Review the status of the material weakness remediation and the unusual subsidiary and stock-based-compensation effects on reported results.