BioSig Technologies, Inc. — Q1 2020 Form 10-Q
Entity note: The request identifies Streamex Corp., but the supplied filing is for BioSig Technologies, Inc. (Nasdaq: BSGM), for the quarter ended March 31, 2020. Figures below reflect the filing.
Business context and reporting period
BioSig is developing and commercializing the PURE EP cardiac signal-processing system; its majority-owned subsidiary, ViralClear, was repurposed in March 2020 to develop an antiviral candidate for COVID-19. The unaudited quarter is compared with Q1 2019. BioSig reported no revenue and said it had no paying customers.
Key financial metrics
| Metric | Q1 2020 | Q1 2019 / comparison |
|---|---|---|
| Revenue and cost of goods sold | $0 | $0 |
| Research and development expense | $4.93 million | $1.49 million; up 230.9% |
| General and administrative expense | $7.86 million | $4.38 million; up 79.4% |
| Total operating expenses / operating loss | $12.80 million | $5.88 million |
| Consolidated net loss | $12.76 million | $5.87 million |
| Net loss attributable to BioSig | $11.34 million | $5.88 million |
| Basic and diluted loss per share | $(0.46) | $(0.33) |
| Cash used in operating activities | $5.94 million | $3.52 million |
| Cash used in investing activities | $0.02 million | $0.07 million |
| Cash provided by financing activities | $9.35 million | $10.08 million |
At March 31, cash was $15.50 million, working capital was $14.98 million, total assets were $17.84 million, and total equity was $15.85 million. Total reported debt was $1.79 million, consisting of lease liabilities; the company reported no convertible debentures. With no revenue, a revenue margin is not meaningful.
Material changes versus the prior comparable period
- Operating expenses rose 117.9%, driven by higher R&D and G&A. R&D included $3.52 million of acquired research and development related to the Trek asset purchase, including cash and ViralClear shares.
- G&A increased primarily from added staff and performance pay, stock-based compensation, professional services, consulting and commercialization-related activity. Total equity-based compensation was $4.41 million.
- Operating cash use increased by $2.42 million. The company raised $9.05 million net from a common-stock offering and received $0.30 million from warrant exercises during the quarter.
- Common shares outstanding increased to 26.01 million from 23.32 million at year-end 2019, including 2.5 million shares sold in the quarter.
Outlook, risks, contingencies and unusual items
- Management said cash on hand, together with approximately $6.5 million of subsequent ViralClear stock-sale proceeds and subsequent warrant/option exercise proceeds, was expected to fund operations for at least 12 months. The company nevertheless expects continuing losses and negative operating cash flows and may need additional financing; unavailable or unfavorable financing could force it to curtail or cease operations.
- PURE EP had FDA 510(k) clearance, but the company had no paying customers. Management anticipated near-term U.S. sales preparations; ISO 13485 and CE-mark audit work was expected to proceed in 2021, with timing subject to pandemic-related delays.
- ViralClear acquired assets from Trek for $350,000 cash and 634,910 ViralClear shares valued at $3.17 million. The candidate merimepodib (Vicromax) was at an early development stage. The filing cites in-vitro results showing more than 98% lower viral production, plans to pursue FDA-approved trials in Q2 2020, and an April CTAP application; these are not evidence of clinical efficacy or approval.
- Further Trek consideration includes specified FDA-approval and sublicensing payments; the acquired license also carries clinical and marketing milestones and a 5% royalty. ViralClear later licensed Mayo know-how and patent rights, issuing shares and agreeing to royalties and milestone payments.
- COVID-19 could delay PURE EP commercialization, research, clinical activity and supply chains, and disrupt capital markets. Other material risks include clinical and regulatory failure, competition, dilution from future financing, and Series C preferred-stock redemption triggers.
- At December 31, 2019, management had identified a material weakness in internal control over financial reporting related to inadequate segregation of duties. It described remediation measures during Q1; disclosure controls were assessed as effective at March 31, 2020.
- Related-party matters include the Trek transaction with a company controlled by a BioSig director and a ViralClear financial-advisory engagement with a broker-dealer controlled by a board member. The filing reported no legal proceedings.
Important facts for investors to verify
- Confirm the filing is BioSig’s, not Streamex Corp.’s, and verify the reporting entity and ticker before relying on these figures.
- Reconcile the filing’s loss measures: the statements show $12.76 million consolidated net loss and $11.34 million attributable to BioSig, while the loss-per-share figure is $(0.46). The MD&A’s descriptions of loss available to common shareholders are not consistently labeled; the filing text does not provide a clear reconciliation.
- Verify subsequent financing proceeds, ViralClear’s ownership and dilution after the stock issuance, and the timing and terms of any additional funding.
- Track clinical-trial progress, regulatory submissions, commercial readiness and independent evidence supporting the antiviral candidate; the reported laboratory findings are preliminary.
- Assess cash runway against ongoing operating cash burn, milestone and royalty obligations, lease commitments, and the status of remediation of the material weakness.