Business context and reporting period
Filing identity: The supplied filing is BioSig Technologies, Inc.’s Form 10-Q for the quarter ended September 30, 2016—not a filing identified as Streamex Corp. Confirm the issuer before relying on this summary.
BioSig is a development-stage medical-device company developing its PURE EP System for cardiac recordings used in electrophysiology studies and ablation procedures. It had no commercial product, customers, or revenue. Financial statements are unaudited.
Financial performance and position
| Metric | Three months ended September 30 | Nine months ended September 30 |
|---|---|---|
| Revenue | $0 in 2016 and 2015 | $0 in 2016 and 2015 |
| Research and development expense | $560,514 vs. $354,471 | $2,139,671 vs. $1,146,113 |
| General and administrative expense | $991,852 vs. $2,117,010 | $7,257,852 vs. $8,801,878 |
| Net income (loss) | $(1,537,165) vs. $377,667 | $(10,212,420) vs. $(7,436,623) |
| Net income (loss) available to common stockholders | $(1,561,891) vs. $324,619 | $(10,297,887) vs. $(7,681,139) |
| Operating cash flow | Not presented for the quarter | $(3,844,553) vs. $(3,431,733) |
At September 30, 2016, cash was $150,454, total current assets were $284,984, and total current liabilities were $3,383,446. Working capital deficit was $3,098,462, or $482,916 excluding warrant and derivative liabilities. Total assets were $335,288; stockholders’ deficit was $4,138,158. Warrant and derivative liabilities were $2,324,460 and $291,086, respectively. The company reported no convertible debentures outstanding. No gross margin is available because there were no sales.
For the nine months, financing provided $3,053,868, entirely from common-stock sales; investing used $12,095. Cash fell from $953,234 at year-end 2015 to $150,454. Common shares outstanding rose from 16,825,703 at December 31, 2015 to 20,935,093 at September 30, 2016.
Material changes versus the prior comparable period
- Quarterly R&D expense rose 58.1%; nine-month R&D expense rose 86.7%, reflecting increased activity, staffing and consulting, and higher equity-based compensation.
- Quarterly G&A fell 53.1% and nine-month G&A fell 17.6%, primarily because of lower stock-based compensation and service-provider costs.
- Nine-month derivative remeasurement changed from a $3,050,318 gain in 2015 to an $807,087 loss in 2016, contributing to the larger 2016 net loss. These are fair-value accounting changes, not operating revenue.
- Preferred dividends declined to $85,467 for the nine months from $244,516, following conversions of Series C preferred stock.
- Operating cash use increased by $412,820 year over year. Equity financing was lower than in the comparable period.
Outlook, risks and unusual items
Management stated that cash on hand was expected to cover research, development and other needs for only about two months, and that approximately $2 million in 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. Management expects continuing losses and increased R&D costs, including clinical studies; additional financing is necessary, with no assurance it will be available on acceptable terms.
Management aimed to obtain FDA 510(k) marketing clearance and begin commercialization in the first half of 2017, subject to financing, regulatory approvals and development progress. The company had initiated product development with Minnetronix and planned further pre-clinical, end-user preference and research studies. These are targets, not guaranteed outcomes.
After quarter-end, the company reported net proceeds of $450,477 from an October 28 common-stock-and-warrant financing and issued 15,000 shares for consultant services on October 16. Potential dilution also includes 8,090,190 options, 8,333,235 warrants and Series C preferred stock convertible into 726,667 common shares, as disclosed in the filing. Series C terms include cumulative 9% dividends and anti-dilution provisions. Warrant and derivative valuations are Level 3 and sensitive to stock price and volatility.
Other items: stock-based compensation was a significant non-cash expense; legal proceedings were reported as none; management said disclosure controls were effective at a reasonable assurance level and reported no material quarterly change in internal control over financial reporting.
Important facts for investors to verify
- Whether this BioSig filing is the intended document, given the Streamex Corp. request metadata.
- Actual cash runway and financing needs, including the effect of the October financing and any subsequent capital raises.
- Progress, costs and timing of PURE EP development, pre-clinical work and FDA 510(k) clearance; the H1 2017 target is forward-looking.
- The terms and potential dilution from Series C preferred stock, warrants, options and future financing.
- The filing’s MD&A says nine-month net loss was $10,297,887 versus “net income” of $7,681,139; the financial statements identify those amounts as loss available to common stockholders, while net loss was $10,212,420 versus $7,436,623. Verify the MD&A wording and figures against the statements.