BioSig Technologies, Inc. — Q2 2016 Form 10-Q
Entity note: The request identifies Streamex Corp., but the supplied filing is for BioSig Technologies, Inc. This summary reflects the filing provided. Reporting period ended June 30, 2016; financial statements are unaudited.
Business context and reporting period
BioSig is a development-stage medical-device company developing the PURE EP System for cardiac signal recording and analysis during electrophysiology procedures. It reported no revenue and had no commercial product or customers.
Key financial metrics
| Metric | Q2 2016 / June 30, 2016 | Comparable period / prior balance |
|---|---|---|
| Revenue | $0 | $0 in Q2 2015 |
| Operating expenses | $5.54 million | $4.43 million in Q2 2015 |
| Net loss | $6.09 million for Q2; $8.68 million for six months | $4.76 million and $7.81 million, respectively |
| Net loss available to common stockholders | $6.12 million for Q2; $8.74 million for six months | $4.87 million and $8.01 million, respectively |
| Loss per common share, basic and diluted | $0.32 for Q2; $0.49 for six months | $0.35 and $0.62, respectively |
| Cash and current assets | $705,341 cash; $846,884 current assets | $953,234 cash; $984,542 current assets at Dec. 31, 2015 |
| Working capital | Deficit of $2.37 million | Would be positive $259,166 excluding warrant and derivative liabilities |
| Operating cash flow | Use of $2.77 million for six months | Use of $2.57 million in six months 2015 |
| Financing cash flow | $2.52 million provided for six months | $3.54 million provided in six months 2015 |
There was no cost of goods sold, so revenue-based margins are not meaningful. The company reported no convertible debentures outstanding. Current liabilities included $2.33 million of warrant liabilities, $308,067 of derivative liabilities, and $316,676 of dividends payable. Stockholders’ deficit was $3.42 million.
Material changes versus prior comparable periods
- Q2 operating expenses rose 25% year over year, driven by higher research and development (up 136%) and general and administrative expense (up 11%). Six-month operating expenses rose about 5%.
- Q2 and six-month net losses increased year over year. A fair-value loss on embedded derivatives of $556,433 for Q2 and $824,858 for six months contrasted with a $198,563 gain in the comparable 2015 periods.
- Cash declined by $247,893 from year-end. Common-stock financing raised $2.52 million during the six months; common shares outstanding increased from 16.83 million to 20.48 million.
- Series C preferred shares outstanding declined from 1,471 to 1,090 through conversions into common shares. Preferred dividends fell year over year as a result.
Outlook, risks, and unusual items
- Going concern: Management said available funds were expected to cover research and development and other requirements for at least two months. The filing states substantial doubt exists about the company’s ability to continue as a going concern; additional financing is required.
- Management estimated it would need approximately $2 million in addition to cash on hand to fund operating and capital requirements for the next 12 months. Failure to obtain financing could force delays, reductions, or termination of development or commercialization activities; future equity financing could dilute shareholders.
- Management expected continuing operating losses and higher research and development costs, including clinical-study costs. It cited a goal of obtaining FDA 510(k) clearance and beginning commercialization in the first half of 2017, subject to financing, regulatory approval, and other factors.
- Development updates included pre-clinical studies at Mayo Clinic and Mount Sinai and a PURE EP development agreement with Minnetronix. These activities do not establish FDA clearance or commercial viability.
- Stock-based compensation was a significant noncash expense: $5.14 million for the first six months. The company also recorded Level 3 fair-value liabilities whose valuations depend on assumptions including stock price and volatility.
- After quarter-end, July and August stock sales generated $332,500 in aggregate proceeds and warrants were issued. Management reported no other subsequent events requiring adjustment or disclosure.
Most important facts for investors to verify
- Confirm the correct issuer: the supplied filing is BioSig Technologies, Inc., not Streamex Corp.
- Review cash runway, financing needs, and subsequent financing against the stated two-month funding estimate and $2 million 12-month requirement.
- Track PURE EP development, clinical and pre-clinical evidence, and FDA 510(k) timing; the 2017 commercialization objective is conditional, not assured.
- Assess potential dilution and securities overhang from preferred conversions, warrants, options, and stock-based compensation.
- Review the assumptions and potential volatility behind the warrant and derivative fair-value liabilities.