The accompanying notes are an integral part of these Consolidated Financial Statements
The accompanying notes are an integral part of these Consolidated Financial Statements
The accompanying notes are an integral part of these Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022
NOTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION
Business and organization
BioSig Technologies, Inc. was initially incorporated on February 24, 2009 under the laws of the State of Nevada and subsequently re-incorporated in the state of Delaware in 2011. The Company is principally devoted to improving the standard care in electrophysiology with our PURE EP System’s enhanced signal acquisition, digital signal processing, and analysis during ablation of cardiac arrhythmias. The Company has generated minimal revenue to date and consequently its operations are subject to all risks inherent in business enterprises in early commercialization stage.
On November 7, 2018, the Company formed a subsidiary under the laws of the State of Delaware originally under the name of NeuroClear Technologies, Inc. which was renamed to ViralClear Pharmaceuticals, Inc. (“ViralClear”) in March 2020. The subsidiary was established to pursue additional applications of the PURE EP™ signal processing technology outside of cardiac electrophysiology, and subsequently in 2020, was repurposed to develop merimepodib, a broad-spectrum anti-viral agent that showed potential for the treatment of COVID-19. Since late 2020, ViralClear has been realigned with its original objective of pursuing additional applications of the PURE EP™ signal processing technology outside of cardiac electrophysiology.
In 2019 and 2020, ViralClear sold an aggregate of 1,965,240 shares of its common stock to investors for net proceeds of $15.6 million and issued an aggregate of 894,869 shares of its common stock in connection with acquiring assets and with know-how agreements. As of December 31, 2022, the Company had a majority interest in ViralClear of 69.08%.
On July 2, 2020, the Company formed an additional subsidiary, NeuroClear Technologies, Inc., a Delaware corporation.
COVID-19
On March 11, 2020, the World Health Organization declared a pandemic related to the rapidly spreading coronavirus (COVID-19) outbreak, which has led to a global health emergency. The full public-health impact of the ongoing pandemic is currently indeterminable and rapidly evolving, and the related health crisis has adversely affected and may continue to adversely affect the global economy, resulting in delaying to our commercialization objectives of the PURE EP Systems into the end of 2022 and 2023.
Inflation Reduction Act of 2022
On August 16, 2022, the U.S. government enacted the Inflation Reduction Act of 2022 that includes, among other provisions, changes to the U.S. corporate income tax system, including a fifteen percent minimum tax based on "adjusted financial statement income," which is effective for tax years beginning after December 31, 2022, and a one percent excise tax on net repurchases of stock after December 31, 2022. The Company is continuing to evaluate the Inflation Reduction Act and its requirements, as well as the application to our business, but at this time does not expect the Inflation Reduction Act to have a material impact on our financial results.
NOTE 2 – GOING CONCERN AND MANAGEMENT’S LIQUIDITY PLANS
As of December 31, 2022, the Company had cash of $0.4 million and working capital deficit of $2.1 million. During the year ended December 31, 2022, the Company used net cash in operating activities of $21.7 million. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.
The Company’s primary source of operating funds since inception has been cash proceeds from sale of common and preferred stock. The Company has experienced net losses and negative cash flows from operations since inception and expects these conditions to continue for the foreseeable future.
The Company’s plans include the continued commercialization of the PURE EP System and other applications of our core technology and raising capital through the sale of additional equity securities, debt or capital inflows from strategic partnerships. The Company’s strategic shift from a focus on technology development to commercialization will allow the Company to significantly reduce operating expenses.
The Company will require additional financing to fund future operations. Further, although the Company began commercial operations, there is no assurance that the Company will be able to generate sufficient cash flow to fund operations. In addition, there can be no assurance that the Company’s continuing research and development will be successfully completed or that any additional products will be commercially viable.
Accordingly, the accompanying consolidated financial statements have been prepared in conformity with U.S. GAAP, which contemplates continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the consolidated financial statements do not necessarily purport to represent realizable or settlement values. The consolidated financial statements do not include any adjustment that might result from the outcome of this uncertainty.
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies applied in the preparation of the accompanying consolidated financial statements follows.
Principals of consolidation
The accompanying consolidated financial statements include the accounts of BioSig Technologies, Inc. and its majority owned subsidiary, ViralClear Pharmaceuticals, Inc., and wholly owned subsidiary, NeuroClear Technologies, Inc. herein collectively referred to as the “Company” or “BioSig”. All significant intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of these consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the recoverability and useful lives of long-lived assets, stock-based compensation and the valuation allowance related to deferred tax assets. Actual results may differ from these estimates.
Revenue Recognition
The Company derives its revenue primarily from the sale of its medical device, the PURE EP™ System, and well as related support and maintenance services and software upgrades in connection with the system.
The Company recognizes revenue in accordance with Accounting Standards Codification (ASC) 842, Leases (“ASC 842”) for lease components and ASC 606, Revenue from Contracts with Customers (“ASC 606”) for non-lease components. For medical device sales, the Company recognize revenue under ASC 606.
The core principle of ASC 606 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
Under ASC 606, the Company determines revenue recognition through the following five steps:
|
●
|
Identify the contract with the customer;
|
|
●
|
Identify the performance obligations in the contract;
|
|
●
|
Determine the transaction price;
|
|
●
|
Allocate the transaction price to the performance obligation in the contract; and
|
|
●
|
Recognize revenue when, or as, the performance obligations are satisfied.
|
Performance obligations are the units of accounting for revenue recognition and generally represent the distinct goods or services that are promised to the customer. If the Company determines that it has not satisfied a performance obligation, it will defer recognition of the revenue until the performance obligation is deemed to be satisfied. Once the PURE EP system is delivered, installed, and accepted by the customer, our performance obligation is recognized. Support, maintenance, and software upgrades are performance obligations over a defined period and are recognized ratably over the contractual service period. Customers typically purchase these services with the initial sale of the PURE EP System and do not have the right to terminate their contracts unless we fail to perform material obligations.
The Company may execute more than one contract with a single customer. If so, it is evaluated whether the agreements were negotiated as a package with a single objective, whether the amount of consideration to be paid in one agreement depends on the price and/or performance of another agreement, or whether the goods or services promised in the agreements represent a single performance obligation. The conclusions reached can impact the allocation of the transaction price to each performance obligation and the timing of revenue recognition related to those arrangements.
The Company records accounts receivable for amounts invoiced to customers for which the Company has an unconditional right to consideration as provided under the contractual arrangement. Unbilled receivables, if any, include amounts related to the Company’s contractual right to consideration for completed performance obligations not yet invoiced. Deferred revenue includes payments received in advance of performance under the contract. Our unbilled receivables and deferred revenue are reported on an individual contract basis at the end of each reporting period. Unbilled receivables are classified as current or noncurrent based on the timing of when we expect to bill the customer. Deferred revenue is classified as current or noncurrent based on the timing of when we expect to recognize revenue.
The Company’s unconditional right to consideration for goods and services transferred to the customer is included in accounts receivable, net (if any) in the Company’s consolidated balance sheet.
In 2022, the Company entered two leases for our PURE EP system at a rate of $4,333 per month each. The term of the leases is for 30 months with an option provided to extend for an additional one year. The leases also have an option to purchase at the end of the lease at the fair market value. The Company accounts for the leases in accordance with ASC 842 and ASC 606.
The Company determined the leases meet the criteria of a sales-type lease whereby the present value of the future expected revenue (less the present value of the estimated unguaranteed residual value), cost of sales and profit and loss are recognized at the lease inception. Non-lease components are recognized under ASC 606. The discount rate utilized was the contract explicit rate of 2% per annum. (See Note 6 – Lease Receivables).
A reconciliation of contract liabilities with customers for the years ended December 31, 2022 and 2021, are presented below:
Year ended December 31,2022:
|
|
Balance at
December 31, 2021
(000’s)
|
|
|
Consideration Received
(000’s)
|
|
|
Recognized in Revenue
(000’s)
|
|
|
Balance at
December 31, 2022
(000’s)
|
|
Product revenue
|
|
$ |
- |
|
|
$ |
254 |
|
|
$ |
(254 |
)
|
|
$ |
- |
|
Service revenue
|
|
|
37 |
|
|
|
- |
|
|
|
(32 |
)
|
|
|
5 |
|
Total
|
|
$ |
37 |
|
|
$ |
254 |
|
|
$ |
(286 |
)
|
|
$ |
5 |
|
Year ended December 31, 2021:
|
|
Balance at
December 31, 2020
(000’s)
|
|
|
Consideration Received
(000’s)
|
|
|
Recognized in Revenue
(000’s)
|
|
|
Balance at
December 31, 2021
(000’s)
|
|
Product revenue
|
|
$ |
- |
|
|
$ |
414 |
|
|
$ |
(414 |
)
|
|
$ |
- |
|
Service revenue
|
|
|
- |
|
|
|
64 |
|
|
|
(27 |
)
|
|
|
37 |
|
Total
|
|
$ |
- |
|
|
$ |
478 |
|
|
$ |
(441 |
)
|
|
$ |
37 |
|
The table below summarizes our deferred revenue as of December 31, 2022 and 2021:
|
|
December 31,
2022
(000’s)
|
|
|
December 31,
2021
(000’s)
|
|
Deferred revenue-current
|
|
$ |
5 |
|
|
$ |
32 |
|
Deferred revenue-noncurrent
|
|
|
- |
|
|
|
5 |
|
Total deferred revenue
|
|
$ |
5 |
|
|
$ |
37 |
|
The Company had three customers which accounts for approximately 44.4%, 44.4% and 11.2% of our revenue in the year ended December 31, 2022 and two customers which accounted for approximately 68% and 32% of their revenue in the year ended December 31, 2021.
At December 31, 2022, the Company had two customers representing 52.2% and 47.8% of the outstanding accounts receivable. No outstanding accounts receivable at December 31, 2021.
The Company utilized one contract manufacturer for the manufacture and supply of the PURE EP system for the year ended December 31, 2022 and 2021.
Cost of Revenue
Cost of revenue consists primarily of the delivered cost of our medical device(s) sold or the leased under a sales-type lease.
Allowance for Doubtful Accounts
The Company adjusts accounts receivable down to net realizable value with its allowance methodology. In determining the allowance for doubtful accounts for estimated losses, aged receivables are analyzed periodically by management. Each identified receivable is reviewed based upon historical collection experience, financial condition of the customer and the status of any open or unresolved issues with the customer preventing the payment thereof. Corrective action, if necessary, is taken by the Company to resolve open issues related to unpaid receivables. The allowance for doubtful accounts was $0 at December 31, 2022 and 2021. The Company believes that its reserve is adequate, however results may differ in future periods. For the years ended December 31, 2022 and 2021, bad debt expense totaled $0.
Concentrations of Credit Risk
Financial instruments and related items, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents. The Company places its cash and temporary cash investments with credit quality institutions. At times, such amounts may be in excess of the FDIC insurance limit. At December 31, 2022 and 2021, deposits in excess of FDIC limits were $0.05 million and $11.2 million, respectively.
Fair Value of Financial Instruments
Accounting Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”) requires disclosure of the fair value of certain financial instruments. The carrying value of cash, accounts payable and accrued liabilities as reflected in the balance sheets, approximate fair value because of the short-term maturity of these instruments. All other significant financial assets, financial liabilities and equity instruments of the Company are either recognized or disclosed in the financial statements together with other information relevant for making a reasonable assessment of future cash flows, interest rate risk and credit risk. Where practicable the fair values of financial assets and financial liabilities have been determined and disclosed; otherwise only available information pertinent to fair value has been disclosed.
The Company follows Accounting Standards Codification subtopic 820-10, Fair Value Measurements and Disclosures (“ASC 820-10”) and ASC 825-10, which permits entities to choose to measure many financial instruments and certain other items at fair value.
Inventory
The inventory is comprised of finished goods available for sale and are stated at the lower of cost or net realizable value using specific identification method for serial numbered inventory and first-in, first-out method for all other inventory for valuation. The inventory December 31, 2022 and 2021 was comprised of the following:
|
|
December 31,
2022
(000’s)
|
|
|
December 31,
2021
(000’s)
|
|
Finished goods-total
|
|
$ |
1,477 |
|
|
$ |
1,881 |
|
Finished goods-short term
|
|
|
336 |
|
|
|
1,881 |
|
Finished goods-long term
|
|
$ |
1,141 |
|
|
$ |
- |
|
Prepaid Expenses and Vendor Deposits
Prepaid expenses and vendor deposits are comprised of prepaid insurance, operating expenses and other prepayments.
Leases (lessee)
The Company determines if a contractual arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, current operating lease liabilities, and noncurrent operating lease liabilities on the Company’s consolidated balance sheet. The Company evaluates and classifies leases as operating or finance leases for financial reporting purposes. The classification evaluation begins at the commencement date and the lease term used in the evaluation includes the non-cancellable period for which the Company has the right to use the underlying asset, together with renewal option periods when the exercise of the renewal option is reasonably certain and failure to exercise such option which result in an economic penalty. All the Company’s real estate leases are classified as operating leases. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term.
The lease payments included in the present value are fixed lease payments. As most of the Company’s leases do not provide an implicit rate, the Company estimates its collateralized incremental borrowing rate, based on information available at the commencement date, in determining the present value of lease payments. The Company applies the portfolio approach in applying discount rates to its classes of leases. The operating lease ROU assets include any payments made before the commencement date. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company does not currently have subleases. The Company does not currently have residual value guarantees or restrictive covenants in its leases.
Leases (lessor)
The Company classifies contractual lease arrangements entered as a lessor as a sales-type, direct financing or operating lease as described in ASC 842-Leases. For sales-type leases, the Company derecognizes the leased asset and recognizes the lease investment on the balance sheet.
Property and Equipment
Property and equipment are stated at cost and depreciated using the straight-line method over their estimated useful lives of 3 to 5 years. When retired or otherwise disposed, the related carrying value and accumulated depreciation are removed from the respective accounts and the net difference less any amount realized from disposition, is reflected in earnings.
Other Assets:
Other assets are comprised of the following:
|
|
December 31,
2022
(000’s)
|
|
|
December 31,
2021
(000’s)
|
|
Security deposits
|
|
$ |
43 |
|
|
$ |
42 |
|
Trademarks
|
|
|
1 |
|
|
|
1 |
|
Total other assets
|
|
$ |
44 |
|
|
$ |
43 |
|
Impairment of Long-lived Assets
The Company recognizes an impairment of long-lived assets used in operations, other than goodwill, when events or circumstances indicate that the asset might be impaired and the estimated undiscounted cash flows to be generated by those assets over their remaining lives are less than the carrying amount of those items. The net carrying value of assets not recoverable is reduced to fair value, which is typically calculated using the discounted cash flow method. The Company did not recognize and record any impairments of long-lived assets used in operations during the year ended December 31, 2022 and 2021.
Research and Development Costs
The Company accounts for research and development costs in accordance with the Accounting Standards Codification subtopic 730-10, Research and Development (“ASC 730-10”). Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and developments costs are expensed when the contracted work has been performed or as milestone results have been achieved. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred. The Company incurred research and development expenses of $5.8 million and $5.6 million for the years ended December 31, 2022 and 2021, respectively.
Net Income (loss) Per Common Share
The Company computes earnings (loss) per share under Accounting Standards Codification subtopic 260-10, Earnings Per Share (“ASC 260-10”). Net loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share, if presented, would include the dilution that would occur upon the exercise or conversion of all potentially dilutive securities into common stock using the “treasury stock” and/or “if converted” methods as applicable.
The computation of basic and diluted loss per share as of December 31, 2022 and 2021 excludes potentially dilutive securities when their inclusion would be anti-dilutive, or if their exercise prices were greater than the average market price of the common stock during the period.
Potentially dilutive securities excluded from the computation of basic and diluted net income (loss) per share are as follows:
|
|
December 31,
2022
|
|
|
December 31,
2021
|
|
Series C convertible preferred stock
|
|
|
655,619 |
|
|
|
83,468 |
|
Options to purchase common stock
|
|
|
4,555,484 |
|
|
|
4,568,484 |
|
Warrants to purchase common stock
|
|
|
4,217,111 |
|
|
|
818,910 |
|
Restricted stock units to acquire common stock
|
|
|
239,584 |
|
|
|
141,250 |
|
Totals
|
|
|
9,667,798 |
|
|
|
5,612,112 |
|
Stock Based Compensation
The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award as measured on the grant date. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period.
Income Taxes
The Company follows Accounting Standards Codification subtopic 740-10, Income Taxes (“ASC 740-10”) for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability during each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change. Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods.
Patents, Net
The Company capitalizes certain initial asset costs in connection with patent applications including registration, documentation and other professional fees associated with the application. Patent costs incurred prior to the Company’s U.S. Food and Drug Administration (“FDA”) 510(k) application on March 28, 2018 were charged to research and development expense as incurred. Commencing upon first in-man trials on February 18 and 19, 2019, capitalized costs are amortized to expense using the straight-line method over the lesser of the legal patent term or the estimated life of the product of 20 years. During the year ended December 31, 2022 and 2021, the Company recorded amortization of $19,006 and $19,006 to current period operations, respectively.
Warranty
The Company generally warrants its products to be free from material defects and to conform to material specifications for a period of up to two (2) years. Warranty expense is estimated based primarily on historical experience and is reflected in the consolidated financial statements.
Segment Information
Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision-making group, in making decisions how to allocate resources and assess performance. The information disclosed herein represents all of the material financial information related to the Company’s principal operating segments. (See Note 13 – Segment Reporting).
Non-controlling Interest
The Company’s non-controlling interest represents the non-controlling shareholders ownership interests related to the Company’s subsidiary, ViralClear. The Company reports its non-controlling interest in subsidiaries as a separate component of equity in the unaudited condensed consolidated balance sheets and reports both net loss attributable to the non-controlling interest and net loss attributable to the Company’s common shareholders on the face of the unaudited condensed consolidated statements of operations. The Company’s equity interest in ViralClear is 69.08% and the non-controlling stockholders’ interest is 30.92% as of December 31, 2022. This is reflected in the consolidated statements of changes in equity.
Warrants
The Company accounts for stock warrants as either equity instruments, derivative liabilities, or liabilities in accordance with ASC 480, Distinguishing Liabilities from Equity (ASC 480), and ASC 815, Derivatives and Hedging (ASC 815), depending on the specific terms of the warrant agreement.
Recent Accounting Pronouncements
In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss model that requires the use of forward-looking information to calculate credit loss estimates. It also eliminates the concept of other-than-temporary impairment and requires credit losses on available-for-sale debt securities to be recorded through an allowance for credit losses instead of as a reduction in the amortized cost basis of the securities. ASU 2016-13 was effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2019. Early adoption was permitted, including adoption in any interim period.
In February 2020, the FASB issued ASU 2020-02, Financial Instruments-Credit Losses (Topic 326) and Leases (Topic 842) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases (Topic 842), which amended the effective date of the original pronouncement for smaller reporting companies. ASC 2016-13 and its amendments will be effective for annual and interim periods beginning after December 15, 2022 for smaller reporting companies. The Company does not expect to have a material impact on the Company’s financial position, results of operations or cash flows upon adoption of this new standard.
There were other various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company’s financial position, results of operations or cash flows.
NOTE 4 – PROPERTY AND EQUIPMENT
Property and equipment as of December 31, 2022 and 2021 is summarized as follows:
|
|
December 31,
2022
(000’s)
|
|
|
December 31,
2021
(000’s)
|
|
Computer equipment
|
|
$ |
397 |
|
|
$ |
383 |
|
Furniture and fixtures
|
|
|
109 |
|
|
|
88 |
|
Manufacturing equipment
|
|
|
372 |
|
|
|
286 |
|
Testing/Demo equipment
|
|
|
304 |
|
|
|
145 |
|
Leasehold improvements
|
|
|
84 |
|
|
|
79 |
|
Total
|
|
|
1,266 |
|
|
|
981 |
|
Less accumulated depreciation
|
|
|
(601 |
)
|
|
|
(329 |
)
|
Property and equipment, net
|
|
$ |
665 |
|
|
$ |
652 |
|
Property and equipment are stated at cost and depreciated using the straight-line method over their estimated useful lives of 3 to 5 years. Leasehold improvements are depreciated over the related expected lease term. When retired or otherwise disposed, the related carrying value and accumulated depreciation are removed from the respective accounts and the net difference less any amount realized from disposition, is reflected in earnings.
Depreciation expense was $273,915 and $179,136 for year ended December 31, 2022 and 2021, respectively.
NOTE 5 – RIGHT TO USE ASSETS AND LEASE LIABILITY
On August 3, 2021, the Company entered into a sublease agreement whereby the Company leased approximately 6,590 square feet of office space at 55 Greens Farms Road, Westport, Connecticut commencing September 1, 2021 and expiring December 31, 2024 (40 months) at the initial rate beginning January 1, 2022 of $14,828 with escalating payments. In connection with the lease, the Company paid a security deposit of $14,232. There is no option to extend the lease past its initial term. At the lease commencement date, the Company estimated the lease liability and right-to-use assets at present value using the Company’s incremental borrowing rate of 6.5% and determined their initial present values, at inception, of $492,876. In conjunction with the lease, the Company terminated, without penalty, the sublease at 54 Wilton Road, Westport, CT effective September 4, 2021 and removed the remaining right-to-use assets of $36,756 and related lease liability of $37,625 with a credit to rent expense of $868 relating to the lease termination.
On August 2, 2021, the Company exercised its option to extend its Rochester, Minnesota lease of approximately 1,400 square feet of office space for two additional years expiring on October 31, 2023 with a fixed monthly rate of $3,513, increasing to $3,618 for the second year. On January 18, 2023, effective November 1, 2022, the Company entered into a termination agreement with the lessor for a termination fee of $7,155. In connection with the termination, the Company removed the remaining right-to-use assets of $41,227 and related lease liability of $41,930 with a credit to rent expense of $703 relating to the lease termination.
On April 4, 2022, the Company entered into a Seventh Amendment to the Office Lease at 12424 Wilshire Blvd in Los Angeles dated August 9, 2011 (the “Seventh Amendment”) – it is the Fifth Extended Term with respect to Suite 745 and the Expansion Term with respect to Suite 740 which is from July 1, 2022 until July 31, 2025 with a fixed monthly rent beginning at $14,124 and escalating yearly to $15,130 in the final year. The security deposit remains unchanged at $27,404.
The Company determined that the Seventh Amendment was a lease modification and accordingly reassessed the lease classification, remeasured the lease liability and adjusted the right-to-use asset. At April 4, 2022, the Company removed the remaining right-to-use net assets of $42,312 and related lease liability of $40,564 and recorded right-to-use assets and related lease liability of $502,445.
As of December 31, 2022, the Company had outstanding two leases with aggregate payments of $28,951 per month, expiring through July 31, 2025.
Right to use assets is summarized below:
|
|
December 31,
2022
(000’s)
|
|
|
December 31,
2021
(000’s)
|
|
Right to use asset
|
|
$ |
995 |
|
|
$ |
803 |
|
Less accumulated amortization
|
|
|
(290 |
)
|
|
|
(199 |
)
|
Right to use assets, net
|
|
$ |
705 |
|
|
$ |
604 |
|
During the year ended December 31, 2022 and 2021, the Company recorded $438,129 and $479,746 as lease expense to current period operations, respectively.
Lease liability is summarized below:
|
|
December 31,
2022
(000’s)
|
|
|
December 31,
2021
(000’s)
|
|
Total lease liability
|
|
$ |
765 |
|
|
$ |
656 |
|
Less: short term portion
|
|
|
(313 |
)
|
|
|
(283 |
)
|
Long term portion
|
|
$ |
452 |
|
|
$ |
373 |
|
Maturity analysis under these lease agreements are as follows (000’s):
Year ended December 31, 2023
|
|
|
357 |
|
Year ended December 31, 2024
|
|
|
370 |
|
Year ended December 31, 2025
|
|
|
106 |
|
Total
|
|
|
833 |
|
Less: Present value discount
|
|
|
(68 |
)
|
Lease liability
|
|
$ |
765 |
|
Lease expense for the year ended December 31, 2022 and 2021 was comprised of the following:
|
|
December 31,
2022
(000’s)
|
|
|
December 31,
2021
(000’s)
|
|
Operating lease expense
|
|
$ |
373 |
|
|
$ |
441 |
|
Short-term lease expense
|
|
|
37 |
|
|
|
39 |
|
Variable lease expense
|
|
|
28 |
|
|
|
- |
|
Total
|
|
$ |
438 |
|
|
$ |
480 |
|
NOTE 6 – LEASE RECEIVABLES
In 2022, the Company entered into two leases for our PURE EP system at a rate of $4,333 per month each. The term of the leases is for 30 months with an option provided to extend for an addition one year. The leases also have an option to purchase at the end of the lease at the fair market value.
The Company determined the leases meet the criteria of a sales-type lease whereby the present value of the future expected revenue (less the present value of the estimated unguaranteed residual value), cost of sales and profit and loss are recognized at the lease inception. The discount rate utilized was the contract explicit rate of 2% per annum. The present value of the unguaranteed residual assets of $4 are included in net investment in leases in the balance sheet.
A reconciliation of lease receivables with customers for the year ended December 31, 2022 is presented below (none for 2021):
Year ended December 31, 2022:
|
|
Balance at
December 31, 2021
(000’s)
|
|
|
Recognized in Revenue
(000’s)
|
|
|
Invoiced to Customer
(000’s)
|
|
|
Interest Earned
(000’s)
|
|
|
Unguaranteed
Residual
Assets
(000’s)
|
|
|
Balance at
December 31, 2022
(000’s)
|
|
Contract asset
|
|
$ |
- |
|
|
$ |
254 |
|
|
$ |
(39 |
)
|
|
$ |
2 |
|
|
$ |
4 |
|
|
$ |
221 |
|
Less current portion
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(120 |
)
|
Noncurrent portion
|
|
$ |
- |
|
|
$ |
254 |
|
|
$ |
(39 |
)
|
|
|
2 |
|
|
$ |
4 |
|
|
$ |
101 |
|
Future cash flows under this lease agreement are as follows (000’s):
Year ended December 31, 2023
|
|
$ |
104 |
|
Year ended December 31, 2024
|
|
|
104 |
|
Year ended December 31, 2025
|
|
|
13 |
|
Present value of unguaranteed residual assets
|
|
|
4 |
|
Total
|
|
|
225 |
|
Less: Present value discount
|
|
|
(4 |
)
|
Net investment in leases
|
|
$ |
221 |
|
NOTE 7 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses at December 31, 2022 and 2021 consist of the following:
|
|
December 31,
2022
(000’s)
|
|
|
December 31,
2021
(000’s)
|
|
Accrued accounting and legal
|
|
$ |
646 |
|
|
$ |
204 |
|
Accrued reimbursements and travel
|
|
|
33 |
|
|
|
56 |
|
Accrued consulting
|
|
|
546 |
|
|
|
264 |
|
Accrued research and development expenses
|
|
|
625 |
|
|
|
367 |
|
Accrued product purchases
|
|
|
- |
|
|
|
1 |
|
Accrued marketing
|
|
|
256 |
|
|
|
38 |
|
Accrued office and other
|
|
|
220 |
|
|
|
84 |
|
Accrued payroll
|
|
|
513 |
|
|
|
552 |
|
Accrued settlement related to arbitration
|
|
|
13 |
|
|
|
613 |
|
|
|
$ |
2,852 |
|
|
$ |
2,179 |
|
NOTE 8 – SERIES C 9% CONVERTIBLE PREFERRED STOCK
Series C 9% Convertible Preferred Stock
On January 9, 2013, the Board of Directors authorized the issuance of up to 4,200 shares of 9% Series C Convertible Preferred Stock (the “Series C Preferred Stock”).
The Series C Preferred Stock is entitled to preference over holders of junior stock upon liquidation in the amount of $1,000 plus any accrued and unpaid dividends; entitled to dividends as a preference to holders of junior stock at a rate of 9% per annum of the stated value of $1,000 per share, payable quarterly beginning on September 30, 2013 and are cumulative. The holders of the Series C Preferred Stock vote together with the holders of our common stock on an as-converted basis but may not vote the Series C Preferred Stock in excess of the beneficial ownership limitation of the Series C Preferred Stock. The beneficial ownership limitation is 4.99% of our then outstanding shares of common stock following such conversion or exercise, which may be increased to up to 9.99% of our then outstanding shares of common stock following such conversion or exercise upon the request of an individual holder. The beneficial ownership limitation is determined on an individual holder basis, such that the as-converted number of shares of one holder is not included in the shares outstanding when calculating the limitation for a different holder.
As a result of an amendment to the conversion price of our Series C Preferred Stock, the conversion price effective as of December 31, 2020 was $3.75 per share, subject to certain reset provisions. In 2021, the conversion price was reset from $3.75 per share to $2.27 per share and in 2022 reset to $0.25 per share. As such, the Company recorded a noncash deemed dividend of $209,682 during the year ended December 31, 2022.
The Series C Preferred Stock contains triggering events which would, among other things, require redemption (i) in cash, at the greater of (a) 120% of the stated value of $1,000 or (b) the product of (I) the variable weighted average price of our common stock on the trading day immediately preceding the date of the triggering event and (II) the stated value divided by the then conversion price or (ii) in shares of our common stock, equal to a number of shares equal to the amount set forth in (i) above divided by 75%. As of December 31, 2022 and 2021, the aggregate stated value of our Series C Preferred Stock was $105,000. The triggering events include our being subject to a judgment of greater than $100,000 or our initiation of bankruptcy proceedings. If any of the triggering events contained in our Series C Preferred Stock occur, the holders of our Series C Preferred Stock may demand redemption, an obligation the Company may not have the ability to meet at the time of such demand. The Company will be required to pay interest on any amounts remaining unpaid after the required redemption of our Series C Preferred Stock, at a rate equal to the lesser of 18% per annum or the maximum rate permitted by applicable law. Accordingly, the Company has classified the Series C Preferred Stock as a mezzanine obligation in the accompanying consolidated balance sheets.
Series C Preferred Stock issued and outstanding totaled 105 as of December 31, 2022 and 2021. As of December 31, 2022 and 2021, the Company has accrued $91,117 and $81,667 dividends payable on the Series C Preferred Stock.
NOTE 9 – STOCKHOLDER EQUITY
Shareholder rights plan
On July 14, 2020, our board of directors adopted a stockholder rights plan (the “Rights Plan”) and declared a dividend of one preferred share purchase right for each outstanding share of BioSig’s common stock to stockholders of record on July 27, 2020, and one right will be issued for each new share of common stock issued thereafter. Each right will initially trade with common stock, and will allow its holder to purchase from BioSig one one-thousandth of a share of Series F Junior Participating Preferred stock, par value $0.001 per share, for an exercise price of $50.00, once the rights become exercisable. In the event that a person or group acquires beneficial ownership of 12% or more of BioSig’s then outstanding common stock, subject to certain exceptions, each right would entitle its holder (other than such person or members of such group) to purchase additional shares of BioSig’s common stock having a market value of two times the exercise price of the right. In addition, at any time after a person or group acquires 12% or more of BioSig’s outstanding common stock (unless such person or group acquires 50% or more), the Board may exchange one share of BioSig’s common stock for each outstanding right (other than rights owned by such person or group, which would have become void). The Rights Plan could make it more difficult for a third party to acquire control of BioSig or a large block of our common stock without the approval of our board of directors. The rights expired on July 13, 2021.
Preferred stock
The Company is authorized to issue 1,000,000 shares of $0.001 par value preferred stock. As of December 31, 2022 and 2021, the Company has designated 200 shares of Series A preferred stock, 600 shares of Series B preferred stock, 4,200 shares of Series C Preferred Stock, 1,400 shares of Series D Preferred Stock, 1,000 shares of Series E Preferred Stock and 200,000 shares of Series F Preferred Stock. As of December 31, 2022, and 2021, there were no outstanding shares of Series A, Series B, Series D, Series E and Series F preferred stock.
Common stock
The Company is authorized to issue 200,000,000 shares of $0.001 par value common stock. As of December 31, 2022 and 2021, the Company had 54,610,638 and 35,567,180 shares issued and outstanding, respectively.
2021:
In January 2021, the Company issued an aggregate of 658,868 shares of its common stock for services at a fair value previously recorded in 2020 of $2,658,224.
On July 2, 2021, the Company entered into securities purchase agreements with investors pursuant to which the Company issued 2,500,000 shares of common stock for aggregate proceeds of $9,004,033, net of $995,966 in expenses.
During the year ended December 31, 2021, the Company issued 1,124,341 shares of common stock for services at a fair value of $3,975,451.
During the year ended December 31, 2021, the Company issued 9,375 shares of common stock in exchange for proceeds of $27,750 from the exercise of options.
During the year ended December 31, 2021, the Company issued an aggregate of 258,084 shares of its common stock for vested restricted stock units.
At-The-Market Sale Agreement (2021)
On August 28, 2020, the Company entered into an Open Market Sale Agreement (the “Sales Agreement”) with Jefferies LLC to act as the Company’s sales agent and/or principal (“Jefferies” or the “Agent”), with respect to the issuance and sale of up to $45.0 million of the Company’s shares of common stock from time to time in an at-the-market offering.
The Company paid Agent a commission equal to 3.0% of the gross proceeds from the sale of the shares pursuant to the Sales Agreement. The Company has also agreed to provide Jefferies with customary indemnification and contribution rights.
The offering of shares pursuant to the Sales Agreement will terminate upon the earlier of (i) the sale of all common stock subject to the Sales Agreement or (ii) termination of the Sales Agreement in accordance with its terms.
The common stock was sold and issued pursuant the Company’s shelf registration statement on Form S-3, which was previously declared effective by the Securities and Exchange Commission, and a related prospectus.
From January 15, 2021 through February 16, 2021, the Company sold 251,720 shares of its common stock through the Open Market Sales Agreement for net proceeds of $1,300,135, after transactional costs of $40,365.
On March 25, 2021, the Company delivered written notice to Jefferies to terminate the Sales Agreement effective as of April 8, 2021, pursuant to Section 7(b)(i) thereof. The Company was not subject to any termination penalties related to the termination of the Sales Agreement.
2022:
During the year ended December 31, 2022, the Company issued 1,930,000 shares of common stock for services at a fair value of $2,108,500.
During the year ended December 31, 2022, the Company issued an aggregate of 259,165 shares of its common stock for vested restricted stock units.
During the year ended December 31, 2022, the Company issued an aggregate of 238,638 shares of its common stock in settlement of outstanding accounts payable of $105,000.
On November 3, 2022, the Company reduced the exercise price of the March 21, 2022 issued warrants (see below) from an exercise price of $1.40 per share to $0.25 per share from November 4, 2022 through November 10, 2022. The Company issued an aggregate of 873,000 shares of Common Stock for warrants exercised for a total of $218,250.
At December 31, 2022, the Company accrued for 2,370,000 obligated, but unissued shares of common stock for services at a fair value of $1,060,740.
Sale of common stock
On March 21, 2022, the Company entered into a securities purchase agreement with several institutional and accredited investors, pursuant to which the Company sold in a registered direct offering an aggregate of 2,613,130 shares of the Company’s common stock, at an offering price of $1.15 per share and warrants to purchase up to 2,613,130 shares of common stock at an exercise price of $1.40 per share, that are exercisable six months after the date of issuance and will expire three and one-half years following the date of issuance, for gross proceeds of approximately $3,005,000, net of expenses of approximately $5,000.
On June 24, 2022, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Laidlaw & Company (UK) Ltd. (the “Underwriter”), which was amended and restated on June 28, 2022 (the “Amended and Restated Underwriting Agreement”), relating to a best-efforts public offering (the “June 2022 Offering”) of 4,341,667 shares of the Company’s common stock. The public offering price of the common stock was $0.75 per share. After the underwriting discounts, which includes a reduced discount with respect to certain Company-introduced investors, and offering expenses, the Company received net proceeds from the offering of approximately $2,818,000.
Pursuant to the Amended and Restated Underwriting Agreement, the Company issued to the Underwriter, or its designees warrants to purchase up to an aggregate 217,083 shares of common stock, or 5% of the number of common stock sold in the offering.
On November 18, 2022, the Company entered into a Securities Purchase Agreement with certain accredited investors pursuant to which the Company sold to the investors an aggregate of 3,541,469 shares (the “Shares”) of the Company’s common stock at a purchase price of $0.41 per share, in exchange for aggregate consideration of $1,411,775, net of expenses of $40,225.
On December 21, 2022, the Company entered into a Securities Purchase Agreement with certain institutional and accredited investors pursuant to which the Company sold to the investors an aggregate of 2,161,598 shares of the Company’s common stock at a purchase price of $0.51 per share, and warrants to purchase up to 1,080,799 shares of common stock at an exercise price of $0.45 per share, that are exercisable six months after the date of issuance and will expire five and one-half years following the date of issuance, in exchange for aggregate consideration of $1,050,960, net of expenses of $47,132.
ATM Sales Agreement
On May 17, 2022, the Company entered into an ATM Sales Agreement (the “Sales Agreement”) with Virtu Americas LLC to act as the Company’s sales agent or principal (“Agent”), with respect to the issuance and sale of up to $10.0 million of the Company’s shares of common stock, from time to time in an at-the-market public offering.
The Company will pay Agent a commission of up to 2.5% of the gross proceeds from the sale of the common stock pursuant to the Sales Agreement.
From May 18, 2022 through November 29, 2022, the Company sold 3,084,791 shares of its common stock through the Sales Agreement for net proceeds of $2,069,582, after transactional costs of $121,926.
On November 30, 2022, the Company delivered written notice to the Agent to terminate the Sales Agreement, effective December 1, 2022 pursuant to Section 13(b) of the Sales Agreement. The Company is not subject to any termination penalties related to the termination of the Sales Agreement.
NOTE 10 – OPTIONS, RESTRICTED STOCK UNITS AND WARRANTS
BioSig Technologies, Inc.
2012 Equity Incentive Plan
On October 19, 2012, the Board of Directors of BioSig Technologies, Inc. approved the 2012 Equity Incentive Plan (the “Plan”) and terminated the Long-Term Incentive Plan (the “2011 Plan”). The Plan (as amended) provides for the issuance of options, stock appreciation rights, restricted stock and restricted stock units to purchase up to 14,474,450 shares of the Company’s common stock to officers, directors, employees and consultants of the Company. Under the terms of the Plan the Company may issue Incentive Stock Options as defined by the Internal Revenue Code to employees of the Company only and nonstatutory options. The Board of Directors of the Company or a committee thereof administers the Plan and determines the exercise price, vesting and expiration period of the grants under the Plan.
However, the exercise price of an Incentive Stock Option should not be less than 110% of fair value of the common stock at the date of the grant for a 10% or more stockholder and 100% of fair value for a grantee who is not 10% stockholder. The fair value of the common stock is determined based on the quoted market price or in absence of such quoted market price, by the administrator in good faith.
Additionally, the vesting period of the grants under the Plan will be determined by the administrator, in its sole discretion, with an expiration period of not more than ten years. On October 19, 2022, the 2012 Equity Incentive Plan expired.
2023 Long-Term Incentive Plan
On December 27, 2022, the Board of Directors of BioSig Technologies, Inc. approved the 2023 Long-Term Incentive Plan (the “2023 Plan”). The 2023 Plan provides for the issuance of options, stock appreciation rights, restricted stock and restricted stock units to purchase up to 5,265,945 shares, plus any prior plan awards of the Company’s common stock to officers, directors, employees and consultants of the Company. Under the terms of the Plan the Company may issue Incentive Stock Options as defined by the Internal Revenue Code to employees of the Company only and nonstatutory options. The Board of Directors of the Company or a committee thereof administers the Plan and determines the exercise price, vesting and expiration period of the grants under the Plan.
However, the exercise price of an Incentive Stock Option should not be less than 110% of fair value of the common stock at the date of the grant for a 10% or more stockholder and 100% of fair value for a grantee who is not 10% stockholder. The fair value of the common stock is determined based on the quoted market price or in absence of such quoted market price, by the administrator in good faith.
Additionally, the vesting period of the grants under the Plan will be determined by the administrator, in its sole discretion, with an expiration period of not more than ten years. At December 31, 2022, there were 5,265,945 shares available under the 2023 Long-Term Incentive Plan.
Options
Option valuation models require the input of highly subjective assumptions. The fair value of stock-based payment awards was estimated using the Black-Scholes option model with a volatility figure derived from historical stock prices of the Company. The Company accounts for the expected life of options using the based on the contractual life of options for non-employees.
For employees, the Company accounts for the expected life of options in accordance with the “simplified” method, which is used for “plain-vanilla” options, as defined in the accounting standards codification. The risk-free interest rate was determined from the implied yields of U.S. Treasury zero-coupon bonds with a remaining life consistent with the expected term of the options.
During the year ended December 31, 2022 and 2021, the Company granted an aggregate of 1,428,000 and 1,818,000 options to officers, directors and key consultants, respectively.
The following table presents information related to stock options at December 31, 2022:
|
Options Outstanding
|
|
|
Options Exercisable
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
Exercisable
|
|
|
Exercise
|
|
|
Number of
|
|
|
Remaining Life
|
|
|
Number of
|
|
|
Price
|
|
|
Options
|
|
|
In Years
|
|
|
Options
|
|
|
$
|
Under 1.00 |
|
|
|
398,000 |
|
|
|
9.7 |
|
|
|
200,000 |
|
|
|
1.00-1.99 |
|
|
|
910,000 |
|
|
|
8.8 |
|
|
|
97,500 |
|
|
|
2.00-2.99 |
|
|
|
875,375 |
|
|
|
8.7 |
|
|
|
641,374 |
|
|
|
3.00-3.99 |
|
|
|
412,466 |
|
|
|
3.4 |
|
|
|
397,882 |
|
|
|
4.00-4.99 |
|
|
|
1,165,916 |
|
|
|
5.1 |
|
|
|
1,049,853 |
|
|
|
5.00-5.99 |
|
|
|
156,132 |
|
|
|
6.1 |
|
|
|
137,792 |
|
|
|
6.00-6.99 |
|
|
|
356,542 |
|
|
|
4.5 |
|
|
|
354,868 |
|
|
|
7.00-7.99 |
|
|
|
157,720 |
|
|
|
5.7 |
|
|
|
152,720 |
|
|
|
Over 8.00 |
|
|
|
123,333 |
|
|
|
3.8 |
|
|
|
117,080 |
|
|
|
|
|
|
|
4,555,484 |
|
|
|
6.7 |
|
|
|
3,149,069 |
|
A summary of the stock option activity and related information for the Plan for the two years ended December 31, 2022 is as follows:
|
|
Shares
|
|
|
Weighted-Average Exercise Price
|
|
|
Weighted-Average Remaining Contractual Term
|
|
|
Aggregate Intrinsic Value
|
|
Outstanding at January 1, 2021
|
|
|
3,568,497 |
|
|
$ |
5.59 |
|
|
|
7.0 |
|
|
$ |
110,961 |
|
Grants
|
|
|
1,818,000 |
|
|
$ |
3.69 |
|
|
|
10.0 |
|
|
|
- |
|
Exercised
|
|
|
(9,375 |
)
|
|
$ |
2.96 |
|
|
|
|
|
|
|
|
|
Forfeited/expired
|
|
|
(808,638 |
)
|
|
$ |
6.19 |
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2021
|
|
|
4,568,484 |
|
|
$ |
4.57 |
|
|
|
6.9 |
|
|
$ |
- |
|
Grants
|
|
|
1,428,000 |
|
|
$ |
1.12 |
|
|
|
10.0 |
|
|
$ |
- |
|
Forfeited/expired
|
|
|
(1,441,000 |
)
|
|
$ |
4.54 |
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2022
|
|
|
4,555,484 |
|
|
$ |
3.49 |
|
|
|
6.7 |
|
|
$ |
3,000 |
|
Exercisable at December 31, 2022
|
|
|
3,149,069 |
|
|
$ |
4.83 |
|
|
|
5.9 |
|
|
$ |
3,000 |
|
The aggregate intrinsic value in the preceding tables represents the total pretax intrinsic value, based on options with an exercise price less than the stock price of BioSig Technologies, Inc. of $0.42 as of December 31, 2022, which would have been received by the option holders had those option holders exercised their options as of that date.
During the year ended December 31, 2021, the Company granted an aggregate of 1,818,000 options to purchase the Company’s common stock in connection with services rendered at exercise prices from $2.44 to $4.97 per share for a term of ten years and with vesting from immediate to three years from the date of issuance.
During the year ended December 31, 2022, the Company granted an aggregate of 1,428,000 options to purchase the Company’s common stock in connection with services rendered at exercise prices from $0.40 to $1.72 per share for a term of ten years and with vesting from immediate to three years from the date of issuance.
The following assumptions were used in determining the fair value of options during the years ended December 31, 2022 and 2021:
|
|
2022
|
|
|
2021
|
|
Risk-free interest rate
|
|
|
1.17% - 4.06 |
% |
|
|
0.77% to 1.49 |
% |
Dividend yield
|
|
|
0 |
% |
|
|
0 |
% |
Stock price volatility
|
|
|
83.83% to 96.29 |
% |
|
|
82.50% to 95.98 |
% |
Expected life
|
|
5 – 10 years |
|
|
5-10 years |
|
Weighted average grant date fair value
|
|
$ |
0.80 |
|
|
$ |
2.55 |
|
On June 28, 2021, in connection with the exit of two members of the Company’s board of directors, the Company extended the life of 145,000 previously issued director options from the contractual 90 days from termination of service to the earlier of the initial life or June 28, 2023. The change in estimated fair value of the modified options of $182,514 was charged to current period operations.
The following assumptions were used in determining the change in fair value of the modified options at June 28, 2021:
Risk-free interest rate
|
|
|
0.05% - 0.25 |
%
|
Dividend yield
|
|
|
0 |
% |
Stock price volatility
|
|
|
88.57 |
% |
Expected life
|
|
0.25 – 2 years |
|
On June 30, 2021, in connection with the resignation of a member of the Company’s board of directors, the Company entered into a one-year consulting contract and extended the life of 221,240 previously issued director options from the contractual 90 days from termination of service to the earlier of the initial life or two years after service contract completion. The change in estimated fair value of the modified options of $111,402 was charged to current period operations.
The following assumptions were used in determining the change in fair value of the modified options on June 30, 2021:
Risk-free interest rate
|
|
|
0.06% - 0.46 |
%
|
Dividend yield
|
|
|
0 |
% |
Stock price volatility
|
|
|
88.59 |
% |
Expected life
|
|
0.59 – 3 years |
|
On March 16, 2022, in connection with the termination of a Company executive, the Company extended the life of 100,000 previously issued options from the contractual 90 days from termination of service to the earlier of the initial life or March 16, 2024. The change in estimated fair value of the modified options of $15,181 was charged to current period operations.
The following assumptions were used in determining the change in fair value of the modified options at March 16, 2022:
Risk-free interest rate
|
|
|
0.44% - 1.95 |
%
|
Dividend yield
|
|
|
0 |
% |
Stock price volatility
|
|
|
83.86 |
% |
Expected life
|
|
0.25 – 2 years |
|
The fair value of all options vesting during the year ended December 31, 2022 and 2021 of $1,829,233 and $3,357,274, respectively, was charged to current period operations. Unrecognized compensation expense of $1,373,155 at December 31, 2022 which the Company expects to recognize over a weighted average period of 1.00 years.
Warrants
The following table summarizes information with respect to outstanding warrants to purchase common stock of BioSig Technologies, Inc. at December 31, 2022:
Exercise
|
|
|
Number
|
|
Expiration
|
Price
|
|
|
Outstanding
|
|
Date
|
$
|
0.4066 |
|
|
|
250,000 |
|
November 2032 |
$
|
0.4100 |
|
|
|
60,976 |
|
May, 2028 |
$
|
0.4455 |
|
|
|
1,130,012 |
|
June 2028 |
$
|
0.9000 |
|
|
|
217,083 |
|
June 2027 |
$
|
1.4000 |
|
|
|
1,740,130 |
|
September 2025 |
$
|
4.8000 |
|
|
|
250,000 |
|
February 2025 to July 2026 |
$
|
6.16 |
|
|
|
568,910 |
|
November 2027 |
|
|
|
|
|
4,217,111 |
|
|
On July 7, 2021, BioSig Technologies, Inc. issued warrants to purchase 125,000 shares of its common stock at $4.80 per share, expiring on July 2, 2026, for placement agent services in connection with the sale of the company’s common stock.
On March 21, 2022, the Company issued warrants to purchase 2,613,130 shares of its common stock at an exercise price of $1.40 per share, that are exercisable six months after the date of issuance and will expire three and one-half years following the date of issuance in connection with the sale of the Company’s common stock.
On June 29, 2022, the Company issued warrants to purchase 217,083 shares of common stock at an exercise price of $0.90 per share and will expire five years following the date of the execution of the Underwriting Agreement in connection with the sale of common stock in the June 2022 Offering.
On November 18, 2022, the Company issued warrants to purchase 250,000 shares of common stock at an exercise price of $0.4066 for services. The warrants expire ten years following the date of issuance The fair value of $90,865, determined using the Black-Scholes Option method was charged to current period operations. The assumptions issued in the fair value determination was volatility: 96.26%, estimated life: 10 years and risk-free rate of 3.82%.
On November 18, 2022, the Company issued warrants to purchase 60,976 shares of common stock at an exercise price of $0.41 per share exercisable six months after the date of issuance and will expire five and one-half years following the date of issuance in connection with the sale of common stock in the November 2022 Offering. This Warrant was issued pursuant to that certain Engagement Agreement, by and between Laidlaw & Company (UK) Ltd. and the Company, dated as of October 11, 2022.
On December 27, 2022, the Company issued warrants to purchase 1,080,799 shares of its common stock at an exercise price of $0.4455 per share, that are exercisable six months after the date of issuance and will expire three and one-half years following the date of issuance in connection with the sale of the Company’s common stock.
On December 27, 2022, the Company issued warrants to purchase 49,213 shares of common stock at an exercise price of $0.4455 per share exercisable six months after the date of issuance and will expire five and one-half years following the date of issuance in connection with the sale of common stock in the December 2022 Offering. This Warrant was issued pursuant to that certain Engagement Agreement, by and between Laidlaw & Company (UK) Ltd. and the Company, dated as of October 11, 2022.
A summary of the warrant activity for the two years ended December 31, 2022 is as follows:
|
|
Shares
|
|
|
Weighted-Average Exercise Price
|
|
|
Weighted-Average Remaining Contractual Term
|
|
|
Aggregate Intrinsic Value
|
|
Outstanding at January 1, 2021
|
|
|
1,446,200 |
|
|
$ |
5.44 |
|
|
|
3.3 |
|
|
$ |
1,500 |
|
Issued
|
|
|
125,000 |
|
|
$ |
4.80 |
|
|
|
5.0 |
|
|
|
- |
|
Expired
|
|
|
(752,290 |
)
|
|
$ |
5.00 |
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2021
|
|
|
818,910 |
|
|
$ |
5.74 |
|
|
|
5.3 |
|
|
$ |
- |
|
Issued
|
|
|
4,271,201 |
|
|
$ |
1.05 |
|
|
|
4.0 |
|
|
|
|
|
Exercised
|
|
|
(873,000 |
)
|
|
$ |
0.25 |
|
|
|
- |
|
|
|
- |
|
Outstanding at December 31, 2022
|
|
|
4,217,111 |
|
|
$ |
1.89 |
|
|
|
4.3 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested and expected to vest at December 31, 2022
|
|
|
4,217,111 |
|
|
$ |
1.89 |
|
|
|
4.3 |
|
|
$ |
3,960 |
|
Exercisable at December 31, 2022
|
|
|
3,026,123 |
|
|
$ |
2.46 |
|
|
|
3.9 |
|
|
$ |
3,350 |
|
The aggregate intrinsic value in the preceding tables represents the total pretax intrinsic value, based on warrants with an exercise price less than the company’s stock price of $0.42 of December 31, 2022, which would have been received by the warrant holders had those warrants holders exercised their options as of that date.
The fair value of warrants issued for services during the year ended December 31, 2022 and 2021 of $90,865 and $0, respectively, was charged to current period operations. Unrecognized compensation expense of $0 at December 31, 2022.
Restricted Stock Units
The following table summarizes the restricted stock activity for the two years ended December 31, 2022:
Restricted shares issued as of January 1, 2021
|
|
|
218,334 |
|
Granted
|
|
|
301,000 |
|
Vested and issued
|
|
|
(258,084 |
)
|
Forfeited
|
|
|
(120,000 |
)
|
Restricted shares issued as of December 31, 2021
|
|
|
141,250 |
|
Granted
|
|
|
387,500 |
|
Vested and issued
|
|
|
(259,165 |
)
|
Forfeited
|
|
|
(30,001 |
)
|
Vested restricted shares as of December 31, 2022
|
|
|
- |
|
Unvested restricted shares as of December 31, 2022
|
|
|
239,584 |
|
In 2021, the Company granted an aggregate of 301,000 restricted stock units for services with vesting ranging from four months to three years.
On June 1, 2021, in connection with the termination of an employee, the Company accelerated vesting of 30,000 previously granted restricted stock units from a three-year period to fully vested. The change in vesting of the modified restricted stock unit resulted in a $109,725 charge to current period operations.
On June 30, 2021, in connection with the resignation of a member of the Company’s board of directors, the Company accelerated vesting of 50,000 previously granted restricted stock units from a three-year period to fully vested. The change in vesting of the modified restricted stock unit resulted in a $232,375 charge to current period operations.
In 2022, the Company granted an aggregate of 387,500 restricted stock units for services with 375,000 vesting from four months to one year and 12,500 upon achievement of certain performance conditions.
Stock based compensation expense related to restricted stock grants was $358,931 and $950,281 for the year ended December 31, 2022 and 2021, respectively. As of December 31, 2022, the stock-based compensation relating to restricted stock of $107,655 remains unamortized.
ViralClear Pharmaceuticals, Inc.
2019 Long-Term Incentive Plan
On September 24, 2019, ViralClear’s Board of Directors approved the 2019 Long-Term Incentive Plan (as subsequently amended, the “ViralClear Plan”). The ViralClear Plan was approved by BioSig as ViralClear’s majority stockholder. The ViralClear Plan provides for the issuance of options, stock appreciation rights, restricted stock and restricted stock units to purchase up to 4,000,000 shares of ViralClear’s common stock to officers, directors, employees and consultants of the ViralClear. Under the terms of the ViralClear Plan, ViralClear may issue Incentive Stock Options as defined by the Internal Revenue Code to employees of ViralClear only and nonstatutory options. The Board of Directors of ViralClear or a committee thereof administers the ViralClear Plan and determines the exercise price, vesting and expiration period of the grants under the ViralClear Plan.
However, the exercise price of an Incentive Stock Option should not be less than 110% of fair market value of the common stock at the date of the grant for a 10% or more stockholder and 100% of fair market value for a grantee who is not 10% stockholder. The fair market value of the common stock is determined based on the quoted market price or in absence of such quoted market price, by the administrator in good faith.
Additionally, the vesting period of the grants under the ViralClear Plan will be determined by the administrator, in its sole discretion, with an expiration period of not more than ten years. There are 2,650,071 shares remaining available for future issuance of awards under the terms of the ViralClear Plan.
ViralClear Options
A summary of the stock option activity and related information for the ViralClear Plan for the two years ended December 31, 2022 is as follows:
|
|
Shares
|
|
|
Weighted-Average Exercise Price
|
|
|
Weighted-Average Remaining Contractual Term
|
|
Outstanding at January 1, 2021
|
|
|
1,527,666 |
|
|
$ |
5.00 |
|
|
|
4.0 |
|
Exercised
|
|
|
(550,000 |
)
|
|
$ |
5.00 |
|
|
|
|
|
Forfeited/expired
|
|
|
(852,666 |
)
|
|
$ |
5.00 |
|
|
|
|
|
Outstanding at December 31, 2021
|
|
|
125,000 |
|
|
$ |
5.00 |
|
|
|
7.2 |
|
Forfeited/expired
|
|
|
(100,000 |
)
|
|
$ |
5.00 |
|
|
|
|
|
Outstanding at December 31, 2022
|
|
|
25,000 |
|
|
$ |
5.00 |
|
|
|
1.5 |
|
Exercisable at December 31, 2022
|
|
|
25,000 |
|
|
$ |
5.00 |
|
|
|
1.5 |
|
The following table presents information related to stock options at December 31, 2022:
Options Outstanding
|
|
|
Options Exercisable
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
Exercisable
|
|
Exercise
|
|
|
Number of
|
|
|
Remaining Life
|
|
|
Number of
|
|
Price
|
|
|
Options
|
|
|
In Years
|
|
|
Options
|
|
$
|
5.00 |
|
|
|
25,000 |
|
|
|
1.5 |
|
|
|
25,000 |
|
The fair value of the stock-based payment awards was estimated using the Black-Scholes option model with a volatility figure derived from an index of historical stock prices of comparable entities with the market value of stock price based on recent sales. The Company accounts for the expected life of options in accordance with the “simplified” method, which is used for “plain-vanilla” options, as defined in the accounting standards codification. The risk-free interest rate was determined from the implied yields of U.S. Treasury zero-coupon bonds with a remaining life consistent with the expected term of the options.
On July 1, 2021, ViralClear issued 206,250 shares of its common stock in exchange for the cashless exercise of 550,000 options previously granted on October 16, 2019.
On June 30, 2021, in connection with the resignation of a member of the Company’s board of directors, the Company entered into a one-year consulting contract and extended the life of 25,000 previously issued director options from the contractual 90 days from termination of service to the earlier of the initial life or two years after service contract completion. The change in estimated fair value of the modified options of $26,577 was charged to current period operations.
The following assumptions were used in determining the change in fair value of the modified options at June 30, 2021:
Risk-free interest rate
|
|
|
0.07% - 0.46 |
%
|
Dividend yield
|
|
|
0 |
%
|
Stock price volatility
|
|
|
88.59 |
%
|
Expected life
|
|
1.25 - 3 years |
|
The fair value of all options vesting during the years ended December 31, 2022 and 2021 of $36,520 and $146,083, respectively, was charged to current period operations. Unrecognized compensation expense of $0 at December 31, 2022.
Warrants (ViralClear)
The following table presents information related to warrants (ViralClear) at December 31, 2022:
|
Exercise
|
|
|
Number
|
|
Expiration
|
|
Price
|
|
|
Outstanding
|
|
Date
|
|
$
|
5.00 |
|
|
|
473,772 |
|
November 2027 |
|
|
10.00 |
|
|
|
6,575 |
|
May 2025 |
|
|
|
|
|
|
480,347 |
|
|
Restricted stock units (ViralClear)
The following table summarizes the restricted stock activity for the two years ended December 31, 2022:
Restricted shares outstanding at January 1, 2021:
|
|
|
1,420,716 |
|
Issued
|
|
|
(40,000 |
)
|
Forfeited
|
|
|
(62,037 |
)
|
Restricted shares outstanding at December 31, 2021:
|
|
|
1,318,679 |
|
Forfeited
|
|
|
(240,000 |
)
|
Total restricted shares outstanding at December 31, 2022:
|
|
|
1,078,679 |
|
|
|
|
|
|
Comprised of:
|
|
|
|
|
Vested restricted shares as of December 31, 2022
|
|
|
678,679 |
|
Unvested restricted shares as of December 31, 2022
|
|
|
400,000 |
|
Total
|
|
|
1,078,679 |
|
Stock based compensation expense related to restricted stock unit grants of ViralClear was $(1,072,094) and $904,112 for the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022, the stock-based compensation relating to restricted stock of $58,140 remains unamortized.
NOTE 11 – NON-CONTROLLING INTEREST
On November 7, 2018, the Company formed a subsidiary, now known as ViralClear, to pursue additional applications of the PURE EP™ signal processing technology outside of cardiac electrophysiology, and subsequently in 2020, was repurposed to develop merimepodib, a broad-spectrum anti-viral agent that showed potential for the treatment of COVID-19. Since late 2020, ViralClear has been realigned with its original objective of pursuing additional applications of the PURE EP™ signal processing technology outside of cardiac electrophysiology.
On April 1, 2021, ViralClear issued an aggregate of 40,000 shares of its common stock in exchange for vested restricted stock units.
On July 1, 2021, ViralClear issued an aggregate of 206,250 shares of its common stock in exchange for the cashless exercise of 550,000 previously issued options.
On April 1, 2022, ViralClear issued 196,778 shares of its common stock to the Company in settlement of outstanding payables to BioSig Technologies.
As of December 31, 2022 and 2021, the Company had a majority interest in ViralClear of 69.08% and 68.44%, respectively.
A reconciliation of the ViralClear Pharmaceuticals, Inc. non-controlling loss attributable to the Company:
Net loss attributable to the non-controlling interest for the year ended December 31, 2022 (000’s):
Net loss
|
|
$ |
(671 |
)
|
Average Non-controlling interest percentage of profit/losses
|
|
|
31.24 |
%
|
Net loss attributable to the non-controlling interest
|
|
$ |
(210 |
)
|
Net loss attributable to the non-controlling interest for the year ended December 31, 2021 (000’s):
Net loss
|
|
$ |
(3,077 |
)
|
Average Non-controlling interest percentage of profit/losses
|
|
|
30.44 |
%
|
Net loss attributable to the non-controlling interest
|
|
$ |
(939 |
)
|
The following table summarizes the changes in non-controlling interest for the two years ended December 31, 2022 (000’s):
Balance, January 1, 2021
|
|
$ |
802 |
|
Allocation of equity to non-controlling interest due to equity-based compensation issued
|
|
|
348 |
|
Allocation of equity to non-controlling interest due change in fair value of modified option
|
|
|
8 |
|
Net loss attributable to non-controlling interest
|
|
|
(939 |
)
|
Balance, December 31, 2021
|
|
|
219 |
|
Allocation of equity to non-controlling interest due to subsidiary shares issued in settlement of debt to parent
|
|
|
292 |
|
Allocation of equity to non-controlling interest due to equity-based compensation issued
|
|
|
(322 |
)
|
Net loss attributable to non-controlling interest
|
|
|
(210 |
)
|
Balance, December 31, 2022
|
|
$ |
(21 |
)
|
NOTE 12 — COMMITMENTS AND CONTINGENCIES
Operating leases
See Note 5 for operating lease discussion
Licensing agreements
Master Services Agreement
On January 1, 2022, the Company entered into a master services agreement with Access Strategy Partners Incorporated (“ASPI”) whereby ASPI will provide commercial executives assigned with specific customer targets and develop sales and marketing plans that are mutually agreed to between ASPI and the Company and assist in their execution. The agreement expires two years from the effective date, with an addition one year extension option.
The Company is obligated to pay ASPI: i) a monthly service fee of $40,000 and ii) 10% commission on all New Account revenue, as defined, on a quarterly basis. At December 31, 2022 and 2021, accounts payable due under the contract was $80 and $0, respectively.
2017 Know-How License Agreement
On March 15, 2017, the Company entered into a know-how license agreement with Mayo Foundation for Medical Education and Research whereby the Company was granted an exclusive license, with the right to sublicense, certain know how and patent applications in the field of signal processing, physiologic recording, electrophysiology recording, electrophysiology software and autonomics to develop, make and offer for sale. The agreement expires in ten years from the effective date.
The Company is obligated to pay to Mayo Foundation a 1% or 2% royalty payment on net sales of licensed products, as defined. At December 31, 2022 and 2021, accounts payable due under the contract was $4 and $1, respectively.
Patent and Know-How License Agreement – EP Software Agreement
On November 20, 2019, the Company entered into a patent and know-how license agreement (the “EP Software Agreement”) with Mayo Foundation for Medical Education and Research (“Mayo”). The EP Software Agreement grants to the Company an exclusive worldwide license, with the right to sublicense, within the field of electrophysiology software and under certain patent rights as described in the EP Software Agreement (the “Patent Rights”), to make, have made, use, offer for sale, sell and import licensed products and a non-exclusive license to the Company to use the research and development information, materials, technical data, unpatented inventions, trade secrets, know-how and supportive information of Mayo to develop, make, have made, use, offer for sale, sell, and import licensed products. The EP Software Agreement will expire upon the later of either (a) the expiration of the Patent Rights or (b) the 10th anniversary of the date of the first commercial sale of a licensed product, unless earlier terminated by Mayo for the Company’s failure to cure a material breach of the EP Software Agreement, the Company’s or a sublicensee’s commencement of any action or proceedings against Mayo or its affiliates other than for an uncured material breach of the EP Software Agreement by Mayo, or insolvency of the Company.
In connection with the EP Software Agreement, the Company agreed to make earned royalty payments to Mayo in connection with the Company’s sales of the licensed products to third parties and sublicense income received by the Company and to make milestone payments of up to $625,000 in aggregate. At December 31, 2022 and 2021, accounts payable due under the contract was $0.
Amended and Restated Patent and Know-How License Agreement – Tools Agreement
On November 20, 2019, the Company entered into an amended and restated patent and know-how license agreement (the “Tools Agreement”) with Mayo. The Tools Agreement contains terms of license grant substantially identical to the EP Software Agreement, although it is for different patent rights and covers the field of electrophysiology systems. In June 2021, patent rights were issued (“Valid Claim”) as defined whereby the Company paid milestone one of $75,000 during the 2021 year.
In connection with the Tools Agreement, the Company agreed to pay Mayo an upfront consideration of $100,000. The Company also agreed to make earned royalty payments to Mayo in connection with the Company’s sales of the licensed products to third parties and sublicense income received by the Company and to make milestone payments of up to $550,000 in aggregate. At December 31, 2022 and 2021, accounts payable due under the contract was $0.
ViralClear Patent and Know-How License Agreement
On November 20, 2019, the Company’s majority-owned subsidiary, ViralClear, entered into a patent and know-how license agreement (the “ViralClear Agreement”) with Mayo. The ViralClear Agreement contains terms of license grant substantially identical to the EP Software Agreement and the Tools Agreement, although it is for different patent rights and covers the field of stimulation and electroporation for hypotension/syncope management, renal and non-renal denervation for hypertension treatment, and for use in treatment of arrhythmias in the autonomic nervous system.
In connection with the ViralClear Agreement, ViralClear agreed to make earned royalty payments to Mayo in connection with ViralClear’s sales of the licensed products to third parties and sublicense income received by the Company and to make milestone payments of up to $700,000 in aggregate. In June 2021, patent rights were issued (“Valid Claim”) as defined whereby the Company paid milestone one of $75,000 during the 2021 year. . At December 31, 2022 and 2021, accounts payable due under the contract was $0.
Trek Therapeutics, PBC
In the event of sublicensing, sale, transfer, assignment or similar transaction, ViralClear agreed to pay Trek 10% of the consideration received.
As part of the acquired assets, ViralClear received an assignment and licensing rights agreement from Trek with a third-party vendor regarding certain formulas and compounds usage. The agreement calls for milestone payments upon marketing authorization (as amended and defined with respect of product in a particular jurisdiction in the territory, the receipt of all approvals from the relevant regulatory authority necessary to market and sell such product in any such jurisdiction, excluding any pricing approval or reimbursement authorization) in any first and second country of $10 million and $5 million, respectively, in addition to 6% royalty payments. . At December 31, 2022 and 2021, accounts payable due under the contract was $0.
Defined Contribution Plan
Effective January 1, 2019, the Company established a qualified defined contribution plan (the “401(k) Plan”) pursuant to Section 401(k) of the Code, whereby all eligible employees may participate. Participants may elect to defer a percentage of their annual pretax compensation to the 401(k) plan, subject to defined limitations. The Company is required to make contributions to the 401(k) Plan equal to 3 percent of each participant’s eligible compensation, subject to limitations under the Code. For the year end December 31, 2022 and 2021, the Company charged operations $247,622 and $252,452, respectively, for contributions under the 401(k) Plan.
Purchase commitments
As of December 31, 2022, the Company had aggregate purchase commitments of approximately $1,882,530 for future services or products, some of which are subject to modification or cancellations.
Litigation
The Company is subject at times to other legal proceedings and claims, which arise in the ordinary course of its business. Although occasional adverse decisions or settlements may occur, the Company believes that the final disposition of such matters should not have a material adverse effect on its financial position, results of operations or liquidity.
NOTE 13 – SEGMENT REPORTING
In accordance with ASC 280-10, the Company reports segment information based on the “management” approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company’s reportable segments. The Company has three reportable segments: BioSig Technologies, Inc. (parent), NeuroClear Technologies, Inc. and ViralClear Pharmaceuticals, Inc.
Information concerning the operations of the Company’s reportable segments is as follows:
|
|
Year Ended
December 31, 2022
(000's)
|
|
|
Year Ended
December 31, 2021
(000's)
|
|
Revenues (from external customers)
|
|
|
|
|
|
|
|
|
BioSig
|
|
$ |
286 |
|
|
$ |
441 |
|
ViralClear
|
|
|
- |
|
|
|
- |
|
NeuroClear
|
|
|
- |
|
|
|
- |
|
|
|
$ |
286 |
|
|
$ |
441 |
|
|
|
Year Ended
December 31, 2022
(000's)
|
|
|
Year Ended
December 31, 2021
(000's)
|
|
Operating Expenses:
|
|
|
|
|
|
|
|
|
BioSig
|
|
$ |
26,819 |
|
|
$ |
30,016 |
|
ViralClear
|
|
|
672 |
|
|
|
3,630 |
|
NeuroClear
|
|
|
3 |
|
|
|
7 |
|
|
|
$ |
27,494 |
|
|
$ |
33,653 |
|
|
|
Year Ended
December 31, 2022
(000's)
|
|
|
Year Ended
December 31, 2021
(000's)
|
|
Loss from Operations
|
|
|
|
|
|
|
|
|
BioSig
|
|
$ |
(26,590 |
)
|
|
$ |
(29,774 |
)
|
ViralClear
|
|
|
(672 |
)
|
|
|
(3,630 |
)
|
NeuroClear
|
|
|
(3 |
)
|
|
|
(7 |
)
|
|
|
$ |
(27,265 |
)
|
|
$ |
(33,411 |
)
|
|
|
December 31, 2022
(000’s)
|
|
|
December 31, 2021
(000’s)
|
|
Total Assets
|
|
|
|
|
|
|
|
|
BioSig
|
|
$ |
4,051 |
|
|
$ |
13,595 |
|
ViralClear
|
|
|
49 |
|
|
|
1,924 |
|
NeuroClear
|
|
|
10 |
|
|
|
- |
|
|
|
$ |
4,110 |
|
|
$ |
15,519 |
|
NOTE 14 – RELATED PARTY TRANSACTIONS
Accounts payable and accrued expenses include due to related parties comprised primarily director fees and travel reimbursements. Due to related parties as of December 31, 2022 and 2021 was $120,000 and $86,208, respectively.
During the year ended December 31, 2022 and 2021, the Company’s Chief Financial Officer guaranteed issued corporate credit cards for no consideration.
NOTE 15 – INCOME TAXES
At December 31, 2022, the Company has available for federal income tax purposes a net operating loss carry forward of approximately $133,000,000, expiring in the year 2040, that may be used to offset future taxable income. The Company has provided a valuation reserve against the full amount of the net operating loss benefit, since in the opinion of management based upon the earnings history of the Company; it is more likely than not that the benefits will not be realized. Due to possible significant changes in the Company’s ownership, the future use of its existing net operating losses may be limited. All or portion of the remaining valuation allowance may be reduced in future years based on an assessment of earnings sufficient to fully utilize these potential tax benefits. During the year ended December 31, 2022, the Company has increased the valuation allowance by $5,645,000 from $31,170,000 to $36,815,000. We have adopted the provisions of ASC 740-10-25, which provides recognition criteria and a related measurement model for uncertain tax positions taken or expected to be taken in income tax returns. ASC 740-10-25 requires that a position taken or expected to be taken in a tax return be recognized in the financial statements when it is more likely than not that the position would be sustained upon examination by tax authorities.
Tax position that meet the more likely than not threshold is then measured using a probability weighted approach recognizing the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement. The Company had no tax positions relating to open income tax returns that were considered to be uncertain.
The Company is required to file income tax returns in the U.S. Federal various State jurisdictions. The Company is no longer subject to income tax examinations by tax authorities for tax years ending before December 31, 2016.
The effective rate differs from the statutory rate of 21% as of December 31, 2022 and 2021 due to the following:
|
|
December 31,
2022
|
|
|
December 31,
2021
|
|
Statutory rate on pre-tax book loss
|
|
|
21.00 |
%
|
|
|
21.00 |
%
|
Other
|
|
|
(0.3 |
)%
|
|
|
(1.3 |
)%
|
Valuation allowance
|
|
|
(20.7 |
)%
|
|
|
(19.7 |
)%
|
|
|
|
0.00 |
%
|
|
|
0.00 |
%
|
The Company’s deferred taxes as of December 31, 2022 and 2021 consist of the following:
|
|
December 31,
2022
|
|
|
December 31,
2021
|
|
Non-Current deferred tax asset:
|
|
|
|
|
|
|
|
|
Net operating loss carry-forwards
|
|
$ |
27,948,000 |
|
|
$ |
24,308,000 |
|
Stock based compensation
|
|
|
7,814,000 |
|
|
|
6,862,000 |
|
Research and development costs
|
|
|
1,053,000 |
|
|
|
- |
|
Valuation allowance
|
|
|
(36,815,000 |
)
|
|
|
(31,170,000 |
)
|
Net non-current deferred tax asset
|
|
$ |
- |
|
|
$ |
- |
|
NOTE 16 – FAIR VALUE MEASUREMENT
The Company adopted the provisions of Accounting Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”). ASC 825-10 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. ASC 825-10 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 825-10 establishes three levels of inputs that may be used to measure fair value:
Level 1 – Quoted prices in active markets for identical assets or liabilities.
Level 2 – Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 – Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.
All items required to be recorded or measured on a recurring basis are based upon level 3 inputs.
To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed and is determined based on the lowest level input that is significant to the fair value measurement.
The carrying value of the Company’s cash and cash equivalents, accounts payable and other current assets and liabilities approximate fair value because of their short-term maturity.
As of December 31, 2022, and 2021, the Company did not have any items that would be classified as level 1, 2 or 3 disclosures.
As of December 31, 2022, and 2021, the Company did not have any derivative instruments that were designated as hedges.
There were no derivative and warrant liabilities as of December 31, 2022 and 2021.
NOTE 17 – SUBSEQUENT EVENTS
Equity transactions:
Options:
On February 16, 2023, BioSig granted 250,000 options to purchase shares of its common stock to an officer. The options are exercisable at $1.25 per share for ten years with vesting in one year in equal quarterly installments.
Common stock issued:
From January through March 2023, the Company issued an aggregate of 121,249 shares of its common stock for restricted stock units and 3,625,500 shares of its common stock for services rendered, valued at $2,345,586, of which $1,060,740 was accrued as stock-based compensation at December 31, 2022.
Equity sales:
From January through March 2023, the Company entered into multiple Securities Purchase Agreements with certain institutional and accredited investors, pursuant to which the Company sold to the Investors an aggregate of 8,500,300 shares of common stock at an average purchase price of $0.80 per share, and warrants to purchase up to 4,250,150 shares of common stock at an average exercise price of $0.7884 per share, that will become exercisable six months after the date of issuance and will expire five and one-half years following the date of issuance, in exchange for aggregate consideration of $6,757,672, net of expenses of $471,967.
Pursuant to certain engagement agreements, dated October 11, 2022 and February 24, 2023 the Company had entered into with Laidlaw & Company (UK) Ltd., the Company issued to Laidlaw in connection with the 2023 PIPES, warrants to purchase 400,525 shares of common stock at an average exercise price of $0.7884 per share. The Laidlaw warrants becomes exercisable six months after the date of issuance and will expire five and one-half years following the date of issuance.