Bulletin
Investor Alert

March 31, 2022, 4:31 p.m. EDT

10-K: BIOSIG TECHNOLOGIES, INC.

new
Watchlist Relevance
LEARN MORE

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

  • X
    Plexus Corp. (PLXS)

or Cancel Already have a watchlist? Log In

(EDGAR Online via COMTEX) -- ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management's Discussion and Analysis of Financial Condition and Results of Operations is intended to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results. You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our financial statements and the related notes thereto that are included in this Form 10-K. In addition to historical information, the following discussion and analysis includes forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this prospectus, particularly in the section entitled "Risk Factors." See "Special Note Regarding Forward-Looking Statements."

Overview

We are a medical technology company that is commercializing our PURE EP(TM) System which is an advanced signal acquisition and processing platform designed to provide essential diagnostic signals with high clinical value in all types of cardiac catheter ablations. PURE EP(TM) is designed to address long-standing limitations that slow and disrupt cardiac catheter ablation procedures, such as environmental lab noise, signal saturation, slow signal recovery, and inaccurate display of fractionated potentials.

Cardiac catheter ablation is a procedure that involves delivery of energy through the tip of a catheter that scars or destroys heart tissue to correct heart rhythm disturbances (arrhythmias). In August 2018, we received 510(k) clearance from the U.S. Food and Drug Administration (the "FDA") to market our PURE (Precise Uninterrupted Real-time evaluation of Electrograms) EP(TM) System.

PURE EP(TM) is a signal processing platform that combines advanced hardware and software to address known challenges associated to signal acquisition, to enable electrophysiologists to see more signals and analyze them in real-time. The device aims to minimize noise and artifacts from cardiac recordings and acquire high-fidelity cardiac signals. Improving fidelity of acquired cardiac signals may potentially increase the diagnostic value of these signals, thereby possibly improving accuracy and efficiency of the EP studies and ablation procedures.

PURE EP(TM)'s initial focus is on improving intracardiac signal acquisition and enhancing diagnostic information for catheter ablation procedures for complex arrhythmias like ventricular tachycardia ("VT"), a potentially life-threatening arrhythmia, and atrial fibrillation ("AF"), the most common cardiac arrhythmia associated with a fivefold risk of stroke.

Table of Contents

Clinical data acquired by the PURE EP(TM) System in a multi-center study at Texas Cardiac Arrhythmia Institute at St. David's Medical Center in Austin, Texas, Mayo Clinic in Jacksonville, Florida, and Massachusetts General Hospital in Boston, Massachusetts was published in September 2021 in the Journal of Cardiovascular Electrophysiology and is available electronically with open access via the Wiley Online Library. Study results showed 93% consensus across the blinded reviewers with a 75% overall improvement in intracardiac signal quality and confidence in interpreting PURE EP(TM) signals over conventional sources. AF accounted for over 40% of enrollments.

We continue to install PURE EP(TM) Systems at centers of excellence for clinical evaluation under our market development plan. The PURE EP(TM) System has been utilized at numerous institutions, including Mayo Clinic campuses in Arizona, Florida and Minnesota; the University of Pennsylvania Hospital in Philadelphia, Pennsylvania; Overland Park Regional Medical System in Overland Park, Kansas; Deborah Heart and Lung Center in Browns Mills, New Jersey; St. Elizabeth's Medical Center in Boston, Massachusetts; Medical City Heart Hospital in Dallas, Texas; Beth Israel Deaconess Medical Center (BIDMC) in Boston, Massachusetts, a teaching hospital of Harvard Medical School; Methodist Hospital in San Antonio, Texas; Houston Methodist Hospital; Medical City North Hills in North Richland Hills; and Westside Regional Medical Center in Plantation, Florida.

To date, more than 2,160 patient procedures have been conducted with the PURE EP(TM) System by more than 76 electrophysiologists across seventeen different clinical sites in the United States.

In addition to clinical evaluation, we have conducted pre-clinical evaluation with the PURE EP(TM) System under several protocols. At Mayo Clinic in Rochester, Minnesota, we have performed twenty-seven experiments (including novel research programs such as Artificial Intelligence, or AI, and repolarization) in various animal models; we also conducted a pre-clinical study at the Mount Sinai Hospital in New York, New York, with an emphasis on the VT model; and six experiments to date during a study at the University of Pennsylvania. We intend to continue additional research and development studies with our technology at Mayo Clinic, the University of Pennsylvania and other national centers.

In September 2021, we announced that we entered into a manufacturing and professional services agreement with Plexus Corp ("Plexus") /zigman2/quotes/208217351/composite PLXS +4.50% . Under the terms of the agreement, Plexus will manufacture the PURE EP(TM) System and develop a new product pipeline for our subsidiary, ViralClear.

We have made progress towards obtaining a European CE marking certificate for medical devices. In Q1 2022, we completed the quality management system audit for the International Organization for Standardization ("ISO") 13485:2016 with the expectation to obtain the ISO 13485:2016 certification in the first half of 2022 and proceed to the application for the European CE Marking clearance in the first half of 2023, subject to the guidance and availability from the European Notified Body.

In January 2022, we were awarded U.S. patent claims for our PURE EP(TM) noise-filtering technology which address computer-implemented systems and methods for filtering noise from input cardiac signals. We now have 49 issued or allowed worldwide patents covering our novel technology for arrhythmia care.

In December 2020, we announced that three PURE EP(TM) Systems were contracted for purchase by St. David's Healthcare in Austin, Texas and were subsequently sold in February 2021. We also sold three PURE EP(TM) Systems to Mayo Foundation for Medical Education and Research in 2021 for use in Mayo Clinic campuses in Rochester, Minnesota, Jacksonville, Florida and Phoenix, Arizona. We are in active discussions with several accounts about the acquisition of the PURE EP(TM) System.

Critical Accounting Estimates

The following discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the U.S. The preparation of consolidated financial statements in accordance with generally accepted accounting principles in the U.S. requires us to make estimates and assumptions that affect the amounts reported in our consolidated financial statements. The consolidated financial statements include estimates based on currently available information and our judgment as to the outcome of future conditions and circumstances.

Among the significant judgments made by management in the preparation of our financial statements are the following:

We believe the following critical accounting estimates affect our more significant judgments and estimates used in the preparation of our financial statements.

Table of Contents

Revenue Recognition

We derive our revenue primarily from the sale of our medical device, the PURE EP(TM) System, as well as related support and maintenance services and software upgrades in connection with the system.

We recognize revenue in accordance with Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers ("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.

We determine 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 unit of accounting for revenue recognition and generally represent the distinct goods or services that are promised to the customer. If we determine that it has not satisfied a performance obligation, it will defer recognition of the revenue until the performance obligation is deemed to be satisfied. 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.

We 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.

We estimate the transaction price based on the amount of consideration we expect to receive for transferring the promised goods or services in the contract. The consideration may include both fixed consideration and variable consideration. At the inception of each arrangement that includes variable consideration, we evaluate the amount of the potential payments and the likelihood that the payments will be received. If it is probable that a significant revenue reversal would not occur, the variable consideration is included in the transaction price.

We record 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 our 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.

Research and Development

We account 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 development 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.

Table of Contents

Stock Based Compensation

All stock-based payments to employees and to nonemployee directors for their services as directors consisted of grants of restricted stock and stock options, which are measured at fair value on the grant date and recognized in the statements of operations as compensation expense over the relevant vesting period. Restricted stock payments and stock-based payments to nonemployees are recognized as an expense over the period of performance.

Such payments are measured at fair value at the earlier of the date a performance commitment is reached, or the date performance is completed. In addition, for awards that vest immediately and are non-forfeitable, the measurement date is the date the award is issued.

Use of Estimates

The preparation of our 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, fair value of acquired assets, stock-based compensation and the valuation allowance related to deferred tax assets. Actual results may differ from these estimates.

Acquisition of Intellectual Property

Intellectual property acquired are accounted for under the acquisition method of accounting. This method requires the recording of acquired assets, including separately identifiable intangible assets, and assumed liabilities at their acquisition date fair values. Any excess consideration transferred over fair value is allocated on a relative fair value basis to the identifiable net assets.

The acquired intellectual property from the Trek acquisition was considered unproven compounds, the success of which was uncertain at the time of the acquisition. Accordingly, the fair value of the consideration paid was charged as acquired research and development to current period operations.

Results of Operations (000's)

We anticipate that our results of operations will fluctuate for the foreseeable future due to several factors, such as the progress of our research and development efforts and the timing and outcome of regulatory submissions. Due to these uncertainties, accurate predictions of future operations are difficult or impossible to make.

Twelve Months Ended December 31, 2021, Compared to Twelve Months Ended December 31, 2020

Revenues and Cost of Goods Sold. Revenue for the year ended December 31, 2021, totaled $441 comprised of product sales of $414 and recognized service revenue of $27 as compared to nil for the year ended December 31, 2020.

We derive our revenue primarily from the sale of our medical device, PURE EP(TM) system, as well as related support and maintenance services and software upgrades in connection with the system.

Cost of sales for the year ended December 31, 2021, was $199 comprised of the delivered product and cost of services as compared to nil for the year ended December 31, 2020.

Gross profit from the year ended December 31, 2021, was $242 or 54.9% as compared to nil for the year ended December 31, 2020.

Research and Development Expenses. Research and development expenses for the twelve months ended December 31, 2021, were $5,602, a decrease of $12,534 or 69.1%, from $18,136 for the twelve months ended December 31, 2020. This decrease is primarily due to ceasing development of merimepodib in 2020, which led to a reduction of $13,116 from 2020 to 2021 in the ViralClear segment, net with a $614 increase in the BioSig segment research and development from $4,399 for the twelve months ended December 31, 2020, to $5,013 for the twelve months ended December 31, 2021.

Table of Contents

Research and development expenses were comprised of the following:







                                                       2021         2020
        Salaries and equity compensation              $ 2,833     $  3,030
        Consulting expenses                               725        2,374
        Research, clinical studies, and design work     1,159        2,068
        Regulatory                                        142           68
        Data/AI development                               307          505
        Product development and formulation                15        4,910
        Acquired research and development                 150        4,883
        Travel, supplies, other                           271          298
        Total                                         $ 5,602     $ 18,136
        


Stock-based compensation for research and development personnel was $759 and $1,253 for the twelve months ended December 31, 2021, and 2020, respectively.

On March 24, 2020, ViralClear entered into an asset purchase agreement (the "Asset Purchase Agreement") with Trek Therapeutics, PBC ("Trek"). Pursuant to the Asset Purchase Agreement, Trek sold to ViralClear all right, title and interest of Trek and its affiliates to certain assets (the "Purchased Assets"). As consideration for the Purchased Assets, ViralClear agreed to pay Trek in upfront and milestone payments a combination of cash, shares of ViralClear's common stock, which common stock may equal up to 10% of ViralClear's outstanding equity, and sublicense fees in the event ViralClear sublicenses the Purchased Assets. On March 30, 2020, pursuant to the Asset Purchase Agreement, ViralClear paid $350,000 in cash and issued 634,910 shares of ViralClear's common stock to Trek at a fair of $3,174,550. The Purchased Assets were recorded as acquired research and development.

On April 8, 2020, ViralClear entered into a know-how license agreement (the "Agreement") with Mayo. The Agreement grants to ViralClear (i) an exclusive worldwide license, with the right to sublicense, within the field of anti-viral agents to target COVID-19 (the "Field") to certain patent rights for the development and commercialization of products, methods, and processes for public use and benefit (the "Licensed Products") and (ii) a non-exclusive worldwide license, with the right to sublicense, within the Field, to use the know-how of Mayo that is necessary to develop the Licensed Products.

The Agreement will expire upon the later of either (a) the expiration of the licensed patent rights or (b) the 7th anniversary of the date of the first commercial sale of a Licensed Product, unless earlier terminated by Mayo for ViralClear's failure to cure a material breach of the Agreement, ViralClear'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 Agreement by Mayo, or insolvency ViralClear.

In connection with the Agreement, ViralClear issued to Mayo 259,959 shares of ViralClear's common stock. ViralClear also agreed to make earned royalty payments to Mayo in connection with ViralClear's sales of the Licensed Products along with certain milestone payments.

General and Administrative Expenses. General and administrative expenses for the twelve months ended December 31, 2021, were $27,853, a decrease of $13,101, or 32.0%, from $40,954 incurred in the twelve months ended December 31, 2020. This decrease is primarily due to reduction in equity-based and other compensation, professional services, consulting fees and travel, meals and entertainment costs.

Payroll related expenses (including equity compensation) decreased to $17,360 in the twelve months ended December 31, 2021, from $31,080 for the twelve months ended December 31, 2020, a decrease of $13,720, or 44.1%. This decrease is due to the value of the stock-based compensation decreasing to $9,062 in 2021, as a result of the vesting of stock and stock options issued to board members, officers, and employees, as compared to $23,911 of stock-based compensation in 2020, net with added additional personnel in 2021, a decrease of $14,849 or 62.1%.

Professional services for the twelve months ended December 31, 2021, totaled $1,261, a decrease of $687, or 35.3%, over the $1,948 recognized for the twelve months ended December 31, 2020. Of professional services, legal fees totaled $943 for the twelve months ended December 31, 2021, a decrease of $560, or 37.3%, from $1,503 incurred for the twelve months ended December 31, 2020. The significant decrease in legal fees in 2021 is due to reduction in legal work in asset acquisitions, financing and in developing and registering patents. Accounting fees incurred in the twelve months ended December 31, 2021, amounted to $179, a decrease of $79 or 30.6%, from $258 incurred for the same period in 2020. The significant decrease is due to reduction in 2021 work relating to internal control audit, design and monitoring, audit work relating to ViralClear segment.

Table of Contents

Consulting fees and marketing totaled $4,763 for the twelve months ended December 31, 2021, a decrease of $2,106 or 30.7%, from $6,869 for the twelve months ended December 31, 2020. The decrease primarily relates to reductions in fund raising and investor relations to support our efforts in market research and potential investor identification and key consultants in connection with our commercialization efforts, net increases in marketing activities.

Travel, meals and entertainment costs for the twelve months ended December 31, 2021, were $1,010, an increase of $637, or 170.8%, from $373 incurred during the twelve months ended December 31, 2020. The significant increase in 2021 was due to lifting of various restrictions imposed by the COVID-19 pandemic-related measures as compared to 2020.

Rent for the twelve months ended December 31, 2021, totaled $466, a decrease of $18, or 3.7%, from $484 incurred during the same period in 2020. In 2021, we incurred a rent reduction with our relocation of our corporate offices in Connecticut and our lease extension in our Los Angeles facility.

Depreciation and Amortization Expense. Depreciation and amortization expense for the twelve months ended 2021 totaled $198 as compared to $94 incurred during the same period in 2020. The increase is due primarily to additional equipment purchased in 2021.

Interest Income. Interest income for the twelve months ended December 31, 2021, totaled $2 as compared to $45 earned during the twelve months ended December 31, 2020. The decrease in 2021 was due reduction of interest rates earned with cash balances in our interest-bearing accounts.

Gain on Settlement of Debt. On September 23, 2021, we negotiated a lawsuit settlement with Aurigene relating to certain milestone payments for manufacturing and services under a contract with our ViralClear subsidiary. In connection with the settlement, we recognized a gain on settlement of debt of $553 during the twelve months ended December 31, 2021, as compared to nil for the twelve months ended December 31, 2020.

Preferred Stock Dividend. Preferred stock dividend for the twelve months ended December 31, 2021, totaled $9, a decrease of $5, or 35.7% from $14 incurred during the twelve months ended December 31, 2020. Preferred stock dividends are related to the issuance of our Series C Preferred Stock from 2013 through 2015. The significant decrease in 2021 as compared to 2020 is the result of 2020 conversions of the Series C Preferred Stock.

Noncontrolling Interest. In 2019 and 2020, ViralClear sold shares of its common stock to fund its initial and ongoing operations. As of December 31, 2021, we had a majority interest in ViralClear of 68.4%. The proportionate loss attributed to noncontrolling interests for the twelve months ended December 31, 2021, was $939 as compared to $6,922 for 2020.

Net Loss Available to BioSig Technologies, Inc. Net loss available to common stockholders for the twelve months ended December 31, 2021, was $31,926, compared to a net loss of $52,232 for the twelve months ended December 31, 2020, a decrease of $20,306 or 38.9%. The primary reasons for the decrease, as described above, are the decreases in research and development costs and general and administrative expenses from 2020 to 2021.

Segment Results

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.

Summary Statement of Operations for the year ended December 31, 2021, as compared to the year ended December 31, 2020, are detailed in Note 12 of the accompanying consolidated financial statements.

COVID-19

The full public-health impact of the ongoing COVID-19 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 possibly delaying our commercialization objectives of the PURE EP Systems due to limited resources and accessibility of hospitals as they cope with the pandemic.

Table of Contents

Liquidity and Capital Resources

We had an accumulated deficit as of December 31, 2021, of approximately $189 million, as well as a net loss of approximately $32 million and negative operating cash flows. We expect to continue incurring losses and negative cash flows from operations until our products (primarily PURE EP System) reach commercial profitability.

We have incurred net losses and negative cash flows from operations since inception and our expectation is that these conditions will continue for the foreseeable future. In addition, we will require additional financing to fund future operations. Although we have commercial products available for sale, we have not generated significant revenues to date, and there is no assurance that we will be able to generate cash flow to fund operations. In addition, there can be no assurance that our research and development will be successfully completed or that any additional products will be approved or commercially viable. Our ability to continue as a going concern is subject to our ability to obtain necessary funding from outside sources, including obtaining additional funding from the sale of our securities, obtaining loans from various financial institutions or being awarded grants from government agencies, where possible. Our continued net operating losses increase the difficulty in meeting such goals and there can be no assurances that such methods will prove successful.

Our 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. Our shift from a focus on technology development to commercialization has allowed us to reduce our annual expenses in a meaningful way. As a result of this transition, we have been able to achieve savings through reductions in executive and management compensation and a reduction of our utilization of external consultants and professional service providers. We believe these cost-saving measures combined with our expectations of positive trends in commercial activity create the potential for us to achieve a lower cash flow breakeven rate. There are no assurances, however, that we will be successful in obtaining the level of financing needed for our operations. The . . .

Mar 31, 2022

COMTEX_405058109/2041/2022-03-31T16:31:01

Is there a problem with this press release? Contact the source provider Comtex at editorial@comtex.com. You can also contact MarketWatch Customer Service via our Customer Center.

(c) 1995-2022 Cybernet Data Systems, Inc. All Rights Reserved

/zigman2/quotes/208217351/composite
US : U.S.: Nasdaq
$ 81.00
+3.49 +4.50%
Volume: 371,452
June 24, 2022 4:00p
P/E Ratio
20.93
Dividend Yield
N/A
Market Cap
$2.25 billion
Rev. per Employee
$175,462
loading...

This Story has 0 Comments
Be the first to comment

Story Conversation

Commenting FAQs »

Partner Center

Link to MarketWatch's Slice.