10-K: BioSig Technologies Faces Delisting from Nasdaq Amidst Financial Struggles and Management Turmoil
Sentiment:
Annual Report
BioSig Technologies is facing potential delisting from the Nasdaq Capital Market due to non-compliance with listing rules, workforce reductions, and resignations of key personnel.
Capital raiseThe company entered into multiple Securities Purchase Agreements in 2023, raising $13.1 million.The company sold shares in a registered direct offering in November 2023, raising $2.2 million.The company entered into a securities purchase agreement in January 2024, raising $1.04 million.The company issued a $500,000 promissory note to a related party in March 2024.The company has used at-the-market sales agreements to raise capital.
Worse than expectedThe company's stock price has fallen below the required minimum bid price, and it does not meet the minimum stockholders' equity requirement.The company has experienced substantial workforce reductions and resignations of key personnel.The company has incurred significant operating losses and negative cash flow.The company is facing potential delisting from the Nasdaq Capital Market.
Summary
- BioSig Technologies, a medical device company focused on electrophysiology, is facing significant challenges including potential delisting from the Nasdaq Capital Market.
- The company's stock price has fallen below the required minimum bid price of $1.00 per share, and it does not meet the minimum stockholders' equity requirement.
- BioSig has also experienced substantial workforce reductions, including the departure of key executives and board members, due to lack of funding.
- The company has incurred a net loss of $28.7 million and used $17.3 million in operating activities for the year ended December 31, 2023.
- Despite having an FDA-cleared product, the PURE EP System, sales have been limited, and the company is now seeking partnerships to increase market penetration.
- BioSig has a complex capital structure with multiple classes of preferred stock and warrants, and has recently engaged in private placements and debt financing to raise capital.
- The company is also involved in several legal proceedings, including claims related to employment termination and stock issuance obligations.
- BioSig's future is uncertain, with substantial doubt about its ability to continue as a going concern without additional funding.
Sentiment
Score: 2
Explanation: The document paints a bleak picture of BioSig's current financial and operational state, with significant risks and uncertainties. The potential delisting, workforce reductions, and ongoing legal issues contribute to a very negative outlook.
Positives
- The company has an FDA-cleared product, the PURE EP System, which has shown improved signal quality in clinical studies.
- BioSig has a portfolio of 36 issued utility patents and 30 design patents, along with licenses to additional patents from Mayo Clinic.
- The company is exploring partnerships to expand the market reach of its PURE EP System.
- BioSig has a research agreement with Cleveland Clinic to investigate expanded clinical applications for the PURE EP System.
- The company has a research agreement with Mayo Clinic regarding an AI research program for its signal recording system.
Negatives
- BioSig is facing potential delisting from the Nasdaq Capital Market due to non-compliance with listing rules.
- The company has experienced significant workforce reductions and resignations of key personnel.
- BioSig has incurred substantial operating losses and negative cash flow.
- The company's sales of the PURE EP System have been limited, primarily to research partners.
- BioSig is involved in multiple legal proceedings, including claims related to employment termination and stock issuance obligations.
- The company has a material weakness in its internal control over financial reporting.
Risks
- There is substantial doubt about BioSig's ability to continue as a going concern.
- The company may be unable to raise sufficient capital to fund its operations.
- BioSig's products may not achieve market acceptance or generate sufficient revenue.
- The company faces intense competition in the electrophysiology market.
- BioSig is subject to extensive regulation by the FDA and other regulatory agencies.
- The company's intellectual property rights may not be adequately protected.
- The company's stock price may fluctuate significantly and be subject to delisting.
- BioSig's Series C Preferred Stock contains covenants that could limit financing options and liquidity.
Future Outlook
BioSig's future is uncertain, with substantial doubt about its ability to continue as a going concern without additional funding. The company plans to seek partnerships for commercialization of its PURE EP System and explore new products in the field of Pulse Field Ablation.
Management Comments
- Management of the Company commenced a workforce reduction intended to reduce significantly the annual cash burn.
- Dependent upon funding, Mr. Hrkac would plan on hiring a team of 4-6 persons to execute the business development strategy of finding partners for the commercialization of PURE EP, develop new products in the field of Pulse Field Ablation and to continue to integrate PURE EP into todays lab equipment.
Industry Context
The global electrophysiology market is estimated to be worth over $8 billion in 2023 and is predicted to reach $16 billion by 2028, with a CAGR of 15%. BioSig's PURE EP System is positioned to address the need for improved signal clarity in complex arrhythmia procedures, but faces competition from established players.
Comparison to Industry Standards
- The document mentions that the EP market is dominated by four large companies: GE Healthcare, Boston Scientific, HeNan HuaNan Medical Science and Technology Co., LTD., and Abbott Laboratories.
- These companies offer electrophysiology recording systems with an average selling price of approximately $160,000.
- BioSig's PURE EP System is positioned as an additional information system for the EP lab, aiming to provide superior signal quality compared to existing systems.
- The document notes that current EP recorders use filtering techniques that may alter signals, making it difficult to see low-amplitude, high-frequency signals, which BioSig aims to address with its technology.
- The document also mentions CathVision as a competitor developing an EP recording system, ECGenius System, which recently obtained FDA 510(k) clearance in May 2022.
Management Changes
| Role | Previous Person | New Person | Effective Date | Reason |
|---|---|---|---|---|
| Chief Financial Officer | Steve Buhaly | NA | 2024-02-15 | Resignation |
| Director | David Weild IV | NA | 2024-02-19 | Resignation |
| Director | Donald E. Foley | NA | 2024-02-19 | Resignation |
| Director | Patrick J. Gallagher | NA | 2024-02-19 | Resignation |
| Director | James J. Barry | NA | 2024-02-19 | Resignation |
| Director | James L. Klein | NA | 2024-02-20 | Resignation |
| Director | Frederick D. Hrkac | NA | 2024-02-20 | Resignation |
| Director, President and Principal Executive Officer | Kenneth L. Londoner | Frederick D. Hrkac | 2024-02-27 | Resignation and Re-appointment |
| Executive Chairman and Chief Executive Officer | Kenneth L. Londoner | NA | 2024-02-27 | Resignation |
Corporate Governance
| Change Type | Description | Effective Date | Impact Assessment |
|---|---|---|---|
| Code of Ethics | The company has adopted a code of business conduct and ethics that applies to its officers, directors and employees. | NA | The code of ethics is intended to govern a wide range of potential activities, including, among others, conflicts of interest, self-dealing and related party transactions. |
| Compensation Recovery Policy | The company adopted a Compensation Recovery Policy in compliance with Rule 5608 of the Nasdaq Rules. | 2023-11-06 | The policy allows the company to recover erroneously awarded compensation from executive officers in the event of an accounting restatement. |
Legal Proceedings
- The Company received a threat of litigation for the termination of employment alleging retaliation for bringing wrongful practices to the attention of the board.
- The Company received a threat of litigation seeking restitution for losses resulting from unlawful actions taken by the Companys board of directors.
- Michael Gray Fleming filed a lawsuit against the Company, its former CEO, and former CFO, alleging failure to issue stock certificates.
Related Party Transactions
- Accounts payable and accrued expenses include amounts due to related parties, primarily for director fees and travel reimbursements.
- The company's former Chief Financial Officer participated in the company's 2023 private placement.
- The company entered into a consulting agreement with a former board member who was appointed as Executive Vice President.
Stakeholder Impact
- Shareholders face the risk of significant losses due to potential delisting and stock price volatility.
- Employees have been significantly impacted by workforce reductions and resignations.
- Customers may experience uncertainty regarding the company's ability to provide ongoing support and services.
- Creditors face increased risk due to the company's financial instability.
Next Steps
- BioSig intends to appeal the Nasdaq delisting determination.
- The company plans to seek partnerships for commercialization of its PURE EP System.
- BioSig will explore new products in the field of Pulse Field Ablation.
- The company will continue to integrate PURE EP into today's lab equipment.
- The company will attempt to remediate the material weakness in its internal control over financial reporting.
Key Dates
| Date | Description |
|---|---|
| 2009-02 | BioSig Technologies, Inc. was incorporated in Nevada. |
| 2011-04 | BioSig Technologies, Inc. merged with its wholly owned subsidiary, a Delaware corporation, with the Delaware corporation continuing as the surviving entity. |
| 2012-10-19 | BioSig Technologies, Inc. approved the 2012 Equity Incentive Plan. |
| 2013-01-09 | The Board of Directors authorized the issuance of up to 4,200 shares of 9% Series C Convertible Preferred Stock. |
| 2014-10-29 | BioSig's common stock commenced trading on OTCQB. |
| 2017-03-15 | BioSig entered into a know-how license agreement with Mayo Foundation for Medical Education and Research. |
| 2018-08-08 | BioSig received 510(k) clearance from the FDA to market its PURE EP System. |
| 2018-09-21 | BioSig's common stock commenced trading on the Nasdaq Capital Market. |
| 2018-11-07 | BioSig formed a subsidiary, originally named NeuroClear Technologies, Inc., later renamed ViralClear Pharmaceuticals, Inc. |
| 2019-09-24 | ViralClear's Board of Directors approved the 2019 Long-Term Incentive Plan. |
| 2019-11-20 | BioSig entered into licensing agreements with Mayo Clinic to establish a new product pipeline. |
| 2019-11 | BioSig commenced its first clinical study for the PURE EP System. |
| 2020-03 | NeuroClear Technologies, Inc. was renamed ViralClear Pharmaceuticals, Inc. |
| 2020-07-02 | BioSig formed an additional subsidiary, NeuroClear Technologies, Inc., later renamed BioSig AI Sciences, Inc. |
| 2023-01-01 | The Company adopted ASU 2016-13. |
| 2023-06-17 | BioSig AI entered into a consulting agreement with Reified Labs LLC. |
| 2023-08-18 | BioSig entered into a Controlled Equity Offering Sales Agreement with Cantor Fitzgerald & Co. |
| 2023-09-15 | BioSig terminated the Cantor Sales Agreement and entered into an At-The-Market Issuance Sales Agreement with Ascendiant Capital Markets, LLC. |
| 2023-11-08 | BioSig entered into a Securities Purchase Agreement for a registered direct offering. |
| 2023-12-04 | BioSig received a threat of litigation for the termination of employment. |
| 2023-12-18 | BioSig held its 2023 annual meeting of stockholders, approving a reverse stock split. |
| 2023-12-27 | The Board of Directors of BioSig Technologies, Inc. approved the 2023 Long-Term Incentive Plan. |
| 2024-01-12 | BioSig entered into a securities purchase agreement with certain accredited and institutional investors. |
| 2024-01-28 | BioSig commenced a workforce reduction. |
| 2024-01-31 | BioSig filed the Reverse Stock Split Amendment with the Secretary of State of the State of Delaware. |
| 2024-02-01 | The Reverse Stock Split became effective. |
| 2024-02-02 | BioSig's Common Stock began trading on a Reverse Stock Split-adjusted basis. |
| 2024-02-15 | Steve Buhaly resigned from his position as the Chief Financial Officer of the Company. |
| 2024-02-19 | David Weild IV, Donald E. Foley, Patrick J. Gallagher and James J. Barry, resigned from their positions as directors of the Company. |
| 2024-02-20 | James L. Klein and Frederick D. Hrkac resigned from their positions as directors of the Company and the company laid off the entire workforce except for the CEO. |
| 2024-02-22 | BioSig received a threat of litigation seeking restitution for losses. |
| 2024-02-27 | Frederick D. Hrkac was re-appointed as a director and the president and principal executive officer and Kenneth L. Londoner resigned from his positions as director, executive chairman and chief executive officer of the Company. |
| 2024-03-05 | BioSig received a letter from Nasdaq stating that the Company has not regained compliance with Listing Rule 5550(a)(2). |
| 2024-03-07 | BioSig issued a promissory note to an investor and related party for $500,000. |
| 2024-03-11 | BioSig submitted a request for a hearing before the Nasdaq Hearings Panel to appeal the Staffs delisting determination. |
| 2024-03-12 | BioSig received a letter from Nasdaq stating that the Company no longer has an operating business and is a public shell. |
| 2024-03-22 | Michael Gray Fleming filed a lawsuit against BioSig. |
| 2024-05-07 | The requested hearing before the Nasdaq Hearings Panel will be held. |
Keywords
BioSig Technologies, PURE EP System, electrophysiology, Nasdaq delisting, workforce reduction, medical device, capital raise, private placement, reverse stock split, Series C Preferred Stock, legal proceedings, internal control, patent portfolio, Mayo Clinic, clinical trials
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