STEX 10-Q Quarter ended June 30, 2017

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Delaware		26-4333375
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Large accelerated filer	☐		Accelerated filer	☐
Non-accelerated filer	☐		Smaller reporting company	☒
Emerging growth company	☐

PART I.	FINANCIAL INFORMATION
	ITEM 1.	Financial Statements
		Condensed balance sheets as of June 30, 2017 (unaudited) and December 31, 2016		3
		Condensed statements of operations for the three and six months ended June 30, 2017 and 2016 (unaudited)		4
		Condensed statement of stockholders’ deficit for the six months ended June 30, 2017 (unaudited)		5
		Condensed statements of cash flows for the six months ended June 30, 2017 and 2016 (unaudited)		6
		Notes to condensed financial statements (unaudited)		7-21
	ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		22-31
	ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk		31
	ITEM 4.	Controls and Procedures		31
PART II.	OTHER INFORMATION
	ITEM 1.	Legal Proceedings		32
	ITEM 1A.	Risk Factors		32
	ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds		32
	ITEM 3.	Defaults Upon Senior Securities		33
	ITEM 4.	Mine Safety Disclosures		33
	ITEM 5.	Other Information		33
	ITEM 6.	Exhibits		33
	SIGNATURES			34

BIOSIG TECHNOLOGIES, INC.
CONDENSED BALANCE SHEETS
		June 30,				December 31,
		2017				2016
		(unaudited)
ASSETS
Current assets:
Cash		$	880,659			$	1,055,895
Prepaid expenses			175,022				134,263
Total current assets			1,055,681				1,190,158
Property and equipment, net			16,532				24,188
Other assets:
Deposits			27,612				27,612
Total assets		$	1,099,825			$	1,241,958
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable and accrued expenses, including $10,990 and $15,755 to related parties as of June 30, 2017 and December 31, 2016, respectively		$	1,242,173			$	373,103
Dividends payable			382,510				359,891
Warrant liability			2,364,968				1,937,234
Derivative liability			279,379				288,934
Total current  liabilities			4,269,030				2,959,162
Series C Preferred Stock, 1,005 and 1,070 shares issued and outstanding; liquidation preference of $1,005,000 and $1,070,000 as of June 30, 2017 and December 31, 2016, respectively			1,005,000				1,070,000
Stockholders’ deficit
Preferred stock, $0.001 par value, authorized 1,000,000 shares, designated 200 shares of Series A, 600 shares of Series B and 4,200 shares of Series C Preferred Stock
Common stock, $0.001 par value, authorized 200,000,000 shares, 25,627,565 and 22,588,184 issued and outstanding as of June 30, 2017 and December 31, 2016, respectively			25,628				22,588
Additional paid in capital			45,740,427				41,019,251
Common stock subscription			239,970				-
Accumulated deficit			(50,180,230	)			(43,829,043	)
Total stockholders’ deficit			(4,174,205	)			(2,787,204	)
Total liabilities and stockholders’ deficit		$	1,099,825			$	1,241,958

BIOSIG TECHNOLOGIES, INC.
CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
		Three months ended June 30,								Six months ended June 30,
		2017				2016				2017				2016
Operating expenses:
Research and development		$	1,339,039			$	1,153,043			$	2,677,643			$	1,579,157
General and administrative			1,676,336				4,380,540				3,233,677				6,266,000
Depreciation			2,997				2,333				6,066				5,241
Total operating expenses			3,018,372				5,535,916				5,917,386				7,850,398
Loss from operations			(3,018,372	)			(5,535,916	)			(5,917,386	)			(7,850,398	)
Other income (expense):
Loss on change in fair value of derivatives			(60,244	)			(556,433	)			(433,855	)			(824,858	)
Interest income			54				1				54				1
Loss before income taxes			(3,078,562	)			(6,092,348	)			(6,351,187	)			(8,675,255	)
Income taxes (benefit)			-				-				-				-
Net loss			(3,078,562	)			(6,092,348	)			(6,351,187	)			(8,675,255	)
Preferred stock dividend			(22,863	)			(28,497	)			(46,608	)			(60,741	)
NET LOSS AVAILABLE TO COMMON STOCKHOLDERS		$	(3,101,425	)		$	(6,120,845	)		$	(6,397,795	)		$	(8,735,996	)
Net loss per common share, basic and diluted		$	(0.12	)		$	(0.32	)		$	(0.27	)		$	(0.49	)
Weighted average number of common shares outstanding, basic and diluted			25,131,486				18,875,819				24,097,424				17,971,228

BIOSIG TECHNOLOGIES, INC.
CONDENSED STATEMENT OF STOCKHOLDERS’ DEFICIT
SIX MONTHS ENDED JUNE 30, 2017
										Additional
		Common stock								Paid in				Common stock				Accumulated
		Shares				Amount				Capital				Subscription				Deficit				Total
Balance, December 31, 2016			22,588,184			$	22,588			$	41,019,251			$	-			$	(43,829,043	)		$	(2,787,204	)
Sale of common stock			2,149,529				2,150				3,037,222				-				-				3,039,372
Common stock issued for services			625,000				625				894,124				-				-				894,749
Common stock issued upon conversion of Series C Preferred Stock at $1.50 per share			43,335				43				64,957				-				-				65,000
Common stock issued settlement of Series C Preferred Stock accrued dividends at $1.37 per share			17,511				18				23,973				-				-				23,991
Common stock received and canceled in connection with short term swing profit reimbursement			(10,744	)			(11	)			11				-				-				-
Common stock subscription received			-				-				-				239,970				-				239,970
Reclassify fair value of derivative liability to equity upon conversion of Series C Preferred Stock to common shares			-				-				15,676				-				-				15,676
Fair value of warrant issued to acquire research and development			-				-				543,927				-				-				543,927
Stock based compensation			214,750				215				187,894				-				-				188,109
Preferred stock dividend			-				-				(46,608	)			-				-				(46,608	)
Net loss			-				-				-				-				(6,351,187	)			(6,351,187	)
Balance, June 30, 2017 (unaudited)			25,627,565			$	25,628			$	45,740,427			$	239,970			$	(50,180,230	)		$	(4,174,205	)

BIOSIG TECHNOLOGIES, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
		Six months ended June 30,
		2017				2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(6,351,187	)		$	(8,675,255	)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation			6,066				5,241
Equipment distribution as officer compensation			3,210				-
Change in derivative liabilities			433,855				824,858
Equity based compensation			1,082,858				5,141,770
Fair value of issued warrant to acquire research and development			543,927				-
Changes in operating assets and liabilities:
Prepaid expenses			(40,759	)			(110,235	)
Accounts payable			870,186				46,963
Deferred rent payable			(1,114	)			533
Net cash used in operating activities			(3,452,958	)			(2,766,125	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment			(1,620	)			(5,555	)
Net cash used in investing activity			(1,620	)			(5,555	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock			3,039,372				2,523,787
Proceeds from common stock subscription			239,970				-
Net cash provided by financing activities			3,279,342				2,523,787
Net decrease in cash and cash equivalents			(175,236	)			(247,893	)
Cash and cash equivalents, beginning of the period			1,055,895				953,234
Cash and cash equivalents, end of the period		$	880,659			$	705,341
Supplemental disclosures of cash flow information:
Cash paid during the period for interest		$	-			$	-
Cash paid during the period for income taxes		$	-			$	-
Non cash investing and financing activities:
Common stock issued upon conversion of Series C Preferred Stock and accrued dividends		$	88,991			$	465,355
Reclassify fair value of derivative liability to equity		$	15,676			$	97,897

		June 30, 2017				June 30, 2016
Series C convertible preferred stock			670,000				726,667
Options to purchase common stock			8,245,190				8,450,190
Warrants to purchase common stock			11,019,913				8,145,722
Totals			19,935,103				17,322,579

		June 30, 2017				December 31, 2016
Computer equipment		$	82,101			$	84,704
Furniture and fixtures			10,117				10,117
Subtotal			92,217				94,821
Less accumulated depreciation			(75,685	)			(70,633	)
Property and equipment, net		$	16,532			$	24,188

		June 30, 2017				December 31, 2016
Accrued accounting and legal		$	180,497			$	120,464
Accrued reimbursements			10,990				43,116
Accrued consulting			43,702				1,192
Accrued research and development expenses			950,982				181,884
Accrued payroll			40,625				-
Accrued office and other			246				10,202
Deferred rent			1,798				2,912
Accrued settlement related to arbitration			13,333				13,333
		$	1,242,173			$	373,103

●	incur additional indebtedness;
●	permit liens on assets;
●	repay, repurchase or otherwise acquire more than a de minimis number of shares of capital stock;
●	pay cash dividends to our stockholders; and
●	engage in transactions with affiliates.

(i)	we fail to, or announce our intention not to, deliver common stock share certificates upon conversion of our Series C Preferred Stock prior to the seventh trading day after such shares are required to be delivered,
(ii)	we fail for any reason to pay in full the amount of cash due pursuant to our failure to deliver common stock share certificates upon conversion of our Series C Preferred Stock within five calendar days after notice therefor is delivered,
(iii)	we fail to have available a sufficient number of authorized and unreserved shares of common stock to issue upon a conversion of our Series C Preferred Stock,
(iv)	we fail to observe or perform any other covenant, agreement or warranty contained in, or otherwise commit any breach of our obligations under, the securities purchase agreement, the registration rights agreement, the certificate of designation or the warrants entered into pursuant to the private placement transaction for our Series C Preferred Stock, which failure or breach could have a material adverse effect, and such failure or breach is not cured within 30 calendar days after written notice was delivered,
(v)	we are party to a change of control transaction,
(vi)	we file for bankruptcy or a similar arrangement or are adjudicated insolvent,
(vii)	we are subject to a judgment, including an arbitration award against us, of greater than $100,000, and such judgment remains unvacated, unbonded or unstayed for a period of 45 calendar days,

Options Outstanding												Options Exercisable
								Weighted
								Average				Exercisable
Exercise				Number of				Remaining Life				Number of
Price				Options				In Years				Options
	$	1.01-2.00				2,294,642				5.7				1,865,142
		2.01-3.00				5,650,548				3.3				5,108,076
		3.01-4.00				300,000				7.8				300,000
						8,245,190				4.1				7,273,218

										Weighted-Average
						Weighted-Average				Remaining				Aggregate
		Shares				Exercise Price				Contractual Term				Intrinsic Value
Outstanding at December 31, 2016			8,245,190			$	2.24				5.8			$	-
Grants			-								0			$	-
Exercised			-
Canceled			-
Outstanding at June 30, 2017			8,245,190			$	2.24				4.1			$	26,200
Exercisable at June 30, 2017			7,273,218			$	2.27				2.3			$	22,350

Total restricted shares issued as of December 31, 2016			135,000
Granted			-
Vested			(90,000	)
Vested restricted shares as of June 30, 2017			-
Unvested restricted shares as of June 30, 2017			45,000

Exercise				Number			Expiration
Price				Outstanding			Date
$	0.001				383,320		January 2020
$	1.50				6,898,267		February 2018 to June2020
$	1.84				35,076		January 2020
$	1.95				1,689,026		October 2018 to September 2019
$	2.00				100,000		August 2018
$	2.02				30,755		January 2020
$	2.50				100,000		August 2018
$	2.75				228,720		August 2019 to September 2019
$	3.67				214,193		December 2018 to January 2019
$	3.75				1,340,556		April 2019 to March 2020
					11,019,913

										Weighted-Average
						Weighted-Average				Remaining				Aggregate
		Shares				Exercise Price				Contractual Term				Intrinsic Value
Outstanding at December 31, 2016			9,128,189			$	1.96				2.1			$	494,099
Grants			1,930,296			$	1.50				3.0				-
Exercised			-
Canceled			(38,572	)		$	2.10				2.4				-
Outstanding at June 30, 2017			11,019,913			$	1.87				1.8			$	563,097
Vested and expected to vest at June 30, 2017			11,019,913			$	1.87				1.8			$	563,097
Exercisable at June 30, 2017			11,019,913			$	1.87				1.8			$	563,097

		Warrant Liability				Derivative
Balance, December 31, 2016		$	1,937,234			$	288,934
Total (gains) losses
Transfers out due to conversion of Series C Preferred Stock			-				(15,676	)
Mark to market to June 30, 2017			427,734				6,121
Balance, June 30, 2017		$	2,364,968			$	279,379
Loss on change in warrant and derivative liabilities for the six months ended June 30, 2017		$	(427,734	)		$	(6,121	)

●	Higher quality cardiac signal acquisition for accurate and more efficient electrophysiology studies;

●	Precise, uninterrupted, real time evaluations of electrograms;

●	Reliable cardiac recordings to better determine precise ablation targets, strategy and end point of procedures; and

●	A portable device that can be fully integrated into existing electrophysiology lab environments.

●

Initial system concept validation was performed in collaboration with physicians at the Texas Cardiac Arrhythmia Institute at St. David’s Medical Center in Austin, Texas in June 2011. The Texas Cardiac Arrhythmia Institute provided challenging recordings obtained with electrophysiology recording systems presently in use at the institute during various electrophysiology studies. Our technology team successfully imported the data into the PURE EP System software and using proprietary signal processing, the PURE EP System software was able to reduce baseline wander, noise, and artifacts from the data and therefore provide better diagnostic quality signals.

●	We have established clinical and/or advisory relationships for both technology development and validation studies with physicians and researchers affiliated with the following medical centers: Texas Cardiac Arrhythmia Institute, Austin, TX; Cardiac Arrhythmia Center at the University of California at Los Angeles, Los Angeles, CA; Mount Sinai Medical Center, New York, NY; University Hospitals Case Medical Center, Cleveland, OH; Bringham & Women’s Hospital in Boston, MA; and Mayo Clinic, Rochester, MN.
●	The Cardiac Arrhythmia Center at the University of California at Los Angeles and Dr. Kalyanam Shivkumar, a former member of our board of directors, have played a significant role in the initial functional testing of our hardware. Dr. Shivkumar and his team have enabled us to learn the connectivity of the lab and its devices that pertain to where our PURE EP System will fit in. In June 2013, we commenced our first proof of concept pre-clinical study with the assistance of Dr. Shivkumar in order to further test the components of the PURE EP System hardware, as further explained below.
●	We are developing signal processing tools within the PURE EP System that will assist electrophysiologists in further differentiating true signals from noise, which may potentially provide guidance in identifying ablation targets. The signal processing tools are expected to be an integral part of the software of the PURE EP System, which we believe will significantly facilitate the locating of ablation targets.

●	In the second and third quarters of 2013, we performed and finalized testing of our proof of concept unit by initially using an electrocardiogram/intracardiac simulator at our lab, and subsequently by obtaining pre-clinical recordings from the lab at the University of California at Los Angeles. As part of the testing, we simultaneously recorded electrocardiogram and intracardiac signals on our proof of concept unit and GE’s CardioLab recording system. An identical signal was applied to the input of both systems and the monitor of our proof of concept unit was positioned next to the monitor of GE’s CardioLab recording system to allow for visual comparison. We believe that our proof of concept unit performed well as compared to GE’s CardioLab recording system, in that the electrocardiogram and intracardiac signals displayed on our proof of concept unit showed less baseline wander, noise and artifacts compared to signals displayed on GE’s CardioLab recording system. However, because this was a proof of concept test, without any clearly established protocols, we cannot present this data for publication and we do not have any independent verification or peer review of these findings.
●	In the third quarter of 2013, we analyzed the results of our proof of concept unit to determine the final design of the PURE EP System prototype, which has since been completed.
●	In September 2014, we performed additional tests on the PURE EP System prototype at the University of California at Los Angeles.
●	In the fourth quarter of 2014, we appointed Dr. Samuel J. Asirvatham from Mayo Clinic as a member of our Scientific Advisory Board and initiated plans for pre-clinical studies at Mayo Clinic.
●	In the first quarter of 2015, we appointed Dr. K. L. Venkatachalam from Mayo Clinic as a member of our Scientific Advisory Board. On March 31, 2015 Drs. Asirvatham and Venkatachalam performed our first pre-clinical study at Mayo Clinic in Rochester, Minnesota.
●	On June 10, 2015, Dr. Asirvatham performed our second pre-clinical study at Mayo Clinic in Rochester, Minnesota.
●	On November 17, 2015, Dr. Asirvatham performed our third pre-clinical study at Mayo Clinic in Rochester, Minnesota.
●	On February 22, 2016, we signed an agreement to initiate development of its PURE EP System with Minnetronix, Inc. (“Minnetronix”) and are taking steps toward its 510(k) submission.

●	On March 28, 2016, we announced an Advanced Research Program with Dr. Asirvatham at Mayo Clinic beginning June 2016.

●	On March 8, 2016, Dr. Ammar Killu from Mayo Clinic presented our preclinical data at the 13 th Annual Dead Sea Symposium on Innovations in Cardiac Arrhythmias and Device Therapy in Tel Aviv, Israel entitled “Enhanced Electrophysiology Recording Improves Signal Acquisition and Differentiation”.

●	On June 2, 2016, Dr. Asirvatham performed our fourth pre-clinical study at Mayo Clinic in Rochester, Minnesota.

●	On June 23 and August 25 and 26, 2016, Dr. Vivek Reddy performed a pre-clinical study on a ventricular scar model at the Mount Sinai Hospital in New York, NY.

●	On July 27, 2016, Dr. Asirvatham performed our fifth pre-clinical study at Mayo Clinic in Rochester, Minnesota.

●	On September 14, 2016, Dr. Asirvatham performed our sixth pre-clinical study at Mayo Clinic in Rochester, Minnesota.

●	On August 19, 2016, we presented a poster at the IEEE Engineering in Medicine and Biology Society annual conference (IEEE EMBC 2016) entitled “Enhanced Electrophysiology Recording System”.

●

In December 2016, the Journal of the American College of Cardiology (JACC): Clinical Electrophysiology (Vol.2, No.7, pp.850) published  the article entitled, “Novel Electrophysiology Signal Recording System Enables Specific Visualization of the Purkinje Network and Other High-Frequency Signals”, submitted  by the Mayo Clinic team.

●	On December 9, 2016, we filed a provisional patent application entitled “Assessment of Catheter Position by Local Electrogram”.

●	On December 9, 2016, we filed a provisional patent application entitled “Visualization of Conduction Tissue Signals”.

		June 30, 2017				June 30, 2016
Salaries and equity compensation		$	291,320			$	944,978
Consulting expenses			157,140				78,264
Clinical studies and design work			845,294				53,074
Acquired research and development			-
Travel, supplies, other			45,285				76,727
Total		$	1,339,039			$	1,153,043

		June 30, 2017				June 30, 2016
Salaries and equity compensation		$	552,042			$	1,229,221
Consulting expenses			248,685				164,364
Clinical studies and design work			1,241,595				59,012
Acquired research and development			543,927				-
Travel, supplies, other			91,394				126,560
Total		$	2,677,643			$	1,579,157

31.01	Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.02	Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.01	Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101 INS	XBRL Instance Document
101 SCH	XBRL Taxonomy Extension Schema Document
101 CAL	XBRL Taxonomy Calculation Linkbase Document
101 DEF	XBRL Taxonomy Extension Definition Linkbase Document
101 LAB	XBRL Taxonomy Labels Linkbase Document
101 PRE	XBRL Taxonomy Presentation Linkbase Document

	BIOSIG TECHNOLOGIES, INC.
Date: August 10, 2017	By:	/s/ KENNETH L. LONDONER
		Kenneth L. Londoner
		Chief Executive Officer (Principal Executive Officer)
Date: August 10, 2017	By:	/s/ STEVEN CHAUSSY
		Steven Chaussy
		Chief Financial Officer (Principal Accounting Officer)

34