What happened?
On Wednesday morning BioSig Technologies (BSGM 21.88%) announced a registered direct offering of common stock. With the medical device company set to issue new shares and dilute existing shareholders, BioSig's stock is dropping today and is down by 20.4% as of 12:41 p.m. EDT.
So what
BioSig said it had reached an agreement with several accredited and institutional investors, which will purchase 2,187,500 shares of its common stock at a price of $8 per share. The registered direct offering is expected to close on June 26; BioSig will raise approximately $17.5 million in gross proceeds from this transaction. Note that the company's stock closed at $9.71 on Tuesday. As of this writing, BioSig's shares are worth $7.72. This is the second time this year BioSig has sold new shares in an attempt to raise capital. Back in February the company raised $10 million (in gross proceeds) in a public offering during which it sold 2,500,000 shares of its common stock.
Image source: Getty Images.
Now what
While BioSig is developing a number of medical devices, the company currently has no paying customers and does not generate any revenue. During the first quarter, BioSig recorded a net loss of $12.8 million. Also, BioSig had $15.5 million in cash as of March 31. Given these factors, it isn't surprising to see the company resort to dilutive forms of financing. However, the company expects to begin selling some of its products "in the immediate future," primarily to healthcare facilities. BioSig's shares have been performing well this year and are up by a little more than 30% even after today's slide. This may represent a decent entry point for investors who see a bright future ahead for this healthcare company.