Equibles

10-Q

GUIDED THERAPEUTICS INC (GTHP)

10-Q 2023-05-15 For: 2023-03-31
View Original
Added on April 06, 2026

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

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

For the quarterly period ended March 31, 2023

Commission File No. 000-22179

GUIDED THERAPEUTICS, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 58-2029543
--- ---
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)

5835 Peachtree Corners East, Suite B

Norcross, Georgia 30092

(Address of principal executive offices) (Zip Code)

(770) 242-8723

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically, if any, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act (Check one):

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised accounting standards provided pursuant to Section 13 (a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act. Yes ☐ No ☒

As of May 10, 2022, the registrant had 51,010,579 shares of Common Stock, $0.001 par value per share, outstanding.

PART I FINANCIAL INFORMATION

Page
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of March 31, 2023 (Unaudited) and December 31, 2022 3
Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2023 and 2022 (Unaudited) 4
Condensed Consolidated Statements of Stockholders' Deficit for the Three Months Ended March 31, 2023 and 2022 (Unaudited) 5
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2023 and 2022 (Unaudited) 9
Notes to Unaudited Condensed Consolidated Financial Statements 10
Item 2. Management s Discussion and Analysis of Financial Condition and Results of Operations 33
Item 3. Quantitative and Qualitative Disclosures About Market Risk 40
Item 4. Controls and Procedures 40
PART II OTHER INFORMATION
Item 1. Legal Proceedings 41
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 41
Item 6. Exhibits 41
Signatures 42
2
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GUIDED THERAPEUTICS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

**** ****
**** December 31,
2022
ASSETS
Current Assets:
Cash and cash equivalents 1,837 $ 2,313
Accounts receivable, net of allowance for doubtful accounts of 48 at March 31, 2023 and December 31, 2022 7 6
Inventory, net of reserves of 818 at March 31, 2023 and December 31, 2022 585 548
Other current assets 121 137
Total current assets 2,550 3,004
Non-Current Assets:
Property and equipment, net 40 42
Operating lease right-of-use asset, net of amortization 285 303
Other assets 17 17
Total non-current assets 342 362
TOTAL ASSETS 2,892 $ 3,366
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts payable 2,191 $ 2,186
Accounts payable, related parties 29 39
Accrued liabilities 928 1,247
Deferred revenue 488 509
Current portion of lease liability 82 79
Current portion of long-term debt - 17
Current portion of long-term debt, related parties 37 504
Short-term notes payable 23 57
Short-term notes payable, related parties - 1
Short-term convertible notes payable 225 230
Total current liabilities 4,003 4,869
Long-Term Liabilities
Long-term lease liability 225 246
Derivative liability - 5
Long-term convertible debt 982 1,046
Long-term debt, related parties 537 83
Total long-term liabilities 1,744 1,380
Total liabilities 5,747 6,249
COMMITMENTS AND CONTINGENCIES (Note 7)
STOCKHOLDERS' DEFICIT:
Series C convertible preferred stock, .001 par value; 9.0 shares authorized, 0.3 shares issued and outstanding as of March 31, 2023 and December 31, 2022. Liquidation preference of 286 at March 31, 2023 and December 31, 2022. 105 105
Series C1 convertible preferred stock, .001 par value; 20.3 shares authorized, 1.0 shares issued and outstanding as of March 31, 2023 and December 31, 2022. Liquidation preference of 1,049 at March 31, 2023 and December 31, 2022. 170 170
Series C2 convertible preferred stock, .001 par value; 5,000 shares authorized, 2.7 shares issued and outstanding as of March 31, 2023 and December 31, 2022. Liquidation preference of 2,701 at March 31, 2023 and December 31, 2022. 439 439
Series D convertible preferred stock, .001 par value; 6.0 shares authorized, 0.4 shares issued and outstanding as of March 31, 2023 and December 31, 2022. Liquidation preference of 438 at March 31, 2023 and December 31, 2022, respectively. 159 159
Series E convertible preferred stock, .001 par value; 5.0 shares authorized, 0.9 shares issued and outstanding as of March 31, 2023 and December 31, 2022. Liquidation preference of 883 and 888 at March 31, 2023 and December 31, 2022, respectively. 834 839
Series F convertible preferred stock, .001 par value; 1.5 shares authorized, 1.2 and 1.4 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively. Liquidation preference of 1,026 and 1,056 at March 31, 2023 and December 31, 2022, respectively. 858 880
Series F-2 convertible preferred stock, .001 par value; 5.0 shares authorized, 0.5 shares issued and outstanding as of March 31, 2023 and December 31, 2022. Liquidation preference of 520 and 535 at March 31, 2023 and December 31, 2022, respectively. 475 489
Common stock, .001 par value; 500,000 shares authorized, 50,814 and 48,596 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively. 3,438 3,437
Additional paid-in capital 139,127 138,090
Treasury stock at cost (132 ) (132 )
Accumulated deficit (148,328 ) (147,359 )
Total stockholders' deficit (2,855 ) (2,883 )
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT 2,892 $ 3,366

All values are in US Dollars.

The accompanying notes are an integral part of these condensed consolidated statements.

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GUIDED THERAPEUTICS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except per share data)

Three Months Ended ****
**** March 31, ****
**** 2023 **** 2022
Sales - devices and disposables $ 22 $ 5
Cost of goods sold 9 1
Gross profit 13 4
Operating expenses:
Research and development 7 21
Sales and marketing 73 40
General and administrative 776 386
Total operating expenses 856 447
Loss from operations (843 ) (443 )
Other income (expenses):
Interest expense (66 ) (101 )
Change in fair value of derivative liability 5 (6 )
Gain from extinguishment of debt 35 41
Other income - 2
Total other income (expense) (26 ) (64 )
Loss before income taxes (869 ) (507 )
Provision for income taxes - -
Net loss (869 ) (507 )
Deemed dividend for warrant exchanges (65 ) -
Preferred stock dividends (35 ) (548 )
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS $ (969 ) $ (1,055 )
NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS
Basic $ (0.02 ) $ (0.05 )
Diluted $ (0.02 ) $ (0.05 )
Weighted average shares outstanding
Basic 49,297 20,683
Diluted 49,297 20,683

The accompanying notes are an integral part of these condensed consolidated financial statements.

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GUIDED THERAPEUTICS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

FOR THE THREE MONTHS ENDED MARCH 31, 2023

(unaudited, in thousands)

Preferred Stock<br><br>Series C Preferred Stock<br><br>Series C1 Preferred Stock<br><br>Series C2 Preferred Stock<br><br>Series D
**** Shares Amount Shares Amount Shares Amount Shares Amount
Balance at December 31, 2022 - $ 105 **** 1 $ 170 **** 2 $ 439 **** 1 $ 159
Common stock warrants exercised - - - - - - - -
Issuance of common stock for payment of Series D preferred dividends - - - - - - - -
Issuance of common stock for payment of Series E preferred dividends - - - - - - - -
Issuance of common stock for payment of Series F preferred dividends - - - - - - - -
Issuance of common stock for payment of Series F-2 preferred dividends - - - - - - - -
Conversion of Series E preferred stock to common stock - - - - - - - -
Conversion of Series F preferred stock to common stock - - - - - - - -
Conversion of Series F-2 preferred stock to common stock - - - - - - - -
Issuance of common stock for payment of interest - - - - - - - -
Issuance of common stock to consultants - - - - - - - -
Stock-based compensation - - - - - - - -
Expense for warrants issued to consultants - - - - - - - -
Impact of warrant exchanges - - - - - - - -
Accrued preferred dividends - - - - - - - -
Net loss - - - - - - - -
Balance at March 31, 2023 - $ 105 **** 1 $ 170 **** 2 $ 439 **** 1 $ 159
Preferred Stock<br><br>Series E **** Preferred Stock<br><br>Series F **** Preferred Stock<br><br>Series F2 ****
**** Shares Amount **** Shares Amount **** Shares Amount
Balance at December 31, 2022 1 $ 839 **** **** 1 $ 880 **** **** 3 $ 489
Common stock warrants exercised - - - - - -
Issuance of common stock for payment of Series D preferred dividends - - - - - -
Issuance of common stock for payment of Series E preferred dividends - - - - - -
Issuance of common stock for payment of Series F preferred dividends - - - - - -
Issuance of common stock for payment of Series F-2 preferred dividends - - - - - -
Conversion of Series E preferred stock to common stock - (5 ) - - - -
Conversion of Series F preferred stock to common stock - - - (22 ) - -
Conversion of Series F-2 preferred stock to common stock - - - - - (14 )
Issuance of common stock for payment of interest - - - - - -
Issuance of common stock to consultants - - - - - -
Stock-based compensation - - - - - -
Expense for warrants issued to consultants - - - - - -
Impact of warrant exchanges - - - - - -
Accrued preferred dividends - - - - - -
Net loss - - - - - -
Balance at March 31, 2023 1 $ 834 **** **** 1 $ 858 **** **** 3 $ 475 ****
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Additional ****
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Common Stock Paid-In Treasury **** Accumulated **** **** ****
**** Shares Amount Capital Stock **** Deficit **** Total ****
Balance at December 31, 2022 **** 48,596 $ 3,437 $ 138,090 $ (132 ) $ (147,359 ) $ (2,883 )
Common stock warrants exercised 1,072 1 221 - - 222
Issuance of common stock for payment of Series D preferred dividends 26 - 6 - - 6
Issuance of common stock for payment of Series E preferred dividends 26 - 8 - - 8
Issuance of common stock for payment of Series F preferred dividends 233 - 53 - - 53
Issuance of common stock for payment of Series F-2 preferred dividends 85 - 20 - - 20
Conversion of Series E preferred stock to common stock 20 - 5 - - -
Conversion of Series F preferred stock to common stock 120 - 22 - - -
Conversion of Series F-2 preferred stock to common stock 60 - 14 - - -
Issuance of common stock for payment of interest 178 - 59 - - 59
Issuance of common stock to consultants 400 - 116 - - 116
Stock-based compensation - - 107 - - 107
Expense for warrants issued to consultants - - 341 - - 341
Impact of warrant exchanges - - 65 - (65 ) -
Accrued preferred dividends - - - - (35 ) (35 )
Net loss - - - - (869 ) (869 )
Balance at March 31, 2023 50,814 $ 3,438 $ 139,127 $ (132 ) $ (148,328 ) $ (2,855 )

The accompanying notes are an integral part of these condensed consolidated statements.

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GUIDED THERAPEUTICS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

FOR THE THREE MONTHS ENDED MARCH 31, 2022

(unaudited, in thousands)

Preferred Stock<br><br>Series C Preferred Stock<br><br>Series C1 Preferred Stock<br><br>Series C2 Preferred Stock<br><br>Series D
Shares Amount Shares Amount Shares Amount Shares Amount
Balance at December 31, 2021 - $ 105 **** 1 $ 170 **** 3 $ 531 **** 1 $ 276
Common stock warrants exercised - - - - - - - -
Issuance of common stock for payment of Series D preferred dividends - - - - - - - -
Issuance of common stock for payment of Series E preferred dividends - - - - - - - -
Issuance of common stock for payment of Series F preferred dividends - - - - - - - -
Issuance of common stock for payment of Series F-2 preferred dividends - - - - - - - -
Issuance of common stock for payment of interest - - - - - - - -
Issuance of common stock for Series F and Series F-2 one-time 15% dividends - - - - - - - -
Conversion of Series E preferred stock to common stock - - - - - - - -
Conversion of Series F preferred stock to common stock - - - - - - - -
Stock-based compensation - - - - - - - -
Expense for warrants issued to consultants - - - - - - - -
Accrued preferred dividends - - - - - - - -
Net loss - - - - - - - -
Balance at March 31, 2022 - $ 105 **** 1 $ 170 **** 3 $ 531 **** 1 $ 276
Preferred Stock<br><br>Series E **** Preferred Stock<br><br>Series F **** Preferred Stock<br><br>Series F2
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
**** Shares **** Amount **** Shares Amount **** Shares Amount
Balance at December 31, 2021 2 **** $ 1,639 **** **** 1 $ 1,187 **** **** 3 $ 2,963
Common stock warrants exercised - - - - - -
Issuance of common stock for payment of Series D preferred dividends - - - - - -
Issuance of common stock for payment of Series E preferred dividends - - - - - -
Issuance of common stock for payment of Series F preferred dividends - - - - - -
Issuance of common stock for payment of Series F-2 preferred dividends - - - - - -
Issuance of common stock for payment of interest - - - - - -
Issuance of common stock for Series F and Series F-2 one-time 15% dividends - - - - - -
Conversion of Series E preferred stock to common stock (1 ) (725 ) - - - -
Conversion of Series F preferred stock to common stock - - - (13 ) - -
Stock-based compensation - - - - - -
Expense for warrants issued to consultants - - - - - -
Accrued preferred dividends - - - - - -
Net loss - - - - - -
Balance at March 31, 2022 1 **** $ 914 **** **** 1 $ 1,174 **** **** 3 $ 2,963
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Additional ****
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Common Stock Paid-In Treasury Accumulated
Shares Amount Capital Stock **** Deficit **** Total
Balance at December 31, 2021 13,673 $ 3,403 $ 126,800 $ (132 ) $ (142,387 ) $ (5,445 )
Common stock warrants exercised 4,478 4 712 - - 716
Issuance of common stock for payment of Series D preferred dividends 23 - 15 - - 15
Issuance of common stock for payment of Series E preferred dividends 13 - 8 - - 8
Issuance of common stock for payment of Series F preferred dividends 158 - 105 - - 105
Issuance of common stock for payment of Series F-2 preferred dividends 96 - 64 - - 64
Issuance of common stock for payment of interest 121 - 81 - - 81
Issuance of common stock for Series F and Series F-2 one-time 15% dividends 624 - 399 - - 399
Conversion of Series E preferred stock to common stock 3,070 3 722 - - -
Conversion of Series F preferred stock to common stock 60 - 13 - - -
Stock-based compensation - - 44 - - 44
Expense for warrants issued to consultants - - 79 - - 79
Accrued preferred dividends - - - - (548 ) (548 )
Net loss - - - - (507 ) (507 )
Balance at March 31, 2022 22,316 $ 3,410 $ 129,042 $ (132 ) $ (143,442 ) $ (4,989 )

The accompanying notes are an integral part of these condensed consolidated financial statements.

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GUIDED THERAPEUTICS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

Three Months Ended<br><br>March 31, ****
**** 2023 **** 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (869 ) $ (507 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation 2 -
Amortization of debt issuance costs and discounts 32 41
Stock based compensation 107 44
Change in fair value of derivatives (5 ) 6
Amortization of lease right-of-use-asset 18 16
Expense for common stock and warrants issued to consultants 457 79
Gain from forgiveness of debt (35 ) (41 )
Other non-cash expenses (income) 6 6
Change in operating assets and liabilities:
Accounts receivable (1 ) 6
Inventory (36 ) 1
Other current assets 16 (76 )
Accounts payable and accrued liabilities (152 ) 84
Lease liabilities (18 ) (15 )
Deferred revenue (21 ) 177
NET CASH USED IN OPERATING ACTIVITIES (499 ) (179 )
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment - (14 )
NET CASH USED FOR INVESTING ACTIVITIES - (14 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from warrant exercises 195 365
Payments made on notes payable (172 ) (90 )
NET CASH PROVIDED BY FINANCING ACTIVITIES 23 275
NET CHANGE IN CASH (476 ) 82
Cash at beginning of period 2,313 643
CASH AT END OF PERIOD $ 1,837 $ 725
SUPPLEMENTAL DISCLOSURE FOR OPERATING ACTIVITIES:
Cash paid for interest $ 47 $ 6
SUPPLEMENTAL DISCLOSURE FOR NON-CASH INVESTING AND FINANCING ACTIVITIES:
Dividends on preferred stock $ 35 $ 548
Deemed dividends for warrant exchanges $ 65 $ -
Common stock issued for payment of interest $ 59 $ 81
Common stock issued for payment of accrued dividends $ 88 $ 592
Conversion of Series E Preferred Shares into Common Stock $ 5 $ 725
Conversion of Series F Preferred Shares into Common Stock $ 22 $ 13
Conversion of Series F-2 Preferred Shares into Common Stock $ 14 $ -

The accompanying notes are an integral part of these condensed consolidated financial statements.

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GUIDED THERAPEUTICS, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION, BACKGROUND, AND BASIS OF PRESENTATION

Guided Therapeutics, Inc. (formerly SpectRx, Inc.), together with its wholly owned subsidiary, InterScan, Inc. (formerly Guided Therapeutics, Inc.), collectively referred to herein as the “Company”, is a medical technology company focused on developing innovative medical devices that have the potential to improve healthcare. The Company’s primary focus is the continued commercialization of its LuViva non-invasive cervical cancer detection device and extension of its cancer detection technology into other cancers, including esophageal. The Company’s technology, including products in research and development, primarily relates to biophotonics technology for the non-invasive detection of cancers.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. Therefore, these financial statements should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the Securities and Exchange Commission (“SEC”) pursuant to Section 13 or 15(d) under the Securities Exchange Act of 1934. The December 31, 2022 balances reported herein are derived from the audited consolidated financial statements for the year ended December 31, 2022. The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year.

All intercompany transactions and balances have been eliminated in consolidation. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the Company as of March 31, 2023 and December 31, 2022, and the consolidated results of operations and cash flows for the three-month periods ended March 31, 2023 and 2022 have been included.

The Company’s prospects must be considered in light of the substantial risks, expenses and difficulties encountered by entrants into the medical device industry. This industry is characterized by an increasing number of participants, intense competition and a high failure rate. The Company has experienced net losses since its inception and, as of March 31, 2023, it had an accumulated deficit of approximately $148.3 million. To date, the Company has engaged primarily in research and development efforts and the early stages of marketing its products. The Company may not be successful in growing sales for its products. Moreover, required regulatory clearances or approvals may not be obtained in a timely manner, or at all. The Company’s products may not ever gain market acceptance and the Company may not ever generate significant revenues or achieve profitability. The development and commercialization of the Company’s products requires substantial development, regulatory, sales and marketing, manufacturing and other expenditures. The Company expects operating losses to continue for the foreseeable future as it continues to expend substantial resources to complete development of its products, obtain regulatory clearances or approvals, build its marketing, sales, manufacturing and finance capabilities, and conduct further research and development.

The Company is not organized by multiple operating segments for the purpose of making operating decisions or assessing performance. Accordingly, the Company operates in one reportable operating segment. The Company’s principal decision maker is the Chief Executive Officer and acting Chief Financial Officer. Management believes that its business operates as one reportable segment because: a) the Company measures profit and loss as a whole; b) the principal decision makers do not review information based on any operating segment; c) the Company does not maintain discrete financial information on any specific segment; d) the Company has not chosen to organize its business around different products and services, and e) the Company has not chosen to organize its business around geographic areas.

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Going Concern

The Company’s consolidated financial statements have been prepared and presented on a basis assuming it will continue as a going concern. The factors below raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary from the outcome of this uncertainty.

At March 31, 2023, the Company had a negative working capital of approximately $1.5 million, accumulated deficit of $148.3 million, and incurred a net loss including preferred dividends of $1.0 million for the three months then ended. Stockholders’ deficit totaled approximately $2.9 million at March 31, 2023, primarily due to recurring net losses from operations.

During the three months ended March 31, 2023, the Company raised $195 thousand from warrant exercises. During the year ended December 31, 2022, the Company raised $3.2 million from the sale of common stock and warrants (net of expenses), and $495 thousand of proceeds from warrant exercises. The Company will need to continue to raise capital in order to provide funding for its operations and FDA approval process. If sufficient capital cannot be raised, the Company will continue its plans of curtailing operations by reducing discretionary spending and staffing levels and attempting to operate by only pursuing activities for which it has external financial support. However, there can be no assurance that such external financial support will be sufficient to maintain even limited operations or that the Company will be able to raise additional funds on acceptable terms, or at all. In such a case, the Company might be required to enter into unfavorable agreements or, if that is not possible, be unable to continue operations, and to the extent practicable, liquidate and/or file for bankruptcy protection.

2. SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant areas where estimates are used include the allowance for doubtful accounts, inventory valuation and input variables for Black-Scholes, Monte Carlo simulations and binomial calculations. The Company uses the Monte Carlo simulations and binomial calculations in the calculation of the fair value of the warrant liabilities and the valuation of embedded conversion options and freestanding warrants.

Accounting Standard Updates

In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-13, Financial Instruments – Credit Losses (Topic 326) – Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”).  ASU 2016-13 replaces the “incurred loss” credit losses framework with a new accounting standard that requires management's measurement of the allowance for credit losses to be based on a broader range of reasonable and supportable information for lifetime credit loss estimates.  This amendment was adopted effective January 1, 2023 with no impact to our financial statements.

A variety of proposed or otherwise potential accounting standards are currently under consideration by standard-setting organizations and certain regulatory agencies. Because of the tentative and preliminary nature of such proposed standards, management has not yet determined the effect, if any that the implementation of such proposed standards would have on the Company’s consolidated financial statements.

Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be a cash equivalent.

Accounts Receivable

The Company performs periodic credit evaluations of its distributors’ financial conditions and generally does not require collateral. The Company reviews all outstanding accounts receivable for collectability on a quarterly basis. An allowance for doubtful accounts is recorded for any amounts deemed uncollectable. Uncollectibility is determined based on the determination that a distributor will not be able to make payment and the time frame has exceeded one year. The Company does not accrue interest receivables on past due accounts receivable.

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Concentrations of Credit Risk

The Company maintains a cash balance in a financial institution that is insured by the Federal Deposit Insurance Corporation up to certain federal limitations. At times, the Company’s cash balance exceeds these federal limitations. The amount in excess of insured limitations was approximately $1,591,276 and $2,064,772 as of March 31, 2023 and December 31, 2022, respectively.

Inventory Valuation

All inventories are stated at lower of cost or net realizable value, with cost determined substantially on a “first-in, first-out” basis.  Selling, general, and administrative expenses are not inventoried, but are charged to expense when incurred. As of March 31, 2023 and December 31, 2022, our inventories were as follows:

(in thousands) ****
**** March 31, **** December 31,
2023 2022
Raw materials $ 1,292 $ 1,260
Work-in-progress 73 68
Finished goods 38 38
Inventory reserve (818 ) (818 )
Total inventory $ 585 $ 548

The company periodically reviews the value of items in inventory and provides write-downs or write-offs of inventory based on its assessment of market conditions. Write-downs and write-offs are charged to cost of goods sold.

Property and Equipment

Property and equipment are recorded at cost. Depreciation is computed using the straight-line method over estimated useful lives of three to seven years. Leasehold improvements are amortized at the shorter of the useful life of the asset or the remaining lease term. Depreciation and amortization expense are included in general and administrative expense on the statement of operations. Expenditures for repairs and maintenance are expensed as incurred. Property and equipment are summarized as follows at March 31, 2023 and December 31, 2022:

(in thousands) ****
**** March 31, **** December 31,
2023 2022
Equipment $ 1,083 $ 1,083
Software 656 656
Furniture and fixtures 41 41
Leasehold improvements 12 12
Subtotal 1,792 1,792
Less accumulated depreciation (1,752 ) (1,750 )
Property, equipment and leasehold improvements, net $ 40 $ 42

Depreciation expense related to property and equipment for the three months ended March 31, 2023 and 2022 was not material.

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Debt Issuance Costs

Debt issuance costs are capitalized and amortized over the term of the associated debt. Debt issuance costs are presented in the balance sheet as a direct deduction from the carrying amount of the debt liability consistent with the debt discount.

Patent Costs (Principally Legal Fees)

Costs incurred in filing, prosecuting, and maintaining patents are recurring, and expensed as incurred. Maintaining patents are expensed as incurred as the Company has not yet received U.S. FDA approval and recovery of these costs is uncertain. Such costs were not material for the three months ended March 31, 2023 and 2022.

Leases

A lease provides the lessee the right to control the use of an identified asset for a period of time in exchange for consideration. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. The Company determines if an arrangement is a lease at inception. Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term.

Where an operating lease contains extension options that the Company is reasonably certain to exercise, the extension period is included in the calculation of the right-of-use assets and lease liabilities.

The discount rate used to determine the commencement date present value of lease payments is the interest rate implicit in the lease, or when that is not readily determinable, the Company utilizes its secured borrowing rate. Right-of-use assets include any lease payments required to be made prior to commencement and exclude lease incentives. Both right-of-use assets and lease liabilities exclude variable payments not based on an index or rate, which are treated as period costs. The Company’s lease agreements do not contain significant residual value guarantees, restrictions or covenants. See Note 7 – “Commitments and Contingencies.”

Accrued Liabilities

Accrued liabilities as of March 31, 2023 and December 31, 2022 are summarized as follows:

(in thousands)
March 31, 2023 December 31, 2022
Compensation $ 399 $ 444
Professional fees 178 285
Stock Subscription Payable 10 36
Interest 112 189
Vacation 44 41
Preferred dividends 178 231
Other accrued expenses 7 21
Total $ 928 $ 1,247

Stock Subscription Payable

Cash received from investors for shares of common stock that have not yet been issued is recorded as a liability, which is presented within Accrued Liabilities on the consolidated balance sheet.

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Revenue Recognition

ASC 606, Revenue from Contracts with Customers, establishes a single and comprehensive framework which sets out how much revenue is to be recognized, and when. The core principle is that a vendor should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the vendor expects to be entitled in exchange for those goods or services. Revenue will now be recognized by a vendor when control over the goods or services is transferred to the customer. The application of the core principle in ASC 606 is carried out in five steps:

· Step 1 – Identify the contract with a customer: a contract is defined as an agreement (including oral and implied), between two or more parties, that creates enforceable rights and obligations and sets out the criteria for each of those rights and obligations. The contract needs to have commercial substance and it is probable that the entity will collect the consideration to which it will be entitled.
· Step 2 – Identify the performance obligations in the contract: a performance obligation in a contract is a promise (including implicit) to transfer a good or service to the customer. Each performance obligation should be capable of being distinct and is separately identifiable in the contract.
· Step 3 – Determine the transaction price: transaction price is the amount of consideration that the entity can be entitled to, in exchange for transferring the promised goods and services to a customer, excluding amounts collected on behalf of third parties.
· Step 4 – Allocate the transaction price to the performance obligations in the contract: for a contract that has more than one performance obligation, the entity will allocate the transaction price to each performance obligation separately, in exchange for satisfying each performance obligation. The acceptable methods of allocating the transaction price include adjusted market assessment approach, expected cost plus a margin approach, and the residual approach in limited circumstances. Discounts given should be allocated proportionately to all performance obligations unless certain criteria are met and reallocation of changes in standalone selling prices after inception is not permitted.
· Step 5 – Recognize revenue as and when the entity satisfies a performance obligation: the entity should recognize revenue at a point in time, except if it meets any of the three criteria, which will require recognition of revenue over time: the entity’s performance creates or enhances an asset controlled by the customer, the customer simultaneously receives and consumes the benefit of the entity’s performance as the entity performs, and the entity does not create an asset that has an alternative use to the entity and the entity has the right to be paid for performance to date.

The Company did not recognize material revenues during the three-month periods ended March 31, 2023 or 2022. The Company’s revenues do not require significant estimates or judgments. The Company is not party to contracts that include multiple performance obligations or material variable consideration.

Contract Balances

The Company defers payments received as revenue until earned based on the related contracts and applying ASC 606 as required. As of March 31, 2023 and December 31, 2022, deferred revenue totaled $487,882 and $509,101, respectively.

Significant Customers

As of March 31, 2023, accounts receivable outstanding was $55,314, the outstanding amount was netted against a $48,172 allowance, leaving a balance of $7,142, which was from one customer. As of December 31, 2022, accounts receivable outstanding was $54,484; the outstanding amount was netted against a $48,172 allowance, leaving a balance of $6,312, which was from one customer.

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Research and Development

Research and development expenses consist of expenditures for research conducted by the Company and payments made under contracts with consultants or other outside parties and costs associated with internal and contracted clinical trials. All research and development costs are expensed as incurred.

Income Taxes

The provision for income taxes is determined in accordance with ASC 740, “Income Taxes”. The Company provides for income taxes based on enacted tax law and statutory tax rates at which items of income and expense are expected to be settled in our income tax return. Certain items of revenue and expense are reported for Federal income tax purposes in different periods than for financial reporting purposes, thereby resulting in deferred income taxes. Deferred taxes are also recognized for operating losses that are available to offset future taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

The Company has filed for an extension for its 2022 federal and state corporate tax returns. Although the Company has been experiencing recurring losses, it is obligated to file tax returns for compliance with IRS regulations and that of applicable state jurisdictions. At March 31, 2023, the Company had approximately $65.6 million of net operating losses carryforward available. This net operating loss will be eligible to be carried forward for tax purposes at federal and applicable states level. A full valuation allowance has been recorded related the deferred tax assets generated from the net operating losses.

The Company recognizes uncertain tax positions based on a benefit recognition model. Provided that the tax position is deemed more likely than not of being sustained, the Company recognizes the largest amount of tax benefit that is greater than 50.0% likely of being ultimately realized upon settlement. The tax position is derecognized when it is no longer more likely than not of being sustained. The Company classifies income tax related interest and penalties as interest expense and selling, general and administrative expense, respectively, on the consolidated statements of operations.

Warrants

The Company has issued warrants, which allow the warrant holder to purchase one share of stock at a specified price for a specified period of time. The Company records equity instruments including warrants based on the fair value at the date of issue. The fair value of warrants classified as equity instruments at the date of issuance is estimated using the Black-Scholes Model. The fair value of warrants classified as liabilities at the date of issuance is estimated using the Monte Carlo Simulation or Binomial model.

Stock Based Compensation

The Company accounts for its stock-based awards in accordance with ASC Subtopic 718, “Compensation – Stock Compensation”, which requires fair value measurement on the grant date and recognition of compensation expense for all stock-based payment awards made to employees and directors. The Company determines the fair value of stock options using the Black-Scholes model. The fair value of restricted stock awards is based upon the quoted market price of the shares of common stock on the date of grant. The fair value of stock-based awards is expensed over the requisite service periods of the awards. The Company accounts for forfeitures of stock-based awards as they occur.

The Black-Scholes option pricing model requires the input of certain assumptions that require the Company’s judgment, including the expected term and the expected stock price volatility of the underlying stock. The assumptions used in calculating the fair value of stock-based compensation represent management’s best estimates, but these estimates involve inherent uncertainties and the application of judgment. As a result, if factors change resulting in the use of different assumptions, stock-based compensation expense could be materially different in the future.

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Derivatives

The Company reviews the terms of convertible debt issued to determine whether there are embedded derivative instruments, including embedded conversion options, which are required to be bifurcated and accounted for separately as derivative financial instruments. In circumstances where the host instrument contains more than one embedded derivative instrument, including the conversion option, that is required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument.

Bifurcated embedded derivatives are initially recorded at fair value and are then revalued at each reporting date with changes in the fair value reported as non-operating income or expense. When the equity or convertible debt instruments contain embedded derivative instruments that are to be bifurcated and accounted for as liabilities, the total proceeds received are first allocated to the fair value of all the bifurcated derivative instruments. The remaining proceeds, if any, are then allocated to the host instruments themselves, usually resulting in those instruments being recorded at a discount from their face value. The discount from the face value of the convertible debt, together with the stated interest on the instrument, is amortized over the life of the instrument through periodic charges to interest expense.

3.   FAIR VALUE OF FINANCIAL INSTRUMENTS

The guidance for fair value measurements, ASC 820, Fair Value Measurements and Disclosures, establishes the authoritative definition of fair value, sets out a framework for measuring fair value, and outlines the required disclosures regarding fair value measurements. Fair value is the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The Company uses a three-tier fair value hierarchy based upon observable and non-observable inputs as follow:

· Level 1–Quoted market prices in active markets for identical assets and liabilities;
· Level 2–Inputs, other than level 1 inputs, either directly or indirectly observable; and
· Level 3–Unobservable inputs developed using internal estimates and assumptions (there is little or no market date) which reflect those that market participants would use.

The Company records its derivative activities at fair value. There was no movement of instruments between fair value hierarchy tiers during the three months ended March 31, 2023. Derivative liabilities measured on a recurring basis were not material as of March 31, 2023. The following tables present the fair value of derivative liabilities measured on a recurring basis as of December 31, 2022:
Level 2 Level 3 Total
Derivative liability/bifurcated conversion option in connection with Auctus 326,016 loan on December 17, 2019 - - (5 ) (5 )
Total long-term liabilities at fair value - $ - $ (5 ) $ (5 )

All values are in US Dollars.

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The following is a summary of changes to Level 3 instruments during the three months ended March 31, 2023:

(in thousands)
Derivative
Balance, December 31, 2022 $ (5 )
Change in fair value during the period 5
Balance, March 31, 2023 $ -

4.  STOCKHOLDERS’ DEFICIT

Common Stock

The Company has authorized 500,000,000 shares of common stock with $0.001 par value. As of March 31, 2023 and December 31, 2022, 50,814,258 and 48,595,715 shares of common stock were issued and outstanding, respectively.

During the three months ended March 31, 2023, the Company issued 2,218,543 shares of common stock, as summarized below:

Number of<br><br>Shares
Common stock warrants exercised 1,071,794
Issuance of common stock for payment of Series D preferred dividends 25,635
Issuance of common stock for payment of Series E preferred dividends 25,729
Issuance of common stock for payment of Series F preferred dividends 232,889
Issuance of common stock for payment of Series F-2 preferred dividends 84,575
Issuance of common stock for payment of interest 177,921
Issuance of common stock to consultants 400,000
Conversion of Series E preferred stock to common stock 20,000
Conversion of Series F preferred stock to common stock 120,000
Conversion of Series F-2 preferred stock to common stock 60,000
Issued during the three months ended March 31, 2023 2,218,543
Summary table of common stock share transactions:
Shares outstanding at December 31, 2022 48,595,715
Common shares issued during the three months ended March 31, 2023 2,218,543
Common shares outstanding at March 31, 2023 50,814,258

Preferred Stock

The Company has authorized 5,000,000 shares of preferred stock with a $0.001 par value. The board of directors has the authority to issue these shares and to set dividends, voting and conversion rights, redemption provisions, liquidation preferences, and other rights and restrictions.

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Series C Convertible Preferred Stock

The board designated 9,000 shares of preferred stock as Series C Convertible Preferred Stock, (the “Series C Preferred Stock”). Pursuant to the Series C certificate of designations, shares of Series C Preferred Stock are convertible into common stock by their holder at any time and may be mandatorily convertible upon the achievement of specified average trading prices for the Company’s common stock. At March 31, 2023 and December 31, 2022, there were 286 shares outstanding with a conversion price of $0.50 per share, such that each share of Series C Preferred Stock would convert into approximately 2,000 shares of the Company’s common stock; for a total of 572,000 shares of common stock, subject to customary adjustments, including for any accrued but unpaid dividends and pursuant to certain anti-dilution provisions, as set forth in the Series C certificate of designations. The conversion price will automatically adjust downward to 80% of the then-current market price of the Company’s common stock 15 trading days after any reverse stock split of the Company’s common stock, and 5 trading days after any conversions of the Company’s outstanding convertible debt.

Holders of the Series C Preferred Stock are entitled to quarterly cumulative dividends at an annual rate of 12.0% until 42 months after the original issuance date (the “Dividend End Date”), payable in cash or, subject to certain conditions, the Company’s common stock. Unpaid accrued dividends were $120,120 as of March 31, 2023 and December 31, 2022. Upon conversion of the Series C Preferred Stock prior to the Dividend End Date, the Company will also pay to the converting holder a “make-whole payment” equal to the number of unpaid dividends through the Dividend End Date on the converted shares. At March 31, 2023 and December 31, 2022, the “make-whole payment” for a converted share of Series C Preferred Stock would convert to 200 shares of the Company’s common stock.

The Series C Preferred Stock generally has no voting rights except as required by Delaware law. Upon the Company’s liquidation or sale to or merger with another corporation, each share will be entitled to a liquidation preference of $1,000, plus any accrued but unpaid dividends.

Series C1 Convertible Preferred Stock

The board designated 20,250 shares of preferred stock as Series C1 Preferred Stock, of which 1,049.25 shares were issued and outstanding at March 31, 2023 and December 31, 2022. In addition, some holders separately agreed to exchange each share of the Series C1 Preferred Stock held for one (1) share of the Company’s newly created Series C2 Preferred Stock. In total, for 3,262.25 shares of Series C1 Preferred Stock to be surrendered, the Company issued 3,262.25 shares of Series C2 Preferred Stock.

The Series C1 Preferred Stock has terms that are substantially the same as the Series C Preferred Stock, except that the Series C1 Preferred Stock does not pay dividends (unless and to the extent declared on the common stock) or at-the-market “make-whole payments” and, while it has the same anti-dilution protections afforded the Series C Preferred Stock, it does not automatically reset in connection with a reverse stock split or conversion of our outstanding convertible debt.

At March 31, 2023 and December 31, 2022, there were 1,049.25 shares outstanding with a conversion price of $0.50 per share, such that each share of Series C1 Preferred Stock would convert into approximately 2,000 shares of the Company’s common stock, for a total of 2,098,500 shares of common stock.

Series C2 Convertible Preferred Stock

On August 31, 2018, the Company entered into agreements with certain holders of the Company’s Series C1 Preferred Stock, including the chairman of the Company’s board of directors, and the Chief Operating Officer and a director of the Company pursuant to which those holders separately agreed to exchange each share of the Series C1 Preferred Stock held for one (1) share of the Company’s newly created Series C2 Preferred Stock. In total, for 3,262.25 shares of Series C1 Preferred Stock to be surrendered, the Company issued 3,262.25 shares of Series C2 Preferred Stock.

The terms of the Series C2 Preferred Stock are substantially the same as the Series C1 Preferred Stock, except that (i) shares of Series C1 Preferred Stock may not be convertible into the Company’s common stock by their holder for a period of 180 days following the date of the filing of the Certificate of Designation (the “Lock-Up Period”); (ii) the Series C2 Preferred Stock has the right to vote as a single class with the Company’s common stock on an as-converted basis, notwithstanding the Lock-Up Period; and (iii) the Series C2 Preferred Stock will automatically convert into that number of securities sold in the next Qualified Financing (as defined in the Exchange Agreement) determined by dividing the stated value ($1,000 per share) of such share of Series C2 Preferred Stock by the purchase price of the securities sold in the Qualified Financing.

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At March 31, 2023 and December 31, 2022, there were 2,700 shares outstanding, each with a conversion price of $0.50 per share, such that each share of Series C preferred stock would convert into approximately 2,000 shares of the Company’s common stock; for a total of 5,400,000 shares of common stock.

Series D Convertible Preferred Stock

The Board designated 6,000 shares of preferred stock as Series D Preferred Stock, 438 of which remained outstanding as of March 31, 2023 and December 31, 2022. On January 8, 2021, the Company entered into a Stock Purchase Agreement with certain accredited investors (“the Series D Investors”) pursuant to all obligations under the Series D Certificate of Designation. The Series D Investors included the Chief Executive Officer, Chief Operating Officer and a director of the Company. In total, for $763,000 the Company issued 763 shares of Series D Preferred Stock, 1,526,000 shares of common stock, 1,526,000 common stock warrants, exercisable at $0.25, and 1,526,000 common stock warrants, exercisable at $0.75. Each Series D Preferred Stock is convertible into 3,000 shares of common stock. The Series D Preferred Stock have cumulative dividends at the rate per share of 10% per annum. Each share of Series D Preferred Stock has a par value of $0.001 per share and a Stated Value equal to $750.

Each share of Series D Preferred is convertible, at any time for a period of 5 years after issuance, into that number of shares of Common Stock, determined by dividing the Stated Value by $0.25, subject to certain adjustments set forth in the Series D Certificate of Designation (the “Series D Conversion Price”). The conversion of Series D Preferred is subject to a 4.99% beneficial ownership limitation, which may be increased to 9.99% at the election of the holder of the Series D Preferred. If the average of the VWAPs (as defined in the Series D Certificate of Designation) for any consecutive 5 trading day period (“Measurement Period”) exceeds 200% of the then Series D Conversion Price and the average daily trading volume of the Common Stock on the primary trading market exceeds 1,000 shares per trading day during the Measurement Period (subject to adjustments), the Company may redeem the then outstanding Series D Preferred, for cash in an amount equal to aggregate Stated Value then outstanding plus accrued but unpaid dividends.

During the three months ended March 31, 2023, the Company issued 25,635 shares of common stock for the payment of accrued Series D Preferred Stock dividends. As of March 31, 2023 and December 31, 2022, the Company had accrued dividends for the Series D Preferred Stock of $8,360 and $8,213, respectively.

Series E Convertible Preferred Stock

The Board designated 5,000 shares of preferred stock as Series E Preferred Stock, 883 and 888 of which remained outstanding as of March 31, 2023 and December 31, 2022, respectively. Each share of Series E Preferred is convertible, at any time for a period of 5 years after issuance, into that number of shares of Common Stock, determined by dividing the Stated Value by $0.25, subject to certain adjustments set forth in the Series E Certificate of Designation (the “Series E Conversion Price”). The conversion of Series E Preferred is subject to a 4.99% beneficial ownership limitation, which may be increased to 9.99% at the election of the holder of the Series E Preferred. If the average of the VWAPs (as defined in the Series E Certificate of Designation) for any consecutive 5 trading day period (“Measurement Period”) exceeds 200% of the then Series E Conversion Price and the average daily trading volume of the Common Stock on the primary trading market exceeds 1,000 shares per trading day during the Measurement Period (subject to adjustments), the Company may redeem the then outstanding Series E Preferred, for cash in an amount equal to aggregate Stated Value then outstanding plus accrued but unpaid dividends. Each share of Series E Preferred Stock has a par value of $0.001 per share and a Stated Value equal to $1,000, subject to increase set forth in its Certificate of Designation.

Each holder of Series E Preferred Stock is entitled to receive cumulative dividends of 8% per annum, payable annually in cash or, following the listing of the Company’s common stock on certain Canadian trading markets and at the option of the Company, shares of common stock.

During the three months ended March 31, 2023, the Company issued 20,000 shares of common stock for the conversion of 5 shares of Series E Convertible Preferred Stock and 25,729 shares of common stock for the payment of accrued Series E Preferred Stock dividends. As of March 31, 2023 and December 31, 2022, the Company had accrued dividends of $39,932 and $30,414 for the Series E Preferred Stock, respectively.

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Series F Convertible Preferred Stock

The Board designated 1,500 shares of preferred stock as Series F Preferred Stock, 1,026 and 1,056 of which were issued and outstanding as of March 31, 2023 and December 31, 2022, respectively. During 2021, the Company entered into a Stock Purchase Agreement with certain accredited investors (“the Series F Investors”). In total, for $1,436,000 the Company issued 1,436 shares of Series F Preferred Stock. Each Series F Preferred Stock is convertible into 4,000 shares of common stock. The Series F Preferred Stock is entitled to cumulative dividends at the rate per share of 6% per annum. The stated value on the Series F Preferred Stock is $1,000.

Each share of Series F Preferred Stock is convertible, at any time for a period of 5 years after issuance, into that number of shares of Common Stock, determined by dividing the Stated Value by $0.25, subject to certain adjustments set forth in the Series F Certificate of Designation (the “Series F Conversion Price”). The conversion of Series F Preferred is subject to a 4.99% beneficial ownership limitation, which may be increased to 9.99% at the election of the holder of the Series F Preferred. If the average of the VWAPs (as defined in the Series F  Certificate of Designation) for any consecutive 5 trading day period (“Measurement Period”) exceeds 200% of the then Series F Conversion Price and the average daily trading volume of the Common Stock on the primary trading market exceeds 1,000 shares per trading day during the Measurement Period (subject to adjustments), the Company may redeem the then outstanding Series F Preferred, for cash in an amount equal to aggregate Stated Value then outstanding plus accrued but unpaid dividends.

During the three months ended March 31, 2023, the Company issued 120,000 shares of common stock for the conversion of 30 shares of Series F Convertible Preferred Stock and 232,889 shares of common stock for the payment of annual Series F Preferred Stock dividends. As of March 31, 2023 and December 31, 2022, the Company had accrued dividends for Series F preferred shares of $855 and $48,400, respectively.

Series F-2 Convertible Preferred Stock

The Company was oversubscribed for its Series F Convertible Preferred Stock, resulting in the requirement to file an additional Certificate of Designation for Series F-2 Convertible Preferred Stock with substantially the same terms as the Series F Convertible Preferred Stock. The Board designated 3,500 shares of preferred stock as Series F-2 Preferred Stock, 520 and 535 of which were issued and outstanding as of March 31, 2022 and December 31, 2021. During 2021, the Company entered into a Stock Purchase Agreement with certain accredited investors (“the Series F-2 Investors”). In total, for $678,000 the Company issued 678 shares of Series F-2 Preferred Stock. In addition, the Company exchanged outstanding debt of $2,559,000 for 2,559 shares of Series F-2 Preferred Stock. Each Series F-2 Preferred Stock is convertible into 4,000 shares of common stock. The Series F-2 Preferred Stock will have cumulative dividends at the rate per share of 6% per annum. The stated value on the Series F-2 Preferred Stock is $1,000.

Each share of Series F-2 Preferred is convertible, at any time for a period of 5 years after issuance, into that number of shares of Common Stock, determined by dividing the Stated Value by $0.25, subject to certain adjustments set forth in the Series F-2 Certificate of Designation (the “Series F-2 Conversion Price”). The conversion of Series F-2 Preferred is subject to a 4.99% beneficial ownership limitation, which may be increased to 9.99% at the election of the holders of the Series F-2 Preferred. If the average of the VWAPs (as defined in the Series F-2 Certificate of Designation) for any consecutive 5 trading day period (“Measurement Period”) exceeds 200% of the then Series F-2 Conversion Price and the average daily trading volume of the Common Stock on the primary trading market exceeds 1,000 shares per trading day during the Measurement Period (subject to adjustments), the Company may redeem the then outstanding Series F-2 Preferred, for cash in an amount equal to aggregate Stated Value then outstanding plus accrued but unpaid dividends.

During the three months ended March 31, 2023, the Company issued 60,000 shares of common stock for the conversion of 15 shares of Series F-2 Convertible Preferred Stock and 84,575 shares of common stock for the payment of annual Series F-2 Preferred Stock dividends. As of March 31, 2023 and December 31, 2022, the Company had accrued dividends for Series F-2 preferred shares of $9,179 and $24,267, respectively.

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Warrants

The following table summarizes transactions involving the Company’s outstanding warrants to purchase common stock for the three months ended March 31, 2023:

Warrants<br><br>(Underlying Shares) Weighted-Average Exercise Price Per Share
Outstanding, December 31, 2022 35,586,980 $ 0.46
Warrants issued 1,873,750 0.25
Warrants exchanged (1,025,000 ) 0.25
Warrants expired (7,410,000 ) 0.20
Warrants exercised (973,750 ) $ 0.20
Outstanding, March 31, 2023 28,051,980 $ 0.54

During the three months ended March 31, 2023, the Company entered into various agreements with holders of the Company’s $0.20 strike price warrants, pursuant to which each holder separately agreed to exchange 1,025,000 common stock warrants with a strike price of $0.25 for 973,750 common stock warrants with a strike price of $0.20. During the three months ended March 31, 2023, the Company received approximately $194,750 from the holders for the exercise of the 973,750 warrants, of which $9,500 was included in Accrued Liabilities as of March 31, 2023, pending issuance of 47,500 shares of common stock. The Company measured the effect of the exchange as the excess of fair value of the exchanged instruments over the fair value of the original instruments and recorded a deemed dividend of approximately $65,296.

During the three months ended March 31, 2023, the Company issued 900,000 warrants to Richard Blumberg, a related party, pursuant to a consulting agreement. See Note 7, “Commitments and Contingencies” for additional information.

Management estimated the fair value of the warrants issued utilizing the Black-Scholes Option Pricing model with the following assumptions:

March 31,
2023
Expected term (years) 1.47
Volatility 140.4 %
Risk-free interest rate 3.8 %
Dividend yield 0.0 %

5.   STOCK OPTIONS

The Company’s Stock Plan (the “Plan”) allows for the issuance of incentive stock options, nonqualified stock options, and stock purchase rights. The exercise price of options was determined by the Company’s board of directors, but incentive stock options were granted at an exercise price equal to the fair market value of the Company’s common stock as of the grant date. Options historically granted have generally become exercisable over four years and expire ten years from the date of grant. The plan provides for stock options to be granted up to 10% of the outstanding shares of common stock.

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On February 10, 2023, the Company granted 925,000 stock options to employees, executives and directors of the Company. The stock options, which have exercise prices of $0.2629, will expire on February 9, 2033. One fourth of the stock options vested immediately, while the remaining options will vest over a period of 33 months, beginning on May 10, 2023.

On March 7, 2023, the Company granted 100,000 stock options, which have exercise prices of $0.27 and will expire on March 6, 2033, to Alan Grujic, upon appointing him to the Board of Directors. One fourth of the stock options vested immediately, while the remaining options will vest over a period of 33 months, beginning on June 7, 2023.

During the three months ended March 31, 2023 and 2022, the Company recognized stock-based compensation expense of $107,068 and $43,912, respectively. There was no stock option activity during the three months ended March 31, 2022. The following table summarizes the Company’s stock option activity and related information for the three months ended March 31, 2023 and 2022:

Number of Shares Weighted-Average Exercise Price Per Share Weighted-Average Remaining Contractual Life Aggregate Intrinsic Value of In-the-Money Options<br><br>(in thousands)
Options outstanding as of December 31, 2022 1,500,000 $ 0.49 7.5 years $ -
Options granted 1,025,000 $ 0.26
Options forfeited (186,364 ) $ 0.31
Options outstanding as of March 31, 2023 2,338,636 $ 0.41 6.9 years $ -
Options exercisable as of March 31, 2023 1,656,205 $ 0.45 5.8 years $ -
Number of Shares Weighted-Average Exercise Price Per Share Weighted-Average Remaining Contractual Life Aggregate Intrinsic Value of In-the-Money Options<br><br>(in thousands)
--- --- --- --- --- --- --- ---
Options outstanding as of March 31, 2022 1,500,000 $ 0.49 8.3 years $ 240
Options exercisable as of March 31, 2022 1,045,227 $ 0.49 8.3 years $ 167

The aggregate intrinsic value is calculated as the difference between the Company’s closing stock price as of March 31, 2023 and the exercise price, multiplied by the number of options. As of March 31, 2023, there was $193,947 of unrecognized stock-based compensation expense. Such costs are expected to be recognized over a weighted average period of approximately two years. The weighted-average fair value of awards granted was $0.26 and nil during the three months ended March 31, 2023 and 2022, respectively.

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The Company recognizes compensation expense for stock option awards on a straight-line basis over the applicable service period of the award. The service period is generally the vesting period. The Black-Scholes option pricing model and the following weighted-average assumptions were used to estimate the fair value of awards granted during the three months ended March 31, 2023:

March 31,
2023
Expected term (years) 10.0
Volatility 366.4 %
Risk-free interest rate 3.8 %
Dividend yield 0.0 %

6.   LITIGATION AND CLAIMS

From time to time, the Company may be involved in various legal proceedings and claims arising in the ordinary course of business. Management believes that the dispositions of these matters, individually or in the aggregate, are not expected to have a material adverse effect on the Company’s financial condition. However, depending on the amount and timing of such disposition, an unfavorable resolution of some or all of these matters could materially affect the future results of operations or cash flows in a particular year.

As of March 31, 2023, and December 31, 2022, there was no accrual recorded for any potential losses related to pending litigation.

7. COMMITMENTS AND CONTINGENCIES

Operating Leases

The below table presents total operating lease right-of-use assets and lease liabilities as of March 31, 2023 and December 31, 2022:

(in thousands)
March 31,<br><br>2023 December 31,<br><br>2022
Operating lease right-of-use assets $ 285 $ 303
Operating lease liabilities $ 307 $ 325

The table below presents the maturities of operating lease liabilities as of March 31, 2023:

(in thousands)
Operating
Leases
2023 (remaining) $ 84
2024 115
2025 118
2026 50
Total future lease payments 367
Less: discount (60 )
Total lease liabilities $ 307
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The table below presents the weighted-average remaining lease term and discount rate used in the calculation of operating lease right-of-use assets and lease liabilities as of March 31, 2023 and December 31, 2022:

(in thousands)
March 31,<br><br>2023 **** December 31,<br><br>2022
Weighted average remaining lease term (years) 3.2 3.4
Weighted average discount rate 11.4 % 11.4 %

Related Party Contracts

On June 5, 2016, the Company entered into a license agreement with Shenghuo Medical, LLC pursuant to which the Company granted Shenghuo an exclusive license to manufacture, sell and distribute LuViva in Taiwan, Brunei Darussalam, Cambodia, Laos, Myanmar, Philippines, Singapore, Thailand, and Vietnam. Shenghuo was already the Company’s exclusive distributor in China, Macau and Hong Kong, and the license extended to manufacturing in those countries as well. Under the terms of the license agreement, once Shenghuo was capable of manufacturing LuViva in accordance with ISO 13485 for medical devices, Shenghuo would pay the Company a royalty equal to $2.00 or 20% of the distributor price (subject to a discount under certain circumstances), whichever is higher, per disposable distributed within Shenghuo’s exclusive territories. In connection with the license grant, Shenghuo was to underwrite the cost of securing approval of LuViva with Chinese Food and Drug Administration. At its option, Shenghuo also would provide up to $1.0 million in furtherance of the Company’s efforts to secure regulatory approval for LuViva from the U.S. Food and Drug Administration, in exchange for the right to receive payments equal to 2% of the Company’s future sales in the United States, up to an aggregate of $4.0 million. Pursuant to the license agreement, Shenghuo had the option to have a designee appointed to the Company’s board of directors (current director Richard Blumberg is the designee).

On September 6, 2016, the Company entered into a royalty agreement with one of its directors, John Imhoff, and another stockholder, Dolores Maloof, pursuant to which the Company sold to them a royalty of future sales of single-use cervical guides for LuViva. Under the terms of the royalty agreement, and for consideration of $50,000, the Company will pay them an aggregate perpetual royalty initially equal to $0.10, and from and after October 2, 2016, equal to $0.20, for each disposable that the Company sells (or that is sold by a third party pursuant to a licensing arrangement with the Company).

On January 22, 2020, the Company entered into a promotional agreement with Blumberg & Bowles Consulting, LLC (“BB”), which is partially owned by Mr. Blumberg (a related party), to provide investor and public relations services for a period of two years. As compensation for these services, the Company agreed to issue a total of 5,000,000 warrants, broken into four tranches of 1,250,000. The warrants have a strike price of $0.25 and are subject to vesting based upon the close of the Series D offering and a minimum share price based on the 30-day VWAP. If the minimum share price per the terms of the agreement is not achieved, the warrants will expire three years after the issuance date. The fair value of the warrants was estimated utilizing the Black-Scholes option pricing model on the grant date of January 22, 2020.  As a result of this agreement, the Company recognized nil and $79,444 of consulting expense during the three months ended March 31, 2023 and 2022, respectively. Unrecognized consulting expense to be recognized under this agreement was nil as of March 31, 2023.

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On March 10, 2021, the Company entered into a consulting agreement with Richard Blumberg. As a result of the consulting agreement Mr. Blumberg provided $350,000, which was recorded to subscription receivable, to the Company in exchange for the following: (1) on September 26, 2021, 900,000 3-year warrants with an exercise price of $0.30 and 400,000 shares of common stock; (2) on March 26, 2022, 900,000 3-year warrants with an exercise price of $0.40 and 400,000 shares of common stock; (3) on September 26, 2022, 900,000 3-year warrants with an exercise price of $0.50 and 400,000 shares of common stock; and (4) on March 26, 2023, 900,000 3-year warrants with an exercise price of $0.60 and 400,000 shares of common stock. The Company estimated the fair value of the warrants using the Black-Scholes option pricing model and the following assumptions:

Expected term 3.0 Years
Volatility 108.7 %
Risk-free interest rate 4.3 %
Dividend yield 0.0 %

During the three months ended March 31, 2023 and 2022, the Company recognized $295,420 and nil expense for the warrants issued to Mr. Blumberg, respectively. Total unrecognized expense for the warrants was $445,097 as of March 31, 2022. During the three months ended March 31, 2023 and 2022, the Company recognized $65,611 and nil expense for the shares of common stock due to Mr. Blumberg. As the remaining shares had not been issued as of March 31, 2023, the Company estimated the total amount of expense using the closing price of the Company’s stock as of March 31, 2023.

During the year ended December 31, 2021, the consulting agreement was amended to clarify that $350,000 is not intended to be debt and will not be required to be repaid in cash. The Company confirmed an obligation to provide Mr. Blumberg with 950,000 fully transferrable warrants, which will expire on January 1, 2024 and have an exercise price of $0.25. Issuance of the warrants owed to Mr. Blumberg for his services was predicated on the Company receiving funding receipts of $1,000,000, whether from a financing, series of financing, or gross sales. The amended agreement clarified that the warrants issued to Mr. Blumberg are compensation for services which involve investor relations, marketing services and assisting the Company with obtaining financing. During the year ended December 31, 2022, the Company obtained the requisite funding receipts and estimated the fair value of the warrants using the Black-Scholes option pricing model with the following assumptions:

Expected term 1.3 Years
Volatility 164.6 %
Risk-free interest rate 4.1 %
Dividend yield 0.0 %

During the three months ended March 31, 2023 and 2022, expense recorded for the warrants was nil. Unrecognized expense to be recognized for the warrants was nil as of March 31, 2023.

On August 24, 2022, the Company entered into an agreement with Ironstone Capital Corp. and Alan Grujic (the “Advisory Group”) whereby the Advisory Group agreed to perform marketing and investor relations services over a term of twelve months, commencing on the closing of a financing of at least $2.5 million. In consideration for these services, the Company issued 800,000 warrants with an exercise price of $0.50 to Mr. Grujic, which were due within 10 business days of closing the financing transaction (the “Transaction”) that took place in September 2022. In the event the Company’s 20 trading day variable weighted average price (“VWAP”) exceeds $1.00 within one year of the closing of the financing, the Company will issue 600,000 warrants with an exercise price of $0.75 to Mr. Grujic. In the event the Company’s 20 trading day VWAP exceeds $1.50, the Company will issue an additional 600,000 warrants to Mr. Grujic. Once issued, the warrants vest immediately and will expire two years from the date of issuance. If the Company’s U.S. clinical study is not completed and filed with the U.S. FDA or if the Chinese NMPA (formerly Chinese FDA) approval is not granted by each due date for reaching each respective pricing milestone, then the due date for reaching each milestone shall be extended by six months. Pursuant to the agreement, the Company also agreed to pay the Advisory Group $2,000 per month for 12 months, starting the month after the closing of the Transaction.

The Company estimated the fair value of the 800,000 warrants issued in September of 2022 using the Black-Scholes option pricing model. Unrecognized expense for the warrants was nil as of March 31, 2023. Expense recorded for the warrants was nil during the three months ended March 31, 2023 and 2022.

The Company estimated the fair value of the warrants with market conditions using the Binomial Lattice model and recognized expense of $45,172 for the warrants (representing the pro rata expense over the expected term of the warrants) during the three months ended March 31, 2023.

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Other Commitments

On July 24, 2019, the Company agreed to grant Shandong Yaohua Medical Instrument Corporation (“SMI”) (1) exclusive manufacturing rights, excepting the disposable cervical guides for the Republic of Turkey, and the final assembly rights for Hungary, and (2) exclusive distribution and sales for LuViva in jurisdictions, subject to the terms and conditions described below.

First, SMI shall complete the payment for parts, per the purchase order, for five additional LuViva devices. Second, in consideration for the $885,144 that the Company received, SMI will receive 12,147 shares of common stock. Third, SMI shall honor all existing purchase orders it has executed to date with the Company, in order to maintain jurisdiction sales and distribution rights. If SMI needs to purchase cervical guides, then it will do so at a cost including labor, plus ten percent markup. The Company will provide 200 cervical guides at no cost for the clinical trials. Fourth, the Company and SMI will make best efforts to sell devices after CFDA approval. With an initial estimate of year one sales of 200 LuViva devices; year two sales of 500 LuViva devices; year three sales of 1,000 LuViva devices; and year four sales of 1,250 LuViva devices. Fifth, SMI shall pay for entire costs of securing approval of LuViva with the Chinese FDA. Sixth, SMI shall arrange, at its sole cost, for a manufacturer in China to build tooling to support manufacturing. In addition, SMI retains the right to manufacture for China, Hong Kong, Macau and Taiwan, where SMI has distribution and sales rights. For each single-use cervical guide sold by SMI in the jurisdictions, SMI shall transfer funds to escrow agent at a rate of $1.90 per device chip. If within 18 months of the license’s effective date, SMI fails to achieve commercialization of LuViva in China, SMI shall no longer have any rights to manufacture, distribute or sell LuViva. Commercialization is defined as: filing an application with the Chinese FDA for the approval of LuViva; any assembly or manufacture of the devices or disposables that begins in China; and purchase of at least 10 devices and disposables for clinical evaluations and regulatory use and or sales in the jurisdictions.

On August 12, 2021, the Company executed an amendment to its agreement with SMI. Under the terms of the amended agreement, the parties agreed that if by October 30, 2022, SMI fails to achieve commercialization of LuViva in China, SMI shall no longer have any rights to manufacture, distribute or sell LuViva. On March 3, 2023, the Company entered into a third amendment with SMI pursuant to which the Company extended the deadline for SMI to achieve commercialization of LuViva in China to April 30, 2024.

Contingencies

The current outbreak of the Coronavirus SARS-CoV-2, the pathogen responsible for COVID-19, which has already had an impact on financial markets, could result in additional repercussions to the Company’s operating business, including but not limited to, the sourcing of materials for product candidates, manufacture of supplies for preclinical and/or clinical studies, delays in clinical operations, which may include the availability or the continued availability of patients for trials due to such things as quarantines, conduct of patient monitoring and clinical trial data retrieval at investigational study sites.

The future impact of the outbreak is highly uncertain and cannot be predicted, and the Company cannot provide any assurance that the outbreak will not have a material adverse impact on the Company’s operations or future results or filings with regulatory health authorities. The extent of the impact to the Company, if any, will depend on future developments, including actions taken to contain the coronavirus.

The Russia-Ukraine conflict and the sanctions imposed in response to this crisis could result in repercussions to our operating business, including delays in obtaining regulatory approval to market our products in Russia. The future impact of the conflict is highly uncertain and cannot be predicted, and we cannot provide any assurance that the conflict will not have a material adverse impact on our operations or future results or filings with regulatory health authorities.

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8.   NOTES PAYABLE

Short Term Notes Payable

On July 4, 2022, the Company entered into a premium finance agreement to finance its insurance policies totaling $123,889. Monthly payments of $11,409 are due on the note, including interest incurred at a rate of 5.0%. The note, which matures on May 4, 2023, had an outstanding balance of $22,770 and $56,569 as of March 31, 2023 and December 31, 2022, respectively.

During 2019, the Company issued promissory notes to Mr. Cartwright totaling $45,829. The notes were initially issued with 0% interest, however interest increased to 6.0% interest 90 days after the Company received $1,000,000 in financing proceeds. As of March 31, 2023, the notes had been repaid in full.

The following table summarizes short-term notes payable, including related parties:

Short-term notes payable, including related parties
March 31,<br><br>2023 December 31,<br><br>2022
Dr. Cartwright $ - $ 1
Premium Finance (insurance) 23 57
Short-term notes payable $ 23 $ 58

As of March 31, 2023 and December 31, 2022, the short-term notes payable due to related parties was nil and $619, respectively.

9.  AUCTUS CONVERTIBLE DEBT

On December 17, 2019, the Company entered into a securities purchase agreement and convertible note with Auctus. The convertible note issued to Auctus was for a total of $2.4 million. The note may not have been prepaid in whole or in part except as otherwise explicitly allowed. Any amount of principal or interest on the note which was not paid when due shall bore interest at the rate of the lessor of 24% or the maximum permitted by law (the “default interest”). The variable conversion prices equaled the lesser of: (i) the lowest trading price on the issue date, and (ii) the variable conversion price. The variable conversion price was 95% multiplied by the market price (the market price means the average of the five lowest trading prices during the period beginning on the issue date and ending on the maturity date), minus $0.04 per share, provided however that in no event could the variable conversion price be less than $0.15. If an event of default under this note occurred and/or the note was not extinguished in its entirety prior to December 17, 2020, the $0.15 price floor no longer applied.

On September 1, 2022, the Company agreed to exchange certain debt and equity owned by Auctus pursuant to an Exchange Agreement between the Company and Auctus (the “Exchange Agreement”). Immediately prior to the Exchange Agreement, Auctus held $1,228,183 of debt, including an early prepayment penalty of $350,000, default premiums of $281,256, and $91,555 in interest payable. Auctus agreed to reduce the amount owed to $710,911 and to revert the May 27, 2020 note to its original term. Additionally, Auctus agreed to exchange 8,775,000 warrants that were priced between $0.15 and $0.20 and the $350,000 prepayment penalty for 3,900,000  shares of common stock, warrants to purchase 3,900,000  shares of common stock at $0.50 per share and warrants to purchase 3,900,000  shares of common stock at $0.65 per share (the “Exchange”). As a result of the Exchange Agreement, Auctus forgave a default penalty of $225,444. Following the Exchange and Repayment, the Company will make payments to Auctus in four installments, over an 18-month period.

The total balance of Auctus convertible debt outstanding was $224,528 and $326,016 as of March 31, 2023 and December 31, 2022, respectively. As of March 31, 2023, the balance is included within “Short-term convertible notes payable” on the unaudited consolidated balance sheet. As of December 31, 2022, $230,482 is included within “Short-term convertible notes payable” and $95,534 is included within “Long-term convertible debt” on the consolidated balance sheet.

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10.  LONG-TERM DEBT

Long-term Debt – Related Parties ****

On July 14, 2018, the Company entered into an exchange agreement with Dr. Faupel, whereby Dr. Faupel agreed to exchange outstanding amounts due to him for loans, interest, bonus, salary and vacation pay in the amount of $660,895 for a $207,111 promissory note dated September 4, 2018. On July 20, 2018, the Company entered into an exchange agreement with Dr. Cartwright, whereby Dr. Cartwright agreed to exchange outstanding amounts due to him for loans, interest, bonus, salary and vacation pay in the amount of $1,621,499 for a $319,000 promissory note dated September 4, 2018 that incurs interest at a rate of 6% per annum.

On July 24, 2019, Dr. Faupel and Mr. Cartwright agreed to an addendum to the debt restructuring exchange agreement. Pursuant to this modification Dr. Faupel and Mr. Cartwright agreed to extend the note to be due in full on the third anniversary of that agreement.

On February 19, 2021, the Company entered into new promissory notes replacing the original notes from September 4, 2018, with Mark Faupel and Gene Cartwright. For Dr. Cartwright the principal amount on the new note was $267,085, matures on February 18, 2023, and will accrue interest at a rate of 6.0%. For Dr. Faupel the principal amount on the new note was $153,178, matures on February 18, 2023, and will accrue interest at a rate of 6.0%. The modifications extended the maturity date on both of the notes.

On February 19, 2021, the Company exchanged $100,000 and $85,000 of long-term debt for Dr. Cartwright and Dr. Faupel in exchange for 100 and 85 shares of Series F-2 Preferred Stock, respectively.

On February 18, 2023, the Company amended the terms of the promissory notes held by Mark Faupel and Gene Cartwright. Under the terms of the new agreements, the promissory notes will mature on February 18, 2025.

The tables below summarize the outstanding balance of long-term debt owed to Dr. Faupel and Dr. Cartwright:

For Dr. Faupel:
Salary $ 134
Bonus 20
Vacation 95
Interest on compensation 67
Loans to Company 196
Interest on loans 149
Total outstanding prior to exchange 661
Amount forgiven in prior years (454 )
Amount exchanged for Series F-2 Preferred Stock (85 )
Total interest accrued through December 31, 2022 48
Balance outstanding at December 31, 2022 $ 170
Interest accrued through March 31, 2023 2
Balance outstanding at March 31, 2023 $ 172
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For Dr.Cartwright
--- --- --- ---
Salary $ 337
Bonus 675
Loans to Company 528
Interest on loans 81
Total outstanding prior to exchange 1,621
Amount forgiven in prior years (1,302 )
Amount exchanged for Series F-2 Preferred Stock (100 )
Total interest accrued through December 31, 2022 78
Balance outstanding at December 31, 2022 $ 297
Payments on outstanding debt (10 )
Interest accrued through March 31, 2023 4
Balance outstanding at March 31, 2023 $ 291

On March 22, 2021, the Company entered into an exchange agreement with Richard Fowler. As of December 31, 2020, the Company owed Mr. Fowler $546,214 ($412,624 in deferred salary and $133,590 in accrued interest). The Company exchanged $50,000 of the amount owed of $546,214 for 50 share of Series F-2 Preferred Shares (convertible into 200,000 shares of common stock), and a $150,000 unsecured note. The note accrues interest at the rate of 6% (18% in the event of default) beginning on March 22, 2022 and is payable in monthly installments of $3,580 for four years, with the first payment due on March 15, 2022. The effective interest rate of the note is 6.18%.

During the three months ended March 31, 2023, Mr. Fowler forgave $17,721 of the outstanding balance of deferred compensation and, as of March 31, 2023, may forgive up to $180,889 of the remaining deferred compensation if the Company complies with the repayment plan described above. The reductions in the outstanding balance met the criteria for troubled debt because the future undiscounted cash flows under the new terms are less than the carrying value of the original debt. The basic criteria are that the borrower is troubled, i.e., they are having financial difficulties, and a concession is granted by the creditor. As of March 31, 2023, the outstanding principal amount owed on the note was $110,811, of which $37,382 is included in “Current portion of long-term debt, related parties” and the remainder is included in “Long-term debt, related parties” within the unaudited consolidated balance sheets. As of December 31, 2022, the outstanding principal amount owed on the note was $119,814, of which $36,830 is included in “Current portion of long-term debt, related parties” and the remainder is included in “Long-term debt, related parties” within the unaudited consolidated balance sheets.

Future debt obligations at March 31, 2023 for debt owed to related parties is as follows:

Year Amount
2023 (remaining) 28
2024 39
2025 504
2026 3
Total $ 574
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10% Senior Unsecured Convertible Debenture

On May 17, 2021, the Company issued 10% Senior Unsecured convertible debentures to investors, which mature on May 17, 2024 (the “Maturity Date”). The Company subscribed $1,130,000 of the $1,000 convertible debentures. The terms of the debentures are as follows: 1) the principal amount of some or all of the convertible debentures and accrued interest are convertible into shares of common stock at the holder’s option, at a price of $0.50 per common stock share (the “conversion price”), subject to adjustment in certain events, at any time prior to maturity date; 2) upon successful uplist to a U.S. National Exchange, the note will automatically convert into the uplisting financing; 3) each debenture unit will have a right to 1,000 warrants for shares of common stock, warrants have an exercise price of $0.80 and an expiration date of May 17, 2023; 4) if a Change of Control (as defined in the Convertible Debenture Certificate) occurs prior to the Maturity Date, unless the holder elects in writing to convert the Convertible Debentures into shares of common stock, the Company will repay in cash upon the closing of such Change of Control all outstanding principal and accrued interest under each Convertible Debenture plus a Change of Control premium equal to an additional 3% of the outstanding principal sum under such Convertible Debenture. Prior to the closing of an Change of Control, in lieu of repayment as set forth in the preceding sentence, the holder has the right to elect in writing to convert, effective immediately prior to the effective date of such Change of Control, all outstanding principal and accrued Interest under the Convertible Debentures into shares of common stock at the Conversion Price; 5) Subject to a holder’s option of electing conversion prior to the Redemption Date (as such term is defined below), on or after the date that is 24 months from the Closing Date if the daily volume weighted average trading price of the shares of common stock is $1.50 per share of common stock or more for each trading day over a 30 consecutive trading day period, the Company may, at any time (the “Redemption Date”), at its option, redeem all, or any portion of the Convertible Debentures for either: (i) a cash payment (in the form of a certified cheque or bank draft) that is equal to all outstanding principal and accrued interest under each Convertible Debenture up to the Redemption Date; or (ii) by issuing and delivering shares of common stock to the holders of Convertible Debentures at a deemed price of $0.50 per share of common stock that is equal to all outstanding principal and accrued interest under each Convertible Debenture up to the Redemption Date, or any combination of (i) or (ii), upon not less than 30 days and not more than 60 days prior written notice in the manner provided in the Debenture Certificate, to the holder of Convertible Debentures.

At March 31, 2023 and December 31, 2022, the balance due on the 10% Senior Secured Convertible Debenture was $1,130,000 and total accrued interest was $29,712 and $58,494, respectively. The bond payable discount and unamortized debt issuance costs as of March 31, 2023 and December 31, 2022 are presented below (in thousands):

March 31,<br><br>2023 December 31,<br><br>2022
10% Senior Unsecured Convertible Debentures $ 1,130 $ 1,130
Debt Issuance costs to be amortized (33 ) (40 )
Debt Discount (115 ) (140 )
Senior Secured Convertible Debenture $ 982 $ 950

As of March 31, 2023 and December 31, 2022, the entire balance of the Senior Secured Convertible Debenture is included in “Long-term convertible debt” within the consolidated balance sheets.

6% Unsecured Promissory Note

On July 9, 2020, we entered into an exchange agreement with Mr. Bill Wells, a former employee. In lieu of agreeing to dismiss approximately half of what was owed to him, or $220,000, Mr. Wells received the following: (i) cash payment totaling $20,000; (ii) an unsecured promissory note in the amount of $90,000, to be executed within 30 days of completing new financing(s) totaling at least $3.0 million and (iii) 66,000 common  stock options that vest at a rate of 3,667 per month and have a $0.49 exercise price (if two consecutive payments in (ii) are not made the stock options will be canceled and a cash payment will be required). Pursuant to the agreement, Mr. Wells agreed that the total amount forgiven of $110,000 shall be prorated according to the amount paid to him.

During the year ended December 31, 2021, the Company closed a financing round that exceeded the $3.0 million threshold and issued an unsecured promissory note in the amount of $97,052 to Mr. Wells. The note, for which monthly installment payments of $5,000 are due, matures 18 months after the issuance date and incurs interest at a rate of 6.0% per annum. During the three months ended March 31, 2023 and 2022, the Company made principal payments of $17,052 and $35,000 to Mr. Wells, respectively. As a result of these payments, Mr. Wells forgave equivalent amounts of the remaining amount of compensation. The reductions in the outstanding balance met the criteria for troubled debt because the future undiscounted cash flows under the new terms are less than the carrying value of the original debt. The basic criteria are that the borrower is troubled, i.e., they are having financial difficulties, and a concession is granted by the creditor.

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As of March 31, 2023 and December 31, 2022, the outstanding principal balance on the note was nil and $17,052, respectively. As of December 31, 2022, the balance is included in “Current portion of long-term debt” within the consolidated balance sheet. As of March 31, 2023 and December 31, 2022, accrued interest on the note was nil and $5,139, respectively.

11.  INCOME (LOSS) PER SHARE OF COMMON STOCK

Basic net income (loss) per share attributable to common stockholders, amounts are computed by dividing the net income (loss) plus preferred stock dividends and deemed dividends on preferred stock by the weighted average number of shares outstanding during the year.

Diluted net income (loss) per share attributable to common stockholders amounts are computed by dividing the net income (loss) plus preferred stock dividends, deemed dividends on preferred stock, after-tax interest on convertible debt and convertible dividends by the weighted average number of shares outstanding during the year, plus Series C, Series D, Series E, Series F and Series F-2 convertible preferred stock, convertible debt, convertible preferred dividends and warrants convertible into shares of common stock.

The following table sets forth pertinent data relating to the computation of basic and diluted net loss per share attributable to common stockholders (in thousands, except for per-share data):

March 31,
2023 2022
Net loss (969 ) (1,055 )
Basic weighted average number of shares outstanding 49,297 20,683
Net loss per share (basic) (0.02 ) (0.05 )
Diluted weighted average number of shares outstanding 49,297 20,683
Net loss per share (diluted) (0.02 ) (0.05 )
Dilutive equity instruments (number of equivalent units):
Stock options 2,092 917
Preferred stock 1,373 15,572
Convertible debt 203 2,018
Warrants - 13,609
Total Dilutive instruments 3,668 32,116

For periods of net loss, basic and diluted earnings per share are the same as the assumed exercise of warrants and the conversion of convertible debt are anti-dilutive.

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12.  SUBSEQUENT EVENTS

On April 3, 2023, the Company issued 5,888 common shares for Preferred Series F-2 dividends.

On April 10, 2023, the Company issued 29,821 common shares for Preferred Series F-2 dividends.

On April 14, 2023, the Company issued 47,500 common shares for warrant exercises.

On April 18, 2023, the Company issued 32,693 common shares for Series D dividends.

On April 26, 2023, the Company issued 40,000 common shares for the conversion of 10 Series F Preferred shares and 206 common shares for accrued Series F Preferred dividends.

On April 27, 2023, the Company issued 40,000 common shares for the conversion of 10 Series F Preferred shares and 213 common shares for accrued Series F Preferred dividends.

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ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

In addition to historical information, this Quarterly Report on Form 10-Q may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act), which provides a “safe harbor” for forward-looking statements made by us. All statements, other than statements of historical facts, including statements concerning our plans, objectives, goals, beliefs, business strategies, future events, business conditions, results of operations, financial position, business outlook, business trends, and other information, may be forward-looking statements. Words such as “might,” “will,” “may,” “should,” “estimates,” “expects,” “continues,” “contemplates,” “anticipates,” “projects,” “plans,” “potential,” “predicts,” “intends,” “believes,” “forecasts,” “future,” and variations of such words or similar expressions are intended to identify forward-looking statements. The forward-looking statements are not historical facts, and are based upon our current expectations, beliefs, estimates and projections, and various assumptions, many of which, by their nature, are inherently uncertain and beyond our control. Our expectations, beliefs, estimates, and projections are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that management’s expectations, beliefs, estimates, and projections will occur or can be achieved and actual results may vary materially from what is expressed in or indicated by the forward-looking statements.

These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or anticipated results, including those that may be set forth under “Risk Factors” below and elsewhere in this report, as well as in our annual report on Form 10-K for the year ended December 31, 2022 and this quarterly report on Form 10-Q. Examples of these uncertainties and risks include, but are not limited to:

· access to sufficient debt or equity capital to meet our operating and financial needs;
· the extent of dilution of the holdings of our existing stockholders upon the issuance, conversion or exercise of securities issued as part of our capital raising efforts;
· the extent to which certain debt holders may call the notes to be paid;
· the effectiveness and ultimate market acceptance of our products and our ability to generate sufficient sales revenues to sustain our growth and strategy plans;
· whether our products in development will prove safe, feasible and effective;
· whether and when we or any potential strategic partners will obtain required regulatory approvals in the markets in which we plan to operate;
· our need to achieve manufacturing scale-up in a timely manner, and our need to provide for the efficient manufacturing of sufficient quantities of our products;
· the lack of immediate alternate sources of supply for some critical components of our products;
· our ability to establish and protect the proprietary information on which we base our products, including our patent and intellectual property position;
· the current outbreak of the Coronavirus SARS-CoV-2, the pathogen responsible for COVID-19, which has already had an impact on financial markets, could result in additional repercussions in our operating business, including but not limited to, the sourcing of materials for product candidates, manufacture of supplies for preclinical and/or clinical studies, delays in clinical operations, which may include the availability or the continued availability of patients for trials due to such things as quarantines, conduct of patient monitoring and clinical trial data retrieval at investigational study sites;
· The impact of the conflict between Russia and Ukraine on economic conditions in general and on our business operations;
· the need to fully develop the marketing, distribution, customer service and technical support and other functions critical to the success of our product lines;
· the dependence on potential strategic partners or outside investors for funding, development assistance, clinical trials, distribution and marketing of some of our products; and
· other risks and uncertainties described from time to time in our reports filed with the SEC.
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These forward-looking statements reflect our management’s beliefs and views with respect to future events and are based on estimates and assumptions as of the date of this filing and are subject to risks and uncertainties. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. Given these uncertainties, you should not place undue reliance on these forward-looking statements.

Forward-looking statements speak only as of the date the statements are made. We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information except to the extent required by applicable securities laws. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect thereto or with respect to other forward-looking statements.

The following discussion should be read in conjunction with our financial statements and notes thereto included elsewhere in this report.

OVERVIEW

We are a medical technology company focused on developing innovative medical devices that have the potential to improve healthcare. Our primary focus is the sales and marketing of our LuViva® Advanced Cervical Scan non-invasive cervical cancer detection device. The underlying technology of LuViva primarily relates to the use of biophotonics for the non-invasive detection of cancers. LuViva is designed to identify cervical cancers and precancers painlessly, non-invasively and at the point of care by scanning the cervix with light, then analyzing the reflected and fluorescent light.

LuViva provides a less invasive and painless alternative to conventional tests for cervical cancer screening and detection. Additionally, LuViva improves patient well-being not only because it eliminates pain, but also because it is convenient to use and provides rapid results at the point of care. We focus on two primary applications for LuViva: first, as a cancer screening tool in the developing world, where infrastructure to support traditional cancer-screening methods is limited or non-existent, and second, as a triage following traditional screening in the developed world, where a high number of false positive results cause a high rate of unnecessary and ultimately costly follow-up tests.

We are a Delaware corporation, originally incorporated in 1992 under the name “SpectRx, Inc.” and, on February 22, 2008, changed our name to Guided Therapeutics, Inc. At the same time, we renamed our wholly owned subsidiary, InterScan, which originally had been incorporated as “Guided Therapeutics.”

Since our inception, we have raised capital through the public and private sale of debt and equity, funding from collaborative arrangements, and grants.

Our prospects must be considered in light of the substantial risks, expenses and difficulties encountered by entrants into the medical device industry. This industry is characterized by an increasing number of participants, intense competition and a high failure rate. We have experienced operating losses since our inception and, as of March 31, 2023 we have an accumulated deficit of approximately $148.3 million. To date, we have engaged primarily in research and development efforts and the early stages of marketing our products. We do not have significant experience in manufacturing, marketing or selling our products. We may not be successful in growing sales for our products. Moreover, required regulatory clearances or approvals may not be obtained in a timely manner, or at all. Our products may not ever gain market acceptance and we may not ever generate significant revenues or achieve profitability. The development and commercialization of our products requires substantial development, regulatory, sales and marketing, manufacturing and other expenditures. We expect our operating losses to continue for the foreseeable future as we continue to expend substantial resources to complete commercialization of our products, obtain regulatory clearances or approvals, build our marketing, sales, manufacturing and finance capabilities, and conduct further research and development.

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Our product revenues to date have been limited. During the three months ended March 31, 2023 and 2022, the majority of our revenues were from the sale of components of our LuViva devices and disposables. We expect that the majority of our revenue in the near future will be derived from sales of LuViva devices and disposables.

Current Demand for LuViva

Based on written agreements and ongoing discussions with our distributors, we currently hold and expect to generate additional purchase orders for approximately $3.0 million in LuViva devices and disposables and expect those purchase orders to result in actual sales of $1.5 to $2.5 million throughout 2023 and 2024, representing what we view as current demand for our products. We cannot be assured that we will generate all or any of these additional purchase orders, or that existing orders will not be canceled by the distributors or that parts to build product will be available to meet demand, such that existing orders will result in actual sales. Because we have a short history of sales of our products, we cannot confidently predict future sales of our products beyond this time frame and cannot be assured of any particular number of sales. Accordingly, we have not identified any particular trends with regard to sales of our products. In order to increase demand for LuViva, the Company, in 2023 and 2024, is focused on three primary markets: the United States, China and Europe.

In the United States, the Company is actively pursuing FDA approval by initiating a clinical trial protocol involving approximately 400 study participants. The protocol was drafted with input from FDA and at least two prestigious clinical centers that will participate in the study. Additional clinical centers may be added if needed to meet the study’s enrollment criteria. Budgets have been agreed to with both institutions. The LuViva devices have been prepared and have passed bench testing in order to begin the study. On July 20, 2022 we announced that the study had been approved by the designated central Institutional Review Board (“IRB”) and because of that, we initially expected to begin in September or October of 2022. Below is a summary of progress made toward starting the study after delays due primarily to Covid-19, the resulting staffing shortages at medical institutions and the back log of clinical studies that were put on the back burner in deference to Covid-19 related studies.

1) Winship Cancer Center at Emory University (“Emory”) - On November 9, 2022, we received a letter from Emory’s IRB that we were conditionally approved to start the study, pending responses to three questions, which we provided to that IRB on November 10, 2022. We were subsequently notified by Emory’s scientific review committee and Institutional Review Board that our responses to these three questions were satisfactory, and we plan to begin enrolling patients in the second quarter of 2023.
2) University of Alabama at Birmingham (“UAB”) – In November of 2022 we were granted full scientific committee approval and local IRB approval. We signed the clinical research agreement with UAB on December 15, 2022 and began on site orientation and training in March of 2023. Recruiting of test subjects began in April 2023 and the first subjects were enrolled and tested on May 5, 2023.
3) The Company has signed a Clinical Trial Agreement and budget with a third site, Great Lakes Bay Health Centers, which has granted the Company approval to start the study, planned for either June or July 2023.
4) A fourth site has been engaged and is currently reviewing the study protocol for approval. A clinical trial agreement and budget have been executed, pending approval to start the study.
5) The U.S. FDA has required, as a part of the quality control for the study, that the pathology diagnoses for patients enrolled in the study be performed at an institution different than the one enrolling patients. To that end, we have signed a research contract with the University of Florida Pathology Department to provide those services.

There can be no assurance that the studies will be completed within the timeframes described above.

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In China, the Chinese NMPA (National Medical Products Approval) study has begun at four clinical sites. According to enrollment tracking reports sent to us by our Chinese partner SMI in March of 2023, testing of over 320 patients has been completed in the ongoing clinical trial for Chinese National Medical Products Administration (NMPA) approval. The trial is expected to be completed in the second quarter of 2023 and submitted for approval shortly thereafter, although there can be no assurance that the study will be completed within this time frame.

In Europe, the Company attended a meeting in Bucharest, Romania on November 3-4, 2021, hosted by our central Eastern and Russian distribution partner. The LuViva system was demonstrated for doctors at a local clinic and the head Ob-Gyn physician’s hospital has accepted the LuViva device into service and is expected to order additional Cervical Guides to test patients as part of her practice.

CRITICAL ACCOUNTING POLICIES

Our material accounting policies, which we believe are the most critical to investors understanding of our financial results and condition, are discussed below. Because we are still early in our enterprise development, the number of these policies requiring explanation is limited. When we begin to generate revenue from different sources, we expect that the number of applicable policies and complexity of the judgments required will increase.

**Revenue Recognition:**ASC 606, Revenue from Contracts with Customers establishes a single and comprehensive framework which sets out how much revenue is to be recognized, and when. The core principle is that a vendor should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the vendor expects to be entitled in exchange for those goods or services. Revenue will now be recognized by a vendor when control over the goods or services is transferred to the customer. In contrast, Revenue based revenue recognition around an analysis of the transfer of risks and rewards; this now forms one of a number of criteria that are assessed in determining whether control has been transferred. The application of the core principle in ASC 606 is carried out in five steps:

Step 1 – Identify the contract with a customer: a contract is defined as an agreement (including oral and implied), between two or more parties that creates enforceable rights and obligations and sets out the criteria for each of those rights and obligations. The contract needs to have commercial substance and it is probable that the entity will collect the consideration to which it will be entitled.

Step 2 – Identify the performance obligations in the contract: a performance obligation in a contract is a promise (including implicit) to transfer a good or service to the customer. Each performance obligation should be capable of being distinct and is separately identifiable in the contract.

Step 3 – Determine the transaction price: transaction price is the amount of consideration that the entity can be entitled to, in exchange for transferring the promised goods and services to a customer, excluding amounts collected on behalf of third parties.

Step 4 – Allocate the transaction price to the performance obligations in the contract: for a contract that has more than one performance obligation, the entity will allocate the transaction price to each performance obligation separately, in exchange for satisfying each performance obligation. The acceptable methods of allocating the transaction price include adjusted market assessment approach, expected cost plus a margin approach, and the residual approach in limited circumstances. Discounts given should be allocated proportionately to all performance obligations unless certain criteria are met and reallocation of changes in standalone selling prices after inception is not permitted.

Step 5 – Recognize revenue as and when the entity satisfies a performance obligation: the entity should recognize revenue at a point in time, except if it meets any of the three criteria, which will require recognition of revenue over time: the entity’s performance creates or enhances an asset controlled by the customer, the customer simultaneously receives and consumes the benefit of the entity’s performance as the entity performs, and the entity does not create an asset that has an alternative use to the entity and the entity has the right to be paid for performance to date.

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**Valuation of Deferred Taxes:**We account for income taxes in accordance with the liability method. Under the liability method, we recognize deferred assets and liabilities based upon anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases. We establish a valuation allowance to the extent that it is more likely than not that deferred tax assets will not be utilized against future taxable income.

Valuation of Equity Instruments Granted to Employee, Service Providers and Investors: On the date of issuance, the instruments are recorded at their fair value as determined using either the Black-Scholes valuation model or Monte Carlo Simulation model.

**Allowance for Accounts Receivable:**We estimate losses from the inability of our distributors to make required payments and periodically review the payment history of each of our distributors, as well as their financial condition, and revise our reserves as a result.

**Inventory Valuation:**All inventories are stated at lower of cost or net realizable value, with cost determined substantially on a “first-in, first-out” basis. Selling, general, and administrative expenses are not inventoried, but are charged to expense when purchased.

RESULTS OF OPERATIONS

COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

Sales Revenue, Cost of Goods Sold and Gross Profit from Devices and Disposables: Revenues from the sale of LuViva devices and disposables for the three months ended March 31, 2023 were $22,049, compared to $4,625 for the three months ended March 31, 2022. Cost of goods sold was $8,789 during the three months ended March 31, 2023, compared to $946 for the three months ended March 31, 2022. The increase in cost of goods sold in the current year was due to higher sales in the current quarter. While we currently hold and expect to generate purchase orders for approximately $3.0 million in LuViva devices and disposables, supply chain issues due to COVID-19 have caused delays in our ability to procure the circuit boards that are needed to ship our products. As of March 31, 2023, we have a deferred revenue balance of $487,882 for sales of our products, which will be recognized as revenue when our products are shipped. We anticipate recognizing revenue for these shipments in 2023 due to increased availability of certain parts.

Research and Development Expenses: Research and development expenses were $7,146 and $21,409 during the three months ended March 31, 2023 and 2022, respectively. The decrease of $14,263, or 66.6%, was primarily due to a decrease in research and development clinical costs and payroll-related expenses.

Sales and Marketing Expenses: Sales and marketing expenses were $73,045 and $40,242 during the three months ended March 31, 2023 and 2022, respectively. The increase of $32,803, or 81.5%, was primarily due to higher travel and payroll-related expenses, including fees paid to consultants.

***General and Administrative Expense:***General and administrative expenses were $776,433 and $386,446 during the three months ended March 31, 2023 and 2022, respectively. The increase of $389,987, or 100.1%, was primarily due to $286,168 of additional consulting and legal expenses recognized, $67,546 of additional expense related to stock options, $28,575 of additional payroll expense (including benefits and taxes), and an overall increase of $7,698 for other general expenses, such as for utilities and supplies.

Interest Expense: Interest expense during the three months ended March 31, 2023 and 2022 was $65,680 and $101,026, respectively. The decrease of $35,346 (or 35.0%), was due to a decrease in debt, which is a result of the Company’s concerted efforts to reduce debt through payoffs and exchanges.

Change in Fair Value of Derivative Liability: The gain due to the change in fair value of the derivative liability during the three months ended March 31, 2023 was $4,818, compared to a loss of $6,240 during the three months ended March 31, 2022. The change in the fair value of the derivative liability was due to changes to our stock price during the period and a reduction in the principal amount of debt owed.

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***Gain from Extinguishment of Debt:***The gain from extinguishment of debt during the three months ended March 31, 2023 and 2022 was $34,773 and $41,232, respectively. The decrease in the current period was due to a lower amount of debt forgiven as the amount of debt owed has declined.

Other Income: Other income for the three months ended March 31, 2023 and 2022 was nil and $2,377, respectively. Other income in the prior period was primarily due to adjustments to accounts payable.

***Deemed Dividend for Warrant Exchanges:***Expense related to deemed dividends was $65,296 and nil for the periods ended March 31, 2023 and 2022, respectively. The expense in the current period was recognized as the excess fair value of warrant instruments exchanged over the fair value of the original warrants.

***Preferred Stock Dividends:***Expense related to preferred stock dividends was $34,758 and $547,923 for the three months ended March 31, 2023 and 2022, respectively. The decrease of $513,165, or 93.7%, was primarily due to payment of a one-time, non-recurring 15% dividends to the Series F and Series F-2 Preferred shareholders, as required by the Series F and Series F-2 Certificate of Designations in the event the Company did not uplist to the NASDAQ stock exchange or file its clinical data intended for FDA approval of LuViva by December 31, 2021 paid in the first quarter of 2022. The decrease was also driven by a lower amount of outstanding preferred stock due to conversion of preferred shares into shares of common stock.

Net Loss: Net loss attributable to common stockholders was $969,508 and $1,054,998 during the three months ended March 31, 2023 and 2022, respectively. The reasons for the fluctuation are outlined above.

There was no income tax benefit recorded for the three months ended March 31, 2023 or 2022, due to recurring net operating losses.

LIQUIDITY AND CAPITAL RESOURCES

Going Concern Considerations

We have incurred significant losses since our inception. At March 31, 2023, the Company had a negative working capital of approximately $1.5 million, accumulated deficit of $148.3 million, and incurred a net loss including preferred dividends of $1.0 million for the three months then ended. Stockholders’ deficit totaled approximately $2.9 million at March 31, 2023, primarily due to recurring net losses from operations.

During the three months ended March 31, 2023, the Company raised $195 thousand from warrant exercises. During the year ended December 31, 2022, the Company raised $3.2 million from the sale of common stock and warrants (net of expenses), and $495 thousand of proceeds from warrant exercises. The Company will need to continue to raise capital in order to provide funding for its operations and FDA approval process. If sufficient capital cannot be raised, the Company will continue its plans of curtailing operations by reducing discretionary spending and staffing levels and attempting to operate by only pursuing activities for which it has external financial support. However, there can be no assurance that such external financial support will be sufficient to maintain even limited operations or that the Company will be able to raise additional funds on acceptable terms, or at all. In such a case, the Company might be required to enter into unfavorable agreements or, if that is not possible, be unable to continue operations, and to the extent practicable, liquidate and/or file for bankruptcy protection.

Liquidity

Since our inception, we have raised capital through the public and private sale of debt and equity, funding from collaborative arrangements, and grants. As of March 31, 2023, we had cash of approximately $1,836,838 and negative working capital of $1,452,698.

Our major cash flows for the three months ended March 31, 2023 consisted of cash used by operating activities of $498,897 and net cash provided by financing activities of $23,161, which was derived from $194,750 of proceeds from warrant exercises, offset by payments made on outstanding debt.

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Our major cash flows for the three months ended March 31, 2022 consisted of cash used by operating activities of $179,000, cash used for investing activities of $14,000, and net cash provided by financing activities of $275,000, which primarily derived from proceeds received from warrant exercises.

Contingencies

The current outbreak of the Coronavirus SARS-CoV-2, the pathogen responsible for COVID-19, has led to supply chain issues that previously caused delays in our ability to procure the circuit boards needed to ship our products. While we continue to see delays in our ability to obtain necessary parts, we believe we will be able to meet our demand for the remainder of 2023. However, the outbreak could result in additional repercussions in our operating business, including but not limited to, the sourcing of materials for product candidates, manufacture of supplies for preclinical and/or clinical studies, delays in clinical operations, which may include the availability or the continued availability of patients for trials due to such things as quarantines, conduct of patient monitoring and clinical trial data retrieval at investigational study sites.

The Russia-Ukraine conflict and the sanctions imposed in response to this crisis could result in repercussions to our operating business, including delays in obtaining regulatory approval to market our products in Russia. The future impact of the conflict is highly uncertain and cannot be predicted, and we cannot provide any assurance that the conflict will not have a material adverse impact on our operations or future results or filings with regulatory health authorities.

Off-Balance Sheet Arrangements

We have no material off-balance sheet arrangements, no special purpose entities, and no activities that include non-exchange-traded contracts accounted for at fair value.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company, we are not required to provide the information required by this item.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain a set of disclosure controls and procedures designed to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized, and reported, within the time periods specified in Securities and Exchange Commission (“Commission”) rules and forms. We carried out an evaluation under the supervision and with the participation of our management, including the Chief Executive Officer/Acting Chief Financial Officer, Mark Faupel, of the effectiveness of its disclosure controls and procedures. Based on that evaluation, the Chief Executive Officer/Acting Chief Financial Officer has concluded that our disclosure controls and procedures were ineffective as of March 31, 2023, due to the existence of a material weakness in our internal control over financial reporting. The Company currently lacks the resources to properly research and account for complex transactions. While management is currently in the early stages of developing a remediation plan, we have yet to fully remediate this material weakness.

Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March 31, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, the Company may be involved in various legal proceedings and claims arising in the ordinary course of business. Management believes that the disposition of these matters, individually or in the aggregate, is not expected to have a material adverse effect on the Company’s financial condition. See Note 6 to the financial statements for additional information.

ITEM 2. UNREGISTERRED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

During the three months ended March 31, 2023, the Company entered into various agreements with holders of the Company’s $0.20 strike price warrants, pursuant to which each holder separately agreed to exchange 1,025,000 common stock warrants with a strike price of $0.25 for 973,750 common stock warrants with a strike price of $0.20. During the three months ended March 31, 2023, the Company received approximately $194,750 from the holders for the exercise of the 973,750 warrants, of which $9,500 was included in Accrued Liabilities as of March 31, 2023, pending issuance of 47,500 shares of common stock. The Company measured the effect of the exchange as the excess of fair value of the exchanged instruments over the fair value of the original instruments and recorded a deemed dividend of approximately $65,296.

During the three months ended March 31, 2023, the Company issued 900,000 warrants to Richard Blumberg, a related party, pursuant to a consulting agreement. The warrants, which will expire on March 1, 2026, have an exercise price of $0.30.

On February 10, 2023, the Company granted 925,000 stock options to employees, executives and directors of the Company. The stock options, which have exercise prices of $0.2629, will expire on February 9, 2033. One fourth of the stock options vested immediately, while the remaining options will vest over a period of 33 months, beginning on May 10, 2023.

On March 7, 2023, the Company granted 100,000 stock options, which have exercise prices of $0.27 and will expire on March 6, 2033, to Alan Grujic, upon appointing him to the Board of Directors. One fourth of the stock options vested immediately, while the remaining options will vest over a period of 33 months, beginning on June 7, 2023.

ITEM 6. EXHIBITS

Exhibit Number Exhibit Description
3.1 Restated Certificate of Incorporation, as amended through November 3, 2016 (incorporated by reference to Exhibit 3.1 to the annual report on Form 10-K filed March 15, 2016)
3.2 Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 to the current report on Form 8-K, filed March 23, 2012)
3.3 Amended and Restated Certificate of Incorporation, (incorporated by reference to Exhibit 3.1 to the current report on Form 8-K, filed November 15, 2018)
3.4 Certificate of Designation of Preferences, Rights and Limitations of Series D Convertible Preferred Stock (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
3.5 Certificate of Designation of Preferences, Rights and Limitations of Series E Convertible Preferred Stock (incorporated by reference to Exhibit 3.5 to the annual report on Form 10-K filed April 5, 2021)
3.6 Certificate of Designation of Preferences, Rights and Limitations of Series F Convertible Preferred Stock (incorporated by reference to Exhibit 3.6 to the annual report on Form 10-K filed April 5, 2021)
3.7 Certificate of Designation of Preferences, Rights and Limitations of Series F-2 Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the current report on Form 8-K, filed on June 10, 2021)
3.8 Certificate of Designation of Preferences, Rights and Limitations of Series G Convertible Preferred Stock (incorporated by reference to Exhibit 3.8 to the annual report on Form 10-K filed March 30, 2022)
3.9 Certificate of Amendment to the Certificate of Incorporation of Guided Therapeutics, Inc. (incorporated by reference to Exhibit 3.1 to the current report on Form 8-K, filed on January 7, 2022)
4.1* Form of Common Stock Purchase Warrant Issued to Richard Blumberg
10.1* Form of 2023 Warrant Exchange Agreements
10.2* Form of Amended Promissory Note to Gene Cartwright
10.3* Form of Amended Promissory Note to Mark Faupel
31* Rule 13a-14(a)/15d-14(a) Certification
32* Section 1350 Certification
101.1* Interactive data files for Guided Therapeutics, Inc. 's Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, formatted in Inline XBRL: (i) the Condensed Consolidated Balance Sheets (unaudited); (ii) the Condensed Consolidated Statements of Income (unaudited); (iii) the Condensed Consolidated Statements in Stockholders' Deficit (unaudited); (iv) the Condensed Consolidated Statements of Cash Flows (unaudited); and (v) the Notes to the Condensed Consolidated Financial Statements (unaudited).
104 The cover page from Guided Therapeutics, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 (formatted in Inline XBRL and included in Exhibit 101)

______________

*Filed herewith

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

GUIDED THERAPEUTICS, INC.
By: /s/ Mark Faupel
Mark Faupel
President, Chief Executive Officer, Chief Operating Officer and Acting Chief Financial Officer

Date: May 15, 2023

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gthp_ex41.htm EXHIBIT 4.1

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES

COMMON STOCK PURCHASE WARRANT

GUIDED THERAPEUTICS, INC.

Warrant Shares: 900,000 Date of Issuance: March 1, 2023

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, Richard Blumberg or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after date hereof (the “Date of Issuance”) and on or prior to 5:00 p.m. (New York City time) on March 1, 2026 (the “Termination Date”) but not thereafter, to subscribe for and purchase from Guided Therapeutics, Inc., a Delaware corporation (the “Company”), up to 400,000 shares (as subject to adjustment hereunder, the “Warrant Shares”) of Common Stock. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).

Section 1. Definitions. This Warrant is issued by the Company as of the date hereof in connection with that certain Agreement dated September 30, 2021, and Amendment No. 1, dated November 11, 2022, by and among the Company and the Holder (the “Agreement”).

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Section 2. Exercise.

a) Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed facsimile copy or PDF copy submitted by e-mail (or e-mail attachment) of the Notice of Exercise in the form annexed hereto (the “Notice of Exercise”). The Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank. **** No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date on which the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within two (2) Business Days of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

b) Exercise Price. The exercise price per share of the Common Stock under this Warrant shall be $0.30 (the “Exercise Price”).

c) [RESERVED]

d) Mechanics of Exercise.

i. Delivery of Warrant Shares Upon Exercise. The Company shall deliver to the Holder the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise. Upon delivery of the Notice of Exercise, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate Exercise Price is received.

ii. Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

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iii. Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.

iv. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.

v. Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.

vi. Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

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d) Holder’s Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 2(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(d) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(d), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within one Trading Day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(d), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2(d) shall continue to apply. Any increase in the Beneficial Ownership Limitation will not be effective until the 61^st^ day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(d) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.

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Section 3. CertainAdjustments.

a) Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re‑classification.

b) Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(e) on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction.

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c) Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

d) Notice to Holder.

i. Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly deliver to the Holder by facsimile or email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.

ii. Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by facsimile or email to the Holder at its last facsimile number or email address as it shall appear upon the Warrant Register of the Company, at least 10 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

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Section 4. Transfer of Warrant.

a) Transferability. Subject to compliance with any applicable securities laws and the conditions set forth in Section 4(d) hereof and to the provisions of Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date on which the Holder delivers an assignment form to the Company assigning this Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

b) New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the Initial Exercise Date and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

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c) Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

d) Transfer Restrictions. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be either (i) registered pursuant to an effective registrationstatement under the Securities Act and under applicable state securities or blue sky laws or (ii) eligible for resale without volume or manner-of-sale restrictions or current public information requirements pursuant to Rule 144, the Company may require, as a condition of allowing such transfer, that the Holder or transferee of this Warrant, as the case may be, comply with the provisions of Section 5.7 of the Purchase Agreement.

e) Representation by the Holder. The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities law, except pursuant to sales registered or exempted under the Securities Act.

Section 5. Miscellaneous.

a) No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3.

b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

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c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.

d) Authorized Shares.

The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

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Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

e) Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Purchase Agreement.

f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws.

g) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision of this Warrant or the Purchase Agreement, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

h) Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement.

i) Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

j) Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

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k) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

l) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

m) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

n) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

********************

(Signature Page Follows)

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

GUIDED THERAPEUTICS, INC.
By:

| Name: | Gene S. Cartwright |

| Title: | CEO & President |

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NOTICE OF EXERCISE

TO: GUIDED THERAPEUTICS, INC.

(1) The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

(2) Payment shall take the form of in lawful money of the United States

(3) Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:

_______________________________

The Warrant Shares shall be delivered to the following DWAC Account Number:

_______________________________

_______________________________

_______________________________

(4) Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

[SIGNATURE OF HOLDER]

Name of Investing Entity: ________________________________________________________________________

Signature of Authorized Signatory of Investing Entity: _________________________________________________

Name of Authorized Signatory: ___________________________________________________________________

Title of Authorized Signatory: ____________________________________________________________________

Date: ________________________________________________________________________________________

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EXHIBIT B

ASSIGNMENT FORM

(To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

Name:

| | (Please Print) | | Address: | |

| | (Please Print) | | Phone Number: | | | Email Address: | | | Dated: _______________ __, ______ | | | Holder’s Signature: ____________________________ | | | Holder’s Address: ____________________________\ | |

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gthp_ex101.htm EXHIBIT 10.1

February 15, 2023

Holder of $0.25 (Twenty-Five Cent) Commission Warrants That Expire prior to July 15, 2023

Re: Exchange Offer of Common Stock Purchase Warrants

Dear Holder:

Guided Therapeutics, Inc. (the “Company”) is pleased to offer to you the opportunity to exchange all of the Common Stock purchase warrants of the Company issued as Commission Warrants (the “Exchange Warrants”) currently held by you (the “Holder”) in shares of Common Stock. **** Capitalized terms not otherwise defined herein shall have the meanings set forth in the Common Stock Purchase Warrant Agreement, pursuant to the date of issuance, between the Company and the purchasers signatory thereto pursuant to which the Company issued the Exchange Warrants.

In consideration for exchanging in full all of the Holder’s Exchange Warrants (the “Warrant Exchange”), the Company hereby offers you in exchange 0.95% of Common Stock (“Exchange Shares”) at a 20% discount to the original exercise price of $0.25 (twenty-five cents) for each Warrant Share being exchanged (i.e., the Exchange Warrant exercise price will be $0.20 (twenty cents). For the sake of clarity and as an example, if a Holder owns 100,000 warrant shares with a current strike price of $0.25, accepting the Exchange offer would result in 95,000 common shares issue to Holder with an exercise price of $0.20 for a total exercise payment to the Company of $19,000.00 (Nineteen Thousand Dollars).

Within five Trading Days of the exercise date and payment received by the Company, the Company shall deliver the Holder’s Exchange Shares to the Holder’s account at the Company’s Stock Transfer Agent. The terms of the Warrant Exchange, including but not limited to the obligations to deliver the Exchange Shares, shall remain in effect as if the acceptance of this offer was a formal Notice of Exercise (including but not limited to any liquidated damages and compensation in the event of late delivery of the Exchange Shares).

The parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act, the holding period of the Exchange Shares under Rule 144 shall be tacked on to the holding period of the Exchange Warrant.

Expressly subject to the paragraph immediately following this paragraph below, Holder may accept this offer by signing this letter below, with such acceptance constituting Holder's exchange in full of the Exchange Warrant for Exchange Shares, on or before 8:00 a.m. (New York City time) on February 22, 2023.

Additionally, the Company agrees to the representations, warranties and covenants set forth on Annex A attached hereto.

1

Other than an Exempt Issuance (as defined in the Purchase Agreement), from the date hereof until 30 days following the date hereof, (i) the Company and each Subsidiary shall not issue, enter into any agreement to issue or announce the issuance or proposed issuance of any shares of Common Stock or any securities convertible or exchangeable into Common Stock and (ii) the Company shall not enter into any agreement to amend, exchange or otherwise provide any incentive to exercise any of the warrants originally issued together with the Exchange Warrant or any other warrants of the Company that are outstanding on the date hereof.

Within four days of the closing date of this offering, the Company shall file a Current Report on Form 8-K with the Securities and Exchange Commission disclosing all material terms of the transactions contemplated hereunder, including this agreement as an exhibit thereto (“8-K Filing”). From and after the issuance of the 8-K Filing, the Company represents to the Holder that it shall not be in possession of any material, nonpublic information received from the Company, any of its Subsidiaries or any of their respective officers, directors, employees or agents, that is not disclosed in the 8-K Filing. In addition, effective upon the filing of the 8-K Filing, the Company acknowledges and agrees that any and all confidentiality or similar obligations under any agreement, whether written or oral, between the Company, any of its Subsidiaries or any of their respective officers, directors, employees or agents, on the one hand, and the Holder or any of its affiliates, on the other hand, shall terminate. The Company shall not, and shall cause each of its Subsidiaries and its and each of their respective officers, directors, employees and agents, not to, provide the Holder with any material, nonpublic information regarding the Company or any of its Subsidiaries from and after the date hereof without the express prior written consent of the Holder. To the extent that the Company, any of its Subsidiaries or any of their respective officers, directors, employees or agents, delivers any material, non-public information to the Holder without the Holder’s consent, the Company hereby covenants and agrees that the Holder shall not have any duty of confidentiality with respect to, or a duty not to trade on the basis of, such material, non-public information.

The Company acknowledges and agrees that the obligations of the Holder under this letter agreement are several and not joint with the obligations of any other holder of Common Stock purchase warrants of the Company (each, an “Other Holder”) under any other agreement related to the exercise of such warrants (“Other Warrant Exchange Agreement”), and the Holder shall not be responsible in any way for the performance of the obligations of any Other Holder or under any such Other Warrant Exchange Agreement. Nothing contained in this letter agreement, and no action taken by the Holder pursuant hereto, shall be deemed to constitute the Holder and the Other Holders as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Holder and the Other Holders are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by this letter agreement and the Company acknowledges that the Holder and the Other Holders are not acting in concert or as a group with respect to such obligations or the transactions contemplated by this letter agreement or any Other Warrant Exchange Agreement. The Company and the Holder confirm that the Holder has independently participated in the negotiation of the transactions contemplated hereby with the advice of its own counsel and advisors. The Holder shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this letter agreement, and it shall not be necessary for any Other Holder to be joined as an additional party in any proceeding for such purpose.

2

The Company hereby represents and warrants as of the date hereof and covenants and agrees from and after the date hereof until the three (3) month anniversary of the date hereof that none of the terms offered to any Other Holder with respect to any Other Warrant Exchange Agreement (or any amendment, modification or waiver thereof), is or will be more favorable to such Other Holder than those of the Holder and this letter agreement. If and whenever on or after the date hereof, the Company enters into an Other Warrant Exchange Agreement, then (i) the Company shall provide notice thereof to the Holder promptly following the occurrence thereof and (ii) the terms and conditions of this letter agreement shall be, without any further action by the Holder or the Company, automatically amended and modified in an economically and legally equivalent manner such that the Holder shall receive the benefit of the more favorable terms and/or conditions (as the case may be) set forth in such Other Warrant Exchange Agreement (including the issuance of additional Exchange Shares or the issuance of new Common Stock purchase warrants to the Other Holder), including, without limitation, the same price discount and the same issuance of new warrants as in the Other Warrant Exchange Agreement, provided that upon written notice to the Company at any time the Holder may elect not to accept the benefit of any such amended or modified term or condition, in which event the term or condition contained in this letter agreement shall apply to the Holder as it was in effect immediately prior to such amendment or modification as if such amendment or modification never occurred with respect to the Holder. The provisions of this paragraph shall apply similarly and equally to each Other Warrant Exchange Agreement.

Except as expressly set forth herein, each party shall pay the fees and expenses of its advisers, counsel, accountants, and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this letter agreement. The Company shall pay all transfer agent fees, stamp taxes and other taxes and duties levied in connection with the delivery of any Exchange Shares. This letter agreement shall be governed by the laws of the State of New York without regard to the principles of conflicts of law thereof.

***************

3

To accept this offer, Holder must counter execute this letter agreement and return the fully executed agreement to the Company at e-mail: gcartwright@guidedinc.com, attention: Gene S. Cartwright, on or before 8:00 am (New York City time) on February 22, 2023.

Please do not hesitate to call me if you have any questions.

Sincerely yours,
GUIDED THERAPEUTICS, INC.
By:

| Name: |

| Title: |

Accepted and Agreed to:

Name of Holder: ________________________________________________________

Signature of Authorized Signatory of Holder: _________________________________

Name of Authorized Signatory: _______________________________________________

Title of Authorized Signatory: ________________________________________________

Exchange Warrant Shares: _____________________

DTC Instructions:

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Annex A

Representations, Warranties and Covenants of the Company. The Company hereby makes the following representations and warranties to the Holder:

(a) Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this letter agreement and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, its board of directors or its stockholders in connection therewith. This letter agreement has been duly executed by the Company and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

(b) No Conflicts. The execution, delivery and performance of this letter agreement by the Company and the consummation by the Company of the transactions contemplated hereby do not and will not: (i) conflict with or violate any provision of the Company’s certificate or articles of incorporation, bylaws or other organizational or charter documents; or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company in connection with, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement, credit facility, debt or other material instrument (evidencing Company debt or otherwise) or other material understanding to which such Company is a party or by which any property or asset of the Company is bound or affected; or (iii) conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company is bound or affected.

5

gthp_ex102.htm EXHIBIT 10.2

PROMISSORY NOTE

(Extends long term note payable of the principal of $267,085.25, dated February 19, 2021.)

Issuance Date: February 18, 2023 Principal Amount: $267,085.25

THIS PROMISSORY NOTE is duly authorized and validly Note of Guided Therapeutics, Inc., a Delaware corporation, (the “Company”), having its principal place of business at 5835 Peachtree Corners East, Suite B, Norcross, Georgia 30092.

FOR VALUE RECEIVED, the undersigned promises to pay to Gene S. Cartwright (“Holder”) the principal sum of TWO HUNDRED SIXTY SEVEN THOUSAND EIGHTY FIVE DOLLARS AND TWENTY FIVE CENTS ($267,085.25), in lawful money of the United States of America, at such place as Holder may designate in writing.

The Note shall accrue 6% simple annual interest from the date thereof and mature on February 18, 2025.

The entire unpaid principal balance due on this Promissory Note (this “Note”), together with all accrued and unpaid interest and fees, if any, at the choice of the Holder, shall be due and payable in full in the event the Company obtains a financing of at least $4.0 million or, at the end of any quarter during the next two years, has a minimum of $4.0 million in cash on hand.

All parties to this Note, including maker and any sureties, endorsers, or guarantors, hereby waive protest, presentment, notice of dishonor, and notice of acceleration of maturity and agree to continue to remain bound for the payment of principal, interest and all other sums due under this Note, notwithstanding any change or changes by way of release, surrender, exchange, modification or substitution of any security for this Note or by way of any extension or extensions of time for the payment of principal and interest, if any; and all such parties waive all and every kind of notice of such change or changes and agree that the same may be made without notice or consent of any of them.

This Note shall be governed by, and construed in accordance with, the laws of the State of Georgia, regardless of laws that might otherwise govern under applicable principles of conflicts of law.

IN WITNESS WHEREOF, the undersigned has caused this instrument to be duly executed the day and year first above written.

GUIDED THERAPEUTICS, INC.
By:

| | Mark L. Faupel |

| | Chief Operating Officer |

gthp_ex103.htm EXHIBIT 10.3

PROMISSORY NOTE

(Extends long term note payable of the principal of $153,177.69, dated February 19, 2021.)

Issuance Date: February 18, 2023 Principal Amount: $153,177.69

THIS PROMISSORY NOTE is duly authorized and validly Note of Guided Therapeutics, Inc., a Delaware corporation, (the “Company”), having its principal place of business at 5835 Peachtree Corners East, Suite B, Norcross, Georgia 30092.

FOR VALUE RECEIVED, the undersigned promises to pay to Mark L. Faupel (“Holder”) the principal sum of ONE HUNDRED FIFTY-THREE THOUSAND ONE HUNDRED SEVENTY-SEVEN DOLLARS AND SIXTY-NINE CENTS ($153,177.69), in lawful money of the United States of America, at such place as Holder may designate in writing.

The Note shall accrue 6% simple annual interest from the date thereof and mature on February 18, 2025.

The entire unpaid principal balance due on this Promissory Note (this “Note”), together with all accrued and unpaid interest and fees, if any, at the choice of the Holder, shall be due and payable in full in the event the Company obtains a financing of at least $4.0 million or, at the end of any quarter during the next two years, has a minimum of $4.0 million in cash on hand.

All parties to this Note, including maker and any sureties, endorsers, or guarantors, hereby waive protest, presentment, notice of dishonor, and notice of acceleration of maturity and agree to continue to remain bound for the payment of principal, interest and all other sums due under this Note, notwithstanding any change or changes by way of release, surrender, exchange, modification or substitution of any security for this Note or by way of any extension or extensions of time for the payment of principal and interest, if any; and all such parties waive all and every kind of notice of such change or changes and agree that the same may be made without notice or consent of any of them.

This Note shall be governed by, and construed in accordance with, the laws of the State of Georgia, regardless of laws that might otherwise govern under applicable principles of conflicts of law.

IN WITNESS WHEREOF, the undersigned has caused this instrument to be duly executed the day and year first above written.

GUIDED THERAPEUTICS, INC.
By:

| | Gene S. Cartwright |

| | Chief Executive Officer |

gthp_ex31.htm EXHIBIT 31

Rule 13a-14(a)/15(d)-14(a) Certifications

I, Mark Faupel, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Guided Therapeutics Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a 15(e) and 15d 15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant ‘s internal control over financial reporting.
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: May 15, 2023 /s/ Mark Faupel

| | Mark Faupel |

| | President, Chief Executive Officer,<br> <br>Chief Operating Officer and<br> <br>Acting Chief Financial Officer |

gthp_ex32.htm EXHIBIT 32

SECTION 1350 CERTIFICATION

Pursuant to the requirement set forth in Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934, as amended, and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. § 1350), as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Gene S. Cartwright, Chief Executive Officer (principal executive and financial officer) of Guided Therapeutics Inc (the “Company”), hereby certifies that, to his knowledge on the date hereof:

(a) The Quarterly Report on Form 10-Q of the Company for the period ended March 31, 2023 filed on the date hereof with the Securities and Exchange Commission (the “Quarterly Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(b) The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the period covered by the Report.

This certification shall not be deemed to be filed with the Securities and Exchange Commission and shall not be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Quarterly Report), irrespective of any general incorporation language contained in such filing. A signed original of this written statement required by Section 906 has been provided to the Company and will be retained and furnished to the Securities and Exchange Commission or its staff upon request.

/s/ Mark Faupel

| President, Chief Executive Officer, Chief Operating<br> <br>Officer and Acting Chief Financial Officer<br> <br>May 15, 2023 |

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