Guided Therapeutics Inc 10-Q for FY2024 Q3
Guided Therapeutics Inc (GTHP)
About this 10-Q
Guided Therapeutics Inc filed this 10-Q on November 14, 2024, covering the quarter ended September 30, 2024 (FY2024 Q3).
Headline figures
Quarter ended September 30, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $0
- compared with $0 a year earlier
- Net loss
- $654K
- compared with a net loss of $677K a year earlier
- Diluted EPS
- -$0.01
- compared with -$0.01 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
Commission File No.
(Exact Name of Registrant as Specified in Its Charter) |
| ||
(State or other jurisdiction of incorporation or organization) |
| (I.R.S. Employer Identification No.) |
(Address of principal executive offices) (Zip Code) |
(
(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:
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).
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 | ☐ |
☒ | 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
As of November 11, 2024, the registrant had
PART I — FINANCIAL INFORMATION | |||
|
| Page | |
Item 1. | Financial Statements |
| |
| Unaudited Condensed Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023 | 3 | |
| 5 | ||
| 6 | ||
| 10 | ||
| Notes to Unaudited Condensed Consolidated Financial Statements | 11 | |
|
|
| |
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 39 | ||
|
|
| |
46 | |||
|
|
| |
46 | |||
|
|
| |
|
|
| |
47 | |||
|
| ||
47 | |||
|
| ||
47 | |||
|
|
| |
47 | |||
|
|
| |
47 | |||
|
|
| |
47 | |||
|
|
| |
48 | |||
|
|
| |
49 | |||
| 2 |
| Table of Contents |
GUIDED THERAPEUTICS, INC. AND SUBSIDIARY |
| |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
| |||||||
(unaudited, in thousands) |
| |||||||
|
|
|
|
| ||||
|
| September 30, |
|
| December 31, |
| ||
|
| 2024 |
|
| 2023 |
| ||
ASSETS |
| |||||||
|
|
|
|
|
|
| ||
Current Assets: |
|
|
|
|
|
| ||
Cash and cash equivalents |
| $ |
|
| $ |
| ||
Trade receivables, net of allowance for doubtful accounts of nil and $ |
|
|
|
|
|
| ||
Inventory, net of reserves of $ |
|
|
|
|
|
| ||
Other current assets |
|
|
|
|
|
| ||
Total current assets |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Non-Current Assets: |
|
|
|
|
|
|
|
|
Property and equipment, net |
|
|
|
|
|
| ||
Operating lease right-of-use assets, net of amortization |
|
|
|
|
|
| ||
Other assets |
|
|
|
|
|
| ||
Total non-current assets |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
|
|
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
| $ |
|
| $ |
| ||
Accounts payable, related parties |
|
|
|
|
|
| ||
Accrued liabilities |
|
|
|
|
|
| ||
Deferred revenue |
|
|
|
|
|
| ||
Current portion of lease liability |
|
|
|
|
|
| ||
Short-term notes payable due to related parties |
|
|
|
|
|
| ||
Current portion of long-term debt, related parties |
|
|
|
|
|
| ||
Short-term notes payable |
|
|
|
|
|
| ||
Short-term convertible debt |
|
|
|
|
|
| ||
Short-term convertible debt in default |
|
|
|
|
|
| ||
Derivative liability at fair value |
|
|
|
|
|
| ||
Total current liabilities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Long-Term Liabilities, Net of Current Portion |
|
|
|
|
|
|
|
|
Long-term lease liability |
|
|
|
|
|
| ||
Long-term notes payable |
|
|
|
|
|
| ||
Long-term debt, related parties |
|
|
|
|
|
| ||
Total long-term liabilities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES (Note 6) |
|
|
|
|
|
|
|
|
| 3 |
| Table of Contents |
STOCKHOLDERS’ DEFICIT: |
|
|
|
|
|
| ||
|
|
|
|
|
|
| ||
Series C convertible preferred stock, $ |
|
|
|
|
|
| ||
Series C1 convertible preferred stock, $ |
|
|
|
|
|
| ||
Series C2 convertible preferred stock, $ |
|
|
|
|
|
| ||
Series D convertible preferred stock, $ |
|
|
|
|
|
| ||
Series E convertible preferred stock, $ |
|
|
|
|
|
| ||
Series F convertible preferred stock, $ |
|
|
|
|
|
| ||
Series F-2 convertible preferred stock, $ |
|
|
|
|
|
| ||
Common stock, $ |
|
|
|
|
|
| ||
Additional paid-in capital |
|
|
|
|
|
| ||
Treasury stock at cost |
|
| ( | ) |
|
| ( | ) |
Accumulated deficit |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
Total stockholders’ deficit |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT |
| $ |
|
| $ |
| ||
The accompanying notes are an integral part of these condensed consolidated statements.
| 4 |
| Table of Contents |
GUIDED THERAPEUTICS, INC. AND SUBSIDIARY | ||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
(unaudited, in thousands, except per share data) | ||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||
|
| Three Months Ended |
|
| Nine Months Ended |
| ||||||||||
|
| September 30, |
|
| September 30, |
| ||||||||||
|
| 2024 |
|
| 2023 |
|
| 2024 |
|
| 2023 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Sales - devices and disposables |
| $ |
|
| $ |
|
| $ |
|
|
|
| ||||
Cost of goods sold |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Gross profit |
|
|
|
|
| ( | ) |
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Sales and marketing |
|
|
|
|
|
|
|
|
|
|
|
| ||||
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total operating expenses |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expenses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Interest income |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Change in fair value of derivative liability |
|
| ( | ) |
|
|
|
|
| ( | ) |
|
|
| ||
Gain from extinguishment of debt |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Other income |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total other income (expense) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Provision for income taxes |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Deemed dividend for warrant exchanges |
|
|
|
|
|
|
|
|
|
|
| ( | ) | |||
Preferred stock dividends |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
Diluted |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Diluted |
|
|
|
|
|
|
|
|
|
|
|
| ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 5 |
| Table of Contents |
GUIDED THERAPEUTICS, INC. AND SUBSIDIARY | ||||||||||||||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT | ||||||||||||||||||||||||||||||||
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024 | ||||||||||||||||||||||||||||||||
(unaudited, in thousands) | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
|
| Preferred Stock |
|
| Preferred Stock |
|
| Preferred Stock |
|
| Preferred Stock |
| ||||||||||||||||||||
|
| Series C |
|
| Series C1 |
|
| Series C2 |
|
| Series D |
| ||||||||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
| ||||||||
Balance at June 30, 2024 |
|
| - |
|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
| |||||||
Issuance of common stock and warrants in private placement offering, net of expenses |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| ||||
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 interest |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| ||||
Issuance of warrants with debt |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| ||||
Stock-based compensation |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| ||||
Accrued preferred dividends |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| ||||
Net loss |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| ||||
Balance at September 30, 2024 |
|
| - |
|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
| |||||||
|
| Preferred Stock |
|
| Preferred Stock |
|
| Preferred Stock |
| |||||||||||||||
|
| Series E |
|
| Series F |
|
| Series F2 |
| |||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
| ||||||
Balance at June 30, 2024 |
|
|
|
| $ |
|
|
|
|
| $ |
|
|
| - |
|
| $ |
| |||||
Issuance of common stock and warrants in private placement offering, net of expenses |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| |||
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 interest |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| |||
Issuance of warrants with debt |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| |||
Stock-based compensation |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| |||
Accrued preferred dividends |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| |||
Net loss |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| |||
Balance at September 30, 2024 |
|
|
|
| $ |
|
|
|
|
| $ |
|
|
| - |
|
| $ |
| |||||
|
|
|
|
| Additional |
|
|
|
|
|
|
|
| |||||||||||
|
| Common Stock |
|
| Paid-In |
|
| Treasury |
|
| Accumulated |
|
|
|
| |||||||||
|
| Shares |
|
| Amount |
|
| Capital |
|
| Stock |
|
| Deficit |
|
| Total |
| ||||||
Balance at June 30, 2024 |
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) | |||
Issuance of common stock and warrants in private placement offering, net of expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
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 interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Issuance of warrants with debt |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Stock-based compensation |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Accrued preferred dividends |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | |||
Net loss |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | |||
Balance at September 30, 2024 |
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) | |||
The accompanying notes are an integral part of these condensed consolidated statements.
| 6 |
| Table of Contents |
GUIDED THERAPEUTICS, INC. AND SUBSIDIARY | ||||||||||||||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT | ||||||||||||||||||||||||||||||||
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 | ||||||||||||||||||||||||||||||||
(unaudited, in thousands) | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
|
| Preferred Stock |
|
| Preferred Stock |
|
| Preferred Stock |
|
| Preferred Stock |
| ||||||||||||||||||||
|
| Series C |
|
| Series C1 |
|
| Series C2 |
|
| Series D |
| ||||||||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
| ||||||||
Balance at December 31, 2023 |
|
| - |
|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
| |||||||
Issuance of common stock and warrants in private placement offering, net of expenses |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| ||||
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 |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| ||||
Settlement of previously accrued professional fees through common stock issuance |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| ||||
Issuance of warrants with debt |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| ||||
Stock-based compensation |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| ||||
Accrued preferred dividends |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| ||||
Net loss |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| ||||
Balance at September 30, 2024 |
|
| - |
|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
| |||||||
|
| Preferred Stock |
|
| Preferred Stock |
|
| Preferred Stock |
| |||||||||||||||
|
| Series E |
|
| Series F |
|
| Series F2 |
| |||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
| ||||||
Balance at December 31, 2023 |
|
|
|
| $ |
|
|
|
|
| $ |
|
|
| - |
|
| $ |
| |||||
Issuance of common stock and warrants in private placement offering, net of expenses |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| |||
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 |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| |||
Settlement of previously accrued professional fees through common stock issuance |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| |||
Issuance of warrants with debt |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| |||
Stock-based compensation |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| |||
Accrued preferred dividends |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| |||
Net loss |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| |||
Balance at September 30, 2024 |
|
|
|
| $ |
|
|
|
|
| $ |
|
|
| - |
|
| $ |
| |||||
|
|
|
|
| Additional |
|
|
|
|
|
|
|
|
|
| |||||||||
|
| Common Stock |
|
| Paid-In |
|
| Treasury |
|
| Accumulated |
|
|
|
| |||||||||
|
| Shares |
|
| Amount |
|
| Capital |
|
| Stock |
|
| Deficit |
|
| Total |
| ||||||
Balance at December 31, 2023 |
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) | |||
Issuance of common stock and warrants in private placement offering, net of expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Settlement of previously accrued professional fees through common stock issuance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Issuance of warrants with debt |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Stock-based compensation |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Accrued preferred dividends |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | |||
Net loss |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | |||
Balance at September 30, 2024 |
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) | |||
The accompanying notes are an integral part of these condensed consolidated statements.
| 7 |
| Table of Contents |
GUIDED THERAPEUTICS, INC. AND SUBSIDIARY | ||||||||||||||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT | ||||||||||||||||||||||||||||||||
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2023 | ||||||||||||||||||||||||||||||||
(unaudited, in thousands) | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
|
| Preferred Stock |
|
| Preferred Stock |
|
| Preferred Stock |
|
| Preferred Stock |
| ||||||||||||||||||||
|
| Series C |
|
| Series C1 |
|
| Series C2 |
|
| Series D |
| ||||||||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
| ||||||||
Balance at June 30, 2023 |
|
| - |
|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
| |||||||
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 interest |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| ||||
Settlement of previously accrued professional fees through common stock issuance |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| ||||
Stock-based compensation |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| ||||
Accrued preferred dividends |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| ||||
Net loss |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| ||||
Balance at September 30, 2023 |
|
| - |
|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
| |||||||
|
| Preferred Stock |
|
| Preferred Stock |
|
| Preferred Stock |
| |||||||||||||||
|
| Series E |
|
| Series F |
|
| Series F2 |
| |||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
| ||||||
Balance at June 30, 2023 |
|
|
|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
| ||||||
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 interest |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| |||
Settlement of previously accrued professional fees through common stock issuance |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| |||
Stock-based compensation |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| |||
Accrued preferred dividends |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| |||
Net loss |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| |||
Balance at September 30, 2023 |
|
|
|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
| ||||||
|
|
|
|
| Additional |
|
|
|
|
|
|
|
| |||||||||||
|
| Common Stock |
|
| Paid-In |
|
| Treasury |
|
| Accumulated |
|
|
| ||||||||||
|
| Shares |
|
| Amount |
|
| Capital |
|
| Stock |
|
| Deficit |
|
| Total |
| ||||||
Balance at June 30, 2023 |
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) | |||
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 interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Settlement of previously accrued professional fees through common stock issuance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Stock-based compensation |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Accrued preferred dividends |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | |||
Net loss |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | |||
Balance at September 30, 2023 |
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) | |||
The accompanying notes are an integral part of these condensed consolidated statements.
| 8 |
| Table of Contents |
GUIDED THERAPEUTICS, INC. AND SUBSIDIARY | ||||||||||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT | ||||||||||||||||||||||||||||||||
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 | ||||||||||||||||||||||||||||||||
(unaudited, in thousands) | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
|
| Preferred Stock |
|
| Preferred Stock |
|
| Preferred Stock |
|
| Preferred Stock |
| ||||||||||||||||||||
|
| Series C |
|
| Series C1 |
|
| Series C2 |
|
| Series D |
| ||||||||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
| ||||||||
Balance at December 31, 2022 |
|
| - |
|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
| |||||||
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 |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| ||||
Settlement of previously accrued professional fees through common stock issuance |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| ||||
Stock-based compensation |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| ||||
Impact of warrant exchanges |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| ||||
Accrued preferred dividends |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| ||||
Net loss |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| ||||
Balance at September 30, 2023 |
|
| - |
|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
| |||||||
|
| Preferred Stock |
|
| Preferred Stock |
|
| Preferred Stock |
| |||||||||||||||
|
| Series E |
|
| Series F |
|
| Series F2 |
| |||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
| ||||||
Balance at December 31, 2022 |
|
|
|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
| ||||||
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 |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| |||
Settlement of previously accrued professional fees through common stock issuance |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| |||
Stock-based compensation |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| |||
Impact of warrant exchanges |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| |||
Accrued preferred dividends |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| |||
Net loss |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| |||
Balance at September 30, 2023 |
|
|
|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
| ||||||
|
|
|
|
| Additional |
|
|
|
|
|
|
|
|
|
| |||||||||
|
| Common Stock |
|
| Paid-In |
|
| Treasury |
|
| Accumulated |
|
|
| ||||||||||
|
| Shares |
|
| Amount |
|
| Capital |
|
| Stock |
|
| Deficit |
|
| Total |
| ||||||
Balance at December 31, 2022 |
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) | |||
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Settlement of previously accrued professional fees through common stock issuance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Stock-based compensation |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Impact of warrant exchanges |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
| ||||
Accrued preferred dividends |
|
| - |
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) |
|
| ( | ) | ||
Net loss |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | |||
Balance at September 30, 2023 |
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) | |||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 9 |
| Table of Contents |
GUIDED THERAPEUTICS, INC. AND SUBSIDIARY | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(unaudited, in thousands) | ||||||||
|
|
|
|
|
|
| ||
|
| Nine Months Ended |
| |||||
|
| September 30, |
| |||||
|
| 2024 |
|
| 2023 |
| ||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
| ||
Net loss |
| $ | ( | ) |
| $ | ( | ) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Bad debt expense |
|
|
|
|
|
| ||
Depreciation |
|
|
|
|
|
| ||
Amortization of debt issuance costs and discounts |
|
|
|
|
|
| ||
Stock-based compensation |
|
|
|
|
|
| ||
Change in fair value of derivative liability |
|
|
|
|
| ( | ) | |
Amortization of lease right-of-use-asset |
|
|
|
|
|
| ||
Gain from forgiveness of debt |
|
| ( | ) |
|
| ( | ) |
Other non-cash expenses |
|
|
|
|
|
| ||
Change in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
|
|
| ( | ) | |
Inventory |
|
| ( | ) |
|
| ( | ) |
Other current assets |
|
|
|
|
|
| ||
Accounts payable and accrued liabilities |
|
|
|
|
| ( | ) | |
Lease liabilities |
|
| ( | ) |
|
| ( | ) |
Deferred revenue |
|
|
|
|
| ( | ) | |
NET CASH USED IN OPERATING ACTIVITIES |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Proceeds from the issuance of notes payable |
|
|
|
|
|
| ||
Proceeds from the issuance of notes payable issued to related parties |
|
|
|
|
|
| ||
Payments made on notes payable |
|
| ( | ) |
|
| ( | ) |
Payments made on notes payable issued to related parties |
|
| ( | ) |
|
|
| |
Payments of debt issuance costs |
|
| ( | ) |
|
|
| |
Proceeds from issuance of common stock, net of costs |
|
|
|
|
|
| ||
Proceeds from warrant exercises |
|
|
|
|
|
| ||
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES |
|
|
|
|
| ( | ) | |
|
|
|
|
|
|
|
|
|
NET CHANGE IN CASH |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
Cash at beginning of period |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
CASH AT END OF PERIOD |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE FOR OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
Cash paid for interest |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE FOR NON-CASH INVESTING AND FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends on preferred stock |
| $ |
|
| $ |
| ||
Deemed dividends for warrant exchanges |
| $ |
|
| $ |
| ||
Warrants issued with debt |
| $ |
|
| $ |
| ||
Fair value of beneficial conversion features |
| $ |
|
| $ |
| ||
Settlement of interest through common stock issuance |
| $ |
|
| $ |
| ||
Settlement of dividends through common stock issuance |
| $ |
|
| $ |
| ||
Settlement of previously accrued professional fees through common stock issuance |
| $ |
|
| $ |
| ||
Accrued payroll liability exchanged for promissory note |
| $ |
|
| $ |
| ||
Directors and Officers Insurance obtained with Financing |
| $ |
|
| $ |
| ||
Conversion of Series E preferred shares into common stock |
| $ |
|
| $ |
| ||
Conversion of Series F preferred shares into common stock |
| $ |
|
| $ |
| ||
Conversion of Series F-2 preferred shares into common stock |
| $ |
|
| $ |
| ||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 10 |
| Table of Contents |
GUIDED THERAPEUTICS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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 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, 2023 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, 2023 balances reported herein are derived from the audited consolidated financial statements for the year ended December 31, 2023. 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 September 30, 2024 and December 31, 2023, and the consolidated results of operations and cash flows for the three and nine-month periods ended September 30, 2024 and 2023 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 September 30, 2024, it had an accumulated deficit of approximately $153.0 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.
| 11 |
| Table of Contents |
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 September 30, 2024, the Company had a negative working capital of approximately $
During the year ended December 31, 2023, the Company received $
Reclassifications
Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications did not affect net loss, revenues and stockholders’ equity.
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 inventory valuation, valuation of share-based compensation and the valuation of the convertible note payable derivative liability. Management bases its estimates on historical experience and on various other assumptions believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from those estimates, and such differences could be material to the Company’s financial statements.
Accounting Standard Updates
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.
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 nil and $
| 12 |
| Table of Contents |
Trade Receivables
Trade receivables are recorded net of allowances for chargebacks, cash discounts for prompt payment and credit losses. The Company estimates an allowance for expected credit losses by considering factors such as historical experience, credit quality, the age of the accounts receivable balances, and current economic conditions that may affect a customer’s ability to pay. The corresponding expense for the credit loss allowance is reflected in selling, general and administrative expenses. The credit loss allowance was immaterial as of September 30, 2024 and December 31, 2023.
Inventory Valuation
All inventories are stated at the 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. Inventories consisted of the following as of September 30, 2024 and December 31, 2023:
|
| (in thousands) |
| |||||
|
| September 30, |
|
| December 31, |
| ||
|
| 2024 |
|
| 2023 |
| ||
|
|
|
|
|
|
| ||
Raw materials |
| $ |
|
| $ |
| ||
Work-in-progress |
|
|
|
|
|
| ||
Finished goods |
|
|
|
|
|
| ||
Inventory reserve |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
Total inventory |
| $ |
|
| $ |
| ||
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.
| 13 |
| Table of Contents |
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. Depreciation and amortization expense are included in general and administrative expense on the statements of operations. Expenditures for repairs and maintenance are expensed as incurred. Property and equipment consisted of the following as of September 30, 2024 and December 31, 2023:
|
| (in thousands) |
| |||||
|
| September 30, |
|
| December 31, |
| ||
|
| 2024 |
|
| 2023 |
| ||
|
|
|
|
|
|
| ||
Equipment |
| $ |
|
| $ |
| ||
Software |
|
|
|
|
|
| ||
Furniture and fixtures |
|
|
|
|
|
| ||
Leasehold improvements |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Subtotal |
|
|
|
|
|
| ||
Less accumulated depreciation |
|
| ( | ) |
|
| ( | ) |
Property, equipment and leasehold improvements, net |
| $ |
|
| $ |
| ||
Depreciation expense related to property and equipment for the three and nine months ended September 30, 2024 and 2023 was not material.
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 and nine months ended September 30, 2024 and 2023.
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 6 – “Commitments and Contingencies.”
| 14 |
| Table of Contents |
Accrued Liabilities
Accrued liabilities as of September 30, 2024 and December 31, 2023 are summarized as follows:
|
| (in thousands) |
| |||||
|
| September 30, 2024 |
|
| December 31, 2023 |
| ||
|
|
|
|
|
|
| ||
Compensation |
| $ |
|
| $ |
| ||
Professional fees |
|
|
|
|
|
| ||
Interest |
|
|
|
|
|
| ||
Vacation |
|
|
|
|
|
| ||
Preferred dividends |
|
|
|
|
|
| ||
Other accrued expenses |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Total |
| $ |
|
| $ |
| ||
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.
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 must be 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. |
| 15 |
| Table of Contents |
The Company’s revenues do not require significant estimates or judgments and are recognized when control of the promised goods or services is transferred to the Company’s customers, which occurs at a point in time, most frequently upon shipment of the product or receipt of the product, depending on shipment terms. Revenue is measured as the amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company does not offer returns, discounts, loyalty programs or other sales incentive programs that are material to revenue recognition. 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. Deferred revenue totaled $
Significant Customers
As of September 30, 2024, trade receivables of $
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 its 2023 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 September 30, 2024, the Company had approximately $
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
| 16 |
| Table of Contents |
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 or binomial option pricing models.
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.
During the nine months ended September 30, 2024, the Company recognized $
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, which 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.
| 17 |
| Table of Contents |
Fair Value Measurements
ASC 820, “Fair Value Measurements and Disclosures,” clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Fair value is a market-based measurement that should be determined based upon assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
| · | Level 1: Quoted prices for identical assets or liabilities in active markets that the Company can access at the measurement date. |
|
|
|
| · | Level 2: Significant other observable inputs other than level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data. |
|
|
|
| · | Level 3: Significant unobservable inputs that reflect the Company’s judgment about the assumptions that market participants would use in pricing an asset or liability. |
An asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.
Assets and liabilities measured at fair value are based on one or more of the following three valuation techniques noted in ASC 820:
| · | Market approach: Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. |
|
|
|
| · | Cost approach: Amount that would be required to replace the service capacity of an asset (replacement cost). |
|
|
|
| · | Income approach: Techniques to convert future amounts to a single present value amount |
The Company believes its valuation methods are appropriate and consistent with other market participants, however the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.
3. STOCKHOLDERS’ DEFICIT
September Private Placement Offering
On September 23, 2024, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional investors, including John Imhoff a member of the Company’s Board of Directors, for the purpose of raising $
Common Stock
The Company has authorized
| 18 |
| Table of Contents |
During the nine months ended September 30, 2024, the Company issued
|
| Number of Shares |
| |
Issuance of common stock in private placement offering |
|
|
| |
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 to consultants |
|
|
| |
Total common stock issued during the nine months ended September 30, 2024 |
|
|
| |
|
|
|
|
|
Summary table of common stock transactions: |
|
|
|
|
Shares outstanding at December 31, 2023 |
|
|
| |
Common shares issued during the nine months ended September 30, 2024 |
|
|
| |
Shares outstanding at September 30, 2024 |
|
|
| |
Preferred Stock
The Company has authorized
Series C Convertible Preferred Stock
The board designated
Holders of the Series C Preferred Stock are entitled to quarterly cumulative dividends at an annual rate of
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 $
| 19 |
| Table of Contents |
Series C1 Convertible Preferred Stock
The board designated
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.
Series C2 Convertible Preferred Stock
On August 31, 2018, the Company entered into agreements with certain holders of the Company’s Series C1 Convertible Preferred Stock, including the chairman of the Company’s board of directors, the former Chief Operating Officer (now the Chief Executive 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 Convertible Preferred Stock. In total, for
At September 30, 2024 and December 31, 2023, there were
The terms of the Series C2 Convertible Preferred Stock are substantially the same as the Series C1 shares, except that (i) shares of Series C1 Convertible Preferred Stock were not 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 Convertible 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 Convertible 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 ($
Series D Convertible Preferred Stock
The board designated
Each share of Series D Preferred is convertible, at any time for a period of
| 20 |
| Table of Contents |
Series E Convertible Preferred Stock
The Board designated
Each share of Series E Preferred is convertible, at any time for a period of
Each holder of Series E Preferred Stock is entitled to receive cumulative dividends of
During the nine months ended September 30, 2024, the Company issued
Series F Convertible Preferred Stock
The Board designated
Each share of Series F Preferred Stock is convertible, at any time for a period of
During the nine months ended September 30, 2024, the Company issued
| 21 |
| Table of Contents |
Series F-2 Convertible Preferred Stock
The Company was oversubscribed for its Series F Preferred Stock, resulting in the requirement to file an additional Certificate of Designation for Series F-2 Preferred Stock with substantially the same terms as the Series F Preferred Stock. The Board designated
Each share of Series F-2 Preferred Stock is convertible, at any time for a period of
During the nine months ended September 30, 2024, the Company issued
Warrants
The following table summarizes transactions involving the Company’s outstanding warrants to purchase common stock for the nine months ended September 30, 2024 and 2023:
|
| Warrants (Underlying Shares) |
|
| Weighted-Average Exercise Price Per Share |
| ||
|
|
|
|
| ||||
Outstanding, December 31, 2023 |
|
|
|
| $ |
| ||
Warrants issued |
|
|
|
|
|
| ||
Warrants expired |
|
| ( | ) |
|
|
| |
Outstanding, September 30, 2024 |
|
|
|
| $ |
| ||
|
| Warrants (Underlying Shares) |
|
| Weighted-Average Exercise Price Per Share |
| ||
|
|
|
|
| ||||
Outstanding, December 31, 2022 |
|
|
|
| $ |
| ||
Warrants issued |
|
|
|
|
|
| ||
Warrants exchanged |
|
| ( | ) |
|
|
| |
Warrants expired |
|
| ( | ) |
|
|
| |
Warrants exercised |
|
| ( | ) |
|
|
| |
Outstanding, September 30, 2023 |
|
|
|
| $ |
| ||
| 22 |
| Table of Contents |
Warrants Issued in 2024
During the nine months ended September 30, 2024, the Company issued
During the nine months ended September 30, 2024, the Company issued
During the nine months ended September 30, 2024, the Company issued
Expected term (years) |
|
|
| |
Volatility |
|
| % | |
Risk-free interest rate |
|
| % | |
Dividend yield |
|
| % |
Warrants Issued in 2023
On May 14, 2023, the Compensation Committee of the Company’s Board of Directors approved the issuance of
On May 14, 2023, the Compensation Committee of the Company’s Board of Directors also approved the issuance of
During the nine months ended September 30, 2023, the Company issued 1,800,000 warrants to Richard Blumberg, a related party, pursuant to a consulting agreement. See Note 6, “Commitments and Contingencies” for additional information.
During the nine months ended September 30, 2023, the Company entered into various agreements with holders of the Company’s $
| 23 |
| Table of Contents |
During the nine months ended September 30, 2023, management estimated the fair value of the warrants issued utilizing the Black-Scholes Option Pricing model with the following weighted-average assumptions:
Expected term (years) | ||
Volatility |
| |
Risk-free interest rate | ||
Dividend yield | ||
4. 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 aggregate number of common shares that may be issued or reserved pursuant to stock option or other awards under the plan may not exceed
The following tables summarize the Company’s stock option activity and related information for the nine months ended September 30, 2024 and 2023:
|
| Number of Shares |
|
| Weighted-Average Exercise Price Per Share |
|
| Weighted-Average Remaining Contractual Life |
| Aggregate Intrinsic Value of In-the-Money Options (in thousands) |
| |||
|
|
|
|
|
|
| ||||||||
Options outstanding as of December 31, 2023 |
|
|
|
| $ |
|
|
| $ |
| ||||
Options granted |
|
|
|
| $ |
|
|
|
|
|
|
| ||
Options outstanding as of September 30, 2024 |
|
|
|
| $ |
|
| |
| $ |
| |||
Options exercisable as of September 30, 2024 |
|
|
|
| $ |
|
| |
| $ |
| |||
|
| Number of Shares |
|
| Weighted-Average Exercise Price Per Share |
|
| Weighted-Average Remaining Contractual Life |
| Aggregate Intrinsic Value of In-the-Money Options (in thousands) |
| |||
|
|
|
|
|
|
| ||||||||
Options outstanding as of December 31, 2022 |
|
|
|
| $ |
|
|
| $ |
| ||||
Options granted |
|
|
|
| $ |
|
|
|
|
|
|
| ||
Options forfeited |
|
| ( | ) |
| $ |
|
|
|
|
|
|
| |
Options outstanding as of September 30, 2023 |
|
|
|
| $ |
|
| |
| $ |
| |||
Options exercisable as of September 30, 2023 |
|
|
|
| $ |
|
| |
| $ |
| |||
The aggregate intrinsic value is calculated as the difference between the Company’s closing stock price as of September 30, 2024 and the exercise price, multiplied by the number of options. As of September 30, 2024, there was $
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. During the nine months ended September 30, 2024 and 2023, the Company recognized expense for stock options of $
2024 Stock Option Activity
On July 9, 2024, the Company granted
| 24 |
| Table of Contents |
The Black-Scholes option pricing model and the following weighted-average assumptions were used to estimate the fair value of awards granted during the nine months ended September 30, 2024:
Expected term (years) |
|
|
| |
Volatility |
|
| % | |
Risk-free interest rate |
|
| % | |
Dividend yield |
|
| - |
|
2023 Stock Option Activity
On February 10, 2023, the Company granted
On March 7, 2023, the Company granted
The Black-Scholes option pricing model and the following weighted-average assumptions were used to estimate the fair value of awards granted during the nine months ended September 30, 2023:
Expected term (years) |
|
|
| |
Volatility |
|
| % | |
Risk-free interest rate |
|
| % | |
Dividend yield |
|
|
|
On March 3, 2023, Dr. Gene Cartwright retired from his position as President and Chief Executive Officer of the Company and as a member of the Board. Upon his departure, Mr. Cartwright forfeited 186,364 unvested stock options. On May 2, 2023, the Company’s Board of Directors approved an extension of the expiration date of Mr. Cartwright’s vested options to June 1, 2025. Management measured the modified stock option award using the Black-Scholes option pricing model and recorded expense of $
Expected term (years) |
|
|
| |
Volatility |
|
| % | |
Risk-free interest rate |
|
| % | |
Dividend yield |
|
| % |
5. 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 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 September 30, 2024, and December 31, 2023, there was no accrual recorded for any potential losses related to pending litigation.
| 25 |
| Table of Contents |
6. COMMITMENTS AND CONTINGENCIES
Operating Leases
Our corporate offices, which also comprise our administrative, research and development, marketing and production facilities, are located on a 12,835 square foot leased property. Total operating lease cost recognized for this lease was unchanged from the prior year and was $
|
| (in thousands) |
| |||||
|
| September 30, |
|
| December 31 |
| ||
|
| 2024 |
|
| 2023 |
| ||
Operating lease right-of-use assets |
| $ |
|
| $ |
| ||
Operating lease liabilities |
| $ |
|
| $ |
| ||
The table below presents the maturities of operating lease liabilities as of September 30, 2024:
|
| (in thousands) |
| |
|
| Operating |
| |
|
| Lease Payments |
| |
2024 (remaining) |
|
|
| |
2025 |
|
|
| |
2026 |
|
|
| |
Total future lease payments |
|
|
| |
Less: discount |
|
| ( | ) |
Total lease liabilities |
| $ |
| |
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 September 30, 2024 and December 31, 2023
|
| (in thousands) |
| |||||
|
| September 30, 2024 |
|
| December 31, 2023 |
| ||
Weighted average remaining lease term (years) |
|
|
|
|
|
| ||
Weighted average discount rate |
|
| % |
|
| % | ||
Related Party Contracts
During the nine months ended September 30, 2024, the Company issued promissory notes totaling $75,000 to members of the Board of Directors. See Note 9, “Related Party Debt” for additional details.
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. 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
| 26 |
| Table of Contents |
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 $
On January 22, 2020, the Company entered into a promotional agreement with a related party, which is partially owned by Mr. Blumberg, 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
During the nine months ended September 30, 2023, the Company entered into an agreement with Mr. Blumberg to exchange
On March 10, 2021, the Company entered into a consulting agreement with Richard Blumberg. As a result of the consulting agreement Mr. Blumberg provided a non-refundable payment of $
Expected term (years) |
|
|
| |
Volatility |
|
| % | |
Risk-free interest rate |
|
| % | |
Dividend yield |
|
| % |
During the nine months ended September 30, 2024 and 2023, the Company issued
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
| 27 |
| Table of Contents |
Pursuant to the agreement, the Company also agreed to pay the Advisory Group $
The Company estimated the fair value of the first tranche warrants issued in September 2022 using the Black-Scholes option pricing model with the following assumptions:
Expected term (years) |
|
|
| |
Volatility |
|
| % | |
Risk-free interest rate |
|
| % | |
Dividend yield |
|
| % |
Expense related to the first tranche of warrants was recognized in prior years. Unrecognized expense related to the first tranche warrants was nil as of September 30, 2024.
The Company estimated the fair value of the second tranche warrants using the Binomial Lattice model with the following assumptions:
Expected term (years) |
|
|
| |
Volatility |
|
| % | |
Risk-free interest rate |
|
| % | |
Dividend yield |
|
| % |
The Company recognized expense for the second tranche of warrants of nil and $
The Company estimated the fair value of the third tranche warrants using the Binomial Lattice model with the following assumptions:
Expected term (years) |
|
|
| |
Volatility |
|
| % | |
Risk-free interest rate |
|
| % | |
Dividend yield |
|
| % |
The Company recognized expense for the third tranche of warrants of $
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.
| 28 |
| Table of Contents |
First, SMI shall complete the payment for parts, per the purchase order, for five additional LuViva devices. Second, in consideration for the $
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.
On February 17, 2024, the Company entered into a fourth amendment to the agreement with SMI. Under the terms of the amended agreement, SMI agreed to pay the Company $
The amended agreement also provides for a timeline for the Company to deliver inventory during 2024, including LuViva devices and components, as well as approximately 1,640,000 RFID chips. In consideration, SMI agreed to pay a total of $
On March 27, 2024, the parties entered into a Standstill Agreement (the “Standstill Agreement”). The parties agreed that SMI will make a nonrefundable payment of $100,000 to the Company prior to March 31, 2024. In exchange, the Company will not initiate any legal proceedings, including but not limited to filing a lawsuit, obtaining a judgement, or enforcing any security interest, as related to the March shortfall in payments of $201,100, until April 30, 2024. Upon paying $100,000, SMI will have the option to extend the Standstill Agreement until June 15, 2024 by making a nonrefundable payment to the Company of $150,000. One additional payment of $150,000 may be made to extend the standstill rights until July 30, 2024, if mutually agreed upon. If SMI is unable to make the payments pursuant to the Standstill Agreement, the Company agreed to seek loans on behalf of SMI to cover the payments. SMI agreed to reimburse the Company for these loans along with all expenses associated with them within three months of the loans being issued as long as the loans are used solely for (1) parts for LuViva devices to be used by SMI for marketing and promotional activities, or (2) labor or consulting fees connected to providing parts, assemblies of devices or disposables to SMI. Additionally, SMI confirmed its commitment to make payments to GTI of at least $
On April 26, 2024, the parties extended the Standstill Agreement (“Standstill Extension”) until July 30, 2024,
On July 31, 2024, the parties extended the Standstill Agreement until August 16, 2024. A long-term agreement was reached subsequent to September 30, 2024 (see Note 12, “Subsequent Events” for details).
| 29 |
| Table of Contents |
Contingencies
The conflict in Ukraine, which has already had an impact on financial markets, could result in additional repercussions in 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.
7. SHORT-TERM NOTES PAYABLE
On July 23, 2024, the Company issued a promissory note totaling $
Expected term (years) |
|
|
| |
Volatility |
|
| % | |
Risk-free interest rate |
|
| % | |
Dividend yield |
|
| % |
On June 28, 2024, the Company issued a promissory note totaling $
Expected term (years) |
|
|
| |
Volatility |
|
| % | |
Risk-free interest rate |
|
| % | |
Dividend yield |
|
| % |
On April 15, 2024, the Company entered into an exchange agreement with a former employee, whereby the former employee agreed to exchange outstanding amounts due to him for deferred compensation in the amount of $
On July 4, 2024, the Company entered into a premium finance agreement to finance its insurance policies totaling $
| 30 |
| Table of Contents |
On July 4, 2023, the Company entered into a premium finance agreement to finance its insurance policies totaling $
The following table summarizes short-term notes payable (in thousands):
|
| Short-Term Notes Payable |
| |||||
|
| September 30, 2024 |
|
| December 31, 2023 |
| ||
Short-term promissory notes |
| $ |
|
| $ |
| ||
Current portion of long-term promissory note |
|
|
|
|
|
| ||
Premium Finance (insurance) |
|
|
|
|
|
| ||
Debt discount |
|
| ( | ) |
|
|
| |
Short-term notes payable |
| $ |
|
| $ |
| ||
8. CONVERTIBLE DEBT
10% Senior Unsecured Convertible Debentures
On May 17, 2021, the Company issued
| 31 |
| Table of Contents |
At September 30, 2024 and December 31, 2023, the balance due on the 10% Senior Secured Convertible Debentures was $
|
| Senior Secured Convertible Debenture |
| |||||
|
| September 30, 2024 |
|
| December 31, 2023 |
| ||
10% Senior Unsecured Convertible Debentures |
| $ |
|
| $ |
| ||
Unamortized debt issuance costs |
|
|
|
|
| ( | ) | |
Debt discount |
|
|
|
|
| ( | ) | |
Senior Unsecured Convertible Debentures |
| $ |
|
| $ |
| ||
As of September 30, 2024, the balance of the Senior Unsecured Convertible Debentures is included in “Short-term convertible notes payable in default” within the condensed consolidated balance sheets. As of December 31, 2023, the balance of the Senior Unsecured Convertible Debentures is included in “Short-term convertible notes payable” within the condensed consolidated balance sheets.
1800 Diagonal Lending LLC Notes
On July 22, 2024, the Company entered into a securities purchase agreement and contingently convertible note with 1800 Diagonal Lending LLC (“Diagonal Lending”). The convertible note issued to Diagonal Lending had a total principal balance of $
On June 11, 2024, the Company entered into a securities purchase agreement and contingently convertible note with Diagonal Lending (together with the July 22, 2024 note, the “Notes”). The convertible note issued to Diagonal Lending had a total principal balance of $
In the event of default, the unpaid portion of the Notes and accrued interest is convertible into shares of common stock at a conversion rate equal to the variable conversion price. The variable conversion price is equal to the lowest closing price of our common stock during the ten days prior to the conversion date multiplied by 65.0%. The Company assessed the embedded conversion features and determined that they are not considered clearly and closely related to the host notes, and therefore meet the definition of derivatives. Therefore, these embedded conversion features are required to be bifurcated from the note and accounted for separately as a derivative liability. The Company estimated the fair value of the derivative liabilities on the issuance dates of the Notes and recorded them as discounts that net against the convertible notes. The Company is required to remeasure the derivative liabilities to their then fair values at each subsequent balance sheet date, through an adjustment to current earnings (see Note 11 for further details on the Company’s fair value measurement).
| 32 |
| Table of Contents |
At September 30, 2024, the balance due on the Notes was $
|
| September 30, 2024 |
|
| December 31, 2023 |
| ||
Short-term convertible promissory notes |
| $ |
|
| $ |
| ||
Unamortized debt issuance costs |
|
| ( | ) |
|
|
| |
Debt discount |
|
| ( | ) |
|
|
| |
1800 Diagonal Lending Convertible Note |
| $ |
|
| $ |
| ||
Auctus Convertible Note
On December 17, 2019, the Company entered into a securities purchase agreement and convertible note with Auctus Fund, LLC (“Auctus’). The convertible note issued to Auctus was for a total of $
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 $
The total outstanding balance of the convertible note was $
| 33 |
| Table of Contents |
9. RELATED PARTY DEBT
Short-Term Notes Payable Due to Related Parties
During the nine months ended September 30, 2024, the Company issued promissory notes totaling $
Expected term (years) |
|
|
| |
Volatility |
|
| % | |
Risk-free interest rate |
|
| % | |
Dividend yield |
|
| % |
The outstanding principal and associated debt discounts as of September 30, 2024 and December 31, 2023 are presented below (in thousands):
|
| Short-Term Notes Payable Due to Related Parties |
| |||||
|
| September 30, 2024 |
|
| December 31, 2023 |
| ||
Short-term promissory notes |
| $ |
|
| $ |
| ||
Debt discount |
|
| ( | ) |
|
|
| |
Short-term notes payable due to related parties |
| $ |
|
| $ |
| ||
Current Portion of 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 $
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 $
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.
| 34 |
| Table of Contents |
The tables below summarize the outstanding balance of debt owed to Dr. Faupel and Dr. Cartwright (in thousands):
For Dr. Faupel:
Salary |
| $ |
| |
Bonus |
|
|
| |
Vacation |
|
|
| |
Interest on compensation |
|
|
| |
Loans to Company |
|
|
| |
Interest on loans |
|
|
| |
Total outstanding prior to exchange |
|
|
| |
|
|
|
|
|
Amount forgiven in prior years |
|
| ( | ) |
Amount exchanged for Series F-2 Preferred Stock |
|
| ( | ) |
Total interest accrued through December 31, 2023 |
|
|
| |
Balance outstanding at December 31, 2023 |
| $ |
| |
|
|
|
|
|
Interest accrued through September 30, 2024 |
|
|
| |
Balance outstanding at September 30, 2024 |
| $ |
|
For Dr. Cartwright
Salary |
| $ |
| |
Bonus |
|
|
| |
Loans to Company |
|
|
| |
Interest on loans |
|
|
| |
Total outstanding prior to exchange |
|
|
| |
|
|
|
|
|
Amount forgiven in prior years |
|
| ( | ) |
Amount exchanged for Series F-2 Preferred Stock |
|
| ( | ) |
Total interest accrued through December 31, 2023 |
|
|
| |
Payments on outstanding debt |
|
| ( | ) |
Balance outstanding at December 31, 2023 |
| $ |
| |
|
|
|
|
|
Interest accrued through September 30, 2024 |
|
|
| |
Balance outstanding at September 30, 2024 |
| $ |
|
On March 22, 2021, the Company entered into an exchange agreement with Richard Fowler. As of December 31, 2020, the Company owed Mr. Fowler $
During the three and nine months ended September 30, 2024, Mr. Fowler forgave $
| 35 |
| Table of Contents |
Future debt obligations at September 30, 2024 for debt owed to related parties is as follows:
Year |
| Amount (in thousands) |
| |
2024 (remaining) |
|
|
| |
2025 |
|
|
| |
2026 |
|
|
| |
Total |
| $ |
| |
10. 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 C-1, Series C-2, Series D, Series E, Series F and Series F-2 convertible preferred stock, convertible debt, convertible preferred dividends, warrants and stock options convertible into common stock shares.
During a period of net loss, basic and diluted earnings per share are the same as the assumed exercise of warrants and the conversion of convertible debt and preferred stock are anti-dilutive. For the three and nine months ended September 30, 2024 and 2023, all stock options, convertible preferred stock, convertible debt and warrants were anti-dilutive and were therefore excluded from the computation of diluted loss per share. At September 30, 2024 and 2023, these instruments were convertible into
The following table sets forth pertinent data relating to the computation of basic and diluted net loss per share attributable to common shareholders (in thousands, except for per-share data):
|
| September 30, |
| |||||
|
| 2024 |
|
| 2023 |
| ||
|
|
|
|
|
|
| ||
Net loss |
| $ | ( | ) |
| $ | ( | ) |
Basic weighted average number of shares outstanding |
|
|
|
|
|
| ||
Net loss per share (basic) |
| $ | ( | ) |
| $ | ( | ) |
Diluted weighted average number of shares outstanding |
|
|
|
|
|
| ||
Net loss per share (diluted) |
| $ | ( | ) |
| $ | ( | ) |
11. FAIR VALUE MEASUREMENTS
The convertible notes payable derivative liabilities are considered Level 3 measurements, due to the significant unobservable inputs in the valuation, which are based on a forecast of the Company’s future stock performance and, as the note payable is contingently convertible upon an event of default, management’s estimate of the likelihood and timing of conversion.
| 36 |
| Table of Contents |
Based on the terms and provisions of the Diagonal Lending notes payable, management built a pricing simulation that predicts the Company’s future stock prices using historical volatility. Our model is designed to utilize the Company’s best estimates of the timing and likelihood of a conversion of the notes payable to calculate the variable conversion price as of the future conversion date.
The key inputs to the valuation model that was utilized to estimate the fair value of the bifurcated conversion option included:
| · | The forecasted future stock prices were determined using historical stock prices and the Company’s equity volatility. |
| · | The expected conversion price was determined using the forecast and the contractual term of the convertible note agreement. |
| · | The probability of an event of default and timing of a future conversion are based on management’s best estimate of the future settlement of the convertible note. |
The following tables present the fair value of the bifurcated conversion options:
|
| Fair Value at September 30, 2024 (in thousands) |
| |||||||||||||
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Derivative liability/bifurcated conversion options in connection with Diagonal Lending promissory notes |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total short-term liabilities at fair value |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Derivative financial instruments and changes thereto recorded in the three and nine months ended September 30, 2024 and 2023 include the following:
|
| Three Months Ended September 30, |
| |||||
|
| 2024 |
|
| 2023 |
| ||
|
|
|
|
|
|
| ||
Fair value, beginning of period |
| $ |
|
| $ |
| ||
Inception of derivative liability |
|
|
|
|
|
| ||
Change in fair value of beneficial conversion features |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Fair value, end of period |
| $ |
|
| $ |
| ||
|
| Nine Months Ended September 30, |
| |||||
|
| 2024 |
|
| 2023 |
| ||
|
|
|
|
|
|
| ||
Fair value, beginning of period |
| $ |
|
| $ | ( | ) | |
Inception of derivative liability |
|
|
|
|
|
| ||
Change in fair value of beneficial conversion features |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Fair value, end of period |
| $ |
|
| $ |
| ||
| 37 |
| Table of Contents |
12. SUBSEQUENT EVENTS
Promissory Note
On October 10, 2024, the Company issued a promissory note totaling $
Agreement with SMI
On October 21, 2024, the Company executed an agreement with SMI (the “Agreement”), which supersedes all previous agreements, other than existing purchase orders (except those as modified and summarized below). Pursuant to the Agreement, the Company plans to execute a purchase agreement with a distributor of SMI for 35 base units, connected, aligned, calibrated and tested (“Completed Instrumentation Packages”). SMI, to obtain the license for global manufacturing rights and exclusive distribution of LuViva within certain jurisdictions, agreed to:
| 1. | Meet an established schedule for minimum sales of the product in China. |
| 2. | Establish a manufacturing capability for the manufacture of LuViva and its accessories including the single use disposable Cervical Guide “Disposables” or “Accessories”). |
| 3. | Apply for NMPA approval for LuViva no later than October 30, 2024. Said application was filed by SMI with NMPA on October 16, 2024. |
Under the terms of the agreement, the Handheld Unit and Base Unit constitute an Instrumentation Package or “IP”. An IP and mobile cart with a monitor constitute a fully functional LuViva device ready for sale. SMI will be responsible for the manufacture of the mobile carts that house the IPs and the display monitor. All active purchase orders will be revised to include 100 IPs to be provided by GTI to SMI and/or its distribution partners to meet expected demand for the end of 2024 and 2025, as summarized below:
| 1. | Forty-seven (47) of the 100 IPs will be provided by GTI to SMI, at an approximate price of $ |
| 2. | Thirty-five (35) of the 100 IPs will be provided by GTI to SMI or to one of SMI’s distributors, at a total price of $ |
| 3. | Eighteen (18) of the 100 IPs will be provided to SMI at no additional charge, beyond what has already been paid by SMI. |
Beginning in 2026 and extending into 2030, to preserve its licensing rights, SMI shall be committed to the minimum LuViva Cervical Guide Radio Frequency Identification Chips and Royalty Sales (“RFID Chips”) of the single-use Cervical Guide Chip, at a sale price to SMI at $1.00, as specified in the table below:
Year |
| Cumulative Number of Devices Placed or Sold |
|
| Cumulative Resulting Minimum Tests |
|
| Cumulative Minimum Cervical Guide Royalty Payments to GTI |
| |||
2026 |
|
|
|
|
|
|
| $ |
| |||
2027 |
|
|
|
|
|
|
| $ |
| |||
2028 |
|
|
|
|
|
| $ |
| ||||
2029 |
|
|
|
|
|
| $ |
| ||||
2030 |
|
|
|
|
|
| $ |
| ||||
If by April 30, 2025, SMI fails to achieve commercialization of LuViva in China, SMI shall no longer have any rights to manufacture, distribute or sell LuViva.
Issuances of Common Stock
Subsequent to September 30, 2024, we issued
| 38 |
| Table of Contents |
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, 2023 and this quarterly report on Form 10-Q. Examples of these uncertainties and risks include, but are not limited to:
| · | Notes in the amount of $1.13 million in default 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 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. |
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.
| 39 |
| Table of Contents |
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 made 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 in 1992 as SpectRx, Inc. and, as of September 30, 2024, we have an accumulated deficit of approximately $153.0 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.
Our product revenues to date have been limited. Our historical and expected future revenue has been and will be derived from sales of LuViva devices and disposables.
| 40 |
| Table of Contents |
Current Demand for LuViva
Based on written agreements and ongoing discussions with SMI, we currently hold and expect to generate additional purchase orders which we expect to result in actual sales of approximately $2.4 million within the next twelve months, 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, we are focused on three primary markets: the United States, China and Europe.
In the United States, the Company is actively pursuing FDA approval by conducting a clinical trial involving approximately 400 study participants, with the exact number depending in part on the numbers of women in the study both with and without cervical disease. The study protocol was drafted with input from FDA and physicians at the clinical centers that are participating in the study. In 2023, FDA completed its review of the protocol and had no further recommendations or questions. Also in 2023, four clinical sites agreed to participate in the study and all four of the study sites were fully IRB approved. The protocol was also approved by an independent, nationally recognized institutional review board. All four sites have received LuViva devices and have been trained in their use. All four sites have undergone one or more clinical study monitoring visits by the Company’s clinical study monitors. Clinical study monitoring visits are required by FDA to ensure that the study is being conducted under FDA guidelines and in compliance with the study protocol. Findings from the ongoing clinical study monitoring visits include:
| 1) | Approximately 255 patients have been enrolled and tested, which represents approximately sixty-four percent of the 400 anticipated patients needed to complete the study. |
| 2) | There have not been any adverse events reported related to the use of LuViva. |
|
|
|
| 3) | All four monitored clinical study sites are adhering to the study protocol and are completing the necessary case report forms according to FDA standards. |
Based on current and expected enrollment rates, we expect the study to be completed near the end of 2024 or early in 2025, depending in part by how many women are diagnosed with cervical disease, along with other factors such as potential slowdowns during the fall and winter holidays. However, there can be no assurance that the study will progress within the expected timeline, or ever.
Regarding international sales efforts, our focus has been on achieving regulatory approval to sell LuViva in China. Our Chinese partner, SMI, filed the application with NMPA for approval of LuViva as a Class 3 medical device in China on October 16, 2024. The results for the 449 women tested by LuViva were better than required by NMPA with a sensitivity of 83% and a specificity of 54%. There were no adverse events reported during the use of LuViva in the study, adding further evidence as to the safety of the technology. SMI believes NMPA approval could happen within six months, although there can be no assurance that NMPA approval will occur within the projected time frame.
In Europe, our distribution partners, Newmars Medical Technologies (“Newmars”), reported that sales efforts have restarted after delays caused by Covid-19. They are now actively pursuing potential customers in Poland, Hungary and Romania, where we have obtained the required approvals to sell our products though Newmars. In addition, an application for approval has been filed in Russia, although current geopolitics presents uncertainty as to the ability to sell and market new medical technology in that country.
In Turkey, we have been in contact with three different medical groups representing over 60 individual hospitals and clinics. We have entered contract discussions with ORA Medical of Ankara, Turkey for distribution rights in Turkey.
In Indonesia, our contracted distributors are in discussions with the local government hospital system of Sulawesi, one of the nation’s most populous islands.
| 41 |
| Table of Contents |
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 must be 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.
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 Employees, Service Providers and Investors: On the date of issuance, the instruments are recorded at their fair value as determined using the Black-Scholes or binomial option pricing models.
Allowance for Credit Losses: Trade receivables are recorded net of allowances for chargebacks, cash discounts for prompt payment and credit losses. The Company estimates an allowance for expected credit losses by considering factors such as historical experience, credit quality, the age of the accounts receivable balances, and current economic conditions that may affect a customer’s ability to pay. The corresponding expense for the credit loss allowance is reflected in selling, general and administrative expenses. The credit loss allowance was immaterial as of September 30, 2024 and December 31, 2023.
Inventory Valuation: All inventories are stated at the 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.
| 42 |
| Table of Contents |
RESULTS OF OPERATIONS
COMPARISON OF THE THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
Sales Revenue and Cost of Goods Sold: Revenues and cost of goods sold from the sale of LuViva devices and disposables for the three months ended September 30, 2024 and 2023 were not material. As of September 30, 2024, we have a deferred revenue balance of $747,780, which will be recognized as revenue when our products are shipped, which is expected to occur late in 2024 or early in 2025, upon receiving NMPA approval.
Research and Development Expenses: Research and development expenses were $111,298 and $69,140 during the three months ended September 30, 2024 and 2023, respectively. The increase of $42,158 or 61.0%, was primarily due to additional costs of $59,201 for sponsored research related to our U.S. clinical trials during the three months ended September 30, 2024. The increase in sponsored research costs was partially offset by a decline in patent maintenance fees of $12,208 and a decline in clinical research-related travel expenses of $3,818.
Sales and Marketing Expenses: Sales and marketing expenses were $75,850 and $69,359 during the three months ended September 30, 2024 and 2023, respectively. The increase of $6,491, or 9.4%, was primarily due to $2,678 of additional rent expense allocated to our sales & marketing department and $2,240 of additional travel expenses for sales trips.
General and Administrative Expense: General and administrative expenses were $374,190 and $480,550 during the three months ended September 30, 2024 and 2023, respectively. The decrease of $106,360, or 22.1%, was primarily driven by a decrease of $138,906 in consulting fees, of which $104,543 was due to less expense recognized in the current period for the shares of common stock and warrants issued to Mr. Blumberg and $24,959 was due to less expense recognized for warrants issued to Mr. Grujic, pursuant to their respective agreements. The decrease was also due to an $18,830 decline in property taxes. These decreases were offset by a $42,999 increase in attorney and other professional fees paid to outside service providers and a $16,350 increase in stock option expense.
Interest Expense: Interest expense was $107,500 and $71,481 during the three months ended September 30, 2024 and 2023, respectively. The increase of $36,019, or 50.4%, was due to an increase in debt in the current period versus the prior.
Change in fair value of derivative liability: The change in the fair value of our derivative liability resulted in a loss of $585 during the three months ended September 30, 2024. The change in the fair value was attributed to changes in our forecasted stock price.
Gain from Extinguishment of Debt: The gain from extinguishment of debt of $16,145 and $17,184 during the three months ended September 30, 2024 and 2023, respectively, was materially consistent over the two periods and was due to forgiveness of debt from our creditors.
Preferred Stock Dividends: Expense related to preferred stock dividends of $38,194 and $40,073 for the three months ended September 30, 2024 and 2023, respectively, was materially consistent over the two periods.
Net Loss: Net loss attributable to common stockholders was $691,417 and $718,777 during the three months ended September 30, 2024 and 2023, respectively. The reasons for the decrease in our net loss are outlined above.
There was no income tax benefit recorded for the three months ended September 30, 2024 or 2023, due to recurring net operating losses.
| 43 |
| Table of Contents |
RESULTS OF OPERATIONS
COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
Sales Revenue and Cost of Goods Sold: Revenues from the sale of LuViva devices and disposables for the nine months ended September 30, 2024, were $5,720, compared to $66,287 for the nine months ended September 30, 2023. Cost of goods sold was $1,879 during the nine months ended September 30, 2024, compared to $45,570 during the nine months ended September 30, 2023. As of September 30, 2024, we have a deferred revenue balance of $747,780, which will be recognized as revenue when our products are shipped, which is expected to occur late in 2024 or early in 2025, upon receiving NMPA approval. In the prior period, the majority of our sales were related to four IPs sold to SMI.
Research and Development Expenses: Research and development expenses were $386,417 and $142,450 during the nine months ended September 30, 2024 and 2023, respectively. The increase of $243,967 or 171.3%, was primarily due to a $245,274 increase in sponsored research costs, a $5,775 increase in clinical travel expenses and an increase of $5,394 in engineering staff salaries. These increases were offset by a decline of $18,695 in patent maintenance fees.
Sales and Marketing Expenses: Sales and marketing expenses were $217,653 and $203,334 during the nine months ended September 30, 2024 and 2023, respectively. The increase of $14,319, or 7.0% was primarily due to an increase of $10,002 in rent expense allocated to our sales & marketing department.
General and Administrative Expense: General and administrative expenses were $974,406 and $2,647,017 during the nine months ended September 30, 2024 and 2023, respectively. The decrease of $1,672,611, or 63.2%, was primarily driven by a decline of $903,676 of expense for consulting fees, which was caused by (1) $801,327 less expense recognized for shares of common stock and warrants issued to Mr. Blumberg, (2) $84,371 less expense for warrants issued to Mr. Grujic and (3) a decline of $18,014 in fees paid to other outside consultants. The decrease in our current year general and administrative expenses was also due to a $602,689 decline in payroll and benefits expenses (including payroll taxes), which was primarily caused by a one-time charge of $679,959 recorded for warrants issued in relation to the appointment of Dr. Mark Faupel as the Company’s President and Chief Executive Officer during the prior year period. Additionally, expense for stock options decreased $160,283 in the current period due to (1) a one-time charge of $59,216 in the prior year for the modification of a stock option award and (2) fewer stock option awards vesting in the current period versus the prior. These decreases were partially offset by an increase in rent and utilities of $7,525 and an increase of $6,805 in fees for outside services in the current period versus the prior.
Interest Expense: Interest expense was $246,990 and $205,872 during the nine months ended September 30, 2024 and 2023, respectively. The increase of $41,118, or 20.0%, was due to an increase in debt in the current period versus the prior.
Change in Fair Value of Derivative Liability: The change in the fair value of our derivative liability resulted in a loss of $7,935 in the nine months ended September 30, 2024, versus a gain of $5,104 during the nine months ended September 30, 2024. The change in the fair value in the current period was attributed to changes in our forecasted stock price. The gain due to the change in fair value of the derivative liability during the nine months ended September 30, 2023 was due to changes in our stock price.
Gain from Extinguishment of Debt: The gain from extinguishment of debt was $49,205 and $69,407 during the nine months ended September 30, 2024 and 2023, respectively. The decrease of $20,202, or 29.1%, was due to a lower amount of debt forgiven in the current period, as the balances owed to our creditors have declined.
Other Income: Other income was $12,372 and $568 during the nine months ended September 30, 2024 and 2023, respectively. The change in other income was primarily due to an adjustment of a liability recorded during the nine months ended September 30, 2024.
Deemed Dividend for Warrant Exchanges: Expense for deemed dividends was nil and $65,296 in the nine months ended September 30, 2024 and 2023, respectively. The expense in the prior 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 of $126,030 and $122,328 for the nine months ended September 30, 2024 and 2023, respectively, was materially consistent over the two periods.
Net Loss: Net loss attributable to common stockholders was $1,890,970 and $3,289,502 during the nine months ended September 30, 2024 and 2023, respectively. The reasons for the decrease in our net loss are outlined above.
There was no income tax benefit recorded for the nine months ended September 30, 2024 or 2023, due to recurring net operating losses.
| 44 |
| Table of Contents |
LIQUIDITY AND CAPITAL RESOURCES
Going Concern Considerations
We have incurred significant losses since our inception. At September 30, 2024, the Company had negative working capital of approximately $5.0 million, accumulated deficit of $153.0 million, and incurred a net loss including preferred dividends of $1.9 million for the nine months then ended. Stockholders’ deficit totaled approximately $4.9 million at September 30, 2024, primarily due to recurring net losses from operations.
The risks and uncertainties surrounding our ability to continue our business with limited capital resources raise substantial doubt as to our ability to continue as a going concern for twelve months from the issuance of these financial statements. Our consolidated financial statements do not include any adjustments that might result if we are unable to continue as a going concern. If we are unable to continue as a going concern, the holders of our securities might lose their entire investment. These factors, among others, may make it difficult to raise any additional capital and may cause us to be unable to continue to operate our business.
The Company will need to continue to raise capital in order to provide funding for its operations and the 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
The Company’s primary liquidity requirements are for working capital, funding clinical studies, and other costs associated with achieving regulatory approval to sell our products. Although income taxes are not currently a significant use of funds, after the benefits of our net operating loss carryforwards are fully recognized, they could become a material use of funds, depending on our future profitability and future tax rates. We anticipate we will require approximately $1.5 million to $1.8 million of funds to operate our business over the next twelve months, including approximately $512 thousand of funds to complete our ongoing clinical studies.
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 September 30, 2024, we had cash of approximately $194 thousand and negative working capital of $5.0 million. During the nine months ended September 30, 2024, our $1,13 million of 10% Senior Secured Convertible Debentures (the “Debentures”) went into default. After the May 17, 2024 maturity date, the interest rate on the Debentures increased to the default rate of 18.0%.
Our major cash flows for the nine months ended September 30, 2024 consisted of cash used for operating activities of $787 thousand, proceeds from the issuance of notes payable and common stock of $387 thousand and $300 thousand, respectively, and payments of debt and debt issuance costs of $297 thousand.
Our major cash flows for the nine months ended September 30, 2023 consisted of cash used for operating activities of $1.4 million, payments of debt of $367 thousand and proceeds from warrant exercises of $195 thousand.
The reduction in cash used in operating activities was primarily attributable to the timing of payments associated with our accounts payable and accrued liabilities and a $324 thousand increase to deferred revenue in the current period. The $562 thousand increase in cash provided by financing activities was attributed to a $358 increase in proceeds from issuance of notes payable, net of debt issuance costs, a $300 thousand increase in proceeds from the issuance of common stock, and a $99 thousand reduction in payments made on notes payable in the current year versus the prior.
On October 10, 2024, we issued a promissory note totaling $0.2 million to an unaffiliated third party (the “Holder”). The promissory note matures on October 10, 2025 and will accrue interest at a rate of 12.0% per annum. Monthly payments of $20 thousand are due on the note, beginning November 30, 2024 until August 31, 2025, while the interest payment is due on or before October 10, 2025. If not repaid by the maturity date, the unpaid balance of the note will accrue interest at a rate of 16.0% per annum. With the Holder’s permission, the promissory note may be prepaid in full or in part without penalty or premium.
On October 21, 2024, we executed an agreement with SMI (the “Agreement”), which supersedes all previous agreements, other than existing purchase orders. Pursuant to the Agreement, the Company plans to execute a purchase agreement with a distributor of SMI for 35 base units, connected, aligned, calibrated and tested (“Completed Instrumentation Packages”). Under the terms of the agreement, the Handheld Unit and Base Unit constitute an Instrumentation Package or “IP”. An IP and mobile cart with a monitor constitute a fully functional LuViva device ready for sale. SMI will be responsible for the manufacture of the mobile carts that house the IPs and the display monitor. All active purchase orders will be revised to include 100 IPs to be provided by GTI to SMI and/or its distribution partners to meet expected demand for the end of 2024 and 2025, as summarized below:
| 1. | Forty-seven (47) of the 100 IPs will be provided by GTI to SMI, at an approximate price of $1,351,250; The number of IPs may be reduced if the full payment is delayed beyond the end of 2024. |
| 2. | Thirty-five (35) of the 100 IPs will be provided by GTI to SMI or to one of SMI’s distributors, at a total price of $700,000. |
| 3. | Eighteen (18) of the 100 IPs will be provided to SMI at no additional charge, beyond what has already been paid by SMI. |
Beginning in 2026 and extending into 2030, to preserve its licensing rights, SMI shall be committed to the minimum LuViva Cervical Guide Radio Frequency Identification Chips and Royalty Sales (“RFID Chips”) of the single-use Cervical Guide Chip, at a sale price to SMI at $1.00, as specified in the table below:
Year |
| Cumulative Number of Devices Placed or Sold |
|
| Cumulative Resulting Minimum Tests |
|
| Cumulative Minimum Cervical Guide Royalty Payments to GTI |
| |||
2026 |
|
| 300 |
|
|
| 1,440,000 |
|
| $ | 1,440,000 |
|
2027 |
|
| 400 |
|
|
| 5,040,000 |
|
| $ | 4,480,000 |
|
2028 |
| 1500 |
|
|
| 15,840,000 |
|
| $ | 15,840,000 |
| |
2029 |
| 3000 |
|
|
| 37,440,000 |
|
| $ | 37,440,000 |
| |
2030 |
| 4000 |
|
|
| 66,240,000 |
|
| $ | 66,240,000 |
| |
If by April 30, 2025, SMI fails to achieve commercialization of LuViva in China, SMI shall no longer have any rights to manufacture, distribute or sell LuViva.
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.
| 45 |
| Table of Contents |
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 September 30, 2024, due to the existence of material weaknesses in our internal control over financial reporting. The material weaknesses identified arose from a lack of recourses to properly research and account for complex transactions and lack of oversight and approval by the Board of Directors and Audit Committee, including formally documented approval of significant transactions, including related party 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 September 30, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
| 46 |
| Table of Contents |
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.
ITEM 1A. RISK FACTORS
There have been no material changes from the risk factors previously disclosed in the Company’s most recent Annual Report on Form 10-K as filed with the SEC on March 28, 2024.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
On July 9, 2024, the Company granted 45,000 stock options to employees under the Plan and 500,000 stock options to executives and directors of the Company outside of the Plan. The stock options, which have exercise prices of $0.12, will expire on July 8, 2034. One fourth of the stock options vested immediately, while the remaining options will vest over a period of 33 months, beginning on October 9, 2024.
On July 23, 2024, the Company issued a promissory note totaling $50,000 to an unaffiliated third party. The promissory note matures on February 1, 2025 and will accrue total interest of $5,000. The holder of the promissory note also received 60,000 common stock purchase warrants, which have an exercise price of $0.25 and will expire on August 1, 2028.
During the three months ended September 30, 2024, the Company issued promissory notes totaling $75,000 to members of the Board of Directors. The promissory notes mature in the third quarter of 2025, at which time the principal and accrued interest payments are due in full. The promissory notes accrue interest at a rate of 9.0%. The holders of the promissory notes also received 75,000 common stock purchase warrants, which have exercise prices of $0.25 and will expire four years after issuance.
On September 1, 2024, the Company issued 900,000 warrants to Richard Blumberg, a related party, pursuant to a consulting agreement. The warrants, which will expire on September 1, 2027, have a strike price of $0.30.
On September 23, 2024, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional investors, including John Imhoff a member of the Company’s Board of Directors, for the purpose of raising $300,000 in gross proceeds for the Company. Pursuant to the terms of the Purchase Agreement, the Company agreed to sell, in a private placement offering, an aggregate of 3,333,335 units, each unit consisting of one share of common stock and one warrant to purchase up to 3,333,335 shares of common stock (the “Warrants”). The purchase price per unit was $0.09. The Warrants were immediately exercisable upon issuance, expire four years following the issuance date and have an exercise price of $0.12 per share.
ITEM 3: DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4: MINE SAFETY DISCLOSURES.
Not applicable
ITEM 5: OTHER INFORMATION.
None.
| 47 |
| Table of Contents |
ITEM 6. EXHIBITS
Exhibit Number |
| Exhibit Description |
|
|
|
| ||
| Promissory Note, dated July 23, 2024, in the amount of $50,000 | |
| ||
| ||
| ||
| ||
101.1* |
| Interactive data files for Guided Therapeutics, Inc. 's Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, formatted in Inline XBRL: (i) the Unaudited Condensed Consolidated Balance Sheets; (ii) the Unaudited Condensed Consolidated Statements of Income; (iii) the Unaudited Condensed Consolidated Statements in Stockholders' Deficit; (iv) the Unaudited Condensed Consolidated Statements of Cash Flows; and (v) the Notes to the Unaudited Condensed Consolidated Financial Statements. |
104 |
| The cover page from Guided Therapeutics, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024 (formatted in Inline XBRL and included in Exhibit 101) |
______________
*Filed herewith
| 48 |
| Table of Contents |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
GUIDED THERAPEUTICS, INC. | ||
| ||
By: | /s/ Mark Faupel | |
Mark Faupel | ||
President, Chief Executive Officer, Chief Operating Officer and Acting Chief Financial Officer | ||
Date: November 14, 2024
| 49 |
EXHIBIT 10.1
PROMISSORY NOTE
| Original Issuance Date: _________, 2024 |
| Principal Amount: ___________ |
THIS PROMISSORY NOTE is duly authorized and validly Note of Guided Therapeutics, Inc., a Delaware corporation, (the “Company”), having its principal place of business at 5835 Peachtree Corners East, Suite B, Peachtree Corners, Georgia 30092.
FOR VALUE RECEIVED, the undersigned promises to pay to __________ (“Holder”) the principal sum of __________________________________ DOLLARS ($____________), in lawful money of the United States of America, at such place as Holder may designate in writing.
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 on the first anniversary of this agreement. The Note shall accrue 9% simple annual interest from the date thereof and mature on ___________, 2025.
With the Holder's written permission, this Note may be prepaid in full or in part from time to time without penalty or premium.
The Holder will also receive _________ common stock purchase warrants of Guided Therapeutics, Inc. (Exhibit A). The exercise price per share of the common stock under this warrant shall be $0.25.
The warrants shall have an issuance date of ________, 2024, and will expire 4 years from the date herein.
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 |
|
|
|
| CEO & President |
|
EXHIBIT 10.2
PROMISSORY NOTE
| $50,000.00 |
| July 23, 2024 |
FOR VALUE RECEIVED, Guided Therapeutics, Inc., a Delaware corporation (referred to hereinafter as “Maker” and “Company”), hereby promises to pay to Bryan Mamula (“Holder”) the principal sum of Fifty-Thousand Dollars ($50,000.00), plus accrued interest from the date hereof. The principal amount under this Note (“Promissory Note”) shall accrue a total interest of $5,000.00 (“Interest Amount”).
The Promissory Note (this “Note”) will mature on February 1, 2025.
The Holder and the Company agree on the following payment schedule:
| · | $10,000.00 on or before September 1, 2024 |
| · | $10,000.00 on or before October 1, 2024 |
| · | $10,000.00 on or before November 1, 2024 |
| · | $10,000.00 on or before December 1, 2024 |
| · | $10,000.00 on or before January 1, 2025 |
| · | $5,000.00 (interest amount) on or before February 1, 2025 |
With the Holder's written permission, this Note may be prepaid in full or in part from time to time without penalty or premium.
With the Holder's written permission, any monthly payment may be used to participate in an Offering by Guided expected to be consummated on or before September 30, 2024.
The Holder will also receive 60,000 common stock purchase warrants of Guided Therapeutics, Inc. (Exhibit A). The exercise price per share of the common stock under this warrant shall be $0.25.
The warrants shall have an issuance date of August 1, 2024, and will expire 4 years from the date herein.
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; 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 |
|
|
|
| CEO & President |
|
|
|
Exhibit A
(Follows)
| 2 |
EXHIBIT 10.3
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: 60,000 |
| Date of Issuance: August 1, 2024 |
THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, Bryan Mamula 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 August 1, 2028 (the “Termination Date”) but not thereafter, to subscribe for and purchase from Guided Therapeutics, Inc., a Delaware corporation (the “Company”), up to 60,000 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 Promissory Note dated July 23, 2024, by and among the Company and the Holder (the “Agreement”).
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 $0.25 (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.
| 2 |
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.
| 3 |
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 61st 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.
| 4 |
Section 3. Certain Adjustments.
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.
| 5 |
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.
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.
| 6 |
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.
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 registration statement 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.
| 7 |
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.
| 8 |
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.
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.
| 9 |
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)
| 10 |
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: Mark L. Faupel Title: CEO & President |
|
| 11 |
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: ________________________________________________________________________________________
| 12 |
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: | ______________________________________ |
|
Phone Number:
Email Address:
| (Please Print)
______________________________________
______________________________________
|
| Dated: _______________ __, ______
|
|
| Holder’s Signature:
|
|
| Holder’s Address: |
|
| 13 |
EXHIBIT 10.4
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________ |
| Date of Issuance: _______, 2024 |
THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, _____________ 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 _________, 2028 (the “Termination Date”) but not thereafter, to subscribe for and purchase from Guided Therapeutics, Inc., a Delaware corporation (the “Company”), up to __________ 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 Promissory Note dated __________, 2024, by and among the Company and the Holder (the “Agreement”).
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 $0.25 (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.
| 2 |
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.
| 3 |
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 61st 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.
| 4 |
Section 3. Certain Adjustments.
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.
| 5 |
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.
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.
| 6 |
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.
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 registration statement 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.
| 7 |
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.
| 8 |
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.
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.
| 9 |
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)
| 10 |
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: Mark L. Faupel Title: CEO & President |
|
| 11 |
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: ________________________________________________________________________________________
| 12 |
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: | ______________________________________ |
|
Phone Number:
Email Address:
| (Please Print)
______________________________________
______________________________________
|
| Dated: _______________ __, ______
|
|
| Holder’s Signature:
|
|
| Holder’s Address: |
|
| 13 |
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. | I am 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. | 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: November 14, 2024 |
| /s/ Mark Faupel |
|
|
|
| Mark Faupel |
|
|
|
| President, Chief Executive Officer, Chief Operating Officer and Acting Chief Financial Officer |
|
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, Mark Faupel, 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 September 30, 2024 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 Officer and Acting Chief Financial Officer November 14, 2024 |