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
All information and footnote disclosures included
in the consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the
United States.
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 February 2, 2019 filed with the Securities
and Exchange Commission (“SEC”) pursuant to Section 13 or 15(d) under the Securities Exchange Act of 1934. In the opinion
of management, all adjustments (consisting of normal recurring accruals and other items) considered necessary for a fair presentation
have been included.
A 1:800 reverse stock split of all of the Company’s
issued and outstanding common stock was implemented on March 29, 2019. As a result of the reverse stock split, every 800 shares
of issued and outstanding common stock were converted into 1 share of common stock. All fractional shares created by the reverse
stock split were rounded to the nearest whole share. The number of authorized shares of common stock did not change. The reverse
stock split decreased the Company’s issued and outstanding shares of common stock from 2,652,309,322 shares to 3,319,469
shares as of that date with rounding. See Note 4, Stockholders’ Deficit. Unless otherwise specified, all per share amounts
are reported on a post-stock split basis, as of March 31, 2020 and December 31, 2019.
The Company’s prospects must be considered
in light of the substantial risks, expenses and difficulties encountered by entrants into the medical device industry. This industry
is characterized by an increasing number of participants, intense competition and a high failure rate. The Company has experienced
net losses since its inception and, as of March 31, 2020, it had an accumulated deficit of approximately $136.8 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.
Certain prior year amounts have been reclassified
in order to conform to the current year presentation.
Going Concern
The Company’s consolidated financial statements
have been prepared and presented on a basis assuming it will continue as a going concern. The factors below raise substantial doubt
about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that
might be necessary from the outcome of this uncertainty.
At March 31, 2020, the Company had a negative
working capital of approximately $9.0 million, accumulated deficit of $136.8 million, and net income of $2.7 million for the three
months then ended (the net income was the result of a $3.2 million change in fair value of warrants gain that was recorded in the
period). Stockholders’ deficit totaled approximately $11.3 million at March 31, 2020, primarily due to recurring net losses
from operations, deemed dividends on warrants and preferred stock, offset by proceeds from the exercise of options and warrants
and proceeds from sales of stock.
The Company has taken steps to improve its going
concern opinion, including:
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During the end of 2019 and beginning of 2020, the Company was able to raise $2.3 million in equity and debt investments; |
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The Company has executed several exchange agreements that converted to approximately $2.1 million of debt for equity, as well as eliminate some existing debt; |
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The Company’s has applied for an uplisting on the Over the Counter (OTC) bulletin board from the pink sheets; |
If sufficient capital cannot be raised during
2020, 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.
The Company had warrants exercisable for approximately
27.2 million shares of its common stock outstanding at March 31, 2020, with exercise prices ranging between $0.04 and $1.82 per
share. Exercises of in the money warrants would generate a total of approximately $1.3 million in cash, assuming full exercise,
although the Company cannot be assured that holders will exercise any warrants. Management may obtain additional funds through
the public or private sale of debt or equity, and grants, if available.
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