GUIDED THERAPEUTICS INC
For the period ended Jun 30, 2024. Filed Aug 14, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 14, 2024
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What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-14.
0001477932-24-002788
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-14.
0001477932-24-004869
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 58 previous paragraphs and 72 current paragraphs.
35 unchanged; 18 reworded; 16 added; 5 removed; 0 previous and 3 current paragraphs rearranged.
Tables are not compared: 2 previous and 3 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (16)
Current report
**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 June 30, 2024 and December 31, 2023.
Current report
Research and Development Expenses: Research and development expenses were $221,565 and $66,164 during the three months ended June 30, 2024 and 2023, respectively. The increase of $155,401 or 234.9%, was primarily due to additional $153,764 of costs for sponsored research related to our clinical trials during the three months ended June 30, 2024.
Current report
Sales and Marketing Expenses: Sales and marketing expenses were $69,231 and $60,930 during the three months ended June 30, 2024 and 2023, respectively. The increase of $8,300, or 13.6%, was primarily due to $5,008 of additional rent expense allocated to our sales & marketing department and $2,663 of additional travel expenses for sales trips.
Current report
***General and Administrative Expense:***General and administrative expenses were $363,989 and $1,389,034 during the three months ended June 30, 2024 and 2023, respectively. The decrease of $1,025,045, or 73.8%, was primarily driven by a decrease of $697,338 in payroll and benefits (including payroll taxes), which was primarily due to 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, the Company recognized $59,216 of additional stock-based compensation expense during the prior year period due to the modification of a stock option award and $30,745 of additional expense for stock options for which the related expense was fully recognized as of the end of the prior period. The decrease in general and administrative expenses was also due to a decline of $326,502 of expense for consulting and legal fees, which was primarily driven by $336,745 less expense recognized for shares of common stock and warrants issued to Mr. Blumberg and $29,706 less expense for warrants issued to Mr. Grujic. These decreases were offset by an increase of $39,949 in fees paid to consultants and other third-party professional services providers.
Current report
Interest Expense: Interest expense was $75,372 and $68,711 during the three months ended June 30, 2024 and 2023, respectively. The increase of $6,661, or 9.7%, was primarily due to an $8,127 increase in interest due on a local tax liability and $2,019 of additional interest incurred for the promissory note issued to Diagonal Lending during the three months ended June 30, 2024. These increases were offset by decreases in interest expense due to declining balances in other notes payable outstanding.
Current report
***Gain from Extinguishment of Debt:***The gain from extinguishment of debt of $16,401 and $17,450 during the three months ended June 30, 2024 and 2023, respectively, was materially consistent period over period and was due to forgiveness of debt from our creditors.
Current report
***Other Income:***Other income was $11,515 and $248 during the three months ended June 30, 2024 and 2023, respectively. The change in other income was primarily due to an adjustment of a liability during the three months ended June 30, 2024.
Current report
RESULTS OF OPERATIONS
Current report
COMPARISON OF THE SIX MONTHS ENDED JUNE 30, 2024 AND 2023
Current report
Sales and Marketing Expenses: Sales and marketing expenses were $141,803 and $133,975 during the six months ended June 30, 2024 and 2023, respectively. The increase of $7,827, or 5.8% was primarily due to an increase of $7,324 in rent expense allocated to our sales & marketing department.
Current report
***General and Administrative Expense:***General and administrative expenses were $600,216 and $2,165,467 during the six months ended June 30, 2024 and 2023, respectively. The decrease of $1,565,251, or 72.3%, was primarily driven by a decrease of $771,892 in payroll and benefits (including payroll taxes), which was primarily due to 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, the Company recognized $59,216 of additional stock-based compensation expense during the prior year period due to the modification of a stock option award. The decrease in general and administrative expenses was also due to a decline of $800,040 of expense for consulting and legal fees, which was primarily driven by (1) $696,784 less expense recognized for shares of common stock and warrants issued to Mr. Blumberg, (2) $59,412 less expense for warrants issued to Mr. Grujic and (3) a decline of $43,879 in fees paid to consultants and other third party professional service providers. These decreases were offset by an overall increase of $6,682 in other general and miscellaneous expenses.
Current report
Interest Expense: Interest expense was $139,490 and $134,391 during the six months ended June 30, 2024 and 2023, respectively. The increase of $5,099, or 3.8%, was primarily due to a $9,345 increase in interest due on a local tax liability and $2,019 of additional interest incurred for the promissory note issued to Diagonal Lending during the three months ended June 20, 2024. These increases were offset by decreases in interest expense due to declining balances in other notes payable outstanding.
Current report
Change in Fair Value of Derivative Liability: The change in the fair value of our derivative liability resulted in a loss of $7,350 during the six months ended June 30, 2024. The change in the fair value was attributed to changes in our forecasted stock price. The gain due to the change in fair value of the derivative liability during the six months ended June 30, 2023 was $5,038 and was attributed to changes in our stock price.
Current report
***Other Income:***Other income was $12,372 and $248 during the six months ended June 30, 2024 and 2023, respectively. The change in other income was primarily due to an adjustment of a liability during the six months ended June 30, 2024.
Current report
On July 22, 2024, we issued a $62,100 convertible promissory note to Diagonal Lending. The convertible promissory note, which had an original issue discount of $8,100, will mature on May 30, 2025 and will accrue total interest of $8,694. A payment of $35,397 will be due on January 30, 2025. The remaining balance, including the accrued interest, will be paid in monthly installments of $8,849 beginning February 28, 2024 and ending on the maturity date. The remaining terms of the convertible promissory note are identical to the June 11, 2024 convertible promissory note disclosed within Note 8,“Convertible Debt.”
Current report
On July 23, 2024, we issued a $50,000 promissory note to an unaffiliated third party (the “Holder”). The promissory note, which will incur total interest of $5,000, will mature on February 1, 2025. Monthly payments of $10,000 are due beginning September 1, 2024 and ending January 1, 2025. The $5,000 interest payment is due on February 1, 2025. With the Holder’s permission, the promissory note may be prepaid in full or in part without penalty or premium. In connection with the promissory note, we issued 60,000 common stock warrants with a strike price of $025. The warrants will expire on July 31, 2028.
Removed paragraphs (5)
Previous report
**Allowance for Accounts Receivable:**The Company reviews all outstanding accounts receivable for collectability on a quarterly basis. An allowance for credit losses is recorded for any amounts deemed uncollectable. The allowance is adjusted based on our assessment of the ability of our distributors to make required payments and our review of the financial condition of our distributors.
Previous report
Sales and Marketing Expenses: Sales and marketing expenses of $72,572 and $73,045 during the three months ended March 31, 2024 and 2023, respectively, were materially consistent over the two periods.
Previous report
***General and Administrative Expense:***General and administrative expenses were $236,227 and $776,433 during the three months ended March 31, 2024 and 2023, respectively. Lower general and administrative costs of $540,206, or 69.6%, was primarily driven by a $392,273 decline in expense for warrants and common stock issued to consultants and related parties, a decrease of $92,232 in stock option expense, a decrease of $81,300 for professional fees paid to consultants, and a decrease of $8,605 in other miscellaneous operating costs. The decline in our general and administrative expenses during the three months ended March 31, 2024 was partially offset by a $23,320 increase in payroll and benefits expense and an $10,850 increase in taxes.
Previous report
Contingencies
Previous report
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.
Reworded paragraphs (18)
Previous wording
Our prospects must be considered in light of the substantial risks, expenses and difficulties encountered by entrants into the medical device industry. This industry is characterized by an increasing number of participants, intense competition and a high failure rate. We have experienced operating losses since our inception and, as of March 31, 2024, we have an accumulated deficit of approximately $151.6 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.
Current wording
Our prospects must be considered in light of the substantial risks, expenses and difficulties encountered by entrants into the medical device industry. This industry is characterized by an increasing number of participants, intense competition and a high failure rate. We have experienced operating losses since our inception and, as of June 30, 2024, we have an accumulated deficit of approximately $152.1 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.
Previous wording
Our product revenues to date have been limited. During the three months ended March 31, 2024 and 2023, the majority of our revenues were from the sale of components of our LuViva devices and disposables. We expect that the majority of our revenue in the near future will be derived from sales of LuViva devices and disposables.
Current wording
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.
Previous wording
Based on written agreements and ongoing discussions with our distributors, including an amended agreement executed on February 17, 2024, we currently hold and expect to generate additional purchase orders for approximately $4.2 million in LuViva devices and disposables and expect those purchase orders to result in actual sales of $1.5 to $2.5 million throughout in 2024, representing what we view as current demand for our products. We cannot be assured that we will generate all or any of these additional purchase orders, or that existing orders will not be canceled by the distributors or that parts to build product will be available to meet demand, such that existing orders will result in actual sales. Because we have a short history of sales of our products, we cannot confidently predict future sales of our products beyond this time frame and cannot be assured of any particular number of sales. Accordingly, we have not identified any particular trends with regard to sales of our products. In order to increase demand for LuViva, we are focused on three primary markets: the United States, China and Europe.
Current wording
Based on written agreements and ongoing discussions with our distributors, we currently hold and expect to generate additional purchase orders for approximately $4.2 million in LuViva devices and disposables and expect those purchase orders to result in actual sales of $1.5 to $2.5 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.
Previous wording
In the United States, the Company is actively pursuing FDA approval by initiating a clinical trial protocol 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 protocol was drafted with input from FDA and at least two prestigious 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 are fully IRB approved. All four sites have received LuViva devices and have been trained on their use. One site unexpectedly needed additional approvals from the local hospital that is contributing subjects to the study, but that approval was granted on March 28, 2024. Three of the four sites have undergone one or more clinical study monitoring visits by Company 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 initial clinical study monitoring visits include:
Current wording
In the United States, the Company is actively pursuing FDA approval by initiating a clinical trial protocol 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 protocol was drafted with input from FDA and at least two prestigious 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 are fully IRB approved. All four sites have received LuViva devices and have been trained on their use. One site unexpectedly needed additional approvals from the local hospital that is contributing subjects to the study, but that approval was granted on March 28, 2024. All of the four sites have undergone one or more clinical study monitoring visits by Company 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 initial clinical study monitoring visits include:
Previous wording
Regarding international sales efforts, our focus has been on achieving regulatory approval to sell LuViva in China. Our Chinese partner, SMI, has reported to us that as of March 31, 2024, all study subjects needed for Chinese National Medical Products Administration (NMPA) approval have been enrolled and tested. There have been no reports of any adverse events from the study associated with the LuViva device. SMI believes that they can file the clinical report with NMPA during the second quarter of 2024 and that approval could occur in 2024, although there can be no assurance that NMPA filing and approval will be completed within the projected time frames.
Current wording
Regarding international sales efforts, our focus has been on achieving regulatory approval to sell LuViva in China. Our Chinese partner, SMI, has reported to us that as of June 30, 2024, all study subjects needed for Chinese National Medical Products Administration (NMPA) approval have been enrolled and tested. There have been no reports of any adverse events from the study associated with the LuViva device. Filing with the NMPA was temporarily delayed during the second quarter of 2024 due to an unexpected medical leave taken by a clinical medical administrator at one of the clinical sites. SMI believes that they can file the clinical report with NMPA during 2024 and that approval could occur in 2024, although there can be no assurance that NMPA filing and approval will be completed within the projected time frames.
Previous wording
Sales Revenue and Cost of Goods Sold: Revenues from the sale of LuViva devices and disposables for the three months ended March 31, 2024, were $5,720, compared to $22,049 for the three months ended March 31, 2023. Cost of goods sold was $1,875 during the three months ended March 31, 2024, compared to $8,789 during the three months ended March 31, 2023. The decrease in cost of goods sold in the current year was due to lower sales. As of March 31, 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 in 2024.
Current wording
Sales Revenue and Cost of Goods Sold: Revenues from the sale of LuViva devices and disposables for the three months ended June 30, 2024, were nil, compared to $44,238 for the three months ended June 30, 2023. Cost of goods sold was nil during the three months ended June 30, 2024, compared to $33,038 during the three months ended June 30, 2023. As of June 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 upon receiving NMPA approval.
Previous wording
Change in Fair Value of Derivative Liability: The gain for the change in fair value of the derivative liability during the three months ended March 31, 2024 and 2023 was nil and $4,818, respectively, which was due to changes to our stock price during the period.
Current wording
Change in fair value of derivative liability: The change in the fair value of our derivative liability resulted in a loss of $7,350 during the three months ended June 30, 2024. The change in the fair value was attributed to changes in our forecasted stock price.
Previous wording
Interest Expense: Interest expense of $64,118 and $65,680 during the three months ended March 31, 2024 and 2023, respectively, was materially consistent over the two periods.
Current wording
***Preferred Stock Dividends:***Expense related to preferred stock dividends of $48,929 and $47,497 for the three months ended June 30, 2024 and 2023, respectively, was materially consistent over the two periods.
Previous wording
Net Loss: Net loss attributable to common stockholders was $441,372 and $969,508 during the three months ended March 31, 2024 and 2023, respectively. The reasons for the fluctuation are outlined above.
Current wording
Net Loss: Net loss attributable to common stockholders was $758,180 and $1,603,219 during the three months ended June 30, 2024 and 2023, respectively. The reasons for the decrease in our net loss are outlined above.
Previous wording
Research and Development Expenses: Research and development expenses were $53,554 and $7,146 during the three months ended March 31, 2024 and 2023, respectively. The increase of $46,408, or 649.4%, was primarily due to an increase in costs related to clinical trials in the three months ended March 31, 2024 compared to the three months ended March 31, 2023.
Current wording
Research and Development Expenses: Research and development expenses were $275,119 and $73,310 during the six months ended June 30, 2024 and 2023, respectively. The increase of $201,809 or 275.3%, was primarily due to an increase in costs for clinical trials, including a $186,074 increase in sponsored research costs and $9,593 additional travel expenses for trials during the in the six months ended June 30, 2024.
Previous wording
***Gain from Extinguishment of Debt:***The gain from extinguishment of debt during the three months ended March 31, 2024 and 2023 was $16,659 and $34,773, respectively. The decrease of $18,114, or 52%, in the current period was due to a lower amount of debt forgiven as the amount of debt owed has declined.
Current wording
***Gain from Extinguishment of Debt:***The gain from extinguishment of debt was $33,060 and $52,223 during the six months ended June 30, 2024 and 2023, respectively. The decrease of $19,163, or 36.7% was due to a lower amount of debt forgiven in the current period, as the balances owed to our creditors have declined.
Previous wording
***Deemed Dividend for Warrant Exchanges:***Expense related to deemed dividends was nil and $65,296 in the period ended March 31, 2024 and 2023. 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.
Current wording
***Deemed Dividend for Warrant Exchanges:***Expense for deemed dividends was nil and $65,296 in the six months ended June 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.
Previous wording
***Preferred Stock Dividends:***Expense related to preferred stock dividends was $38,907 and $34,758 for the three months ended March 31, 2024 and 2023, respectively. The increase of $4,149, or 11.9% was due to differences in the value of common shares issued to settle preferred stock dividends.
Current wording
***Preferred Stock Dividends:***Expense related to preferred stock dividends was $87,836 and $82,255 for the six months ended June 30, 2024 and 2023, respectively. The increase of $5,581, or 6.8%, was due to changes in the value of the common shares used to settle preferred stock dividends in each period.
Previous wording
We have incurred significant losses since our inception. At March 31, 2024, the Company had a negative working capital of approximately $4.1 million, accumulated deficit of $151.6 million, and incurred a net loss including preferred dividends of $0.4 million for the three months then ended. Stockholders’ deficit totaled approximately $4.0 million at March 31, 2024, primarily due to recurring net losses from operations.
Current wording
We have incurred significant losses since our inception. At June 30, 2024, the Company had negative working capital of approximately $4.7 million, accumulated deficit of $152.3 million, and incurred a net loss including preferred dividends of $1.2 million for the six months then ended. Stockholders’ deficit totaled approximately $4.7 million at June 30, 2024, primarily due to recurring net losses from operations.
Previous wording
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 $1.8 million to $2.2 million of funds to operate our business over the next twelve months, including approximately $0.6 million of funds to complete our ongoing clinical studies.
Current wording
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 $1.8 million to $2.2 million of funds to operate our business over the next twelve months, including approximately $0.4 million of funds to complete our ongoing clinical studies.
Previous wording
Since our inception, we have raised capital through the public and private sale of debt and equity, funding from collaborative arrangements, and grants. As of March 31, 2024, we had cash of approximately $0.45 million and negative working capital of $4.1 million.
Current wording
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 June 30, 2024, we had cash of approximately $275 thousand and negative working capital of $4.7 million.
Previous wording
Our major cash flows for the three months ended March 31, 2024 consisted of cash used for operating activities of $0.1 million and cash used for financing activities of $46 thousand, which was for payments made on outstanding debt.
Current wording
Our major cash flows for the six months ended June 30, 2024 consisted of cash used for operating activities of $314 thousand, proceeds from the issuance of notes payable of $200 thousand and payments of debt and debt issuance costs of $202 thousand.
Previous wording
Our major cash flows for the three months ended March 31, 2023 consisted of cash used by operating activities of $0.5 million and net cash provided by financing activities of $23 thousand, which was derived from $195 thousand of proceeds from warrant exercises, offset by payments made on outstanding debt.
Current wording
Our major cash flows for the six months ended June 30, 2023 consisted of cash used by operating activities of $937 thousand, payments of debt of $213 thousand and proceeds from warrant exercises of $195 thousand.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
Sales Revenue and Cost of Goods Sold: Revenues from the sale of LuViva devices and disposables for the six months ended June 30, 2024, were $5,720, compared to $66,287 for the six months ended June 30, 2023. Cost of goods sold was $1,875 during the six months ended June 30, 2024, compared to $41,827 during the six months ended June 30, 2023. As of June 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 upon receiving NMPA approval.
Current report — wording carried from elsewhere
Net Loss: Net loss attributable to common stockholders was $1,199,452 and $2,572,726 during the six months ended June 30, 2024 and 2023, respectively. The reasons for the decrease in our net loss are outlined above.
Current report — wording carried from elsewhere
There was no income tax benefit recorded for the three months ended June 30, 2024 or 2023, due to recurring net operating losses.