GUIDED THERAPEUTICS INC

Previous wording

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

Current wording

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.

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 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.

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 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.

Previous 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.

Current wording

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.

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. 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:

Current wording

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:

Previous wording

Based on current and expected enrollment rates, we expect the study to be completed in 2024, however there can be no assurance that the study will progress within the expected timeline.

Current wording

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.

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 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.

Current wording

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.

Previous wording

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.

Current wording

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.

Previous wording

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

Current wording

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.

Previous wording

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

Current wording

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.** **

Previous wording

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

Current wording

**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.

Previous 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.

Current wording

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.

Previous wording

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 wording

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.

Previous wording

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 wording

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.

Previous wording

***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 wording

***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.

Previous 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.

Current wording

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.

Previous wording

***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 wording

***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.

Previous 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.

Current wording

***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.

Previous 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.

Current wording

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.

Previous wording

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 wording

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.

Previous 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.

Current wording

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.

Previous wording

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 wording

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.

Previous wording

***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 wording

***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.

Previous 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 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 wording

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.

Previous 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.

Current wording

***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.

Previous wording

***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 wording

***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.

Previous 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.

Current wording

***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.

Previous wording

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 wording

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.

Previous wording

There was no income tax benefit recorded for the three months ended June 30, 2024 or 2023, due to recurring net operating losses.

Current wording

There was no income tax benefit recorded for the nine months ended September 30, 2024 or 2023, due to recurring net operating losses.

Previous 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.

Current wording

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.

Previous wording

The Company will need to continue to raise capital in order to provide funding for its operations and FDA approval process. If sufficient capital cannot be raised, the Company will continue its plans of curtailing operations by reducing discretionary spending and staffing levels and attempting to operate by only pursuing activities for which it has external financial support. However, there can be no assurance that such external financial support will be sufficient to maintain even limited operations or that the Company will be able to raise additional funds on acceptable terms, or at all. In such a case, the Company might be required to enter into unfavorable agreements or, if that is not possible, be unable to continue operations, and to the extent practicable, liquidate and/or file for bankruptcy protection.

Current wording

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.

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 $0.4 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 $1.5 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.

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 June 30, 2024, we had cash of approximately $275 thousand and negative working capital of $4.7 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 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%.

Previous 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.

Current wording

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.

Previous 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.

Current wording

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.

Previous wording

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.

Current wording

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.