GUIDED THERAPEUTICS, INC. 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 can 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
· access to sufficient debt or equity capital to meet our operating and
financial needs;
· the extent of dilution of the holdings of our existing stockholders upon
the issuance, conversion or exercise of securities issued as part of our
capital raising efforts;
· the extent to which certain debt holders may call the notes to be paid;
· the effectiveness and ultimate market acceptance of our products and our
ability to generate sufficient sales revenues to sustain our growth and
strategy plans;
· whether our products in development will prove safe, feasible and
effective;
· whether and when we or any potential strategic partners will obtain
required regulatory approvals in the markets in which we plan to operate;
· our need to achieve manufacturing scale-up in a timely manner, and our
need to provide for the efficient manufacturing of sufficient quantities
of our products;
· the lack of immediate alternate sources of supply for some critical
components of our products;
· our ability to establish and protect the proprietary information on which
we base our products, including our patent and intellectual property
position;
· the current outbreak of the Coronavirus SARS-CoV-2, the pathogen
responsible for COVID-19, which has already had an impact on financial
markets, could result in additional repercussions in our operating
business, including but not limited to, the sourcing of materials for
product candidates, manufacture of supplies for preclinical and/or
clinical studies, delays in clinical operations, which may include the
availability or the continued availability of patients for trials due to
such things as quarantines, conduct of patient monitoring and clinical
trial data retrieval at investigational study sites?
· The future impact of the outbreak is highly uncertain and cannot be
predicted, and we cannot provide any assurance that the outbreak will not
have a material adverse impact on our operations or future results or
filings with regulatory health authorities. The extent of the impact, if
any, we will depend on future developments, including actions taken to
contain the coronavirus; · The impact of the conflict between Russia and
Ukraine on economic conditions in general and on our business and
operations;
· the need to fully develop the marketing, distribution, customer service
and technical support and other functions critical to the success of our
product lines;
· the dependence on potential strategic partners or outside investors for
funding, development assistance, clinical trials, distribution and
marketing of some of our products; and
· other risks and uncertainties described from time to time in our reports
filed with the SEC .
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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
Since our inception, we have raised capital through the public and private sale of debt and equity, funding from collaborative arrangements, and grants.
Our prospects must be considered in light of the substantial risks, expenses and
difficulties encountered by entrants into the medical device industry. This
industry is characterized by an increasing number of participants, intense
competition and a high failure rate. We have experienced operating losses since
our inception and, as of
Our product revenues to date have been limited. In 2021, 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 going forward will be derived from revenue from the sale of LuViva devices and disposables.
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Current Demand for LuViva
Based on discussions with our distributors, we currently hold and expect to
generate additional purchase orders for approximately
In
In
In
CRITICAL ACCOUNTING POLICIES
Our material accounting policies, which we believe are the most critical to investors understanding of our financial results and condition, are discussed below. Because we are still early in our enterprise development, the number of these policies requiring explanation is limited. When we begin to generate revenue from different sources, we expect that the number of applicable policies and complexity of the judgments required will increase.
Revenue Recognition: ASC 606, Revenue from Contracts with Customers establishes a single and comprehensive framework which sets out how much revenue is to be recognized, and when. The core principle is that a vendor should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the vendor expects to be entitled in exchange for those goods or services. Revenue will now be recognized by a vendor when control over the goods or services is transferred to the customer. In contrast, Revenue based revenue recognition around an analysis of the transfer of risks and rewards; this now forms one of a number of criteria that are assessed in determining whether control has been transferred. The application of the core principle in ASC 606 is carried out in five steps:
Step 1 - Identify the contract with a customer: a contract is defined as an agreement (including oral and implied), between two or more parties that creates enforceable rights and obligations and sets out the criteria for each of those rights and obligations. The contract needs to have commercial substance and it is probable that the entity will collect the consideration to which it will be entitled.
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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 Employee, Service Providers and Investors: On the date of issuance, the instruments are recorded at their fair value as determined using either the Black-Scholes valuation model or Monte Carlo Simulation model.
Allowance for Accounts Receivable: We estimate losses from the inability of our distributors to make required payments and periodically review the payment history of each of our distributors, as well as their financial condition, and revise our reserves as a result.
Inventory Valuation: All inventories are stated at lower of cost or net realizable value, with cost determined substantially on a "first-in, first-out" basis. Selling, general, and administrative expenses are not inventoried, but are charged to expense when purchased.
RESULTS OF OPERATIONS
COMPARISON OF THREE MONTHS ENDED
Sales Revenue, Cost of Sales and Gross Profit from Devices and
Disposables: Revenues from the sale of LuViva devices and disposables for the
three months ended
While we currently hold and expect to generate purchase orders for approximately
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Research and Development Expenses: Research and development expenses for the
three months ended
Sales and Marketing Expenses: Sales and marketing expenses for the three months
ended
General and Administrative Expense: General and administrative expenses for the
three months
Interest Expense: Interest expense for the three months ended
Change in Fair Value of Derivative Liability: The gain due to the change in fair
value of the derivative liability during the three months ended
Gain from extinguishment of debt: Gain from extinguishment of debt for the three
months ended
Other Income: Other income for the three months ended
Preferred Stock Dividends: Income from preferred stock dividends during the
three months ended
Net Loss: Net loss attributable to common stockholders during the three months
ended
There was no income tax benefit recorded for the three months ended
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COMPARISON OF THE NINE MONTHS ENDED
Sales Revenue, Cost of Sales and Gross Profit from Devices and
Disposables: Revenues from the sale of LuViva devices and disposables for the
nine months ended
Research and Development Expenses: Research and development expenses were
Sales and Marketing Expenses: Sales and marketing expenses were
General and Administrative Expense: General and administrative expenses were
Interest Expense: Interest expense during the nine months ended
Other Income: Other income for the nine months ended
Change in Fair Value of Derivative Liability: The gain due to the change in fair
value of the derivative liability during the nine months ended
Gain from extinguishment of debt: Gain from extinguishment of debt during the
nine months ended
Change in Fair Value of Warrants: Change in fair value of warrants during the
nine months ended
Preferred Stock Dividends: Expense related to preferred stock dividends during
the nine months ended
Net Loss: Net loss attributable to common stockholders was
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There was no income tax benefit recorded for the nine months ended
LIQUIDITY AND CAPITAL RESOURCES
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
Our major cash flows for the nine months ended
As of the date of this filing, our previously planned uplist to Nasdaq is currently on hold, pending improvement in market conditions. The Company will reassess those conditions over the ensuing months to determine whether an uplist to Nasdaq can and should be attempted, although there is no assurance that market conditions will improve or that the Company will qualify for Nasdaq in the future.
Capital resources for 2021
During 2021, the Company received
During 2021, the Company received
During 2021, the Company finalized an investment by
During 2021, the Company entered into an exchange agreement with
Contingencies
Based on the current outbreak of the Coronavirus SARS-CoV-2, the pathogen responsible for COVID-19, which has already had an impact on financial markets, there could be additional repercussions in our operating business, including but not limited to, the sourcing of materials for product candidates, manufacture of supplies for preclinical and/or clinical studies, delays in clinical operations, which may include the availability or the continued availability of patients for trials due to such things as quarantines, conduct of patient monitoring and clinical trial data retrieval at investigational study sites.
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The future impact of the outbreak is highly uncertain and cannot be predicted, and we cannot provide any assurance that the outbreak will not have a material adverse impact on our operations or future results or filings with regulatory health authorities. The extent of the impact, if any, we will depend on future developments, including actions taken to contain the coronavirus.
The
Off-Balance Sheet Arrangements
We have no material off-balance sheet arrangements, no special purpose entities, and no activities that include non-exchange-traded contracts accounted for at fair value.
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