UNITED STATES

SECURITIES AND

EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐

~~[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

~~[ ]~~ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT 1934

For the quarterly period ended ~~September~~June 30, ~~2017~~2022

Commission File No. 0-22179

~~GUIDED THERAPEUTICS, INC.~~

~~(Exact Name of Registrant as Specified in Its Charter)~~

GUIDED THERAPEUTICS, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

58-2029543

(State or other jurisdiction of

incorporation or organization)

~~58-2029543~~

(I.R.S. Employer

Identification No.)

~~5835 Peachtree Corners East, Suite D~~

~~Norcross, Georgia 30092~~

~~(Address of principal executive offices) (Zip Code)~~

5835 Peachtree Corners East, Suite B

Norcross, Georgia 30092

(Address of principal executive offices) (Zip Code)

(770) 242-8723

(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: Yes ~~[X] No[ ]~~☒ No ☐

Indicate by check mark whether the registrant has submitted electronically, ~~and posted on its corporate Web site,~~ if any, every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ such files). Yes ~~[X]~~☒ No ~~[ ]~~☐

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”~~filer“ and “smaller reporting ~~company”~~company“ and “emerging growth ~~company”~~company“ in Rule 12b-2 of the Exchange Act (Check one):

Large Accelerated filer ~~[ ]~~	☐	Accelerated filer ~~[ ]~~	☐
Non-accelerated ~~filer [ ] (Do not check if smaller reporting company)~~Filer	☒	Smaller reporting company ~~[X]~~	☒
		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 ~~[ ]~~☐ No ~~[X]~~☒

As of ~~November 7, 2017,~~August 15, 2022, the registrant had ~~19,453,469~~36,664,707 shares of ~~common~~Common Stock, $0.001 par value per share, outstanding.

~~GUIDED THERAPEUTICS, INC. AND SUBSIDIARY~~

~~INDEX~~

~~Part I. Financial Information~~	3


~~Item 1. Financial Statements~~	3

~~Condensed~~

PART I — FINANCIAL INFORMATION
		Page
Item 1.	Financial Statements
	Consolidated Balance Sheets ~~– (Unaudited)~~ as of
~~September~~ June 30, ~~2017~~2022 (Unaudited) and December 31, ~~2016~~2021	3

~~Condensed~~ Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2022 and 2021 (Unaudited)	4
	Consolidated Statements of Stockholders' Deficit for the Three and ~~nine months ended September~~Six Months Ended June 30, ~~2017~~2022 and ~~2016~~2021 (Unaudited)	4 5

~~Condensed~~ Consolidated Statements of Cash Flows ~~(Unaudited)~~ for the Six Months Ended June 30, 2022 and 2021 (Unaudited)	9
~~Nine months ended September 30, 2017 and 2016~~	5

Notes to ~~Condensed~~Unaudited Consolidated Financial Statements ~~(Unaudited)~~	6 10

Item 2. ~~Management's~~	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25 35
	Company Overview	36
	Results of Operations	38
	Disclosure About Off-Balance Sheet Arrangements	42
	Critical Accounting Policies and Estimates	37
	Liquidity and Capital Resources	41

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29 42

Item 4.	Controls and Procedures	29 42

~~Part II. Other Information~~			30 PART II — OTHER INFORMATION

Item . 1.	Legal Proceedings	30 43

Item 1A.	Risk Factors	30 43

Item 2.	Unregistered ~~Sale~~Sales of Equity Securities and Use of ~~Proceeds.~~Proceeds	30 43

Item 3.	Defaults Upon Senior Securities	30 43

Item 4.	Mine Safety Disclosures

Item 5.	Other Information

Item 6.	Exhibits	43

Signatures		44


~~Item 4. Mine Safety Disclosures~~	302

~~Item 5. Other information~~	30Table of Contents

~~Item 6. Exhibits~~	30

~~Signatur~~es	31

~~PART I - FINANCIAL INFORMATION~~

~~ITEM 1. FINANCIAL STATEMENTS~~

GUIDED THERAPEUTICS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS Unaudited (in Thousands)
ASSETS September 30, 2017 December 31, 2016
CURRENT ASSETS:
Cash and cash equivalents $ 74 $ 14
  Accounts receivable, net of allowance for doubtful accounts of $244
and $279 at September 30, 2017 and December 31, 2016, respectively
—   —
   Inventory, net of reserves of $409 and $278, at September 30, 2017 and December 31, 2016, respectively 577 773
Other current assets 179 259
                    Total current assets 830 1,046

Property and equipment, net 56 126
Other assets, net of reserve of $293 at September 30, 2017 19 320
                    Total noncurrent assets 75 446

                    TOTAL ASSETS $ 905 $ 1,492

LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES:
Notes payable in default, including related parties $ 689 $ 1,008
Short-term notes payable, including related parties 820 197
Accounts payable 2,965 2,600
Convertible notes in default 2,322 2,361
Convertible notes payable 814 468
Accrued liabilities 3,650 2,670
Deferred revenue 156 34
                    Total current liabilities 11,416 9,338

Warrants at fair value 1,834 1,420

                    TOTAL LIABILITIES 13,250 10,758

COMMITMENTS & CONTINGENCIES (Note 7)

STOCKHOLDERS’ DEFICIT:

   Series C convertible preferred stock, $.001 par value; 9.0 shares authorized, 1.2 and 1.6 shares issued and outstanding as of September 30, 2017 and December 31, 2016, (Liquidation preference of $1,177 and $1,643 at September 30, 2017 and December 31, 2016, respectively) 431 601
   Series C1 convertible preferred stock, $.001 par value; 20.3 shares authorized, 4.3 shares issued and outstanding as of September 30, 2017 and December 31, 2016 (Liquidation preference of $4,312 at September 30, 2017 and December 31, 2016) 701 701
   Common stock, $.001 Par value; 1,000,000 shares authorized, 9,253 and 669 shares issued and outstanding as of September, 30 2017 and December 31, 2016, respectively 751 742
Additional paid-in capital 117,223 116,380
Treasury stock, at cost (132 ) (132 )
Accumulated deficit (131,319 ) (127,558 )

                   TOTAL STOCKHOLDERS’ DEFICIT (12,345 ) (9,266 )

                   TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT $ 905 $ 1,492

The accompanying notes are an integral part of these condensed consolidated financial statements.

~~GUIDED THERAPEUTICS, INC.~~

~~CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS~~

~~(Unaudited, in Thousands)~~

FOR THE THREE
MONTHS
ENDED SEPTEMBER 30, FOR THE NINE
MONTHS
ENDED SEPTEMBER 30,
2017 2016 2017 2016
REVENUE:
          Sales – devices and disposables $ 33 $ 95 $ 137 $ 486
          Cost of goods sold 97 85 195 185
                                Gross (loss) profit (64 ) 10 (58 ) 301

OPERATING EXPENSES:
         Research and development 69 87 251 525
         Sales and marketing 37 92 187 295
         General and administrative 1,169 510 1,894 2,187
                                 Total operating expenses 1,275 689 2,332 3,007

                                 Operating loss (1,339 ) (679 ) (2,390 ) (2,706 )

OTHER INCOME (EXPENSES):
         Other income 3 24 18 67
         Interest expense (268 ) (226 ) (814 ) (1,597 )
         Change in fair value of warrants (761 ) 670 (359 ) 2,276
                                 Total other income (expenses) (1,026 ) 468 (1,155 ) 746

LOSS BEFORE INCOME TAXES (2,365 ) (211 ) (3,545 ) (1,960 )

PROVISION FOR INCOME TAXES —   —   —   —

NET LOSS $ (2,365 ) $ (211 ) $ (3,545 ) (1,960 )

PREFERRED STOCK DIVIDENDS
(52 ) (179 ) (216 ) (941 )

NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS
$ (2,417 ) $ (390 ) $ (3,761 ) (2,901 )

NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS
      BASIC $ (0.35 ) $ (1.36 ) $ (1.43 ) (25.52 )
      DILUTED $ (0.35 ) $ (1.36 ) $ (1.43 ) (25.52 )

WEIGHTED AVERAGE SHARES OUTSTANDING
      BASIC 6,884 283 2,632 114
      DILUTED 6,884 283 2,632 114

GUIDED THERAPEUTICS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(in thousands)
	June 30,			December 31,
	2022			2021
	(unaudited)
ASSETS

Current Assets:
Cash and cash equivalents	$	446		$	643
Accounts receivable, net of allowance for doubtful accounts of $126 at June 30, 2022 and December 31, 2021		29			46
Inventory, net of reserves of $785 at June 30, 2022 and December 31, 2021		569			571
Other current assets		59			377
Total current assets		1,103			1,637

Non-Current Assets:
Property and equipment, net		45			14
Operating lease right-of-use assets, net of amortization		338			372
Other assets		17			17
Total non-current assets		400			403

TOTAL ASSETS	$	1,503		$	2,040

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current Liabilities:
Accounts payable	$	2,404		$	2,362
Accounts payable, related parties		75			87
Accrued liabilities		1,206			1,768
Deferred revenue		513			337
Current portion of lease liability		73			67
Current portion of long-term debt		47			88
Current portion of long-term debt, related parties		490			0
Short-term notes payable		0			48
Short-term notes payable, related parties		28			40
Convertible notes payable in default		786			161
Short-term convertible notes payable, including non-convertible penalty		350			736
Derivative liability		24			0
Total current liabilities		5,996			5,694

Long-Term Liabilities
Long-term lease liabilities		287			325
Derivative liability		0			32
Long-term convertible debt		884			820
Long-term debt		0			22
Long-term debt, related parties		102			592
Total long-term liabilities		1,273			1,791

Total liabilities		7,269			7,485

COMMITMENTS AND CONTINGENCIES (Note 7)

STOCKHOLDERS’ DEFICIT:

Series C convertible preferred stock, $0.001 par value; 9.0 shares authorized, 0.3 shares issued and outstanding as of June 30, 2022 and December 31, 2021. Liquidation preference of $286 at June 30, 2022 and December 31, 2021.		105			105
Series C1 convertible preferred stock, $0.001 par value; 20.3 shares authorized, 1.0 shares issued and outstanding as of June 30, 2022 and December 31, 2021. Liquidation preference of $1,049 at June 30, 2022 and December 31, 2021.		170			170
Series C2 convertible preferred stock, $0.001 par value; 5,000 shares authorized, 3.3 shares issued and outstanding as of June 30, 2022 and December 31, 2021. Liquidation preference of $3,263 at June 30, 2022 and December 31, 2021.		531			531
Series D convertible preferred stock, $0.001 par value; 6.0 shares authorized, 0.4 and 0.8 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively Liquidation preference of $438 and $763 at June 30, 2022 and December 31, 2021, respectively.		159			276
Series E convertible preferred stock, $0.001 par value; 5.0 shares authorized, 0.9 and 1.7 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively. Liquidation preference of $888 and $1,736 at June 30, 2022 and December 31, 2021, respectively.		839			1,639
Series F convertible preferred stock, $0.001 par value; 1.5 shares authorized, 1.1 and 1.4 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively Liquidation preference of $1,071 and $1,426 at June 30, 2022 and December 31, 2021, respectively.		892			1,187
Series F-2 convertible preferred stock, $0.001 par value; 5.0 shares authorized, 2.8 and 3.2 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively. Liquidation preference of $2,771 and $3,237 at June 30, 2022 and December 31, 2021, respectively.		2,536			2,963
Series G convertible preferred stock, $0.001 par value; 1,000 shares authorized, nil shares issued and outstanding as of June 30, 2022 and December 31, 2021. Liquidation preference was nil at June 30, 2022 and December 31, 2021.		0			0
Common stock, $0.001 par value; 500,000 shares authorized, 27,583 and 13,673 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively		3,416			3,403
Additional paid-in capital		130,166			126,800
Treasury stock at cost		(132	)		(132	)
Accumulated deficit		(144,448	)		(142,387	)

Total stockholders’ deficit		(5,766	)		(5,445	)

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	1,503		$	2,040

The accompanying notes are an integral part of these ~~condensed~~ consolidated ~~financial~~ statements.


4	3

Table of Contents

GUIDED THERAPEUTICS INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in Thousands)

FOR THE NINE MONTHS
ENDED SEPTEMBER 30,
2017 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net loss $ (3,545 ) $ (1,960 )
     Adjustments to reconcile net loss to net cash used in operating activities:
           Bad debt (recovery) expense 298 4
           Depreciation 77 148
           Amortization of debt issuance costs and discounts 196 930
           Stock based compensation 56 72
           Change in fair value of warrants 359 (2,276 )
Changes in operating assets and liabilities:
           Inventory 196 (40 )
           Accounts receivable (89 ) (53 )
           Other current assets 80 317
           Other assets 300 47
           Accounts payable 366 626
           Deferred revenue 122 (148 )
           Accrued liabilities 1,103 728
                         Total adjustments 3,064 355

                         Net cash used in operating activities (481 ) (1,605 )

CASH FLOWS FROM FINANCING ACTIVITIES:
      Proceeds from debt financing, net of discounts and debt issuance costs 746 1,719
      Payments made on notes payable (205 ) (145 )

                        Net cash provided by financing activities 541 1,574

NET CHANGE IN CASH AND CASH EQUIVALENTS 60 (31 )
CASH AND CASH EQUIVALENTS, beginning of year 14 35
CASH AND CASH EQUIVALENTS, end of period $ 74 $ 4
SUPPLEMENTAL SCHEDULE OF:
Cash paid for:
     Interest $ 1 $ 62
NONCASH INVESTING AND FINANCING ACTIVITIES:
  Issuance of common stock as debt repayment $ 185 $ 251
  Dividends on preferred stock $ 216 $ 941

GUIDED THERAPEUTICS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share data)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2022			2021			2022			2021

Sales - devices and disposables	$	5		$	2		$	10		$	2
Cost of goods sold		1			0			2			0
Gross profit		4			2			8			2

Operating expenses:
Research and development		9			20			31			36
Sales and marketing		37			30			77			66
General and administrative		675			513			1,062			1,340
Total operating expenses		721			563			1,170			1,442

Loss from operations		(717	)		(561	)		(1,162	)		(1,440	)

Other income (expenses):
Interest expense		(256	)		(315	)		(357	)		(456	)
Change in fair value of derivative liability		14			0			8			(88	)
Gain (loss) from extinguishment of debt		34			(185	)		75			(185	)
Change in fair value of warrants		0			0			0			448
Other income (expenses)		(1	)		27			4			27
Total other income (expense)		(209	)		(473	)		(270	)		(254	)

Loss before income taxes		(926	)		(1,034	)		(1,432	)		(1,694	)
Provision for income taxes		0			0			0			0

Net loss		(926	)		(1,034	)		(1,432	)		(1,694	)
Preferred stock dividends		(81	)		(125	)		(629	)		(177	)

NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	(1,007	)	$	(1,159	)	$	(2,061	)	$	(1,871	)

NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS
Basic	$	(0.04	)	$	(0.09	)	$	(0.09	)	$	(0.14	)
Diluted	$	(0.04	)	$	(0.09	)	$	(0.09	)	$	(0.14	)

Weighted average shares outstanding
Basic		26,337			13,280			23,526			13,226
Diluted		26,337			13,280			23,526			13,226

The accompanying notes are an integral part of these ~~condensed~~ consolidated financial statements.

Table of Contents

GUIDED THERAPEUTICS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
FOR THE THREE MONTHS ENDED JUNE 30, 2022
(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 March 31, 2022		-	$	105			1	$	170			3	$	531			1	$	276
Common stock warrants exercised		-		0			-		0			-		0			-		0
Issuance of common stock for payment of Series D preferred dividends		-		0			-		0			-		0			-		0
Issuance of common stock for payment of Series E preferred dividends		-		0			-		0			-		0			-		0
Issuance of common stock for payment of Series F preferred dividends		-		0			-		0			-		0			-		0
Issuance of common stock for payment of Series F-2 preferred dividends		-		0			-		0			-		0			-		0
Conversion of Series D preferred stock to common stock		-		0			-		0			-		0			-		(117	)
Conversion of Series E preferred stock to common stock		-		0			-		0			-		0			-		0
Conversion of Series F preferred stock to common stock		-		0			-		0			-		0			-		0
Conversion of Series F-2 preferred stock to common stock		-		0			-		0			-		0	��		-		0
Stock-based compensation		-		0			-		0			-		0			-		0
Accrued preferred dividends		-		0			-		0			-		0			-		0
Net loss		-		0			-		0			-		0			-		0
Balance at June 30, 2022		-	$	105			1	$	170			3	$	531			1	$	159

	Preferred Stock					Preferred Stock					Preferred Stock
	Series E					Series F					Series F2
	Shares		Amount			Shares		Amount			Shares		Amount
Balance at March 31, 2022		1	$	914			1	$	1,174			3	$	2,963
Common stock warrants exercised		-		0			-		0			-		0
Issuance of common stock for payment of Series D preferred dividends		-		0			-		0			-		0
Issuance of common stock for payment of Series E preferred dividends		-		0			-		0			-		0
Issuance of common stock for payment of Series F preferred dividends		-		0			-		0			-		0
Issuance of common stock for payment of Series F-2 preferred dividends		-		0			-		0			-		0
Conversion of Series D preferred stock to common stock		-		0			-		0			-		0
Conversion of Series E preferred stock to common stock		-		(75	)		-		0			-		0
Conversion of Series F preferred stock to common stock		-		0			-		(282	)		-		0
Conversion of Series F-2 preferred stock to common stock		-		0			-		0			-		(427	)
Stock-based compensation		-		0			-		0			-		0
Accrued preferred dividends		-		0			-		0			-		0
Net loss		-		0			-		0			-		0
Balance at June 30, 2022		1	$	839			1	$	892			3	$	2,536

					Additional
	Common Stock				Paid-In		Treasury			Accumulated
	Shares		Amount		Capital		Stock			Deficit			Total
Balance at March 31, 2022		22,315	$	3,411	$	129,041	$	(132	)	$	(143,441	)	$	(4,988	)
Common stock warrants exercised		650		1		129		0			0			130
Issuance of common stock for payment of Series D preferred dividends		25		0		13		0			0			13
Issuance of common stock for payment of Series E preferred dividends		51		0		26		0			0			26
Issuance of common stock for payment of Series F preferred dividends		4		0		2		0			0			2
Issuance of common stock for payment of Series F-2 preferred dividends		19		0		12		0			0			12
Conversion of Series D preferred stock to common stock		975		1		117		0			0			1
Conversion of Series E preferred stock to common stock		320		0		75		0			0			0
Conversion of Series F preferred stock to common stock		1,360		1		282		0			0			1
Conversion of Series F-2 preferred stock to common stock		1,864		2		425		0			0			0
Stock-based compensation		-		0		44		0			0			44
Accrued preferred dividends		-		0		0		0			(81	)		(81	)
Net loss		-		0		0		0			(926	)		(926	)
Balance at June 30, 2022		27,583	$	3,416	$	130,166	$	(132	)	$	(144,448	)	$	(5,766	)

The accompanying notes are an integral part of these consolidated statements.

Table of Contents

GUIDED THERAPEUTICS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
FOR THE SIX MONTHS ENDED JUNE 30, 2022
(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, 2021		-	$	105		1	$	170		3	$	531		1	$	276
Common stock warrants exercised		-		0		-		0		-		0		-		0
Issuance of common stock for payment of Series D preferred dividends		-		0		-		0		-		0		-		0
Issuance of common stock for payment of Series E preferred dividends		-		0		-		0		-		0		-		0
Issuance of common stock for payment of Series F preferred dividends		-		0		-		0		-		0		-		0
Issuance of common stock for payment of Series F-2 preferred dividends		-		0		-		0		-		0		-		0
Issuance of common stock for payment of interest		-		0		-		0		-		0		-		0
Issuance of common stock for Series F and Series F-2 one-time 15% dividends		-		0		-		0		-		0		-		0
Conversion of Series D preferred stock to common stock		-		0		-		0		-		0		-		(117	)
Conversion of Series E preferred stock to common stock		-		0		-		0		-		0		-		0
Conversion of Series F preferred stock to common stock		-		0		-		0		-		0		-		0
Conversion of Series F-2 preferred stock to common stock		-		0		-		0		-		0		-		0
Stock-based compensation		-		0		-		0		-		0		-		0
Expense for warrants issued to consultants		-		0		-		0		-		0		-		0
Accrued preferred dividends		-		0		-		0		-		0		-		0
Net loss		-		0		-		0		-		0		-		0
Balance at June 30, 2022		-	$	105		1	$	170		3	$	531		1	$	159

	Preferred Stock						Preferred Stock					Preferred Stock
	Series E						Series F					Series F2
	Shares			Amount			Shares		Amount			Shares		Amount
Balance at December 31, 2021		2		$	1,639			1	$	1,187			3	$	2,963
Common stock warrants exercised		-			0			-		0			-		0
Issuance of common stock for payment of Series D preferred dividends		-			0			-		0			-		0
Issuance of common stock for payment of Series E preferred dividends		-			0			-		0			-		0
Issuance of common stock for payment of Series F preferred dividends		-			0			-		0			-		0
Issuance of common stock for payment of Series F-2 preferred dividends		-			0			-		0			-		0
Issuance of common stock for payment of interest		-			0			-		0			-		0
Issuance of common stock for Series F and Series F-2 one-time 15% dividends		-			0			-		0			-		0
Conversion of Series D preferred stock to common stock		-			0			-		0			-		0
Conversion of Series E preferred stock to common stock		(1	)		(800	)		-		0			-		0
Conversion of Series F preferred stock to common stock		-			0			-		(295	)		-		0
Conversion of Series F-2 preferred stock to common stock		-			0			-		0			-		(427	)
Stock-based compensation		-			0			-		0			-		0
Expense for warrants issued to consultants		-			0			-		0			-		0
Accrued preferred dividends		-			0			-		0			-		0
Net loss		-			0			-		0			-		0
Balance at June 30, 2022		1		$	839			1	$	892			3	$	2,536

					Additional
	Common Stock				Paid-In		Treasury			Accumulated
	Shares		Amount		Capital		Stock			Deficit			Total
Balance at December 31, 2021		13,674	$	3,403	$	126,800	$	(132	)	$	(142,387	)	$	(5,445	)
Common stock warrants exercised		5,128		5		841		0			0			846
Issuance of common stock for payment of Series D preferred dividends		48		0		29		0			0			29
Issuance of common stock for payment of Series E preferred dividends		64		0		34		0			0			34
Issuance of common stock for payment of Series F preferred dividends		161		0		107		0			0			107
Issuance of common stock for payment of Series F-2 preferred dividends		114		0		75		0			0			75
Issuance of common stock for payment of interest		121		0		81		0			0			81
Issuance of common stock for Series F and Series F-2 one-time 15% dividends		624		1		399		0			0			400
Conversion of Series D preferred stock to common stock		975		1		117		0			0			1
Conversion of Series E preferred stock to common stock		3,390		3		797		0			0			0
Conversion of Series F preferred stock to common stock		1,420		1		294		0			0			0
Conversion of Series F-2 preferred stock to common stock		1,864		2		425		0			0			0
Stock-based compensation		-		0		88		0			0			88
Expense for warrants issued to consultants		-		0		79		0			0			79
Accrued preferred dividends		-		0		0		0			(629	)		(629	)
Net loss		-		0		0		0			(1,432	)		(1,432	)
Balance at June 30, 2022		27,583	$	3,416	$	130,166	$	(132	)	$	(144,448	)	$	(5,766	)

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

GUIDED THERAPEUTICS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
FOR THE THREE MONTHS ENDED JUNE 30, 2021
(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 March 31, 2021		-	$	105		1	$	170		3	$	531	1	$	276
Series F preferred offering		-		0		-		0		-		0	-		0
Series F-2 preferred offering		-		0		-		0		-		0	-		0
Conversion of debt and expenses for Series F-2 preferred stock		-		0		-		0		-		0	-		0
Issuance of common stock for Series D preferred dividends		-		0		-		0		-		0	-		0
Series G redemption		-		0		-		0		-		0	-		0
Issuance of common stock to finders		-		0		-		0		-		0	-		0
Issuance of warrants to consultants		-		0		-		0		-		0	-		0
Stock-based compensation		-		0		-		0		-		0	-		0
Accrued preferred dividends		-		0		-		0		-		0	-		0
Net loss		-		0		-		0		-		0	-		0
Balance at June 30, 2021		-	$	105		1	$	170		3	$	531	1	$	276

	Preferred Stock				Preferred Stock				Preferred Stock				Preferred Stock
	Series E				Series F				Series F-2				Series G
	Shares		Amount		Shares		Amount		Shares		Amount		Shares			Amount
Balance at March 31, 2021		2	$	1,639		1	$	1,195		-	$	0		153		$	0
Series F preferred offering		-		0		-		0		-		0		-			0
Series F-2 preferred offering		-		0		-		0		1		404		-			0
Conversion of debt and expenses for Series F-2 preferred stock		-		0		-		0		2		2,559		-			0
Issuance of common stock for Series D preferred dividends		-		0		-		0		-		0		-			0
Series G redemption		-		0		-		0		-		0		(91	)		0
Issuance of common stock to finders		-		0		-		0		-		0		-			0
Issuance of warrants to consultants		-		0		-		0		-		0		-			0
Stock-based compensation		-		0		-		0		-		0		-			0
Accrued preferred dividends		-		0		-		0		-		0		-			0
Net loss		-		0		-		0		-		0		-			0
Balance at June 30, 2021		2	$	1,639		1	$	1,195		3	$	2,963		62		$	-

					Additional
	Common Stock				Paid-In		Treasury			Accumulated
	Shares		Amount		Capital		Stock			Deficit				Total
Balance at March 31, 2021		13,180	$	3,403	$	125,489	$	(132	)	$	(140,668	)	$	(7,992	)
Series F preferred offering		-		0		0		0			0			0
Series F-2 preferred offering		-		0		0		0			0			404
Conversion of debt and expenses for Series F-2 preferred stock		-		0		0		0						2,559
Issuance of common stock for Series D preferred dividends		19		0		14		0			0			14
Series G redemption		-		0		0		0			0			0
Issuance of common stock to finders		98		0		54		0			0			54
Issuance of warrants to consultants		-		0		736		0			0			736
Stock-based compensation		-		0		60		0			0			60
Accrued preferred dividends		-		0		0		0			(125	)		(125	)
Net loss				0		0		0			(1,034	)		(1,034	)
Balance at June 30, 2021		13,297	$	3,403	$	126,353	$	(132	)	$	(141,827	)	$	(5,324	)

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

GUIDED THERAPEUTICS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(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, 2020		-	$	105		1	$	170		3	$	531		1	$	276
Series F preferred offering		-		0		-		0		-		0		-		0
Series F-2 preferred offering		-		0		-		0		-		0		-		0
Conversion of debt and expenses for Series F-2 preferred stock		-		0		-		0		-		0		-		0
Issuance of common stock for Series D preferred dividends		-		0		-		0		-		0		-		0
Series G preferred offering		-		0		-		0		-		0		-		0
Series G redemption		-		0		-		0		-		0		-		0
Issuance of common stock to finders		-		0		-		0		-		0		-		0
Issuance of warrants to consultants		-		0		-		0		-		0		-		0
Conversions of warrants from liability to equity		-		0		-		0		-		0		-		0
Stock-based compensation		-		0		-		0		-		0		-		0
Accrued preferred dividends		-		0		-		0		-		0		-		0
Net loss		-		0		-		0		-		0		-		0
Balance at June 30, 2021		-	$	105		1	$	170		3	$	531		1	$	276

	Preferred Stock				Preferred Stock				Preferred Stock				Preferred Stock
	Series E				Series F				Series F-2				Series G
	Shares		Amount		Shares		Amount		Shares		Amount		Shares			Amount
Balance at December 31, 2020		2	$	1,639		-	$	0		-	$	0		-		$	0
Series F preferred offering		-		0		1		1,195		-		0		-			0
Series F-2 preferred offering		-		0		-		0		1		404		-			0
Conversion of debt and expenses for Series F-2 preferred stock		-		0		-		0		2		2,559		-			0
Issuance of common stock for Series D preferred dividends		-		0		-		0		-		0		-			0
Series G preferred offering		-		0		-		0		-		0		153			0
Series G redemption		-		0		-		0		-		0		(91	)		0
Issuance of common stock to finders		-		0		-		0		-		0		-			0
Issuance of warrants to consultants		-		0		-		0		-		0		-			0
Conversions of warrants from liability to equity		-		0		-		0		-		0		-			0
Stock-based compensation		-		0		-		0		-		0		-			0
Accrued preferred dividends		-		0		-		0		-		0		-			0
Net loss		-		0		-		0		-		0		-			0
Balance at June 30, 2021		2	$	1,639		1	$	1,195		3	$	2,963		62		$	0

					Additional
	Common Stock				Paid-In		Treasury			Accumulated
	Shares		Amount		Capital		Stock			Deficit			Total
Balance at December 31, 2020		13,138	$	3,403	$	123,109	$	(132	)	$	(139,956	)	$	(10,855	)
Series F preferred offering		-		0		0		0			0			1,195
Series F-2 preferred offering		-		0		0		0			0			404
Conversion of debt and expenses for Series F-2 preferred stock		-		0		0		0						2,559
Issuance of common stock for Series D preferred dividends		61		0		28		0			0			28
Series G preferred offering		-		0		0		0			0			0
Series G redemption		-		0		0		0			0			0
Issuance of common stock to finders		98		0		54		0			0			54
Issuance of warrants to consultants		-		0		1,285		0			0			1,285
Conversions of warrants from liability to equity		-		0		1,755		0			0			1,755
Stock-based compensation		-		0		122		0			0			122
Accrued preferred dividends		-		0		0		0			(177	)		(177	)
Net loss				0		0		0			(1,694	)		(1,694	)
Balance at June 30, 2021		13,297	$	3,403	$	126,353	$	(132	)	$	(141,827	)	$	(5,324	)

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

GUIDED THERAPEUTICS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)

		Six Months Ended
		June 30,
		2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(1,432	)	$	(1,694	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of debt issuance costs and discounts			78			236
Amortization of beneficial conversion feature			0			8
Stock based compensation			88			122
Change in fair value of warrants			0			(448	)
Change in fair value of derivative liability			(8	)		88
Amortization of lease right-of-use-asset			33			0
Expense for warrants issued to consultants			79			477
(Gain) loss from forgiveness of debt			(75	)		185
Other non-cash expenses (income)			157			0
Change in operating assets and liabilities:
Accounts receivable			16			(2	)
Inventory			2			(26	)
Other current assets			317			24
Other non-current assets			0			(17	)
Accounts payable and accrued liabilities			74			15
Lease liabilities			(32	)		0
Deferred revenue			175			20
NET CASH USED IN OPERATING ACTIVITIES			(528	)		(1,012	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment			(31	)		(5	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from warrant exercises			495			0
Payments made on notes payable			(133	)		(1,368	)
Proceeds from debt financing, net of discounts and debt issuance costs			0			1,044
Note payable default penalty			0			56
Proceeds from Series F offering, net of costs			0			1,436
Proceeds from Series F-2 offering, net of costs			0			539
Proceeds from Series G offering, net of costs			0			125
Redemption of Series G preferred stock			0			(75	)
NET CASH PROVIDED BY FINANCING ACTIVITIES			362			1,757

NET CHANGE IN CASH			(197	)		740

Cash at beginning of period			643			182

CASH AT END OF PERIOD		$	446		$	922

SUPPLEMENTAL DISCLOSURE FOR OPERATING ACTIVITIES:
Cash paid for interest		$	14		$	541

SUPPLEMENTAL DISCLOSURE FOR NON-CASH INVESTING AND FINANCING ACTIVITIES:
Dividends on preferred stock		$	629		$	177
Settlement of interest through common stock issuance		$	81		$	-
Issuance of series F-2 preferred stock	��	$	0		$	2,559
Issuance of warrants to finders in connection with Series F and Series F-2 preferred stock		$	0		$	377
Settlement of dividends through common stock issuance		$	646		$	31
Settlement of accounts payable through common stock issuance		$	0		$	24
Warrants exchanged for fixed price warrants		$	0		$	1,755
Conversion of Series D Preferred Shares into Common Stock		$	118		$	0
Conversion of Series E Preferred Shares into Common Stock		$	800		$	0
Conversion of Series F Preferred Shares into Common Stock		$	296		$	0
Conversion of Series F-2 Preferred Shares into Common Stock		$	426		$	0

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

GUIDED THERAPEUTICS, INC. AND SUBSIDIARY

NOTES TO ~~CONDENSED~~ CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. ORGANIZATION, BACKGROUND, AND BASIS OF PRESENTATION

~~Organization~~

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 ~~Background~~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.

~~A 1:800~~

During the year ended December 31, 2021, the Board simultaneously approved a 1-for-20 reverse stock split of ~~all of the Company’s issued and outstanding~~our common stock ~~was implemented on~~and decreased the total number of authorized common shares to 500,000,000. On November ~~7, 2016. As a result of~~18, 2021, the Company submitted an Issuer Company Related Action Notification regarding the reverse stock split ~~every 800 shares of issued and outstanding common stock was converted into 1 share of common stock. All fractional shares created by the reverse stock split were rounded~~ to the ~~nearest whole share.~~ Financial Industry Regulatory Authority (“FINRA“). On July 25, 2022, the Company filed a Certificate of Correction with the Secretary of State of Delaware to render null and void ab initio the Reverse Split Amendment and as a result, the Reverse Split was deemed null and void.

Basis of Presentation

The ~~number~~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 ~~authorized shares~~Regulation S-X. Accordingly, they do not include all of ~~common stock did~~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, 2021 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, 2021 balances reported herein are derived from the audited consolidated financial statements for the year ended December 31, 2021. The results of operations for the interim periods are not ~~change. The reverse stock split decreased~~necessarily indicative of the ~~Company’s issued~~results of operations to be expected for the full year.

All intercompany transactions and ~~outstanding shares~~balances have been eliminated in consolidation. In the opinion of ~~common stock from 453,694,400 shares to 570,707 shares~~management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the Company as of ~~that date. See Note 4, Stockholders’ Deficit. Unless otherwise specified, all per share amounts are reported on a post-stock split basis, as~~June 30, 2022 and December 31, 2021, and the consolidated results of ~~September~~operations and cash flows for the three and six-month periods ended June 30, ~~2017. On February 24, 2016, the Company had also implemented a 1:100 reverse stock split of its issued~~2022 and ~~outstanding common stock.~~2021 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~~June 30, ~~2017,~~2022, it had an accumulated deficit of approximately ~~$131.3~~$144.4 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 ~~through at least~~for the ~~end of 2017~~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.

~~Basis of Presentation~~

The ~~accompanying unaudited condensed consolidated financial statements included herein have been prepared~~Company is not organized by multiple operating segments for the purpose of making operating decisions or assessing performance. Accordingly, the Company operates in ~~accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) for interim financial reporting~~one reportable operating segment. The Company’s principal decision makers are the Chief Executive Officer and ~~with~~its Chief Financial Officer. Management believes that its business operates as one reportable segment because: a) the ~~instructions to Form 10-Q~~Company measures profit and ~~Article 10 of Regulation S-X. Accordingly, they~~loss as a whole; b) the principal decision makers do not ~~include all~~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 ~~footnotes required by GAAP for complete financial statements. These statements reflect adjustments, all of which are of a normal, recurring nature,~~services, and ~~which are, in~~e) the ~~opinion of management, necessary~~Company has not chosen to present fairly the Company’s financial position as of September 30, 2017, results of operations for the three and nine months ended September 30, 2017 and 2016, and cash flows for the three and nine months ended September 30, 2017 and 2016. The results of operations for the three and nine months ended September 30, 2017 are not necessarily indicative of the results for a full fiscal year. Preparing financial statements requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and disclosure of contingent assets and liabilities. Actual results could differ from those estimates. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2016.organize its business around geographic areas.

Table of Contents

~~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.~~

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~~June 30, ~~2017,~~2022, the Company had a negative working capital of approximately ~~$10.6~~$4.9 million, accumulated deficit of ~~$131.3~~$144.4 million, and incurred a net loss including preferred dividends of ~~$2.4~~$2.1 million for the ~~quarter~~six months then ended. Stockholders’ deficit totaled approximately ~~$12.3~~$5.8 million at ~~September~~June 30, ~~2017,~~2022, primarily due to recurring net losses from operations.

During the six-month period ended June 30, 2022, the Company raised $0.5 million of proceeds from warrant exercises. The Company will need to continue to raise capital in order to provide funding for its operations and ~~deemed dividends on warrants and preferred stock, offset by proceeds from the exercise of warrants and proceeds from sales of stock.~~

~~The Company’s capital-raising efforts are ongoing.~~FDA approval process. If sufficient capital cannot be raised, ~~during the first quarter of 2018,~~ 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 ~~86.8~~24.7 million shares of its common stock outstanding at ~~September~~June 30, ~~2017,~~2022, with exercise prices ranging between ~~$0.017~~$0.15 and ~~$40,000~~$0.80 per share. Exercises of ~~these~~in-the-money warrants would generate a total of approximately ~~$6.2~~$4.2 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.

2. SIGNIFICANT ACCOUNTING POLICIES

The Company’s significant accounting policies were set forth in the audited financial statements and notes thereto for the year ended December 31, 2016 included in its annual report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”).

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 allowance for doubtful accounts, inventory valuation and input variables for Black-Scholes, Monte Carlo simulations and binomial calculations. The Company uses the Monte Carlo simulations and binomial calculations in the calculation of the fair value of the warrant liabilities and the valuation of embedded conversion options and freestanding warrants.

~~Principles of Consolidation~~Accounting Standard Updates

~~The accompanying consolidated financial statements include the accounts~~A variety of ~~Guided Therapeutics, Inc.~~proposed or otherwise potential accounting standards are currently under consideration by standard-setting organizations and ~~its wholly owned subsidiary. All intercompany transactions are eliminated.~~

~~Accounting Standard Updates~~

In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” (“ASU 2014-09”). ASU 2014-09 outlines a new, single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. This new revenue recognition model provides a five-step analysis in determining when and how revenue is recognized. The new model requires revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration a company expects to receive. ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In August 2015, the FASB issued ASU 2015-14, “Deferralcertain regulatory agencies. Because of the ~~Effective Date”, which amends ASU 2014-09. As a result,~~tentative and preliminary nature of such proposed standards, management has not yet determined the ~~effective date will be~~effect, if any that the ~~first quarter~~implementation of ~~fiscal year 2018 with early adoption permitted in the first quarter of fiscal year 2017. Subsequently, the FASB has issued the following~~such proposed standards related to ASU 2014-09: ASU 2016-08, “Revenue from Contracts with Customers (Topic 606), Principal versus Agent Considerations (Reporting Revenue Gross versus Net),” (“ASU 2016-08”); ASU 2016-10, “Revenue from Contracts with Customers (Topic 606), Identifying Performance Obligations and Licensing,” (“ASU 2016-10”); ASU 2016-12, “Revenue from Contracts with Customers (Topic 606) Narrow-Scope Improvements and Practical Expedients,” (“ASU 2016-12”); and ASU 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers,” (“ASU 2016-20”), which are intended to provide additional guidance and clarity to ASU 2014-09. The Company must adopt ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20 along with ASU 2014-09 (collectively, the “New Revenue Standards”). The New Revenue Standards may be applied using one of two retrospective application methods: (1) a full retrospective approach for all periods presented, or (2) a modified retrospective approach that presents a cumulative effect as of the adoption date and additional required disclosures. The Company is evaluating the impact that adoption of this guidance willwould have ~~on the determination or reporting of its financial results.~~

In July 2015, the FASB issued ASU 2015-11, “Simplifying the Measurement of Inventory,” (“ASU 2015-11”). ASU 2015-11 requires inventory be measured at the lower of cost and net realizable value and options that currently exist for market value be eliminated. ASU 2015-11 defines net realizable value as estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The guidance is effective for reporting periods beginning after December 15, 2016 and interim periods within those fiscal years with early adoption permitted. ASU 2015-11 should be applied prospectively. The Company has adopted this guidance during the quarter ended September 30, 2017 on a prospective basis. The adoption of this guidance did not have a significant impact on the operating results for the period ended September 30, 2017.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” that requires lessees to recognize on the balance sheet the assets and liabilities associated with the rights and obligations created by those leases. Under the new guidance, a lessee will be required to recognize assets and liabilities for leases with lease terms of more than 12 months. Consistent with current U.S. GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as finance or operating lease. The update is effective for reporting periods beginning after December 15, 2018. Early adoption is permitted. The Company is evaluating the impact adoption of this guidance will have on determination or reporting of its financial results.

In March 2016, the FASB issued ASU 2016-05, “Derivatives and Hedging (Topic 815),” (“ASU 2016-05”). ASU 2016-05 provides guidance clarifying that novation of a derivative contract (i.e., a change in counterparty) in a hedge accounting relationship does not, in and of itself, require dedesignation of that hedge accounting relationship. The effective date will be the first quarter of fiscal year 2017, with early adoption permitted. The Company has adopted this guidance during the quarter ended March 31, 2017 on a prospective basis. The adoption of this guidance did not have a significant impact on the operating results for the period ended September 30, 2017.

In March 2016, the FASB issued ASU 2016-06, “Derivatives and Hedging (Topic 815),” (“ASU 2016-06”). ASU 2016-06 simplifies the embedded derivative analysis for debt instruments containing contingent call or put options by clarifying that an exercise contingency does not need to be evaluated to determine whether it relates to interest rates and credit risk in an embedded derivative analysis. The effective date will be the first quarter of fiscal year 2017, with early adoption permitted. The Company has adopted this guidance during the quarter ended March 31, 2017 on a prospective basis. The adoption of this guidance did not have a significant impact on the operating results for the period ended September 30, 2017.

In March 2016, the FASB issued ASU 2016-09, “Compensation-Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting,” (“ASU 2016-09”). ASU 2016-09 is intended to simplify several aspects related to how share-based payments are accounted for and presented in the financial statements, such as requiring all income tax effects of awards to be recognized in the income statement when the awards vest or are settled and allowing a policy election to account for forfeitures as they occur. In addition, all related cash flows resulting from share-based payments will be reported as operating activities on the statement of cash flows. ASU 2016-09 could result in increased volatility of the Company’s provision for income taxes and earnings per share, depending on the Company’s share price at exercise or vesting of share-based awards compared to grant date. The effective date will be the first quarter of fiscal year 2017, with early adoption permitted. The Company has adopted this guidance during the quarter ended March 31, 2017 on a prospective basis. The adoption of this guidance did not have a significant impact on the operating results for the period ended September 30, 2017.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses,” (“ASU 2016-13”). ASU 2016-13 sets forth a “current expected credit loss” model which requires the Company to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable supportable forecasts. The guidance in this new standard replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures. The effective date will be the first quarter of fiscal year 2020. The Company is evaluating the impact that adoption of this new standard will have on its consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments,” (“ASU 2016-15”). ASU 2016-15 reduces the existing diversity in practice in financial reporting by clarifying existing principles in ASC 230, “Statement of Cash Flows,” and provides specific guidance on certain cash flow classification issues. The effective date for ASU 2016-15 will be the first quarter of fiscal year 2018, with early adoption permitted. The Company is evaluating the impact adoption of this guidance will have on determination or reporting of its financial results.

In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230) - Restricted Cash,” (“ASU 2016-18”). ASU 2016-18 requires a statement of cash flows to explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The Company is evaluating the impact adoption of this guidance will have on determination or reporting of its financial results.

In January 2017, the FASB issued ASU 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” (“ASU 2017-04”). ASU 2017-04 eliminates Step 2 from the goodwill impairment test. Instead, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, if any. The loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment. The effective date will be the first quarter of fiscal year 2020, with early adoption permitted in 2017. Adoption is not expected to have a material effect on the Company’s consolidated financial statements.

In May 2017, the FASB issued ASU 2017-09, “Compensation – Stock Compensation (Topic 718), Scope of Modification Accounting)” (“ASU 2017-09”) which clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. The new guidance will reduce diversity in practice and result in fewer changes to the terms of an award being accounted for as modifications. ASU 2017-09 will be applied prospectively to awards modified on or after the adoption date. The guidance is effective for annual periods, and interim periods within those annual periods beginning after December 15, 2017, with early adoption permitted. The Company is currently evaluating the impact that this standard will have on its consolidated financial statements

~~Except as noted above, the guidance issued by the FASB during the current year is not expected to have a material effect 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.

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Accounts Receivable

The Company performs periodic credit evaluations of its ~~customers’~~distributors’ financial conditions and generally does not require collateral. The Company reviews all outstanding accounts receivable for collectability on a quarterly basis. An allowance for doubtful accounts is recorded for any amounts deemed uncollectable. Uncollectibility is determined based on the determination that a distributor will not be able to make payment and the time frame has exceeded one year. The Company does not accrue interest ~~receivable~~receivables on past due accounts receivable.

Concentrations of Credit Risk

The Company, from time to time during the years covered by these consolidated financial statements, may have bank balances in excess of its insured limits. Management has deemed this a normal business risk.

~~Revenue Recognition~~

Revenue from the sale of the Company’s products is recognized upon shipment of such products to its customers. The Company recognizes revenue from contracts on a straight-line basis, over the terms of the contract. The Company recognizes revenue from grants based on the grant agreement, at the time the expenses are incurred.

~~Significant Customers~~

During the nine months ended September 30, 2017 and 2016, all of the Company’s revenues were from four and three customers, respectively. Revenue from these customers totaled $136,750 and $369,000 for the nine months ended September 30, 2017 and 2016, respectively. All accounts receivable are fully reserved at September 30, 2017.

Inventory Valuation

All inventories are stated at lower of cost or net realizable value, with cost determined substantially on a “first-in, ~~first-out”~~first-out“ basis. Selling, general, and administrative expenses are not inventoried, but are charged to expense when incurred. ~~At September~~The following is a summary of the Company’s inventories as of June 30, ~~2017~~2022 and December 31, ~~2016, our inventories were as follows (in thousands):~~2021:

							(in thousands)
							June 30,			December 31,
	September 30,			December 31,			2022				2021
	2017			2016
Raw materials	$	795		$	795		$	1,252		$	1,255
Work in process		83			115
Work-in-progress								70			69
Finished goods		108			141			32			32
Inventory reserve		(409	)		(278	)		(785	)		(785	)
Total	$	577		$	773

Total inventory							$	569		$	571

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.

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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. Leasehold improvements are amortized at the shorter of the useful life of the asset or the remaining lease term. Depreciation and amortization expense isare included in general and administrative expense on the statement of operations. Expenditures for repairs and maintenance are expensed as incurred. ~~Property~~The following is a summary of the Company’s property and equipment ~~are summarized as follows~~ at ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016 (in thousands):~~2021:

								(in thousands)
								June 30,			December 31,
	September 30,			December 31,				2022			2021
	2017			2016
Equipment	$	1,378		$	1,378		Equipment	$	1,049		$	1,048
Software		740			740		Software		652			652
Furniture and fixtures		124			124		Furniture and fixtures		41			41
Leasehold Improvement		199			199
Leasehold improvements							Leasehold improvements		12			12
Construction in progress							Construction in progress		39			8
		2,441			2,441
Less accumulated depreciation and amortization		(2,385	)		(2,315	)
Total	$	56		$	126
Subtotal							Subtotal		1,793			1,761
Less accumulated depreciation							Less accumulated depreciation		(1,748	)		(1,747	)
Property, equipment and leasehold improvements, net							Property, equipment and leasehold improvements, net
								$	45		$	14

Depreciation expense related to property and equipment for the three and six months ended June 30, 2022 and 2021 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 ~~that~~ debt liability consistent with the debt discount.

~~Other Assets~~

~~Other assets primarily consist of short- and long-term deposits for various tooling inventory that are being constructed for the Company and deferred financing costs.~~

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 ~~aggregated approximately $15,000 and $9,000~~were not material for the ~~nine~~three and six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016, respectively.~~2021.

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 7 – Commitments and Contingencies.

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Accrued Liabilities

Accrued liabilities as of June 30, 2022 and December 31, 2021 are summarized as ~~follows (in thousands):~~follows:

September 30,
2017
December 31,
2016
Accrued compensation $ 2,037 $ 1,656
Accrued professional fees 74 161
   Deferred rent —   13
Accrued warranty 44 58
Accrued vacation 151 175
Accrued interest 449 —
Accrued dividends 316 296
Other accrued expenses 579 311
            Total $ 3,650 $ 2,670

	(in thousands)
	June 30, 2022		December 31, 2021

Compensation	$	544	$	621
Professional fees		53		98
Stock Subscription Payable		0		351
Interest		211		261
Vacation		41		39
Preferred dividends		327		349
Other accrued expenses		30		49

Total	$	1,206	$	1,768

~~Deferred~~ Stock Subscription Payable

Cash received from investors for common stock shares 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. 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.

	·	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.

The Company did not recognize material revenues during the six-month periods ended June 30, 2022 or 2021. The Company’s revenues do not require significant estimates or judgments. The Company is not party to contracts that include multiple performance obligations or material variable consideration.

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Contract Balances

The Company defers payments received as revenue until earned based on the related contracts ~~on a straight-line basis, over the terms of the contract.~~and applying ASC 606 as required. As of ~~September~~June 30, ~~2017, the Company has received prepayments for devices~~2022 and ~~disposables~~December 31, 2021, deferred revenue was approximately $512,557 and ~~deferred that revenue in the amount of $156,000.~~$337,315, respectively.

Significant Distributors

As of June 30, 2022, accounts receivable outstanding was approximately $155,046. The gross outstanding amount was netted against a $125,584 allowance, leaving a balance of $29,462 which was from two distributors. As of December 31, 2021, accounts receivable outstanding was $171,153; the outstanding amount was netted against a $125,584 allowance, leaving a balance of $45,569, which was from two distributors.

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 ~~uses the liability method of accounting for income taxes. Under this method, deferred~~has filed its 2021 federal and state corporate tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Management provides valuation allowances against the deferred tax assets for amounts that are not considered more likely than not to be realized.

returns. The Company ~~is currently~~has entered into an agreed upon payment plan with the IRS for delinquent ~~with~~payroll taxes. The Company has an established payment arrangement for its ~~federal and applicable state tax returns filings. Some of the federal income tax returns are currently under examination by the U.S. Internal Revenue Service (“IRS”). None of the Company’s~~delinquent state income ~~tax returns are currently under review by state authorities.~~taxes with the State of Georgia. 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~~June 30, ~~2017 and December 31, 2016,~~2022, the Company ~~has~~had approximately ~~$37 and $33~~$61.6 million of net operating losses ~~respectively.~~carryforward available. This net operating loss will be eligible to be carried forward for tax purposes at federal and applicable states level. A full valuation allowance has been recorded related the deferred tax assets generated from the net operating losses.

~~Uncertain Tax Positions~~

The Company ~~assesses each income~~recognizes uncertain tax positions based on a benefit recognition model. Provided that the tax position ~~using a two-step process. A determination~~ is ~~first made as to whether it is~~deemed more likely than not ~~that~~of being sustained, the income tax position will be sustained, based upon technical merits, upon examination by the taxing authorities. If the income tax position is expected to meet the more-likely-than-not criteria, the benefit recorded in the financial statements equalsCompany recognizes the largest amount of tax benefit that is greater than ~~50%~~50.0% likely ~~to be~~of being ultimately realized upon ~~its ultimate~~ settlement. ~~At September 30, 2017~~The tax position is derecognized when it is no longer more likely than not of being sustained. The Company classifies income tax related interest and ~~December 31, 2016 there were no uncertain tax positions.~~penalties as interest expense and selling, general and administrative expense, respectively, on the consolidated statements of operations.

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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 ~~issued to non-employees~~ 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 Model. The fair value of warrants classified as liabilities at the date of issuance is estimated using the Monte Carlo Simulation or Binomial model.

Stock Based Compensation

The Company ~~records~~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 ~~related~~for all stock-based payment awards made to ~~options granted to non-employees based on~~employees and directors. The Company determines the fair value of ~~the award.~~

~~Compensation cost is recorded as earned for all unvested~~ stock options ~~outstanding at~~using the ~~beginning~~Black-Scholes model. The fair value of ~~the first year~~restricted stock awards is based upon the ~~grant~~quoted market price of the common shares on the date of grant. The fair value ~~estimates,~~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 ~~for compensation cost for all share-based payments granted or modified subsequently based on~~the expected stock price volatility of the underlying stock. The assumptions used in calculating the fair value ~~estimates.~~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.

~~For~~Derivatives

The Company reviews the ~~nine months ended September 30, 2017~~terms of convertible debt issued to determine whether there are embedded derivative instruments, including embedded conversion options, which are required to be bifurcated and ~~2016 share-based compensation~~accounted for ~~options attributable~~separately as derivative financial instruments. In circumstances where the host instrument contains more than one embedded derivative instrument, including the conversion option, that is required to ~~employees, officers~~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 ~~Board members were approximately $56,000 and $72,000. These amounts have been included~~are then revalued at each reporting date with changes in the ~~Company’s statements~~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 ~~operations. Compensation costs for stock options which vest over time~~all the bifurcated derivative instruments. The remaining proceeds, if any, are ~~recognized~~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 ~~vesting period. As~~life of ~~September 30, 2017,~~ the ~~Company had approximately $53,000 of unrecognized compensation costs related~~instrument through periodic charges to ~~granted stock options that will be recognized over the remaining vesting period of approximately three years.~~interest expense.

3. FAIR VALUE OF FINANCIAL INSTRUMENTS

The guidance for fair value measurements, ~~ASC820,~~ ASC 820, Fair Value Measurements and Disclosures, establishes the authoritative definition of fair value, sets out a framework for measuring fair value, and outlines the required disclosures regarding fair value measurements. Fair value is the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The Company uses a three-tier fair value hierarchy based upon observable and non-observable inputs as ~~follows:~~follow:

~~Level 1 – Quoted market prices in active markets for identical assets and liabilities;~~

	• ·	Level ~~2 –~~ 1–Quoted market prices in active markets for identical assets and liabilities;
	·	Level 2–Inputs, other than level 1 inputs, either directly or indirectly observable; and
	·
	•	Level ~~3 –~~ 3–Unobservable inputs developed using internal estimates and assumptions (there is little or no market date) which reflect those that market participants would use.

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The Company records its derivative activities at fair ~~value, which consisted~~value. As of ~~warrants as~~June 30, 2022 we had one instrument that we valued for the derivative liability associated with the bifurcated conversion option of ~~September 30, 2017. The~~the Auctus loan for $400,000. There was no movement of instruments between fair value ofhierarchy tiers during the warrants was estimated using the Binomial Simulation model. Gains and losses from derivative contracts are included in net gain (loss) from derivative contracts in the statement of operations. The fair value of the Company’s derivative warrants is classified as a Level 3 measurement, since unobservable inputs are used in the valuation.six months ended June 30, 2022.

The following ~~table presents~~tables present the fair value ~~for~~of those liabilities measured on a recurring basis as of ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016:~~ 2021:

~~FAIR VALUE MEASUREMENTS (In Thousands)~~

~~The following is summary of items that the Company measures at fair value on a recurring basis:~~

Fair Value at September 30, 2017

Level 1 Level 2 Level 3 Total

Warrants issued in connection with Distributor Debt $ —   $ —   $ (114 ) (114 )
Warrants issued in connection with Senior Secured Debt —   —   (1,720 ) (1,720 )

            Total long-term liabilities at fair value $ —   $ —   $ (1,834 ) (1,834 )

	Fair Value at June 30, 2022 (in thousands)
	Level 1		Level 2		Level 3			Total

Derivative liability/bifurcated conversion option in connection with Auctus $400,000 loan on December 17, 2019	$	0	$	0	$	(24	)	$	(24	)

Total short-term liabilities at fair value	$	0	$	0	$	(24	)	$	(24	)

	Fair Value at December 31, 2021 (in thousands)
	Level 1		Level 2		Level 3			Total

Derivative liability/bifurcated conversion option in connection with Auctus $400,000 loan on December 17, 2019		0		0		(32	)		(32	)

Total long-term liabilities at fair value	$	0	$	0	$	(32	)	$	(32	)

Fair Value at December 31, 2016

Level 1 Level 2 Level 3 Total

Warrants issued in connection with Distributor Debt $ —   $ —   $ (114 ) $ (114 )
Warrants issued in connection with Senior Secured Debt —   —   (1,306 ) (1,306 )

            Total long-term liabilities at fair value $ —   $ —   $ (1,420 ) $ (1,420 )

The following is a summary of changes to Level 3 instruments during the ~~nine~~six months ended ~~September~~June 30, ~~2017:~~2022:

Fair Value Measurements Using Significant Unobservable
Inputs (Level 3)
Series C Warrants Series B Warrants Senior Secured Debt Distributor Debt Total

Balance, December 31, 2016 $ —   $ —   $ (1,306 ) $ (114 ) $ (1,420 )
Warrants issued during the period —   —   (55 ) —   (55 )
Change in fair value during the period —   —   (359 ) —   (359 )

Balance, September 30, 2017 $ —   $ —   $ (1,720 ) $ (114 ) $ (1,834 )

	(in thousands)
	Senior Secured		Derivative			Total

Balance, December 31, 2021	$	0	$	(32	)	$	(32	)
Change in fair value during the period		0		8			8

Balance, June 30, 2022	$	0	$	(24	)	$	(24	)

As of September 30, 2017, the fair value of warrants was approximately $1,834,000. A net change of approximately $359,000 has been recorded to the accompanying statement of operations for the nine months ended September 30, 2017.

4. STOCKHOLDERS’ DEFICIT

Common Stock

The Company has authorized ~~1,000,000,000~~500,000,000 shares of common stock with $0.001 par ~~value,~~value. As of ~~which 9,252,889~~June 30, 2022 and December 31, 2021, 27,583,473 and 13,673,583 shares were issued and outstanding, ~~as of September 30, 2017. As of December 31, 2016, there were 1,000,000,000 authorized shares of common stock, of which 668,651 were issued and outstanding.~~respectively.

A 1:800 reverse stock split of all of our issued and outstanding common stock was implemented on November 7, 2016. As a result of the reverse stock split, every 800 shares of issued and outstanding common stock was 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. On February 24, 2016, the Company had also implemented a 1:100 reverse stock split of its issued and outstanding common stock. The number of the authorized shares did not change.

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~~For~~During the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2022, the Company issued ~~8,584,238~~13,909,890 shares of common stock, as ~~listed~~summarized below:

~~Series C Preferred Stock Conversions~~	~~2,475,095~~ Number of Shares
~~Series C Preferred Stock Dividends~~ Issuance of common stock for warrants exercised	~~1,195,800~~	5,127,923
Issuance of ~~shares due to commitment in Debt agreement~~common stock for payment of Series D Preferred dividends	~~50,000~~	48,397
~~Convertible Debt Conversions~~ Issuance of common stock for payment of Series E Preferred dividends	~~4,863,343~~	62,662
~~Total~~ Issuance of common stock for payment of Series F Preferred dividends	~~8,584,238~~	162,436
Issuance of common stock for payment of Series F-2 Preferred dividends		114,304
Issuance of common stock for payment of interest		121,262
Issuance of common stock for Series F one-time 15% dividend		255,401
Issuance of common stock for Series F-2 one-time 15% dividend		368,505
Conversion of Series D Preferred stock to common stock		975,000
Conversion of Series E Preferred stock to common stock		3,390,000
Conversion of Series F Preferred stock to common stock		1,420,000
Conversion of Series F-2 Preferred stock to common stock		1,864,000
Issued during the six months ended June 30, 2022		13,909,890

Summary table of common stock share transactions:
Shares outstanding at December 31, 2021		13,673,583
Issued in 2022		13,909,890
Shares outstanding at June 30, 2022		27,583,473

On January 22, 2017, the Company entered into a license agreement with Shandong Yaohua Medical Instrument Corporation, or SMI, pursuant to which the Company granted SMI an exclusive global license to manufacture the LuViva device and related disposables (subject to a carve-out for manufacture in Turkey) and exclusive distribution rights in the Peoples Republic of China, Macau, Hong Kong and Taiwan. In exchange for the license, SMI will pay a $1.0 million licensing fee, payable in five installments through November 2017, as well as a royalty on each disposable sold in the territories. As of September 30, 2017, SMI had paid $750,000. SMI will also underwrite the cost of securing approval of LuViva with the Chinese Food and Drug Administration, or CFDA. Pursuant to the SMI agreement, SMI must become capable of manufacturing LuViva in accordance with ISO 13485 for medical devices by the second anniversary of the SMI agreement, or else forfeit the license. During 2017, SMI must purchase no fewer than ten devices (with up to two devices pushed to 2018 if there is a delay in obtaining approval from the CFDA). In the three years following CFDA approval, SMI must purchase a minimum of 3,500 devices (500 in the first year, 1,000 in the second, and 2,000 in the third) or else forfeit the license. As manufacturer of the devices and disposables, SMI will be obligated to sell each to us at costs no higher than our current costs. As partial consideration for, and as a condition to, the license, and to further align the strategic interests of the parties, the Company agreed to issue $1.0 million in shares of its common stock to SMI, in five installments through October 2017, at a price per share equal to the lesser of the average closing price for the five days prior to issuance and $1.25. These shares have not been issued as of September 30, 2017.

In order to facilitate the SMI agreement, immediately prior to its execution the Company entered into an agreement with Shenghuo Medical, LLC, regarding its previous license to Shenghuo (see Note 7, Commitments and Contingencies). Under the terms of the new agreement, Shenghuo agreed to relinquish its manufacturing license and its distribution rights in SMI’s territories, and to waive its rights under the original Shenghuo agreement, all for as long as SMI performs under the SMI agreement. As consideration, the Company agreed to split with Shenghuo the licensing fees and net royalties from SMI that the Company will receive under the SMI agreement. Should the SMI agreement be terminated, the Company have agreed to re-issue the original license to Shenghuo under the original terms. The Company’s COO and director, Mark Faupel, is a shareholder of Shenghuo, as well as Dr. John Imhoff, a director and another director, Richard Blumberg, is a managing member of Shenghuo.

Preferred Stock

The Company has authorized 5,000,000 shares of preferred stock with a ~~$.001~~$0.001 par value. The board of directors has the authority to issue these shares and to set dividends, voting and conversion rights, redemption provisions, liquidation preferences, and other rights and restrictions.

Series C Convertible Preferred Stock

The board ~~of directors~~ designated 525,000 shares of preferred stock redeemable convertible preferred stock, none of which remain outstanding, 33,000 shares of preferred stock as Series B Preferred Stock, none of which remain outstanding, 9,000 shares of preferred stock as Series C Convertible Preferred Stock, ~~of which 1,177 and 1,643 were issued and outstanding at September 30, 2017 and December 31, 2016, respectively, and 20,250 shares of preferred stock as Series C1 Convertible~~(the “Series C Preferred ~~Stock, of which 4,312 shares were issued and outstanding at September 30, 2017 and December 31, 2016.~~

~~Series B Convertible Preferred Stock~~

~~Holders of the Series B Preferred Stock were entitled to quarterly dividends at an annual rate of 10.0%, payable in cash or, subject to certain conditions, common stock, at the Company’s option.~~

The Series B Preferred Stock were issued with Tranche A warrants to purchase 24 shares of common stock and Tranche B warrants purchasing 7,539 shares of common stock, at an exercise price of $8,364 and $75 per share, respectively.

At December 31, 2015, as a result of the operation of certain anti-dilution provisions, the Tranche B warrants were convertible into 1 shares of common stock. These warrants were re-measured based upon their fair value each reporting period and classified as a liability on the Balance Sheet. Between June 13, 2016 and June 14, 2016, the Company entered into various agreements with holders of the Company’s “Series B Tranche B” warrants, pursuant to which each holder separately agreed to exchange the warrants for either (1) shares of common stock equal to 166% of the number of shares of common stock underlying the surrendered warrants, or (2) new warrants exercisable for 200% of the number of shares underlying the surrendered warrants, but without certain anti-dilution protections included with the surrendered warrants.

~~Series C Convertible Preferred Stock~~

On June 29, 2015, the Company entered into a securities purchase agreement with certain accredited investors, including John Imhoff and Mark Faupel, members of the Board, for the issuance and sale of an aggregate of 6,737 shares of Series C convertible preferred stock, at a purchase price of $750 per share and a stated value of $1,000 per share. On September 3, 2015 the Company entered into an interim agreement amending the securities purchase agreement to provide for certain of the investors to purchase an additional aggregate of 1,166 shares. Total cash and non-cash expenses were valued at $853,000, resulting in net proceeds of $3,698,000.

Stock“). Pursuant to the Series C certificate of designations, shares of Series C preferred stock are convertible into common stock by their holder at any time and may be mandatorily convertible upon the achievement of specified average trading prices for the Company’s common stock. At ~~September~~June 30, ~~2017,~~2022 and December 31, 2021, there were ~~1,177~~286 shares outstanding with a conversion price of ~~$0.0299~~$0.50 per share, such that each share of Series C preferred stock would convert into approximately ~~31,492~~2,000 shares of the Company’s common stock; for a total convertible of 572,000 common stock shares, subject to customary adjustments, including for any accrued but unpaid dividends and pursuant to certain anti-dilution provisions, as set forth in the Series C certificate of designations. The conversion price will automatically adjust downward to 80% of the then-current market price of the Company’s common stock 15 trading days after any reverse stock split of the Company’s common stock, and 5 trading days after any conversions of the Company’s outstanding convertible debt.

Holders of the Series C preferred stock are entitled to quarterly cumulative dividends at an annual rate of 12.0% until 42 months after the original issuance date (the “Dividend End ~~Date”~~Date“), payable in cash or, subject to certain conditions, the Company’s common stock. ~~In addition, upon~~Unpaid accrued dividends were $120,120 as of June 30, 2022. Upon conversion of the Series C preferred stock prior to the Dividend End Date, the Company will also pay to the converting holder a “make-whole ~~payment”~~payment“ equal to the ~~amount~~number of unpaid dividends through the Dividend End Date on the converted shares. At ~~September~~June 30, ~~2017,~~2022 and December 31, 2021, the “make-whole ~~payment”~~payment“ for a converted share of Series C preferred stock would convert to ~~14,030~~200 shares of the Company’s common stock.

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 $1,000, plus any accrued but unpaid dividends.

In addition, the purchasers of the Series C preferred stock received, on a pro rata basis, warrants exercisable to purchase an aggregate of approximately 150 shares of Company’s common stock. The warrants contain anti-dilution adjustments in the event that the Company issues shares of common stock, or securities exercisable or convertible into shares of common stock, at prices below the exercise price of such warrants. As a result of the anti-dilution protection, the Company is required to account for the warrants as a liability recorded at fair value each reporting period. At September 30, 2017, the exercise price per share was $640.

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On May 23, 2016, an investor canceled certain of these warrants, exercisable into 903 shares of common stock. The same investor also transferred certain of these warrants, exercisable for 150 shares of common stock, to two investors who also had participated in the 2015 Series C financing.

Series C1 Convertible Preferred Stock

~~Between April 27, 2016 and May 3, 2016, the Company entered into various agreements with certain holders~~

The board designated 20,250 shares of ~~Series C~~ preferred stock ~~including directors John Imhoff~~as Series C1 Preferred Stock, of which 1,049 shares were issued and ~~Mark Faupel, pursuant to which those~~outstanding at June 30, 2022 and December 31, 2021. In addition, some holders separately agreed to exchange each share of the Series ~~C preferred stock~~C1 Preferred Stock held for ~~2.25 shares~~one (1) share of the Company’s newly created Series ~~C1 preferred stock and 12 (9,600 pre-split) shares of the Company’s common stock (the “Series C Exchanges”).~~C2 Preferred Stock. In ~~connection with the Series C Exchanges, each holder also agreed to roll over the $1,000 stated value per share of the holder’s~~total, for 3,262.25 shares of Series C1 preferred stock into the next qualifying financing undertaken by the Company on a dollar-for-dollar basis and, except in the event of an additional $50,000 cash investment in the Company by the holder,Preferred Stock to ~~execute a customary “lockup” agreement in connection with the financing. In total, for 1,916 shares of Series C preferred stock~~be surrendered, the Company issued ~~4,312~~3,262.25 shares of Series ~~C1 preferred stock~~C2 Preferred Stock. At June 30, 2022 and ~~22,996~~December 31, 2021, shares of ~~common stock. At September 30, 2017, there were 4,312 shares outstanding with~~Series C2 had a conversion price of ~~$0.0299~~$0.50 per share, such that each share of Series C preferred stock would convert into approximately ~~31,492~~2,000 shares of the Company’s common stock.

At June 30, 2022 and December 31, 2021, there were 1,049.25 shares outstanding with a conversion price of $0.50 per share, such that each share of Series C1 preferred stock would convert into approximately 2,000 shares of the Company’s common stock, for a total convertible of 2,098,500 common stock shares.

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”~~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 Preferred Stock, including the chairman of the Company’s board of directors, the Chief Operating 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 Preferred Stock. In total, for 3,262.25 shares of Series C1 Preferred Stock to be surrendered, the Company issued 3,262.25 shares of Series C2 Preferred Stock. At June 30, 2022 and December 31, 2021, shares of Series C2 had a conversion price of $0.50 per share, such that each share of Series C preferred stock would convert into approximately 2,000 shares of the Company’s common stock, for a total convertible of 6,524,500 common stock shares.

The terms of the Series C2 Preferred Stock are substantially the same as the Series C1 Preferred Stock, except that (i) shares of Series C1 Preferred Stock may not be 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 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 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 ($1,000 per share) of such share of Series C2 Preferred Stock by the purchase price of the securities sold in the Qualified Financing.

Series D Convertible Preferred Stock

The Board designated 6,000 shares of preferred stock as Series D Preferred Stock, 438 and 763 of which remained outstanding as of June 30, 2022 and December 31, 2021, respectively. On January 8, 2021, the Company entered into a Stock Purchase Agreement with certain accredited investors (“the Series D Investors“) pursuant to all obligations under the Series D Certificate of Designation. The Series D Investors included the Chief Executive Officer, Chief Operating Officer and a director of the Company. In total, for $763,000 the Company issued 763 shares of Series D Preferred Stock, 1,526,000 common stock shares, 1,526,000 common stock warrants, exercisable at $0.25, and 1,526,000 common stock warrants, exercisable at $0.75. Each Series D Preferred Stock is convertible into 3,000 common stock shares. The Series D Preferred Stock will have cumulative dividends at the rate per share of 10% per annum. The stated value and liquidation preference on the Series D Preferred Stock is $763. The 763 Series D Preferred Shares are convertible into debt at the option of the holder during a prescribed time period. If the Series D Preferred Shares are converted, the Series D preferences are surrendered and the debt is then secured by the Company’s assets. As of June 30, 2022, none of the remaining 438 Series D Preferred Shares have been converted to secured debt.

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Each share of Series D Preferred is convertible, at any time for a period of 5 years after issuance, into that number of shares of Common Stock, determined by dividing the Stated Value by $0.25, subject to certain adjustments set forth in the Series D Certificate of Designation (the “Series D Conversion Price“). The conversion of Series D Preferred is subject to a 4.99% beneficial ownership limitation, which may be increased to 9.99% at the election of the holder of the Series D Preferred. If the average of the VWAPs (as defined in the Series D Certificate of Designation) for any consecutive 5 trading day period (“Measurement Period“) exceeds 200% of the then Series D Conversion Price and the average daily trading volume of the Common Stock on the primary trading market exceeds 1,000 shares per trading day during the Measurement Period (subject to adjustments), the Company may redeem the then outstanding Series D Preferred, for cash in an amount equal to aggregate Stated Value then outstanding plus accrued but unpaid dividends.

During the six months ended June 30, 2022, the Company entered into various agreements with Series D Preferred shareholders, pursuant to which each holder separately agreed to exchange their Series D Preferred shares into the Company’s common shares (in accordance with their existing Series D Preferred Share Agreements). In addition, the holders agreed to exchange 650,000 common stock warrants with a strike price of $0.25 for 650,000 warrants with a strike price of $0.20, which were required to be immediately exercised. The Company received $130,000 from the holders for exercises of the aforementioned warrants.

During the six months ended June 30, 2022, the Company issued 975,000 common stock shares for the conversion of 325 shares of Series D Preferred Stock. During the six months ended June 30, 2022, the Company issued 48,397 common stock shares for the payment of accrued Series D Preferred Stock dividends. As of June 30, 2022, the Company had accrued dividends for Series D preferred shares of $8,213.

Series E Convertible Preferred Stock

The Board designated 5,000 shares of preferred stock as Series E Preferred Stock, 888 and 1,736 of which remained outstanding as of June 30, 2022 and December 31, 2021, respectively. Each share of Series E Preferred is convertible, at any time for a period of 5 years after issuance, into that number of shares of Common Stock, determined by dividing the Stated Value by $0.25, subject to certain adjustments set forth in the Series E Certificate of Designation (the “Series E Conversion Price“). The conversion of Series E Preferred is subject to a 4.99% beneficial ownership limitation, which may be increased to 9.99% at the election of the holder of the Series E Preferred. If the average of the VWAPs (as defined in the Series E Certificate of Designation) for any consecutive 5 trading day period (“Measurement Period“) exceeds 200% of the then Series E Conversion Price and the average daily trading volume of the Common Stock on the primary trading market exceeds 1,000 shares per trading day during the Measurement Period (subject to adjustments), the Company may redeem the then outstanding Series E Preferred, for cash in an amount equal to aggregate Stated Value then outstanding plus accrued but unpaid dividends.

Each share of Series E Preferred Stock has a par value of $0.001 per share and a Stated Value equal to $1,000, subject to increase set forth in its Certificate of Designation. Each holder of Series E Preferred Stock is entitled to receive cumulative dividends of 8% per annum, payable annually in cash or, following the listing of the Company’s common stock on certain Canadian trading markets and at the option of the Company, in shares of common stock.

During the six months ended June 30, 2022, the Company issued 3,390,000 common stock shares for the conversion of 847.50 shares of Series E Convertible Preferred Stock. During the six months ended June 30, 2022, the Company issued 62,662 common stock shares for the payment of Series E Preferred Stock dividends accrued. As of June 30, 2022, the Company had accrued dividends for Series E preferred shares of $57,934.

Series F Convertible Preferred Stock

The Board designated 1,500 shares of preferred stock as Series F Preferred Stock, 1,071 and 1,426 of which were issued and outstanding as of June 30, 2022 and December 31, 2021, respectively. During 2021, the Company entered into a Stock Purchase Agreement with certain accredited investors (“the Series F Investors“). In total, for $1,436,000 the Company issued 1,436 shares of Series F Preferred Stock. Each Series F Preferred Stock is convertible into 4,000 common stock shares. The Series F Preferred Stock is entitled to cumulative dividends at the rate per share of 6% per annum. The stated value on the Series F Preferred Stock is $1,000.

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Each share of Series F Preferred is convertible, at any time for a period of 5 years after issuance, into that number of shares of Common Stock, determined by dividing the Stated Value by $0.25, subject to certain adjustments set forth in the Series F Certificate of Designation (the “Series F Conversion Price“). The conversion of Series F Preferred is subject to a 4.99% beneficial ownership limitation, which may be increased to 9.99% at the election of the holder of the Series F Preferred. If the average of the VWAPs (as defined in the Series F Certificate of Designation) for any consecutive 5 trading day period (“Measurement Period“) exceeds 200% of the then Series F Conversion Price and the average daily trading volume of the Common Stock on the primary trading market exceeds 1,000 shares per trading day during the Measurement Period (subject to adjustments), the Company may redeem the then outstanding Series F Preferred, for cash in an amount equal to aggregate Stated Value then outstanding plus accrued but unpaid dividends.

During the six months ended June 30, 2022, the Company issued 1,420,000 common stock shares for the conversion of 355 shares of Series F Preferred stock and 162,436 common stock shares for the payment of annual Series F Preferred Stock dividends. During the six months ended June 30, 2022, the Company issued 255,401 common stock shares for the payment of a one-time, non-recurring 15% dividend to the Series F Preferred shareholders (as required by the Series F Certificate of Designation, in the event the Company did not uplist to the NASDAQ stock exchange or file its clinical data intended for FDA approval of LuViva by December 31, 2021). As of June 30, 2022, the Company had accrued dividends for Series F Preferred shares of $16,878.

Series F-2 Convertible Preferred Stock

The Company was oversubscribed for its Series F Convertible Preferred Stock, resulting in the requirement to file an additional Certificate of Designation for Series F-2 Convertible Preferred Stock with substantially the same terms as the Series F Convertible Preferred Stock. The Board designated 3,500 shares of preferred stock as Series F-2 Preferred Stock, 2,771 and 3,237 of which were issued and outstanding as of June 30, 2022 and December 31, 2021, respectively. During 2021, the Company entered into a Stock Purchase Agreement with certain accredited investors (“the Series F-2 Investors“). In total, for $678,000 the Company issued 678 shares of Series F-2 Preferred Stock. In addition, the Company exchanged outstanding debt of $2,559,000 for 2,559 shares of Series F-2 Preferred Stock. Each Series F-2 Preferred Stock is convertible into 4,000 common stock shares. The Series F-2 Preferred Stock will have cumulative dividends at the rate per share of 6% per annum. The stated value on the Series F-2 Preferred Stock is $1,000.

Each share of Series F-2 Preferred is convertible, at any time for a period of 5 years after issuance, into that number of shares of Common Stock, determined by dividing the Stated Value by $0.25, subject to certain adjustments set forth in the Series F-2 Certificate of Designation (the “Series F-2 Conversion Price“). The conversion of Series F-2 Preferred is subject to a 4.99% beneficial ownership limitation, which may be increased to 9.99% at the election of the holders of the Series F-2 Preferred. If the average of the VWAPs (as defined in the Series F-2 Certificate of Designation) for any consecutive 5 trading day period (“Measurement Period“) exceeds 200% of the then Series F-2 Conversion Price and the average daily trading volume of the Common Stock on the primary trading market exceeds 1,000 shares per trading day during the Measurement Period (subject to adjustments), the Company may redeem the then outstanding Series F-2 Preferred, for cash in an amount equal to aggregate Stated Value then outstanding plus accrued but unpaid dividends.

During the six months ended June 30, 2022, the Company issued 1,864,000 common stock shares for the conversion of 466 shares of Series F-2 Preferred stock and 114,304 common stock shares for the payment of annual Series F-2 Preferred Stock dividends. During the six months ended June 30, 2022, the Company issued 368,505 common stock shares for the payment of a one-time, non-recurring 15% dividend to the Series F-2 Preferred shareholders (as required by the Series F-2 Certificate of Designation in the event the Company did not uplist to the NASDAQ stock exchange or file its clinical data intended for FDA approval of LuViva by December 31, 2021). As of June 30, 2022, the Company had accrued dividends for Series F-2 Preferred shares of $123,743.

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Powerup (Series G Convertible Preferred Stock)

During January 2021, the Company finalized an investment by Power Up Lending Group Ltd. Power Up invested $78,500, net to the Company is $75,000, for 91,000 shares of Series G preferred stock with additional tranches of financing up to $925,000 in the aggregate over the terms of the Series G preferred stock. Series G will be non-voting on any matters requiring shareholder vote. The Series G Preferred Stock will have cumulative dividends at the rate per share of 8% per annum. At any time during the period indicated below, after the date of the issuance of shares of Series G preferred stock, the Company will have the right, at the Company’s option, to redeem all of the shares of Series G preferred stock by paying an amount equal to: (i) the number of shares of Series G preferred stock multiplied by then stated value (including accrued dividends); (ii) multiplied by the corresponding percentage as follows: Day 1-60, 105%; Day 61-90, 110%; Day 91-120, 115%; and Day 121-180, 122%. After the expiration of the 180 days following the issuance date, except for mandatory redemption, the Company shall have no right to redeem the Series G preferred stock. Mandatory redemption occurs within 24 months. In addition, if the Company does not redeem the Series G preferred stock, then Power Up will have the option to convert to common stock shares. The variable conversion price will be the value equal to a discount of 19% off of the trading price; which is calculated as the average of the three lowest closing bid prices over the last fifteen trading days. The conversion of Series G Preferred is subject to a 4.99% beneficial ownership limitation, which may be increased to 9.99% at the election of the holder of the Series G Preferred. The Company has redeemed all of the Series G preferred stock and the balance is paid.

During February 2021, the Company finalized an investment by Power Up Lending Group Ltd. Power Up invested $53,500, net to the Company is $50,000, for 62,000 shares of Series G preferred stock with additional tranches of financing up to $925,000 in the aggregate over the terms of the Series G preferred stock. Series G will be non-voting on any matters requiring shareholder vote. The Series G Preferred Stock will have cumulative dividends at the rate per share of 8% per annum. At any time during the period indicated below, after the date of the issuance of shares of Series G preferred stock, the Company will have the right, at the Company’s option, to redeem all of the shares of Series G preferred stock by paying an amount equal to: (i) the number of shares of Series G preferred stock multiplied by then stated value (including accrued dividends); (ii) multiplied by the corresponding percentage as follows: Day 1-60, 105%; Day 61-90, 110%; Day 91-120, 115%; and Day 121-180, 122%. After the expiration of the 180 days following the issuance date, except for mandatory redemption, the Company shall have no right to redeem the Series G preferred stock. Mandatory redemption occurs within 24 months. In addition, if the Company does not redeem the Series G preferred stock then Power Up will have the option to convert to common stock shares. The variable conversion price will be the value equal to a discount of 19% off of the trading price; which is calculated as the average of the three lowest closing bid prices over the last fifteen trading days. The conversion of Series G Preferred is subject to a 4.99% beneficial ownership limitation, which may be increased to 9.99% at the election of the holder of the Series G Preferred.

Due to the mandatory redemption feature of the Series G preferred stock, the total amount of proceeds of $125,000 was recorded as a liability. On June 4, 2021, the Company redeemed the January 2021 investment of $75,000 for $114,597, this $39,597 difference was recorded as interest expense. On July 8, 2021, the Company redeemed the February 2021 investment of $50,000 for $78,094. The difference of $28,094 was recorded as interest expense. As of June 30, 2022 and December 31, 2021, the amount outstanding was nil.

Warrants

The following table summarizes transactions involving the Company’s outstanding warrants to purchase common stock for the ~~quarter~~six months ended ~~September~~June 30, ~~2017:~~2022:

	Warrants (Underlying Shares)			Weighted-Average Exercise Price Per Share
Outstanding, December 31, 2021		27,669,634		$	0.29
Warrants exercised		(2,934,324	)	$	0.17
Outstanding, June 30, 2022		24,735,310		$	0.30

During the six months ended June 30, 2022, the Company issued 5,127,923 common shares for warrants exercised, 2,193,599 of which were for warrants exercised prior to December 31, 2022. During December 31, 2021, the Company received approximately $351,000 from the holders for the exercise of 2,193,599 warrants, which was included in Accrued Liabilities as of December 31, 2021, pending issuance of the common shares.

	~~Warrants~~ ~~(Underlying Shares)~~
~~Outstanding, January 1, 2017~~		~~4,349,762~~
~~Issuances~~		~~82,476,451~~	22
~~Canceled / Expired~~		—
~~Exercised~~		—	Table of Contents
~~Outstanding, September 30, 2017~~		~~86,826,213~~

~~The Company had the following shares reserved for the warrants as of September 30, 2017:~~

Warrants
(Underlying Shares)

Exercise Price
Expiration Date
23 (1) $8,368.00 per share May 23, 2018
7,538 (2) $75.00 per share June 14, 2021
3 (3) $40,000.00 per share April 23, 2019
7 (4) $36,000.00 per share May 22, 2019
4 (5) $30,400.00 per share September 10, 2019
2 (6) $36,864.80 per share September 27, 2019
9 (7) $22,504.00 per share December 2, 2019
105 (8) $7,200.00 per share December 2, 2020
105 (9) $8,800.00 per share December 2, 2020
25 (11) $20,400.00 per share March 30, 2018
22 (12) $9,504.00 per share June 29, 2020
145 (10) $640.00 per share June 29, 2020
150 (11) $640.00 per share September 4, 2020
362 (12) $640.00 per share September 21, 2020
6 (13) $9,504.00 per share September 4, 2020
1 (14) $640.00 per share October 23, 2020
6 (15) $9,504.00 per share October 23, 2020
82,614,942 (16) $0.017 per share June 14, 2021
3,965,519 (17) $0.017 per share February 21, 2021
17,239 (18) $13.92 per share June 6, 2021
200,000 (19) $0.67 per share February 13, 2022
20,000 (20) $0.18 per share May 16, 2022
86,826,213


~~(1)~~	~~Issued in June 2015 in exchange for warrants originally issued as part of a May 2013 private placement.~~
~~(2)~~	~~Issued in June 2015 in exchange for warrants originally issued as part of a May 2013 private placement.~~
~~(3)~~	~~Issued to a placement agent in conjunction with an April 2014 private placement.~~
~~(4)~~	~~Issued to a placement agent in conjunction with a September 2014 private placement.~~
~~(5)~~	~~Issued as part of a September 2014 Regulation S offering.~~
~~(6)~~	~~Issued to a placement agent in conjunction with a 2014 public offering.~~
~~(7)~~	~~Issued in June 2015 in exchange for warrants originally issued as part of a 2014 public offering.~~
~~(8)~~	~~Issued as part of a March 2015 private placement.~~
~~(9)~~	~~Issued to a placement agent in conjunction with a June 2015 private placement.~~
~~(10)~~	~~Issued as part of a June 2015 private placement.~~
~~(11)~~	~~Issued as part of a June 2015 private placement.~~
~~(12)~~	~~Issued as part of a June 2015 private placement.~~
~~(13)~~	~~Issued to a placement agent in conjunction with a June 2015 private placement.~~
~~(14)~~	~~Issued as part of a June 2015 private placement.~~
~~(15)~~	~~Issued to a placement agent in conjunction with a June 2015 private placement.~~
~~(16)~~	~~Issued as part of a February 2016 private placement.~~
~~(17)~~	~~Issued to a placement agent in conjunction with a February 2016 private placement.~~
~~(18)~~ ~~(19)~~	~~Issued pursuant to a strategic license agreement.~~ ~~Issued as part of a February 2017 private placement.~~
~~(20)~~	~~Issued as part of a May 2017 private placement.~~

All outstanding warrant agreements provide for anti-dilution adjustments in the event of certain mergers, consolidations, reorganizations, recapitalizations, stock dividends, stock splits or other changes in the Company’s corporate structure; except for (9). In addition, warrants subject to footnotes (2) and (10)-(12), (14), and (16) – (19) in the table above are subject to “lower price issuance” anti-dilution provisions that automatically reduce the exercise price of the warrants (and, in the cases of warrants subject to footnote (2), (16) and (17) in the table above, increase the number of shares of common stock issuable upon exercise), to the offering price in a subsequent issuance of the Company’s common stock, unless such subsequent issuance is exempt under the terms of the warrants.

The warrants subject to footnote (2) are subject to a mandatory exercise provision. This provision permits the Company, subject to certain limitations, to require exercise of such warrants at any time following (a) the date that is the 30th day after the later of the Company’s receipt of an approvable letter from the U.S. FDA for LuViva and the date on which the common stock achieves an average market price for 20 consecutive trading days of at least $1,040.00 with an average daily trading volume during such 20 consecutive trading days of at least 250 shares, or (b) the date on which the average market price of the common stock for 20 consecutive trading days immediately prior to the date the Company delivers a notice demanding exercise is at least $129,600.00 and the average daily trading volume of the common stock exceeds 250 shares for such 20 consecutive trading days. If these warrants are not timely exercised upon demand, they will expire. Upon the occurrence of certain events, the Company may be required to repurchase these warrants, as well as the warrants subject to footnote (2) in the table above.

The warrants subject to footnote (5) in the table above are also subject to a mandatory exercise provision. This provision permits the Company, subject to certain limitations; to require the exercise of such warrants should the average trading price of its common stock over any 30 consecutive day trading period exceed $92.16.

The warrants subject to footnote (7) in the table above are also subject to a mandatory exercise provision. This provision permits the Company, subject to certain limitations, to require exercise of 50% of the then-outstanding warrants if the trading price of its common stock is at least two times the initial warrant exercise price for any 20-day trading period. Further, in the event that the trading price of the Company’s common stock is at least 2.5 times the initial warrant exercise price for any 20-day trading period, the Company will have the right to require the immediate exercise of 50% of the then-outstanding warrants. Any warrants not exercised within the prescribed time periods will be canceled to the extent of the number of shares subject to mandatory exercise.

The holders of the warrants subject to footnote (2) in the table above have agreed to surrender the warrants, upon consummation of a qualified public financing, for new warrants exercisable for 200% of the number of shares underlying the surrendered warrants, but without certain anti-dilution protections included with the surrendered warrants.

~~Series B Tranche B Warrants~~

As discussed in Note 3, Fair Value Measurements, between June 13, 2016 and June 14, 2016, the Company entered into various agreements with holders of the Company’s “Series B Tranche B” warrants, pursuant to which each holder separately agreed to exchange the warrants for either (1) shares of common stock equal to 166% of the number of shares of common stock underlying the surrendered warrants, or (2) new warrants exercisable for 200% of the number of shares underlying the surrendered warrants, but without certain anti-dilution protections included with the surrendered warrants. In total, for surrendered warrants then-exercisable for an aggregate of 1,185,357 shares of common stock (but subject to exponential increase upon operation of certain anti-dilution provisions), the Company issued or is obligated to issue 16,897 shares of common stock and new warrants that, if exercised as of the date hereof, would be exercisable for an aggregate of 216,707 shares of common stock. As of September 30, 2017, the Company had issued 14,766 shares of common stock and rights to common stock shares for 2,131. In certain circumstances, in lieu of presently issuing all of the shares (for each holder that opted for shares of common stock), the Company and the holder further agreed that the Company will, subject to the terms and conditions set forth in the applicable warrant exchange agreement, from time to time, be obligated to issue the remaining shares to the holder. No additional consideration will be payable in connection with the issuance of the remaining shares. The holders that elected to receive shares for their surrendered warrants have agreed that they will not sell shares on any trading day in an amount, in the aggregate, exceeding 20% of the composite aggregate trading volume of the common stock for that trading day. The holders that elected to receive new warrants will be required to surrender their old warrants upon consummation of the Company’s next financing resulting in net cash proceeds to the Company of at least $1 million. The new warrants will have an initial exercise price equal to the exercise price of the surrendered warrants as of immediately prior to consummation of the financing, subject to customary “downside price protection” for as long as the Company’s common stock is not listed on a national securities exchange, and will expire five years from the date of issuance.

5. STOCK OPTIONS

The ~~Company’s 1995~~new Stock Plan (the ~~“Plan”~~“Plan“) ~~has expired pursuant to its terms, so zero shares remained available for issuance at September 30, 2017. The Plan allowed~~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 ~~after~~over four years and expire ten years from the date of grant. The plan provides for stock options to be granted up to 10% of the outstanding common stock shares.

There was no stock option activity during the six months ended June 30, 2022. The following table summarizes the Company’s outstanding and exercisable stock options as of June 30, 2022:

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 June 30, 2022

1,500,000

0.49

8.0 years

Options exercisable as of June 30, 2022

1,136,182

0.49

8.0 years

The aggregate intrinsic value is calculated as the difference between the Company’s closing stock price as of June 30, 2022 and the exercise price, multiplied by the number of options. As of ~~September~~June 30, ~~2017, the Company has issued and outstanding options~~2022, there was $175,647 of unrecognized stock-based compensation expense. Such costs are expected to ~~purchase a total of 118 shares of common stock pursuant to the Plan, at~~be recognized over a weighted average ~~exercise price~~period of ~~$37,049 per share.~~approximately one year. The weighted-average fair value of awards granted was nil and $0.47 during the six months ended June 30, 2022 and 2021, respectively.

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. The Black-Scholes option pricing model and the following weighted-average assumptions were used to estimate the fair value of ~~stock options are estimated using the Black-Scholes option pricing model. No options were issued~~awards granted during the ~~period~~six months ended ~~September~~June 30, ~~2017.~~2021:

~~Stock option activity for September 30, 2017 as follows:~~

2017
Weighted Average
Shares Exercise Price
Outstanding at beginning of year 125 $ 37,920
   Options granted - $ -
   Options exercised - $ -
   Options expired/forfeited (7 ) $ 55,200
Outstanding at end of the period 118 $ 37,049

	June 30,
	2021
Expected term (years)		10 years
Volatility		153.12	%
Risk-free interest rate		0.98	%
Dividend yield		0.00	%

6. 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 the 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 ~~period.~~

year. As of ~~September~~June 30, ~~2017~~2022, and December 31, ~~2016,~~2021, there was no accrual recorded for any potential losses related to pending litigation.

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7. COMMITMENTS AND CONTINGENCIES

Operating Leases

The ~~Company leases approximately 23,000 square feet under a~~below table presents total operating lease ~~that expired in~~right-of-use assets and lease liabilities as of June ~~2017. The Company occupies the space on a month to month rental basis. The fixed monthly lease expense is approximately $15,000 plus common charges.~~30, 2022:

	(in thousands)
	June 30,
	2022
Operating lease right-of-use assets	$	338
Operating lease liabilities	$	360

The table below presents the maturities of operating lease liabilities as of June 30, 2022:

	(in thousands) Operating Lease Payments

2022 (remaining)	$	55
2023		112
2024		115
2025		118
2026		50
Total future lease payments		450
Less: discount		(90	)
Total lease liabilities	$	360

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:

	Six Months Ended June 30,
	2022

Weighted average remaining lease term (years)		3.9
Weighted average discount rate		11.4	%

Related Party Contracts

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. ~~The Company’s COO and director, Mark Faupel, is a shareholder of Shenghuo, as well as Dr. John Imhoff, a director and another director, Richard Blumberg, is a managing member of Shenghuo.~~ Shenghuo was already the Company’s exclusive distributor in China, Macau and Hong Kong, and the license extended to manufacturing in those countries as well. 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 20% of the distributor price (subject to a discount under certain circumstances), whichever is higher, per disposable distributed within Shenghuo’s exclusive territories. In connection with the license grant, Shenghuo was to underwrite the cost of securing approval of LuViva with Chinese Food and Drug Administration. At its option, Shenghuo also would provide up to $1.0 million in furtherance of the Company’s efforts to secure regulatory approval for LuViva from the U.S. Food and Drug Administration, in exchange for the right to receive payments equal to 2% of the Company’s future sales in the United States, up to an aggregate of $4.0 million. Pursuant to the license agreement, Shenghuo had the option to have a designee appointed to the Company’s board of directors ~~(director~~(current director Richard Blumberg is ~~that~~the designee). As partial consideration for, and as a condition to, the license, and to further align the strategic interests of the parties, the Company agreed to issue a convertible note to Shenghuo, in exchange for an aggregate cash investment of $200,000. The note will provide for a payment to Shenghuo of $300,000, expected to be due within 90 days from issuance and consummation of any capital raising transaction by the Company with net cash proceeds of at least $1.0 million. The note will accrue interest at 20% per year on any unpaid amounts due after that date. The note will be convertible into shares of the Company’s common stock at a conversion price per share of $13.92, subject to customary anti-dilution adjustment. The note will be unsecured, and is expected to provide for customary events of default. The Company will also issue Shenghuo a five-year warrant exercisable immediately for approximately 21,549 shares of common stock at an exercise price equal to the conversion price of the note, subject to customary anti-dilution adjustment. On January 22, 2017, the Company entered into a license agreement with SMI, pursuant to which the Company granted SMI an exclusive global license to manufacture the LuViva device and related disposables (subject to a carve-out for manufacture in Turkey) and exclusive distribution rights in the Peoples Republic of China, Macau, Hong Kong and Taiwan. In order to facilitate the SMI agreement, immediately prior to its execution the Company entered into an agreement with Shenghuo regarding its previous license to Shenghuo. Under the terms of the new agreement, Shenghuo agreed to relinquish its manufacturing license and its distribution rights in SMI’s territories, and to waive its rights under the original Shenghuo agreement, all for as long as SMI performs under the SMI agreement.


18	24

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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 $50,000, the Company will pay them an aggregate perpetual royalty initially equal to $0.10, and from and after October 2, 2016, equal to $0.20, for each disposable that the Company sells (or that is sold by a third party pursuant to a licensing arrangement with the Company).

~~See also Note 8, Notes Payable,~~

On January 22, 2020, the Company entered into a promotional agreement with ~~respect~~a related party, which is partially owned by Mr. Blumberg, to ~~certain short-term notes payable issued~~provide investor and public relations services for a period of two years. As compensation for these services, the Company will issue a total of 5,000,000 warrants, broken into four tranches of 1,250,000. The warrants have a strike price of $0.25 and are subject to ~~certain~~vesting based upon the close of the ~~Company’s officers~~Series D offering and ~~directors.~~a minimum share price based on the 30-day VWAP. If the minimum share price per the terms of the agreement is not achieved, the warrants will expire three years after the issuance date. The warrants were valued using the Black Scholes model on the grant date of January 22, 2020, which resulted in a total fair value of $715,000. The Company did not appropriately expense the services received in connection with this agreement in 2020. During the six months ended June 30, 2022, the Company recognized $79,444 of consulting expenses as a result of this agreement. Unrecognized consulting expense to be recognized under this agreement is nil as of June 30, 2022.

On March 10, 2021, the Company entered into a consulting agreement with Richard Blumberg. As a result of the consulting agreement Mr. Blumberg provided $350,000, which was recorded to subscription receivable, to the Company in exchange for the following: (1) on September 26, 2021, 900,000 3-year warrants with an exercise price of $0.30 and 400,000 common stock shares; (2) on March 26, 2022, 900,000 3-year warrants with an exercise price of $0.40 and 400,000 common stock shares; (3) on September 26, 2022, 900,000 3-year warrants with an exercise price of $0.50 and 400,000 common stock shares; and (4) on March 26, 2023, 900,000 3-year warrants with an exercise price of $0.60 and 400,000 common stock shares.

During the year ended December 31, 2021, the consulting agreement was amended to clarify that $350,000 is not intended to be debt and will not be required to be repaid in cash. Additionally, issuance of the warrants is now predicated on the Company receiving funding receipts of $1,000,000, whether from a financing, series of financing, or gross sales. The amended agreement clarified that the warrants issued to Mr. Blumberg are compensation for services, which involve obtaining financing. The Company will recognize expense for the services equal to the fair value of the warrants issued to Mr. Blumberg as the services are provided, which will coincide with the successful execution of a financing agreement over $1,000,000.

Other Commitments

On July 24, 2019, Shandong Yaohua Medical Instrument Corporation (“SMI“), agreed to modify its existing agreement. Under the terms of this modification, the Company agreed to grant (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 following terms and conditions. First, SMI shall complete the payment for parts, per the purchase order, for five additional LuViva devices. Second, in consideration for the $885,144 that the Company received, SMI will receive 12,147 common stock shares. Third, SMI shall honor all existing purchase orders it has executed to date with the Company, in order to maintain jurisdiction sales and distribution rights. If SMI needs to purchase cervical guides, then it will do so at a cost including labor, plus ten percent markup. The Company will provide 200 cervical guides at no cost for the clinical trials. Fourth, the Company and SMI will make best efforts to sell devices after CFDA approval. With an initial estimate of year one sales of 200 LuViva devices; year two sales of 500 LuViva devices; year three sales of 1,000 LuViva devices; and year four sales of 1,250 LuViva devices. Fifth, SMI shall pay for entire costs of securing approval of LuViva with the Chinese FDA. Sixth, SMI shall arrange, at its sole cost, for a manufacturer in China to build tooling to support manufacturing. In addition, SMI retains the right to manufacture for China, Hong Kong, Macau and Taiwan, where SMI has distribution and sales rights. For each single-use cervical guide sold by SMI in the jurisdictions, SMI shall transfer funds to escrow agent at a rate of $1.90 per device chip. If within 18 months of the license’s effective date, SMI fails to achieve commercialization of LuViva in China, SMI shall no longer have any rights to manufacture, distribute or sell LuViva. Commercialization is defined as: filing an application with the Chinese FDA for the approval of LuViva; any assembly or manufacture of the devices or disposables that begins in China; and purchase of at least 10 devices and disposables for clinical evaluations and regulatory use and or sales in the jurisdictions.

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On August 12, 2021, the Company executed an amendment to its agreement with SMI, which established a payment schedule for the balance owed by SMI to the Company for outstanding purchase orders. The remaining balance owed for outstanding purchase orders was $23,445 as of June 30, 2022. 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.

Contingencies

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 to the Company’s 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 the Company cannot provide any assurance that the outbreak will not have a material adverse impact on the Company’s operations or future results or filings with regulatory health authorities. The extent of the impact to the Company, if any, will depend on future developments, including actions taken to contain the coronavirus.

The Russia-Ukraine conflict and the sanctions imposed in response to this crisis could result in repercussions to 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.

8. NOTES PAYABLE

Short Term Notes Payable ~~in Default~~

At ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016,~~2021, the Company maintained short term notes payable ~~and accrued interest~~ to ~~both~~ related and non-related parties totaling ~~$689,000~~approximately $28,285 and ~~$1,008,000,~~$87,615, respectively. These notes are short term, straight-line amortizing notes. The notes carry annual interest rates between 5%4.3% and ~~10% and have default rates as high a 16.5%.~~

~~Short Term Notes Payable~~

~~At September 30, 2017 and December 31, 2016,~~16%, or 18% in the Company maintained short term notes payable and accrued interest to both related and non-related parties totaling $820,000 and $197,000, respectively. These notes are short term, straight-line amortizing notes. The notes carry annual interest rates between 5% and 10%.

~~9. SHORT-TERM CONVERTIBLE DEBT~~

~~Related Party Convertible Note Payable – Short-Term~~event of default.

On ~~June 5, 2016,~~July 4, 2021, the Company entered into a ~~license~~premium finance agreement ~~with a distributor pursuant~~ to ~~which~~finance its insurance policies totaling $117,560. The note required monthly payments of $11,968, including interest at 4.3%, until it matured in April of 2022. As of June 30, 2022, the outstanding balance was nil.

During 2019, the Company ~~granted the distributor an exclusive license~~issued promissory notes to manufacture, sell and distribute the Company’s LuViva Advanced Cervical Cancer device and related disposables in Taiwan, Brunei Darussalam, Cambodia, Laos, Myanmar, Philippines, Singapore, Thailand, and Vietnam.Mr. Cartwright totaling $45,829. The ~~distributor~~note was ~~already the Company’s exclusive distributor in China, Macau and Hong Kong, and the license will extend~~initially issued with 0% interest, however interest increased to ~~manufacturing in those countries as well.~~

~~As partial consideration for, and as a condition to, the license, and to further align the strategic interests of the parties,~~6.0% interest 90 days after the Company ~~agreed to issue a convertible note to the distributor,~~received $1,000,000 in exchange for an aggregate cash investment of $200,000. The note will provide for a payment to the distributor of $240,000, due upon consummation of any capital raising transaction by the Company within 90 days and with net cash proceeds of at least $1.0 million.financing proceeds. As of ~~September~~June 30, ~~2017,~~2022, the ~~Company had a note due of $400,817. The note will accrue interest at 20% per year~~balance on ~~any unpaid amounts due after that date. The note will be convertible into shares of~~ the Company’s common stock at a conversion price per share of $13.92, subject to customary anti-dilution adjustment. The note will be unsecured, and is expected to provide for customary events of default. The Company will also issue the distributor a five-year warrant exercisable immediately for 17,239 shares of common stock at an exercise price equal to the conversion price of the note, subject to customary anti-dilution adjustment.

~~Convertible Note Payable – Short-Term~~notes was $28,285.

On ~~February 13,~~December 21, 2016 and January 19, 2017, the Company issued promissory notes to Mr. Fowler, in the amounts of approximately $12,500 and $13,900. The notes were initially issued with 0% interest and then went into default with an interest rate of 18%. As part of the March 22, 2021 exchange agreement these notes were combined into one short term note payable of $26,400 and $18,718 in principal and interest of the two previous notes, respectively, for a total balance of $45,118. The aforementioned agreement brought the note current. The note carried a monthly payment of $3,850, including interest at 6.0%, until it matured in March of 2022. As of June 30, 2022, the outstanding balance was nil.

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The following table summarizes short-term notes payable, including related parties:

	Short-term notes payable, including related parties
	June 30, 2022		December 31, 2021
Dr. Cartwright	$	28	$	34
Mr. Fowler		0		6
Premium Finance (insurance)		0		48
Short-term notes payable	$	28	$	88

The short-term notes payable due to related parties was $28,285 at June 30, 2022 and $39,900 of the $87,514 balance at December 31, 2021.

9. SHORT-TERM CONVERTIBLE DEBT, INCLUDING NON-CONVERTIBLE PENALTY

Short-term Convertible Notes Payable, Including Debt in Default and Penalties

Auctus

On December 17, 2019, the Company entered into a securities purchase agreement and convertible note with Auctus. The convertible note issued to Auctus was for a total of $2.4 million. The note may not have been prepaid in whole or in part except as otherwise explicitly allowed. Any amount of principal or interest on the note which was not paid when due shall bore interest at the rate of the lessor of 24% or the maximum permitted by law (the “default interest“). The variable conversion prices equaled the lesser of: (i) the lowest trading price on the issue date, and (ii) the variable conversion price. The variable conversion price was 95% multiplied by the market price (the market price means the average of the five lowest trading prices during the period beginning on the issue date and ending on the maturity date), minus $0.04 per share, provided however that in no event could the variable conversion price be less than $0.15. If an event of default under this note occurred and/or the note was not extinguished in its entirety prior to December 17, 2020, the $0.15 price floor no longer applied.

The first tranche of $700,000 was received on December 2019, matured on December 17, 2021, and accrued interest at a rate of ten percent (10%). In connection with the first tranche of $700,000, the Company issued 7,500,000 warrants to purchase common stock with an exercise price of $0.20. The fair value of the warrants at the date of issuance was $745,972; $635,000 was allocated to the warrant liability and a loss of $110,972 was recorded at the date of issuance for the amount of the fair value in excess of the net proceeds received of $635,000. The $700,000 proceeds were received net of debt issuance costs of $65,000 (net proceeds of $635,000, after administrative and legal expenses Company received $570,000). The Company used $65,000 of the proceeds to make a partial payment of the $89,250 convertible promissory note issued on July 3, 2018 to Auctus. The Company made a $700,000 payment on June 1, 2021, which resulted in a prepayment penalty of $350,000 being assessed to the Company, which remained outstanding as of June 30, 2022 and is not convertible. The Company recorded this prepayment penalty as a loss on extinguishment of debt. The prepayment penalty does not incur interest. As of June 30, 2022 and December 31, 2021, the outstanding amount of the note was nil.

On May 27, 2020, the Company received the second tranche in the amount of $400,000, from the December 17, 2019 securities purchase agreement and convertible note with Auctus. The net amount paid to the Company was $313,000. The note matured on May 27, 2022 and accrued interest at a rate of ten percent (10%). The note may not have been prepaid in whole or in part except as otherwise explicitly allowed. Any amount of principal or interest on the note which was was not paid when due incurred interest at the rate of the lessor of 24% or the maximum permitted by law (the “default interest“). The variable conversion prices shall equal the lesser of: (i) the lowest trading price on the issue date, and (ii) the variable conversion price. The variable conversion price shall mean 95% multiplied by the market price (the market price means the average of the five lowest trading prices during the period beginning on the issue date and ending on the maturity date), minus $0.04 per share. During the six months ended June 30, 2022, the Company incurred a default penalty of $225,444 for nonpayment of the note at maturity, which remained outstanding as of June 30, 2022. The Company recorded this default penalty as interest expense. The penalty incurs interest at the default rate of 24%.

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As of June 30, 2022 and December 31, 2021, $625,444 and $400,000 of principal remained outstanding, respectively. Accrued interest as of June 30, 2022 and December 31, 2021 was $13,760 and $64,778, respectively. Further, as of June 30, 2022 and December 31, 2020, the Company had unamortized debt issuance costs of nil and $13,586. As of June 30, 2022 and December 31, 2021, the estimated fair value of the derivative liability for the bifurcated conversion option was $23,825 and $31,889, respectively.

On June 30, 2020, we entered into a securities purchase agreement with Auctus Fund, LLC for the issuance and sale to Auctus of ~~$170,000~~$112,750 in aggregate principal amount of a 12% convertible promissory ~~note for an aggregate purchase price of $156,400 (representing a $13,600 original issue discount).~~note. On ~~February 13, 2017, the Company~~June 30, 2020, we issued the note to ~~Auctus. Pursuant to the purchase agreement, the Company also~~Auctus and issued ~~to Auctus a warrant exercisable to purchase an aggregate of 200,000 shares of the Company’s~~250,000 five-year common ~~stock. The warrant is exercisable at any time,~~stock warrants at an exercise price ~~per share equal to $0.77 (110%~~ of ~~the closing price~~$0.16. On April 3, 2020, we received net proceeds of ~~the common stock on the day prior to issuance), subject to certain customary adjustments and price-protection provisions contained in the warrant. The warrant has a five-year term.~~$100,000. The note matured ~~nine months from the date of issuance~~on January 26, 2021 and ~~in addition to the original issue discount, accrues~~accrued interest at a rate of 12% per year. ~~The Company could~~We may not have prepaid the note, in whole or in ~~part, for 115%~~part. After the 90^th calendar day after the issuance date and ending on the later of ~~outstanding principal~~maturity date and interest until 30 days from issuance, for 125% of outstanding principal and interest at any time from 31 to 60 days from issuance, and for 130% of outstanding principal and interest at any time from 61 days from issuance to 180 days from issuance. After six months from the date of ~~issuance,~~payment of the default amount, Auctus may convert the note, at any time, in whole or in part, provided such conversion does not provide Auctus with more than 4.99% of the outstanding common share stock. The conversion may be converted into shares of the ~~Company’s~~our common stock, at a conversion price equal to the ~~lower of~~lesser of: (i) the ~~price offered in~~lowest Trading Price during the ~~Company’s next public offering or a 40% discount~~twenty-five (25) trading day period on the last trading prior to the ~~average of~~issue date and (ii) the ~~two~~variable conversion price (55% multiplied by the market price, market price means the lowest trading ~~prices of~~price for the common stock during the 20twenty-five (25) trading ~~days~~day period ending on the latest complete trading day prior to the conversion ~~subject to certain customary adjustments and price-protection provisions contained in~~date). Trading price is the ~~note.~~lowest trade price on the trading market as reported. The note includes customary events of default provisions and a default interest rate of 24% per year. Upon the occurrence of an event of default, Auctus may require the Company to redeem the note (or convert it into shares of common stock) at 150% of the outstanding principal balance plus accrued and unpaid interest. In connection with the transaction, the Company agreed to reimburse Auctus for $30,000 in legal and diligence fees, of which we paid $10,000 in cash and $20,000 in restricted shares of common stock, valued at $0.40 per share (a 42.86% discount to the closing price of the common stock on the day prior to issuance). The Company allocated proceeds of $90,000 to the warrants and common stock issued in connection with the financing. As of ~~September~~June 30, 2017, the Company has net debt of $124,601 including unamortized debt issuance costs of $6,653, unamortized original issue discount of $2,192, and unamortized discount related to common stock and warrants of $19,074.

On May 17, 2017, the Company entered into a securities purchase agreement with Eagle Equities, LLC, providing for the purchase by Eagle of two convertible redeemable notes in the aggregate principal amount of $88,000, with the first note being in the amount of $44,000, and the second note being in the amount of $44,000. The first note was fully funded on May 19, 2017, upon which the Company received $40,000 of net proceeds (net of a 10% original issue discount). The second note has not been issued and will initially be paid for by the issuance of an offsetting $40,000 secured note issued by Eagle. Eagle is required to pay the principal amount of its secured note in cash and in full prior to executing any conversions under the second note the Company issued. The notes bear an interest rate of 8%, and are due and payable on May 17, 2018. The notes may be converted by Eagle at any time after five months from issuance into shares of our common stock (as determined in the notes) calculated at the time of conversion, except for the second note, which also requires full payment by Eagle of the secured note it issued to us before conversions may be made. The conversion price of the notes will be equal to 60% of the lowest trading price of the common stock for the 20 prior trading days including the day upon which the Company receive a notice of conversion. The notes may be prepaid in accordance with the terms set forth in the notes. The notes also contain certain representations, warranties, covenants and events of default including if the Company are delinquent in our periodic report filings with the SEC, and increases in the amount of the principal and interest rates under the notes in the event of such defaults. In the event of default, at Eagle’s option and in its sole discretion, Eagle may consider the notes immediately due and payable. As of September 30, 2017, the Company has net debt of $37,800, including unamortized original issue discount of $1,771, unamortized and debt issuance costs of $4,429.

On May 17, 2017, the Company entered into a securities purchase agreement with Adar Bays, LLC, providing for the purchase by Adar of two convertible redeemable notes in the aggregate principal amount of $88,000, with the first note being in the amount of $44,000, and the second note being in the amount of $44,000. The first note was fully funded on May 19, 2017, upon which the Company received $40,000 of net proceeds (net of a 10% original issue discount). The second note has not been issued and will initially be paid for by the issuance of an offsetting $40,000 secured note issued by Adar. Adar is required to pay the principal amount of its secured note in cash and in full prior to executing any conversions under the second note the Company issued. The notes bear an interest rate of 8%, and are due and payable on May 17, 2018. The notes may be converted by Adar at any time after five months from issuance into shares of our common stock (as determined in the notes) calculated at the time of conversion, except for the second note, which also requires full payment by Adar of the secured note it issued to us before conversions may be made. The conversion price of the notes will be equal to 60% of the lowest trading price of the common stock for the 20 prior trading days including the day upon which the Company receive a notice of conversion. The notes may be prepaid in accordance with the terms set forth in the notes. The notes also contain certain representations, warranties, covenants and events of default including if the Company are delinquent in our periodic report filings with the SEC, and increases in the amount of the principal and interest rates under the notes in the event of such defaults. In the event of default, at Adar’s option and in its sole discretion, Adar may consider the notes immediately due and payable. As of September 30, 2017, the Company has net debt of $37,800, including unamortized original issue discount of $1,771, unamortized and debt issuance costs of $4,429.

On May 18, 2017, the Company entered into a securities purchase agreement with GHS Investments, LLC, an existing investor, providing for the purchase by GHS of a convertible promissory note in the aggregate principal amount of $66,000, for $60,000 in net proceeds (representing a 10% original issue discount). The transaction closed on May 19, 2017. The note matures upon the earlier of our receipt of $100,000 from revenues, loans, investments, or any other means (other than the Eagle and Adar bridge financings)2022 and December 31, ~~2017. In addition to~~2021, the ~~10% original issue discount,~~outstanding balance on the note accrues interest at a rate of 8% per year. The Company may prepay the note, in whole or in part, for 110% of outstanding principal and interest until 30 days from issuance, for 120% of outstanding principal and interest at any time from 31 to 60 days from issuance and for 140% of outstanding principal and interest at any time from 61 days to 180 days from issuance. The note may not be prepaid after 180 days. After six months from the date of issuance, the note will become convertible, at any time thereafter, in whole or in part, at the holder’s option, into shares of our common stock, at a conversion price equal to 60% of the lowest trading price during the 25 trading days prior to conversion. The notewas $161,184 (which includes ~~customary event of default provisions and~~ a default penalty of $48,434). Accrued interest ~~rate~~as of the lesser of 20% per year or the maximum amount permitted by law. Upon the occurrence of an event of default, the holder of the note may require us to redeem the note (or convert it into shares of common stock) at 150% of the outstanding principal balance. As of SeptemberJune 30, ~~2017, the Company has net debt of $59,515, including unamortized original issue discount of $2,431, unamortized~~2022 and ~~debt issuance costs of $4,053.~~December 31, 2021 was $55,877 and $36,428, respectively.

~~On August 18, 2017,~~The following table summarizes the ~~Company entered into a securities purchase agreement with Power Up Lending Group Ltd., providing for the purchase by Power Up from the Company of a convertible note~~Short-term Convertible Notes Payable, including debt in the aggregate principal amount of $53,000. The note bears an interest rate of 12%, and is due and payable on May 19, 2018. The note may be converted by Power Up at any time after 180 days from issuance into shares of Company’s common stock at a conversion price equal to 58% of the average of the lowest two day trading prices of the common stock during the 15 trading days prior to conversion. The note may be prepaid in accordance with its terms, at premiums ranging from 15% to 40%, depending on the time of prepayment. The note contains certain representations, warranties, covenants and events of default including if the Company is delinquent in its periodic report filings with the SEC, and provides for increases in principal and interest in the event of such defaults. As of September 30, 2017, the Company has a net debt of $42,040, including unamortized debt issuance costs of $10,960.(in thousands):

On October 12, 2017, the Company issued an additional note to Power Up, on substantially identical terms, in the aggregate principal amount of $53,000, due and payable on July 20, 2018. See Note 12, Subsequent Events.

On December 28, 2016, the Company entered into a securities purchase agreement with an investor for the issuance and sale to investor of up to $330,000 in aggregate principal amount of 10% original issuance discount convertible promissory notes, for an aggregate purchase price of $300,000. On that date, the Company issued to the investor a note in the principal amount of $222,000, for a purchase price of $200,000. The note matures six months from their date of issuance and, in addition to the 10% original issue discount, accrue interest at a rate of 10% per year. The Company may prepay the notes, in whole or in part, for 115% of outstanding principal and interest until 30 days from issuance, for 125% of outstanding principal and interest at any time from 31 to 60 days from issuance, and for 130% of outstanding principal and interest at any time from 61 days from issuance until immediately prior to the maturity date. After six months from the date of issuance (i.e., if the Company fails to repay all principal and interest due under the notes at the maturity date), the investor may convert the notes, at any time, in whole or in part, into shares of the Company’s common stock, at a conversion price equal to 60% of the lowest volume weighted average price of our common stock during the 20 trading days prior to conversion, subject to certain customary adjustments and anti-dilution provisions contained in the note.

	Short-term convertible notes payable , including debt in default
	June 30, 2022		December 31, 2021
Auctus Tranche 2	$	400	$	400
Auctus Tranche 2 default penalty		225		0
Auctus prepayment penalty		350		350
Auctus (March 31, 2020 Note)		161		161
Debt discount and issuance costs to be amortized		0		(14	)
Convertible notes payable - short-term	$	1,136	$	897

As of ~~September~~June 30, ~~2017,~~2022, the ~~Company has fully amortized debt issuance costs $30,000 and original issue discount of $22,000.~~$350,000 prepayment penalty was included in “Short-term convertible notes payable, including non-convertible penalty“ while the remaining outstanding balances were included in “Convertible notes payable in default“ within the unaudited consolidated balance sheet. As of ~~September 30, 2017,~~December 31, 2021, the $161,000 Auctus note was included in “Convertible notes payable in default“ while the remaining balances were included in “Short-term convertible notes payable, including non-convertible penalty“ within the consolidated balance ~~due to the investor for the December 28, 2016 note, is $111,240.~~sheet.

10. LONG-TERM DEBT

~~10. CONVERTIBLE DEBT IN DEFAULT~~

~~Secured Promissory Note.~~Long-term Debt – Related Parties

On September 10, 2014, the Company sold a secured promissory note to an accredited investor with an initial principal amount of $1,275,000, for a purchase price of $700,000 (an original issue discount of $560,000). The Company may prepay the note at any time. The note is secured by the Company’s current and future accounts receivable and inventory, pursuant to a security agreement entered into in connection with the sale. On March 10, 2015, May 4, 2015, June 1, 2015, June 16, 2015, June 29, 2015, January 21, 2016, January 29, 2016, and February 12, 2016 the Company amended the terms of the note to extend the maturity ultimately until August 31, 2016. During the extension, interest accrues on the note at a rate of the lesser of 18% per year or the maximum rate permitted by applicable law. On February 11, 2016, the Company consented to an assignment of the note to two accredited investors. In connection with the assignment, the holders waived an ongoing event of default under the notes related to the Company’s minimum market capitalization, and agreed to eliminate the requirement going forward. Pursuant to the terms of the amended note, the holder may convert the outstanding balance into shares of common stock at a conversion price per share equal to the lower of (1) $25.0 or (2) 75% of the lowest daily volume weighted average price of the common stock during the five days prior to conversion. If the conversion price at the time of any conversion is lower than $15.00, the Company has the option of delivering the conversion amount in cash in lieu of shares of common stock. On March 7, 2016, the Company further amended the note to eliminate the volume limitations on sales of common stock issued or issuable upon conversion. On July ~~13, 2016, the Company consented to the assignment by one of the accredited investors of its portion of the note of to a third accredited investor.~~

The balance due on the note was $184,997 and $530,691 at September 30, 2017 and December 31, 2016, respectively. The balance was reduced by $306,863 as part of a debt restructuring on December 7, 2016.

Total debt issuance costs as originally capitalized were approximately $130,000. This amount was amortized over nine months and was fully amortized as of December 31, 2015. The original issue discount of $560,000 was fully amortized as of December 31, 2015.

On November 2, 2016, the Company entered into a lockup and exchange agreement with GHS Investments, LLC, holder of approximately $221,000 in outstanding principal amount of the Company’s secured promissory note and all of the outstanding shares of the its Series C preferred stock. Pursuant to the agreement, upon the effectiveness of the 1:800 reverse stock split and continuing for 45 days after, GHS and its affiliates were prohibited from converting any portion of the secured promissory note or any of the shares of Series C preferred stock or selling any of the Company’s securities that they beneficially owned. The Company agreed that, upon consummation of its next financing, the Company would use $260,000 of net cash proceeds first, to repay GHS’s portion of the secured promissory note and second, with any remaining amount from the $260,000, to repurchase a portion of GHS’s shares of Series C preferred stock. In addition, GHS has agreed to exchange the stated value per share (plus any accrued but unpaid dividends) of its remaining shares of Series C preferred stock for new securities of the same type that the Company separately issue in the next qualifying financing it undertakes, on a dollar-for-dollar basis in a private placement exchange.

~~Senior Secured Promissory Note~~

On February 11, 2016, the Company entered into a securities purchase agreement with GPB Debt Holdings II LLC for the issuance and sale on February 12, 2016 of $1.4375 million in aggregate principal amount of a senior secured convertible note for an aggregate purchase price of $1.15 million (a 20% original issue discount of $287,500) and a discount for debt issuance costs paid at closing of $121,000 for a total of $408,500. In addition, GPB received a warrant exercisable to purchase an aggregate of approximately 2,246 shares of the Company’s common stock. The Company allocated proceeds totaling $359,555 to the fair value of the warrants at issuance. This was recorded as an additional discount on the debt. The convertible note matures on the second anniversary of issuance and, in addition to the 20% original issue discount, accrues interest at a rate of 17% per year. The Company is required to pay monthly interest coupons and beginning nine months after issuance, the Company is required to pay amortized quarterly principal payments. If the Company does not receive, on or before the first anniversary after issuance, an aggregate of at least $3.0 million from future equity or debt financings or non-dilutive grants, then the holder will have the option of accelerating the maturity date to the first anniversary of issuance. The Company may prepay the convertible note, in whole or in part, without penalty, upon 20 days’ prior written notice. Subject to resale restrictions under Federal securities laws and the availability of sufficient authorized but unissued shares of the Company’s common stock, the convertible note is convertible at any time, in whole or in part, at the holder’s option, into shares of the Company’s common stock, at a conversion price equal to the lesser of $0.80 per share or 70% of the average closing price per share for the five trading days prior to issuance, subject to certain customary adjustments and anti-dilution provisions contained in the convertible note. On May 28, 2016, in exchange for an additional $87,500 in cash from GPB to the Company, the principal balance was increased by the same amount. The Company is currently in default as they are past due on the required monthly interest payments. In the event of default, the Company shall accrue interest at a rate the lesser of 22% or the maximum permitted by law. The Company has accrued $117,000 for past due interest payments at December 31, 2016. Upon the occurrence of an event of default, the holder may require the Company to redeem the convertible note at 120% of the outstanding principal balance (but as of September 30, 2017, had not done so). As of September 30, 2017, the balance due on the convertible debt was $2,136,863 as the Company has fully amortized debt issuance costs of $47,675 and the debt discount of $768,055 and recorded a 20% penalty totaling $305,000. In addition, the Company has accrued $253,701 of interest expense. The convertible note is secured by a lien on all of the Company’s assets, including its intellectual property, pursuant to a security agreement entered into by the Company and GPB.

The warrant is exercisable at any time, pending availability of sufficient authorized but unissued shares of the Company’s common stock, at an exercise price per share equal to the conversion price of the convertible note, subject to certain customary adjustments and anti-dilution provisions contained in the warrant. The warrant has a five-year term. As of September 30, 2017, the exercise price had been adjusted to $0.017 and the number of common stock shares exchangeable for was 82,614,943. As of September 30, 2017, the effective interest rate considering debt costs was 29%.

The Company used a placement agent in connection with the transaction. For its services, the placement agent received a cash placement fee equal to 4% of the aggregate gross proceeds from the transaction and a warrant to purchase shares of common stock equal to an aggregate of 6% of the total number of shares underlying the securities sold in the transaction, at an exercise price equal to, and terms otherwise identical to, the warrant issued to the investor. Finally, the Company agreed to reimburse the placement agent for its reasonable out-of-pocket expenses.

In connection with the transaction, on February 12, 2016, the Company and GPB entered into a four-year consulting agreement, pursuant to which the investor will provide management consulting services to the Company in exchange for a royalty payment, payable quarterly, equal to 3.5% of the Company’s revenues from the sale of products. As of September 30, 2017, GPB had earned approximately $28,000 in royalties.

~~Debt Restructuring~~.

~~On December 7, 2016,~~14, 2018, the Company entered into an exchange agreement with ~~GPB~~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 $660,895 for a $207,111 promissory note dated September 4, 2018. On July 20, 2018, the Company entered into an exchange agreement with ~~regard~~Dr. Cartwright, whereby Dr. Cartwright agreed to exchange outstanding amounts due to him for loans, interest, bonus, salary and vacation pay in the amount of $1,621,499 for a $319,000 promissory note dated September 4, 2018 that incurs interest at a rate of 6% per annum.

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On July 24, 2019, Dr. Faupel and Mr. Cartwright agreed to an addendum to the ~~$1,525,000~~debt restructuring exchange agreement and to modify the terms of the original exchange agreement. Under this modification Dr. Faupel and Mr. Cartwright agreed to extend the note to be due in ~~outstanding~~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 ~~of senior secured convertible~~on the new note ~~originally issued to GPB~~was $267,085, matures on February 11, 2016, and the $306,863 in outstanding principal amount of the Company’s secured promissory note that GPB holds (see “—Secured Promissory Note”). Pursuant to the exchange agreement, upon completion of the next financing resulting in at least $1 million in cash proceeds, GPB will exchange both securities for a new convertible note in principal amount of $1,831,863. The new convertible note will mature on the second anniversary of issuance18, 2023, and will accrue interest at a rate of ~~19% per year.~~6.0%. For Dr. Faupel the principal amount on the new note was $153,178, matures on February 18, 2023, and will accrue interest at a rate of 6.0%. The modifications extended the maturity date on both of the notes.

On February 19, 2021, the Company ~~will pay monthly interest coupons~~exchanged $100,000 and ~~beginning one year after issuance, will pay amortized quarterly principal payments. Subject to resale restrictions under Federal securities laws~~$85,000 of long-term debt for Dr. Cartwright and ~~the availability of sufficient authorized but unissued~~Dr. Faupel in exchange for 100 and 85 shares of Series F2 Preferred Stock, respectively.

The table below summarizes the ~~Company’s common stock,~~detail of the ~~new convertible note~~exchange agreement:

For Dr. Faupel:

Salary	$	134
Bonus		20
Vacation		95
Interest on compensation		67
Loans to Company		196
Interest on loans		149
Total outstanding prior to exchange		661

Amount forgiven in prior years		(454	)
Amount exchanged for Series F-2 Preferred Stock		(85	)
Total interest accrued through December 31, 2021		39
Balance outstanding at December 31, 2021	$	161

Interest accrued through June 30, 2022		5
Balance outstanding at June 30, 2022	$	166

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For Dr. Cartwright

Salary	$	337
Bonus		675
Loans to Company		528
Interest on loans		81
Total outstanding prior to exchange		1,621

Amount forgiven in prior years		(1,302	)
Amount exchanged for Series F-2 Preferred Stock		(100	)
Total interest accrued through December 31, 2021		62
Balance outstanding at December 31, 2021	$	281

Interest accrued through June 30, 2022		8
Balance outstanding at June 30, 2022	$	289

On June 22, 2022, we entered into exchange agreements with Dr. Cartwright and Dr. Faupel. Pursuant to the agreements, $29,776 of related-party payables, $31,285 of short-term related-party debt and $8,939 of accrued expenses owed to these executives will be ~~convertible at any time, in whole or in part, at the holder’s option,~~converted into shares of common stock and/or warrants valued at $70,000, upon successful completion of a ~~conversion price equal to~~financing of at least $4,000,000.

On March 22, 2021, the ~~price offered~~Company entered into an exchange agreement with Richard Fowler. As of December 31, 2020, the Company owed Mr. Fowler $546,214 ($412,624 in deferred salary and $133,590 in accrued interest). The Company exchanged $50,000 of the amount owed of $546,214 for 50 share of Series F-2 Preferred Shares (convertible into 200,000 common stock shares), and a $150,000 unsecured note. The note accrues interest at the rate of 6% (18% in the qualifying financing that triggers the exchange, subject to certain customary adjustments and anti-dilution provisions contained in the new convertible note. The new convertible note will include customary event of ~~default provisions~~default) beginning on March 22, 2022 and ~~a default~~is payable in monthly installments of $3,580 for four years, with the first payment due on March 15, 2022. The effective interest rate of the ~~lesser~~note is 6.18%. During the six months ended June 30, 2022, Mr. Fowler forgave $24,785 of ~~21% or~~ the ~~maximum amount permitted by law. Upon~~outstanding balance and may forgive up to $234,875 of the ~~occurrence of an event of default, GPB will be entitled to require~~remaining deferred compensation if the Company complies with the repayment plan described above. The reduction in the outstanding balance met the criteria for troubled debt. The basic criteria are that the borrower is troubled, i.e., they are having financial difficulties, and a concession is granted by the creditor. The outstanding principal amount owed on the note was $137,423 as of June 30, 2022, of which $35,749 is included in “Current portion of long-term debt, related parties“ and the remainder of which is included in “Long-term debt, related parties“ on the consolidated balance sheets.

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Future debt obligations as of June 30, 2022 for debt owed to ~~redeem~~related parties are as follows (in thousands):

Year	Amount
2022	$	17
2023		492
2024		39
2025		41
2026		3
Thereafter		0
Total	$	592

As of June 30, 2022, $490,278 of the ~~new~~debt owed to related parties is included in “Current portion of long-term debt, related parties“ and $101,674 is included in “Long-term debt, related parties“ within the unaudited consolidated balance sheet. As of December 31, 2021, the outstanding debt owed was included in “Long-term debt, related parties“ within the consolidated balance sheet.

Small Business Administration Loan

On May 4, 2020, the Company received a loan from the Small Business Administration (SBA) pursuant to the Paycheck Protection Program (PPP) as part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) in the amount of $50,184. The loan accrued interest at a rate of 1.00%, and matured in 24 months, with the principal and interest payments being deferred until the date of forgiveness with interest accruing, then converting to monthly principal and interest payments, at the interest rate provided herein, for the remaining eighteen (18) months. As of June 30, 2022 and December 31, 2021, the outstanding balance was nil and $11,181, respectively, and is included in “Current portion of long-term debt“ within the consolidated balance sheets. Accrued interest on the note was nil and $385 as of June 30, 2022 and December 31, 2021, respectively.

10% Senior Unsecured Convertible Debenture

On May 17, 2021, the Company issued 10% Senior Unsecured convertible debentures to investors, which mature on May 17, 2024 (the “Maturity Date“). The Company subscribed $1,130,000 of the $1,000 convertible debentures. The terms of the debentures are as follows: 1) the principal amount of some or all of the convertible debentures and accrued interest are convertible into common stock shares at the holder’s option, at a price of $0.50 per common stock share (the “conversion price“), subject to adjustment in certain events, at any time prior to maturity date; 2) upon successful uplist to a U.S. National Exchange, the note ~~at 120%~~will automatically convert into the uplisting financing; 3) each debenture unit will have a right to 1,000 warrants for common stock shares, warrants have an exercise price of $0.80 and an expiration date of May 17, 2023; 4) if a Change of Control (as defined in the Convertible Debenture Certificate) occurs prior to the Maturity Date, unless the holder elects in writing to convert the Convertible Debentures into common shares, the Company will repay in cash upon the closing of such Change of Control all outstanding principal and accrued interest under each Convertible Debenture plus a Change of Control premium equal to an additional 3% of the outstanding principal ~~balance. The new convertible note will be secured by~~sum under such Convertible Debenture. Prior to the closing of an Change of Control, in lieu of repayment as set forth in the preceding sentence, the holder has the right to elect in writing to convert, effective immediately prior to the effective date of such Change of Control, all outstanding principal and accrued Interest under the Convertible Debentures into common shares at the Conversion Price; 5) Subject to a ~~lien~~holder‘s option of electing conversion prior to the Redemption Date (as such term is defined below), on ~~all~~or after the date that is 24 months from the Closing Date if the daily volume weighted average trading price of the ~~Company’s assets, including~~common shares is $1.50 per common share or more for each trading day over a 30 consecutive trading day period, the Company may, at any time (the “Redemption Date“), at its ~~intellectual property, pursuant~~option, redeem all, or any portion of the Convertible Debentures for either: (i) a cash payment (in the form of a certified cheque or bank draft) that is equal to all outstanding principal and accrued interest under each Convertible Debenture up to the ~~security agreement entered into~~Redemption Date; or (ii) by issuing and delivering common shares to the ~~Company~~holders of Convertible Debentures at a deemed price of $0.50 per common share that is equal to all outstanding principal and ~~GPB~~accrued interest under each Convertible Debenture up to the Redemption Date, or any combination of (i) or (ii), upon not less than 30 days and not more than 60 days prior written notice in ~~connection with~~ the manner provided in the Debenture Certificate, to the holder of Convertible Debentures.

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At June 30, 2022 and December 31, 2021, the balance due on the 10% Senior Secured Convertible Debenture was $1,130,000 and total accrued interest was $57,528 and $73,326, respectively. The bond payable discount and unamortized debt issuance costs as of the original senior secured convertible note. As an inducement to GPB to enter into these transactions, the Company agreed to increase the royalty payable to GPB pursuant to its consulting agreement with us from 3.5% to 3.85% of revenues from the sales of the Company’s products.June 30, 2022 and December 31, 2021 are presented below (in thousands):

	June 30, 2022			December 31, 2021
10% Senior Unsecured Convertible Debentures	$	1,130		$	1,130
Debt Issuance costs to be amortized		(55	)		(69	)
Debt Discount		(191	)		(241	)
Long-term convertible debt	$	884		$	820

6% Unsecured Promissory Note

On ~~August 7, 2017,~~July 9, 2020, we entered into an exchange agreement with Mr. Bill Wells (a former employee). In lieu of agreeing to dismiss approximately half of what was owed to him, or $220,000, Mr. Wells received the following: (i) cash payments of $20,000; (ii) an unsecured promissory note in the amount of $90,000 to be executed within 30 days of completing new financing(s) totaling at least $3.0 million, (iii) 66,000 common share stock options that vest at a rate of 3,667 per month and have a $0.49 exercise price (if two consecutive payments in (ii) are not made the stock options will be canceled and a cash payment will be required; and (iv) the total amount of forgiveness by creditor of approximately $110,000 shall be prorated according to amount paid.

During the year ended December 31, 2021, the Company ~~entered into~~closed a ~~forbearance agreement with GPB, with regard~~financing round that exceeded the $3.0 million threshold and issued an unsecured promissory note in the amount of $97,052 to Mr. Wells. The note, for which monthly installment payments of $5,000 are due, matures 18 months after the ~~senior secured convertible note. Under~~issuance date and incurs interest at a rate of 6.0% per annum. During the ~~forbearance agreement, GPB has agreed~~six months ended June 30, 2022, the Company made payments of $50,000 to ~~forbear from exercising certain~~Mr. Wells, which resulted in forgiveness of ~~its rights and remedies (but not waive such rights and remedies), arising as a result~~$50,000 of the ~~Company’s failure to pay~~remaining balance of accrued compensation. The reduction in the ~~monthly interest due~~outstanding balance met the criteria for troubled debt. The basic criteria are that the borrower is troubled, i.e., they are having financial difficulties, and ~~owing~~a concession is granted by the creditor.

As of June 30, 2022, the outstanding principal balance on the ~~note. In consideration for~~note was $47,052, and is included in “Current portion of long-term debt“ within the ~~forbearance,~~consolidated balance sheets. As of December 31, 2022, the ~~Company agreed to waive, release, and discharge GPB from all claims against GPB based~~outstanding balance on ~~facts existing on or before the date of the forbearance agreement in connection with~~ the note ~~or the dealings between the Company~~was $97,052, of which $75,000 was included in “Current portion of long-term debt“ and ~~GPB, or the Company’s equity holders~~$22,052 was included in “Long-term debt.“ As of June 30, 2022 and ~~GPB, in connection with the note. Pursuant to the forbearance agreement, the Company has reaffirmed its obligations under~~December 31, 2021, accrued interest on the note was $4,103 and related documents and executed a confession of judgment regarding the amount due under the note, which GPB may file upon any future event of default by the Company. During the forbearance period, the Company must continue to comply will all the terms, covenants, and provisions of the note and related documents.$2,106, respectively.

11. INCOME (LOSS) PER COMMON SHARE

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 ~~period.~~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 ~~period,~~year, plus Series C, Series D, Series E, Series F and Series F-2 convertible preferred stock, Series G preferred stock, convertible debt, convertible preferred dividends and warrants convertible into common stock shares.

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~~Diluted~~

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):

	June 30,
	2022			2021

Net loss		(2,061	)		(1,871	)
Basic weighted average number of shares outstanding		23,526			13,226
Net loss per share (basic)		(0.09	)		(0.14	)
Diluted weighted average number of shares outstanding		23,526			13,226
Net loss per share (diluted)		(0.09	)		(0.14	)

Dilutive equity instruments (number of equivalent units):
Stock options		960			-
Preferred stock		12,151			18,316
Convertible debt		2,431			1,281
Warrants		12,702			17,869
Total Dilutive instruments		28,244			37,466

For period of net loss, basic and diluted earnings per share isare the same as the assumed exercise of warrants and the conversion of convertible debt are anti-dilutive.

Troubled Debt Restructurings - 2022

During the six months ended June 30, 2022, two of the Company’s creditors forgave $74,785 of debt. The reductions in the outstanding balances met the criteria for troubled debt. The basic criteria are that the borrower is troubled, i.e., they are having financial difficulties, and a concession is granted by the creditor. As of June 30, 2022, the troubled debt restructurings in total would have decreased the net loss by $74,785, with no impact to net loss per ~~common share since~~share.

Troubled Debt Restructurings - 2021

As provided in the preceding footnotes, several transactions met the basic criteria for troubled debt, which are that the borrower is troubled, i.e., they are having financial difficulties, and a concession is granted by the creditor. Due to the Company being in default on several of its loans the debt is considered troubled debt. As of June 30, 2021, the total troubled debt restructuring was ~~operating in~~$179,000; since this amount has already been recorded as a loss ~~position for 2017 and 2016.~~on extinguishment of debt, the loss would not have any impact on the per share calculation.

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12. SUBSEQUENT EVENTS

~~12. SUBSEQUENT EVENTS~~Common Stock Issuances

Subsequent to June 30, 2022, we issued 120,652 common stock shares for payment of interest accrued on the 10% Senior Unsecured Convertible Debenture.

Subsequent to June 30, 2022, we issued 8,944,000 common stock shares for the conversion of 2,236 Series F-2 Preferred shares. The common shares issued are subject to standard Rule 144 restrictions.

Warrants Issued

On ~~October 12, 2017,~~July 1, 2022, we issued 875,000 common stock purchase warrants to Mr. Blumberg, which had an exercise price of $0.25 and will expire on December 31, 2023. Additionally, on July 1, 2022, we issued 375,000 warrants to Lee Bowles of Iron Stone Capital, Inc., which had an exercise price of $0.25 and will expire on December 31, 2023. The warrants were issued pursuant to a January 22, 2020 promotional agreement with a related party, which is partially owned by Mr. Blumberg, as compensation for investor and public relations services.

Directors and Officers (“D&O“) Insurance Financing Agreement

On July 4, 2022, the Company entered into a ~~securities purchase~~Premium Finance Security Agreement with Johnson & Johnson Preferred Financing, Inc. Per the terms of the agreement, ~~with Power Up Lending Group Ltd. (“Power Up”), providing for the purchase by Power Up from~~ the Company agreed to finance its D&O insurance premium. The total amount due of ~~a convertible note~~$114,086 will be paid in the aggregate principal amount of $53,000. The note bears an interest rate of 12%, and is due and payable on July 20, 2018. The note may be converted by Power Up at any time after 180 days from issuance into shares of Company’s common stock at a conversion price equal to 58% of the average of the lowest two day trading prices of the common stock during the 15 trading days prior to conversion. The note may be prepaid in accordance with its terms, at premiums ranging from 15% to 40%, depending on the time of prepayment. The note contains certain representations, warranties, covenants and events of default, including if the Company is delinquent in its periodic report filings10 monthly installments, with the ~~SEC, and provides for increases in principal and interest in the event of such defaults.~~first installment due August 4, 2022.

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ITEM 2. ~~MANAGEMENT'S~~MANAGEMENT‘S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

~~Statements in~~

In addition to historical information, this ~~report~~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 ~~express "belief," "anticipation"~~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 ~~"expectation," as well as other~~similar expressions are intended to identify forward-looking statements. The forward-looking statements ~~which~~ 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"~~“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, ~~2016~~2021 and ~~subsequently filed~~this quarterly ~~reports~~report on Form 10-Q. Examples of these uncertainties and risks include, but are not limited to:

	·	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 ~~ability to stay current and make upgrades to our products as technology continuously changes;~~
·	~~our ability~~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 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 ~~net~~operating losses since our inception and, as of ~~September~~June 30, ~~2017,~~2022 we ~~had~~have an accumulated deficit of approximately ~~$131.3~~$144.4 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 ~~through at least~~for the ~~end of 2017~~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. In ~~2016,~~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 in ~~2017~~2022 will be derived from revenue from the sale of LuViva devices and disposables.

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~~Reverse Stock Split:~~ ~~On November 7, 2016,~~

Current Demand for LuViva

Based on discussions with our distributors, we currently hold and expect to generate additional purchase orders for approximately $1.0 to $1.5 million in LuViva devices and disposables in 2022 and expect those purchase orders to result in actual sales of $0.5 to $1.0 million in 2022-2023, 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, the Company ~~implemented~~in 2022 is focused on three primary markets: the United States, China and Europe.

In the United States, the Company is actively pursuing FDA approval by initiating a ~~1:800 reverse stock split of all of our issued~~clinical trial protocol involving approximately 400 study participants. The protocol was drafted with input from FDA and ~~outstanding common stock. As a result of~~two prestigious clinical centers that will participate in the ~~reverse stock split, every 800 shares of issued~~study. Additional clinical centers may be added if needed to meet the study’s enrollment criteria. The budget at one institution has been agreed upon and ~~outstanding common stock was converted into 1 share of common stock. All fractional shares created~~is under negotiation at the other institution. The LuViva devices have been prepared and have passed bench testing in order to begin the study. On July 20, 2022 we announced that the study had been approved 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~~designated Institutional Review Board and ~~outstanding shares of common stock from 453,694,400 shares of Common Stock to 570,707 shares as~~because of that, ~~date. See Note 4, Stockholders’ Deficit. Unless otherwise specified, all per share amounts are reported~~the study was expected to begin in September of 2022, which would allow the study to be completed in the first half of 2023, however, there can be no assurance that the study will be completed within this timeframe.

In China, the Chinese NMPA (National Medical Products Approval) study has begun at four clinical sites. According to enrollment tracking reports sent to us by our Chinese partner SMI on ~~a post-stock split basis, as~~March 11, 2022, testing of ~~September 30, 2017. On February 24, 2016,~~150 patients has been completed in the ongoing clinical trial for Chinese National Medical Products Administration (NMPA) approval. The trial is expected to be completed in the second quarter of this year and submitted for approval shortly thereafter, although there can be no assurance that the study will be completed within this time frame.

In Europe, the Company ~~had also implemented~~attended a ~~1:100 reverse stock split of its issued~~meeting in Bucharest, Romania on November 3-4, 2021, hosted by our central Eastern and ~~outstanding common stock.~~

~~RECENT DEVELOPMENTS~~

~~On October 12, 2017, we entered~~Russian distribution partner. The LuViva system was demonstrated for doctors at a local clinic and the head Ob-Gyn physician’s hospital has accepted the LuViva device into a securities purchase agreement with Power Up Lending Group Ltd., providing for the purchase by Power Up from us of a convertible note in the aggregate principal amount of $53,000. The note bears an interest rate of 12%,service and is ~~due and payable on July 20, 2018. The note may be converted by Power Up at any time after 180 days from issuance into shares~~expected to order additional Cervical Guides to test patients as part of our common stock at a conversion price equal to 58% of the average of the lowest two day trading prices of the common stock during the 15 trading days prior to conversion. The note may be prepaid in accordance with its terms, at premiums ranging from 15% to 40%, depending on the time of prepayment. The note contains certain representations, warranties, covenants and events of default, including if we are delinquent in our periodic report filings with the SEC, and provides for increases in principal and interest in the event of such defaults.her practice.

CRITICAL ACCOUNTING POLICIES

Our material accounting policies, which we believe are the most critical to an 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. AsWhen we begin to generate ~~increased~~ revenue from different sources, we expect that the number of applicable policies and complexity of the judgments required will increase.

Revenue Recognition: WeASC 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 ~~from contracts on~~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 ~~straight line basis,~~vendor when control over the ~~terms~~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. We

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 ~~from grants based on the grant agreement,~~ at ~~the~~a point in time, ~~the expenses are incurred. Revenue from the sale~~except if it meets any of the ~~Company’s products is recognized upon shipment~~three criteria, which will require recognition of ~~such products~~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 ~~its customers.~~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. ~~See Note 3 to the consolidated financial statements accompanying this report for the assumptions used in the Black-Scholes valuation.~~

Allowance for Accounts Receivable: We estimate losses from the inability of our ~~customers~~distributors to make required payments and periodically review the payment history of each of our ~~customers,~~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”~~first-out“ basis. Selling, general, and administrative expenses are not inventoried, but are charged to expense when purchased. ~~To the extent market value is less than our cost or net realizable value, a valuation reserve is established.~~

RESULTS OF OPERATIONS

COMPARISON OF ~~THE~~ THREE MONTHS ENDED ~~SEPTEMBER~~JUNE 30, ~~2017~~2022 AND ~~2016~~2021

Sales Revenue, Cost of Sales and Gross ~~Loss~~Profit from Devices and ~~Disposables~~:Disposables: Revenues from the sale of LuViva devices and disposables for the three months ended ~~September~~June 30, ~~2017 and 2016~~2022 were ~~$33,000 and $95,000, respectively. Revenues decreased by approximately $62,000, or 65% from the same period in 2016. The decrease was due~~$5,358, compared to ~~a lack of funding to support sales and marketing efforts. Related costs of sales were approximately $97,000 and $85,000~~$1,584 for the three months ended ~~September~~June 30, ~~2017 and 2016, respectively.~~2021. Cost of goods sold was $1,331 during the three months ended June 30, 2022, compared to nil for the three months ended June 30, 2021. This resulted in a gross ~~loss~~profit of ~~approximately $64,000~~$4,027 and $1,584 on the sales of devices and ~~disposables for~~disposals during the three months ended ~~September~~June 30, ~~2017, compared with a gross profit~~2022 and June 30, 2021, respectively. While we currently hold and expect to generate purchase orders for approximately $1.0 to $1.5 million in LuViva devices and disposables in 2022, supply chain issues due to COVID-19 have caused delays in our ability to procure the circuit boards that are needed to ship our products. As of ~~approximately $10,000~~June 30, 2022, we have received cash payments of $512,577 for sales of our products, which will be recognized as revenue when our products are shipped. We anticipate recognizing revenue for these shipments in the ~~same period in 2016.~~second half of 2022.

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Research and Development ~~Expenses~~:Expenses: Research and development expenses for the three months ended ~~September~~June 30, ~~2017 decreased~~2022 were $9,155, compared to ~~approximately $69,000, from approximately $87,000 for~~$19,772 in the ~~same period in 2016.~~three months ended June 30, 2021. The decrease of ~~approximately $18,000,~~$10,617, or ~~21%~~54%, was primarily due to ~~decreases~~a reduction in research and development clinical costs and payroll ~~expenses for cost reduction plans.~~expenses.

Sales and Marketing Expenses: Sales and marketing expenses for the three months ended ~~September~~June 30, ~~2017 decreased~~2022 were $36,701, compared to ~~approximately $37,000, from approximately $92,000 for~~$29,814 in the ~~same period in 2016.~~three months ended June 30, 2021. The ~~decrease,~~increase of ~~approximately $55,000,~~$6,887, or ~~60%~~23%, was primarily due to ~~Company-wide expense reduction~~a higher travel and ~~cost savings efforts.~~payroll-related expenses.

General and Administrative ~~Expenses:~~Expense: General and administrative expenses for the three months ended ~~September~~June 30, ~~2017 increased~~2022 were $676,015, compared to ~~approximately $1,169,000, from approximately $510,000 for~~$512,531 in the ~~same period in 2016.~~three months ended June 30, 2021. The increase of ~~approximately $659,000,~~$163,484, or ~~129%~~32%, was primarily ~~related~~due to ~~other professional fee~~an increase in consulting and legal fees recognized in the current period. During the current period, the Company’s plans to uplist to Nasdaq were placed on hold, pending improvement in market conditions. Uplist-related expenses ~~and bad debt expenses incurred~~totaling $369,435 that were previously capitalized were therefore recognized during the ~~same period and payments required for financing agreements.~~current period.

Interest Expense: Interest expense for the three months ended June 30, 2022 was $255,616, compared to $315,000 in the three months ended June 30, 2021. The decrease of $59,384, or 19%, was due to a decrease in debt, resulting in lower interest recognized for outstanding notes payable and convertible debt during the three months ended June 30, 2022 versus the prior year.

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 June 30, 2022 was $14,304, compared to nil during the three months ended June 30, 2021. The gain recorded in the current period was due to changes to our stock price during the period, which impacted the fair value of the derivative liability.

Loss/Gain from extinguishment of debt: Gain from extinguishment of debt for the three months ended June 30, 2022 was $33,553, compared to a loss from extinguishment of debt of $185,000 in the three months ended June 30, 2021. The loss recorded in the prior period was primarily due to a $350,000 prepayment penalty incurred on the Auctus convertible debt. The gain from extinguishment of debt during the three months ended June 30, 2022 was due to forgiveness of debt.

Other ~~Income (Expense)~~:Income: Other income for the three months ended ~~September~~June 30, ~~2017~~2022 was ~~approximately $3,000,~~$1,495, compared to ~~other income of $24,000 for the same period~~$26,528 in ~~2016.~~

~~Interest Expense:~~ ~~Interest expense for~~ the three months ended ~~September~~June 30, ~~2017 increased to approximately $268,000, compared to $226,000 for the same period in 2016.~~2021. The ~~increase~~decrease of ~~approximately $42,000,~~$25,033, or ~~19%~~94%, was primarily due to ~~amortization~~a $26,000 non-recurring write-off of ~~debt discount, debt issuance costs and penalty on event of default of convertible loan that were lower compared to~~accrued salaries in the ~~same period in 2016.~~prior period.

~~Fair Value of Warrants Expense:~~ Fair value of warrants recovery for the three months ended September 30, 2017 increased to approximately a negative $761,000, compared to $670,000 for the same period in 2016. The decrease of approximately $1,431,000, or 213%, was primarily due to the significant changes in warrant conversion prices.

Net ~~loss~~:loss: Net loss attributable to common stockholders during the three months ended June 30, 2022 was ~~approximately $2,417,000,~~$1,006,554, compared to $1,159,000 during the three months ended June 30, 2021. The decrease in net loss of $152,446, or ~~$0.35 per share,~~13% was due to the reasons outlined above and a $43,555 decrease in preferred stock dividends.

There was no income tax benefit recorded for the three months ended ~~September~~June 30, ~~2017, compared~~2022 or 2021, due to ~~$390,000, or $1.36 per share, for~~recurring net operating losses. A full valuation allowance has been recorded related the ~~same period in 2016. The increase of $2,027,000, or 520%, was for reasons outlined above.~~ deferred tax assets generated from the net operating losses.

COMPARISON OF THE ~~NINE~~SIX MONTHS ENDED ~~SEPTEMBER~~JUNE 30, ~~2017~~2022 AND ~~2016~~2021

Sales Revenue, Cost of Sales and Gross ~~Loss~~Profit from Devices and ~~Disposables~~:Disposables: Revenues from the sale of LuViva devices and disposables for the ~~nine~~six months ended ~~September~~June 30, ~~2017 and 2016~~2022 were ~~$137,000 and $486,000, respectively. Revenues decreased by approximately $349,000, or 72%, from the same period in 2016. The decrease was due~~$9,983, compared to ~~a lack of funding to support sales and marketing efforts. Related costs of sales were approximately $195,000 and $185,000~~$1,584 for the ~~nine~~six months ended ~~September~~June 30, ~~2017 and 2016, respectively. Costs~~2021. Cost of ~~sales~~goods sold was $2,277 during the six months ended June 30, 2022, compared to nil for the ~~nine~~six months ended ~~September~~June 30, ~~2017 were approximately $10,000, or 5% higher than the same period in 2016.~~2021. This resulted in a gross ~~loss~~profit of ~~approximately $58,000~~$7,706 and $1,584 on the sales of devices and ~~disposables for~~disposals during the ~~nine~~three months ended ~~September~~June 30, ~~2017,~~2022 and June 30, 2021, respectively. While we currently hold and expect to generate purchase orders for approximately $1.0 to $1.5 million in LuViva devices and disposables in 2022, supply chain issues due to COVID-19 have caused delays in our ability to procure the circuit boards that are needed to ship our products. As of June 30, 2022, we have received cash payments of $512,577 for sales of our products, which will be recognized as revenue when our products are shipped. We anticipate recognizing revenue for these shipments in the second half of 2022 and early 2023.

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Research and Development Expenses: Research and development expenses were $30,564 during the six months ended June 30, 2022, compared ~~with~~to $36,223 during the six months ended June 30, 2021, a ~~gross profit~~decrease of ~~approximately $301,000~~$5,659 or 16%. The decrease was primarily due to a reduction in research and development clinical costs and payroll-related expenses.

Sales and Marketing Expenses: Sales and marketing expenses were $76,943 during the six months ended June 30, 2022, compared to $66,291 during the six months ended June 30, 2021, an increase of $10,652 or 16%. The increase was primarily due to higher travel and payroll-related expenses.

General and Administrative Expense: General and administrative expenses were $1,062,461 during the six months ended June 30, 2022, compared to $1,339,531 during the six months ended June 30, 2021, a decrease of $277,070, or 21%. The decrease was primarily due to a prior-year charge of $398,000 recorded during the six months ended June 30, 2021 for warrants issued to Mr. Blumberg for consulting services. The decrease was offset by higher legal costs recognized during the six months ended June 30, 2022.

Interest Expense: Interest expense during the six months ended June 30, 2022 was $356,642 compared to $456,000 during the six months ended June 30, 2021, a decrease of $99,358, or 22%. The decrease was due a decrease in debt, resulting in lower interest recognized for outstanding notes payable and convertible debt during the six months ended June 30, 2022 versus the same period in ~~2016.~~the prior year.

~~Research and Development Expenses~~~~: Research and development expenses~~Other Income: Other income for the ~~nine~~six months ended ~~September~~June 30, ~~2017 decreased~~2022 was $3,872, compared to ~~approximately $251,000, from approximately $525,000 for~~$26,528 in the ~~same period in 2016.~~six months ended June 30, 2021. The decrease of ~~approximately $274,000,~~$22,656, or ~~52%~~85%, was primarily due to ~~decreases~~a $26,000 non-recurring write-off of accrued salaries in ~~payroll expenses for cost reduction plans.~~

the prior period.

~~Sales and Marketing Expenses:~~ ~~Sales and marketing expenses for~~Change in Fair Value of Derivative Liability: The gain due to the ~~nine~~change in fair value of the derivative liability during the six months ended ~~September~~June 30, ~~2017 decreased~~2022 was $8,064, compared to ~~approximately $187,000,~~a loss of $88,000 during the six months ended June 30, 2021. The change in the fair value of the derivative liability was due to changes to our stock price during the period.

Gain from ~~approximately $295,000 for~~extinguishment of debt: Gain from extinguishment of debt during the ~~same~~six months ended June 30, 2022 was $74,785, compared to a loss from extinguishment of debt of $185,000 during the six months ended June 30, 2021. The loss recorded in the prior period ~~in 2016. The decrease, of approximately $108,000, or 37%,~~ was primarily due to ~~Company-wide expense reduction and cost savings efforts.~~a $350,000 prepayment penalty incurred on the Auctus convertible debt. The gain from extinguishment of debt during the three months ended June 30, 2022 was due to forgiveness of debt.

~~General and Administrative Expenses:~~ ~~General and administrative expenses for~~Change in Fair Value of Warrants: Change in fair value of warrants during the ~~nine~~six months ended ~~September~~June 30, ~~2017 decreased~~2022 was nil, compared to approximately $1,894,000, from approximately $2,187,000 for the same period in 2016. The decrease, of approximately $293,000, or 13%, was primarily related to lower compensation and option expenses incurreda $448,000 gain recorded during the ~~same period.~~

~~Other Income (Expense)~~~~: Other income for the nine~~six months ended ~~September~~June 30, ~~2017 was approximately $18,000, compared to other income of $67,000 for the same period in 2016, a decrease of $49,000 or 73%.~~

~~Interest Expense:~~ ~~Interest expense for the nine months ended September 30, 2017 decreased to approximately $814,000, compared to $1,597,000 for the same period in 2016.~~2021. The decrease ~~of approximately $783,000, or 49%,~~ was primarily due to ~~amortization~~(i) a change in the terms of ~~debt discount, debt issuance costs~~the warrants during 2021, which resulted in reclassification of the warrant instruments from liabilities to equity and ~~penalty on event~~(ii) expiration of ~~default of convertible loan that were lower for same period in 2016.~~the warrants previously outstanding.

~~Fair Value of Warrants Expense:~~ ~~Fair value of warrants recovery for~~Preferred Stock Dividends: Expense related to preferred stock dividends during the ~~nine~~six months ended ~~September~~June 30, ~~2017 decreased to a negative $359,000,~~2022 was $629,368, compared to ~~$2,276,000 for~~$176,590 during the ~~same period in 2016.~~six months ended June 30, 2021. The ~~decrease of approximately $2,635,000, or 102%,~~increase was primarily due to payment of a one-time, non-recurring 15% dividends to the ~~significant changes~~Series F and Series F-2 Preferred shareholders, as required by the Series F and Series F-2 Certificate of Designations in ~~warrant conversion prices.~~the event the Company did not uplist to the NASDAQ stock exchange or file its clinical data intended for FDA approval of LuViva by December 31, 2021. The increase was also due to the timing of the closing of the Series F and Series F-2 Preferred Stock financings, which took place during the six months ended June 30, 2021 and therefore did not result in a full six months of accrued dividends.

Net ~~loss~~:Loss: Net loss attributable to common stockholders was ~~approximately $3,761,000, or $1.43 per share,~~$2,061,552 for the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2022, compared to ~~$2,901,000, or $25.52 per share,~~net loss of $1,871,000 during the six months ended June 30, 2021. The reasons for the ~~same period in 2016. The increase of $860,000, or 30%, was for reasons~~fluctuation are outlined above.

There was no income tax benefit recorded for the six months ended June 30, 2022 and 2021, due to recurring net operating losses. A full valuation allowance has been recorded related the deferred tax assets generated from the net operating losses.

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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. ~~At September~~As of June 30, ~~2017,~~2022, we had cash of approximately ~~$74,000~~$446,443 and a negative working capital of ~~approximately $10.6 million.~~$4,892,695.

Our major cash flows for the ~~quarter~~six months ended ~~September~~June 30, ~~2017~~2022 consisted of cash ~~out-flows~~used for operations of ~~$481,000 from operations, including approximately $3,545,000~~$527,936, cash used for investing activities of $31,207, and net ~~loss, and a net change from~~cash provided by financing activities of ~~$541,000,~~$361,759, which ~~primarily represented the proceeds received from~~consisted of $495,492 of proceeds from ~~debt financing.~~warrant exercises, offset by cash outflows for payments made on outstanding debt.

~~On August 18, 2017, we entered~~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 $1,130,000 of cash from the sale of 10% debenture unit investments and incurred transactional fees of $86,400. The Company issued the finders 413,600 warrants for the Company’s common stock shares. The investors received a total of 1,130,000 warrants for common stock shares. The debentures are convertible into 2,260,000 of the Company’s common stock shares.

During 2021, the Company received $2,114,000 of cash from the sale of equity securities and incurred transactional fees of $139,000. The Company also issued the finders 98,000 of the Company’s common stock shares and 643,700 warrants for the Company’s common stock shares. The investors received a ~~securities purchase agreement with~~total of 1,436 and 3,237 shares of Series F and Series F-2 preferred stock, respectively. Each share of Series F or Series F-2 preferred stock is convertible into 4,000 shares of the Company’s common stock, at the election of the investor.

During 2021, the Company finalized an investment by Power Up Lending Group ~~Ltd., providing for the purchase by~~Ltd (“Power Up“). Power Up ~~from us~~invested $132,000 (of which the Company received $125,000 net of costs) for 153,000 shares of Series G preferred stock. As of December 31, 2021, all Series G preferred shares were redeemed.

During 2021, the Company entered into an exchange agreement with Richard Fowler. As of December 31, 2020, the Company owed Mr. Fowler $546,214 ($412,624 in deferred salary and $133,590 in accrued interest). Mr. Fowler exchanged $50,000 of the amount owed of $546,214 for 50 shares of Series F-2 Preferred Shares (convertible into 200,000 shares of common stock) and a ~~convertible note in the aggregate principal amount of $53,000.~~$150,000 unsecured note. The note ~~bears an~~accrues interest at the rate of 12%, and is due and payable on May 19, 2018. The note may be converted by Power Up at any time after 180 days from issuance into shares of our common stock at a conversion price equal to 58% of the average of the lowest two-day trading prices of the common stock during the 15 trading days prior to conversion. The note may be prepaid in accordance with its terms, at premiums ranging from 15% to 40%, depending on the time of prepayment. The note contains certain representations, warranties, covenants and events of default, including if we are delinquent in our periodic report filings with the SEC, and provides for increases in principal and interest6.0% (18.0% in the event of ~~such defaults. On October 12, 2017, we issued an additional~~default) beginning on March 1, 2022 and is payable in monthly installments of $3,600 for four years, with the first payment being due on March 15, 2022. The effective interest rate of the note is 6.18%. Mr. Fowler forgave $86,554 and may forgive up to ~~Power Up, on substantially identical terms, in~~$259,661 of debt if the ~~aggregate principal amount of $53,000, due and payable on July 20, 2018.~~Company complies with the repayment plan described above.

~~We will~~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 ~~required~~additional repercussions in our operating business, including but not limited to, ~~raise additional funds through public~~ the sourcing of materials for product candidates, manufacture of supplies for preclinical and/or ~~private financing, additional collaborative relationships~~clinical studies, delays in clinical operations, which may include the availability or ~~other arrangements,~~the continued availability of patients for trials due to such things as ~~soon as possible. We~~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 ~~certain~~predicted, and we cannot provide any assurance that ~~our existing and available capital resources~~the outbreak will be sufficient to satisfy our funding requirements through the fourth quarter of 2017. We are evaluating various options to further reduce our cash requirements to operate at a reduced rate, as well as options to raise additional funds, including loans.

Generally, substantial capital will be required to develop our products, including completing product testing and clinical trials, obtaining all required U.S. and foreign regulatory approvals and clearances, and commencing and scaling up manufacturing and marketing our products. Any failure to obtain capital wouldnot have a material adverse ~~effect~~impact on our ~~business, financial condition~~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 Russia-Ukraine conflict and ~~results of operations. Based on discussions with our customers, we expect~~the sanctions imposed in response to ~~generate purchase orders for approximately $3 million to $4 million in LuViva devices and disposables in 2017, and expect those purchase orders to~~this crisis could result in ~~actual sales of $750,000~~repercussions to ~~$1 million~~our operating business, including delays in 2017, 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 customers or that partsobtaining regulatory approval 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~~market our products ~~we cannot confidently predict~~in Russia. The future ~~sales~~impact of ~~our products beyond this time frame,~~the conflict is highly uncertain and cannot be ~~assured of~~predicted, and we cannot provide any ~~particular amount of sales. Accordingly, we have not identified any particular trends with regard to sales of our products. We currently do~~assurance that the conflict will not have ~~cash~~a material adverse impact on ~~hand sufficient to build the inventory required to fill these orders, and material delays in product deliveries could result in canceled orders.~~

our operations or future results or filings with regulatory health authorities.

Our financial statements have been prepared and presented on a basis assuming we will continue as a going concern. The above factors raise substantial doubt about our ability to continue as a going concern, as more fully discussed in Note 1 to the consolidated financial statements contained herein and in the report of our independent registered public accounting firm accompanying our financial statements contained in our annual report on Form 10-K for the year ended December 31, 2016.

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.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The Company under the supervision and with the participation of management, including the Chief Executive Officer (principal executive officer) and the Chief Financial Officer (principal financial officer), evaluated the effectiveness of our “disclosure controls and ~~procedures”~~procedures“ (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange ~~Act”~~Act“)) as of September 30, ~~2017.~~2018. The controls and system currently used by the Company to calculate and record inventory is not operating effectively. Additionally, the Company lacks the resources to properly research and account for complex transactions. The combination of these controls deficiencies ~~have~~has resulted in a material weakness in our internal control over financial reporting.

Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) were not effective as of ~~September~~June 30, ~~2017~~2022 to provide reasonable assurance that (1) information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and (2) information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

The effectiveness of any system of controls and procedures is subject to certain limitations, and, as a result, there can be no assurance that our controls and procedures will detect all errors or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system will be attained.

Changes in Internal Control ~~over~~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~~June 30, ~~2017~~2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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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. See Note 6 to the financial ~~statements.~~statements for additional information.

ITEM 1A. RISK FACTORS

~~Please refer to Part I, Item 1A, “Risk Factors,” in our annual report on Form 10-K~~Not applicable for ~~the year ended December 31, 2016, for information regarding factors that could affect our results of operations, financial condition and liquidity.~~a smaller reporting company.

ITEM 2. UNREGISTERRED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

~~None~~None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. ~~MINE SAFETY DISCLOSURES~~EXHIBITS

~~Not applicable.~~

~~ITEM 5. OTHER INFORMATION~~

~~Not applicable.~~

~~ITEM 6. EXHIBITS~~
Exhibit Number

~~Exhibit Number~~
Exhibit Description
~~4.1~~
31*
~~12% Convertible Redeemable Note (Power Up Note) (incorporated by reference to Exhibit 4.1 to the current report on Form 8-K filed August 24, 2017)~~
~~10.1~~
~~Forbearance Agreement (GPB Debt Holdings II LLC) (incorporated by reference to Exhibit 10.1 to the current report on Form 8-K filed August 17, 2017)~~
~~10.2~~ Securities Purchase Agreement, dated August 18, 2017, between the Company and Power Up Lending Group LTD (incorporated by reference to Exhibit 10.1 to the current report on Form 8-K filed August 24, 2017)
31*
Rule 13a-14(a)/15d-14(a) Certification
32*
Section 1350 Certification
101.1*
XBRL
*Filed herewith
43
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SIGNATURES

*Filed herewith
30
~~SIGNATURES~~
~~In accordance with~~Pursuant to the requirements of the Securities Exchange Act of 1934, the ~~registrant~~Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

GUIDED THERAPEUTICS, INC.
By:
/s/ Gene S. Cartwright

~~/s/ Gene S. Cartwrigh~~t
~~By:~~
Gene S. Cartwright

President, Chief Executive Officer and
Acting Chief Financial Officer
Date: August 15, 2022
~~Date:~~
~~November 20, 2017~~
44

31

GUIDED THERAPEUTICS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS Unaudited (in Thousands)
ASSETS	September 30, 2017			December 31, 2016
CURRENT ASSETS:
Cash and cash equivalents	$	74		$	14
Accounts receivable, net of allowance for doubtful accounts of $244 and $279 at September 30, 2017 and December 31, 2016, respectively		—			—
Inventory, net of reserves of $409 and $278, at September 30, 2017 and December 31, 2016, respectively		577			773
Other current assets		179			259
Total current assets		830			1,046

Property and equipment, net		56			126
Other assets, net of reserve of $293 at September 30, 2017		19			320
Total noncurrent assets		75			446

TOTAL ASSETS	$	905		$	1,492

LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES:
Notes payable in default, including related parties	$	689		$	1,008
Short-term notes payable, including related parties		820			197
Accounts payable		2,965			2,600
Convertible notes in default		2,322			2,361
Convertible notes payable		814			468
Accrued liabilities		3,650			2,670
Deferred revenue		156			34
Total current liabilities		11,416			9,338

Warrants at fair value		1,834			1,420


TOTAL LIABILITIES		13,250			10,758

COMMITMENTS & CONTINGENCIES (Note 7) STOCKHOLDERS’ DEFICIT:
Series C convertible preferred stock, $.001 par value; 9.0 shares authorized, 1.2 and 1.6 shares issued and outstanding as of September 30, 2017 and December 31, 2016, (Liquidation preference of $1,177 and $1,643 at September 30, 2017 and December 31, 2016, respectively)		431			601
Series C1 convertible preferred stock, $.001 par value; 20.3 shares authorized, 4.3 shares issued and outstanding as of September 30, 2017 and December 31, 2016 (Liquidation preference of $4,312 at September 30, 2017 and December 31, 2016)		701			701
Common stock, $.001 Par value; 1,000,000 shares authorized, 9,253 and 669 shares issued and outstanding as of September, 30 2017 and December 31, 2016, respectively		751			742
Additional paid-in capital		117,223			116,380
Treasury stock, at cost		(132	)		(132	)
Accumulated deficit		(131,319	)		(127,558	)

TOTAL STOCKHOLDERS’ DEFICIT		(12,345	)		(9,266	)

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	905		$	1,492

The accompanying notes are an integral part of these condensed consolidated financial statements.

	FOR THE THREE MONTHS ENDED SEPTEMBER 30,						FOR THE NINE MONTHS ENDED SEPTEMBER 30,
	2017			2016			2017			2016
REVENUE:
Sales – devices and disposables	$	33		$	95		$	137		$	486
Cost of goods sold		97			85			195			185
Gross (loss) profit		(64	)		10			(58	)		301

OPERATING EXPENSES:
Research and development		69			87			251			525
Sales and marketing		37			92			187			295
General and administrative		1,169			510			1,894			2,187
Total operating expenses		1,275			689			2,332			3,007

Operating loss		(1,339	)		(679	)		(2,390	)		(2,706	)

OTHER INCOME (EXPENSES):
Other income		3			24			18			67
Interest expense		(268	)		(226	)		(814	)		(1,597	)
Change in fair value of warrants		(761	)		670			(359	)		2,276
Total other income (expenses)		(1,026	)		468			(1,155	)		746

LOSS BEFORE INCOME TAXES		(2,365	)		(211	)		(3,545	)		(1,960	)

PROVISION FOR INCOME TAXES		—			—			—			—

NET LOSS	$	(2,365	)	$	(211	)	$	(3,545	)		(1,960	)
PREFERRED STOCK DIVIDENDS		(52	)		(179	)		(216	)		(941	)
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	(2,417	)	$	(390	)	$	(3,761	)		(2,901	)

NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS
BASIC	$	(0.35	)	$	(1.36	)	$	(1.43	)		(25.52	)
DILUTED	$	(0.35	)	$	(1.36	)	$	(1.43	)		(25.52	)

WEIGHTED AVERAGE SHARES OUTSTANDING
BASIC		6,884			283			2,632			114
DILUTED		6,884			283			2,632			114

GUIDED THERAPEUTICS INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in Thousands)
	FOR THE NINE MONTHS ENDED SEPTEMBER 30,
	2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(3,545	)	$	(1,960	)
Adjustments to reconcile net loss to net cash used in operating activities:
Bad debt (recovery) expense		298			4
Depreciation		77			148
Amortization of debt issuance costs and discounts		196			930
Stock based compensation		56			72
Change in fair value of warrants		359			(2,276	)
Changes in operating assets and liabilities:
Inventory		196			(40	)
Accounts receivable		(89	)		(53	)
Other current assets		80			317
Other assets		300			47
Accounts payable		366			626
Deferred revenue		122			(148	)
Accrued liabilities		1,103			728
Total adjustments		3,064			355

Net cash used in operating activities		(481	)		(1,605	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt financing, net of discounts and debt issuance costs		746			1,719
Payments made on notes payable		(205	)		(145	)

Net cash provided by financing activities		541			1,574

NET CHANGE IN CASH AND CASH EQUIVALENTS		60			(31	)
CASH AND CASH EQUIVALENTS, beginning of year		14			35
CASH AND CASH EQUIVALENTS, end of period	$	74		$	4
SUPPLEMENTAL SCHEDULE OF:
Cash paid for:
Interest	$	1		$	62
NONCASH INVESTING AND FINANCING ACTIVITIES:
Issuance of common stock as debt repayment	$	185		$	251
Dividends on preferred stock	$	216		$	941

	September 30, 2017		December 31, 2016
Accrued compensation	$	2,037	$	1,656
Accrued professional fees		74		161
Deferred rent		—		13
Accrued warranty		44		58
Accrued vacation		151		175
Accrued interest		449		—
Accrued dividends		316		296
Other accrued expenses		579		311
Total	$	3,650	$	2,670