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~~

☐

☒ 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 30, 2022~~March 31, 2023

Commission File No. ~~0-22179~~000-22179

GUIDED THERAPEUTICS, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

58-2029543

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically, if any, every Interactive Data File required to be submitted 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 such files). Yes ☒ 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” and “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act (Check one):

Large Accelerated filer	☐	Accelerated filer	☐
Non-accelerated Filer	☒	Smaller reporting company	☒
		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 ☒

As of ~~November 14,~~May 10, 2022, the registrant had ~~48,578,721~~51,010,579 shares of Common Stock, $0.001 par value per share, outstanding.

PART I FINANCIAL INFORMATION

		Page
Item 1.	Financial Statements	~~Page~~
~~Item 1.~~	~~Financial Statements~~ Condensed Consolidated Balance Sheets as of March 31, 2023 (Unaudited) and December 31, 2022	3
	~~Consolidated Balance Sheets as of September 30, 2022 (Unaudited) and December 31, 2021~~	3
	Condensed Consolidated Statements of Operations for the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ (Unaudited)	54
	Condensed Consolidated Statements of Stockholders' Deficit for the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ (Unaudited)	65
	Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ (Unaudited)	149
	Notes to Unaudited Condensed Consolidated Financial Statements	1510

Item 2.	~~Management's~~Management s Discussion and Analysis of Financial Condition and Results of Operations	40

~~Item 3.~~	~~Quantitative and Qualitative Disclosures About Market Risk~~	48

~~Item 4.~~	~~Controls and Procedures~~	48

~~PART II OTHER INFORMATION~~33

~~Item 1.~~	~~Legal Proceedings~~	49

~~Item 1A.~~	~~Risk Factors~~	49

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40

Item 4.	Controls and Procedures	40

PART II OTHER INFORMATION

Item 1.	Legal Proceedings	41

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4941

~~Item 6.~~	~~Exhibits~~	50

~~Signatures~~		51
Item 6.	Exhibits	41

Signatures		42

Table of Contents

GUIDED THERAPEUTICS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

		September 30,					March 31,
		2022		December 31,			2023			December 31,
		(unaudited)		2021			(unaudited)			2022
ASSETS	ASSETS					ASSETS

Current Assets:
Cash and cash equivalents		$	2,697	$	643		$	1,837		$	2,313
Accounts receivable, net of allowance for doubtful accounts of $48 and $126 at September 30, 2022 and December 31, 2021, respectively			29		46
Inventory, net of reserves of $785 at September 30, 2022 and December 31, 2021			596		571
Accounts receivable, net of allowance for doubtful accounts of $48 at March 31, 2023 and December 31, 2022								7			6
Inventory, net of reserves of $818 at March 31, 2023 and December 31, 2022								585			548
Other current assets			169		377			121			137
Total current assets			3,491		1,637			2,550			3,004

Non-Current Assets:
Property and equipment, net			42		14			40			42
Operating lease right-of-use assets, net of amortization			321		372
Operating lease right-of-use asset, net of amortization								285			303
Other assets			17		17			17			17
Total non-current assets			380		403			342			362

TOTAL ASSETS		$	3,871	$	2,040		$	2,892		$	3,366

LIABILITIES AND STOCKHOLDERS DEFICIT
LIABILITIES AND STOCKHOLDERS' DEFICIT						LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities:
Accounts payable		$	2,217	$	2,362		$	2,191		$	2,186
Accounts payable, related parties			60		87			29			39
Accrued liabilities			1,050		1,768			928			1,247
Deferred revenue			509		337			488			509
Current portion of lease liability			76		67			82			79
Current portion of long-term debt			32		88			-			17
Current portion of long-term debt, related parties			497		-			37			504
Short-term notes payable			90		48			23			57
Short-term notes payable, related parties			17		40			-			1
Convertible notes payable in default			-		161
Short-term convertible notes payable, including non-convertible penalty			579		736
Derivative liability			19		-
Short-term convertible notes payable								225			230
Total current liabilities			5,146		5,694			4,003			4,869

Long-Term Liabilities
Long-term lease liabilities			267		325
Long-term lease liability								225			246
Derivative liability			-		32			-			5
Long-term convertible debt			1,017		820			982			1,046
Long-term debt			-		22
Long-term debt, related parties			92		592			537			83
Total long-term liabilities			1,376		1,791			1,744			1,380

Total liabilities			6,522		7,485			5,747			6,249

COMMITMENTS AND CONTINGENCIES (Note 7)

STOCKHOLDERS' DEFICIT:

Series C convertible preferred stock, $.001 par value; 9.0 shares authorized, 0.3 shares issued and outstanding as of March 31, 2023 and December 31, 2022. Liquidation preference of $286 at March 31, 2023 and December 31, 2022.								105			105
Series C1 convertible preferred stock, $.001 par value; 20.3 shares authorized, 1.0 shares issued and outstanding as of March 31, 2023 and December 31, 2022. Liquidation preference of $1,049 at March 31, 2023 and December 31, 2022.								170			170
Series C2 convertible preferred stock, $.001 par value; 5,000 shares authorized, 2.7 shares issued and outstanding as of March 31, 2023 and December 31, 2022. Liquidation preference of $2,701 at March 31, 2023 and December 31, 2022.								439			439
Series D convertible preferred stock, $.001 par value; 6.0 shares authorized, 0.4 shares issued and outstanding as of March 31, 2023 and December 31, 2022. Liquidation preference of $438 at March 31, 2023 and December 31, 2022, respectively.								159			159
Series E convertible preferred stock, $.001 par value; 5.0 shares authorized, 0.9 shares issued and outstanding as of March 31, 2023 and December 31, 2022. Liquidation preference of $883 and $888 at March 31, 2023 and December 31, 2022, respectively.								834			839
Series F convertible preferred stock, $.001 par value; 1.5 shares authorized, 1.2 and 1.4 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively. Liquidation preference of $1,026 and $1,056 at March 31, 2023 and December 31, 2022, respectively.								858			880
Series F-2 convertible preferred stock, $.001 par value; 5.0 shares authorized, 0.5 shares issued and outstanding as of March 31, 2023 and December 31, 2022. Liquidation preference of $520 and $535 at March 31, 2023 and December 31, 2022, respectively.								475			489
Common stock, $.001 par value; 500,000 shares authorized, 50,814 and 48,596 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively.								3,438			3,437
Additional paid-in capital								139,127			138,090
Treasury stock at cost								(132	)		(132	)
Accumulated deficit								(148,328	)		(147,359	)

Total stockholders' deficit								(2,855	)		(2,883	)

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT							$	2,892		$	3,366

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

Table of Contents

~~COMMITMENTS~~GUIDED THERAPEUTICS, INC. AND ~~CONTINGENCIES (Note 7)~~SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

STOCKHOLDERS DEFICIT:

Series C convertible preferred stock, $0.001 par value; 9.0 shares authorized, 0.3 shares issued and outstanding as of September 30, 2022 and December 31, 2021. Liquidation preference of $286 at September 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 September 30, 2022 and December 31, 2021. Liquidation preference of $1,049 at September 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 September 30, 2022 and December 31, 2021. Liquidation preference of $3,263 at September 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 September 30, 2022 and December 31, 2021, respectively. Liquidation preference of $438 and $763 at September 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 September 30, 2022 and December 31, 2021, respectively. Liquidation preference of $888 and $1,736 at September 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 September 30, 2022 and December 31, 2021, respectively. Liquidation preference of $1,071 and $1,426 at September 30, 2022 and December 31, 2021, respectively.

892

1,187

Series F-2 convertible preferred stock, $0.001 par value; 5.0 shares authorized, 0.5 and 3.2 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively. Liquidation preference of $535 and $3,237 at September 30, 2022 and December 31, 2021, respectively.

489

2,963

Series G convertible preferred stock, $0.001 par value; 1,000 shares authorized, nil shares issued and outstanding as of September 30, 2022 and December 31, 2021. Liquidation preference was nil at September 30, 2022 and December 31, 2021.

-

-

Common stock, $0.001 par value; 500,000 shares authorized, 27,583 and 13,673 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively

3,432

3,403

Additional paid-in capital

136,366

126,800

Treasury stock at cost

(132 )

(132 )
Accumulated deficit

(145,502 )

(142,387 )

Total stockholders deficit

(2,651 )

(5,445 )

TOTAL LIABILITIES AND STOCKHOLDERS DEFICIT

$ 3,871

$ 2,040

(unaudited, in thousands, except per share data)

	Three Months Ended
	March 31,
	2023			2022

Sales - devices and disposables	$	22		$	5
Cost of goods sold		9			1
Gross profit		13			4

Operating expenses:
Research and development		7			21
Sales and marketing		73			40
General and administrative		776			386
Total operating expenses		856			447

Loss from operations		(843	)		(443	)

Other income (expenses):
Interest expense		(66	)		(101	)
Change in fair value of derivative liability		5			(6	)
Gain from extinguishment of debt		35			41
Other income		-			2
Total other income (expense)		(26	)		(64	)

Loss before income taxes		(869	)		(507	)
Provision for income taxes		-			-

Net loss		(869	)		(507	)
Deemed dividend for warrant exchanges		(65	)		-
Preferred stock dividends		(35	)		(548	)

NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	(969	)	$	(1,055	)

NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS
Basic	$	(0.02	)	$	(0.05	)
Diluted	$	(0.02	)	$	(0.05	)

Weighted average shares outstanding
Basic		49,297			20,683
Diluted		49,297			20,683

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

Table of Contents

GUIDED THERAPEUTICS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF ~~OPERATIONS~~STOCKHOLDERS' DEFICIT

FOR THE THREE MONTHS ENDED MARCH 31, 2023

(unaudited, in ~~thousands, except per share data)~~thousands)

	Preferred Stock Series C				Preferred Stock Series C1				Preferred Stock Series C2				Preferred Stock Series D
	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount
Balance at December 31, 2022		-	$	105		1	$	170		2	$	439		1	$	159
Common stock warrants exercised		-		-		-		-		-		-		-		-
Issuance of common stock for payment of Series D preferred dividends		-		-		-		-		-		-		-		-
Issuance of common stock for payment of Series E preferred dividends		-		-		-		-		-		-		-		-
Issuance of common stock for payment of Series F preferred dividends		-		-		-		-		-		-		-		-
Issuance of common stock for payment of Series F-2 preferred dividends		-		-		-		-		-		-		-		-
Conversion of Series E preferred stock to common stock		-		-		-		-		-		-		-		-
Conversion of Series F preferred stock to common stock		-		-		-		-		-		-		-		-
Conversion of Series F-2 preferred stock to common stock		-		-		-		-		-		-		-		-
Issuance of common stock for payment of interest		-		-		-		-		-		-		-		-
Issuance of common stock to consultants		-		-		-		-		-		-		-		-
Stock-based compensation		-		-		-		-		-		-		-		-
Expense for warrants issued to consultants		-		-		-		-		-		-		-		-
Impact of warrant exchanges		-		-		-		-		-		-		-		-
Accrued preferred dividends		-		-		-		-		-		-		-		-
Net loss		-		-		-		-		-		-		-		-
Balance at March 31, 2023		-	$	105		1	$	170		2	$	439		1	$	159

	Preferred Stock Series E					Preferred Stock Series F					Preferred Stock Series F2
	Shares		Amount			Shares		Amount			Shares		Amount
Balance at December 31, 2022		1	$	839			1	$	880			3	$	489
Common stock warrants exercised		-		-			-		-			-		-
Issuance of common stock for payment of Series D preferred dividends		-		-			-		-			-		-
Issuance of common stock for payment of Series E preferred dividends		-		-			-		-			-		-
Issuance of common stock for payment of Series F preferred dividends		-		-			-		-			-		-
Issuance of common stock for payment of Series F-2 preferred dividends		-		-			-		-			-		-
Conversion of Series E preferred stock to common stock		-		(5	)		-		-			-		-
Conversion of Series F preferred stock to common stock		-		-			-		(22	)		-		-
Conversion of Series F-2 preferred stock to common stock		-		-			-		-			-		(14	)
Issuance of common stock for payment of interest		-		-			-		-			-		-
Issuance of common stock to consultants		-		-			-		-			-		-
Stock-based compensation		-		-			-		-			-		-
Expense for warrants issued to consultants		-		-			-		-			-		-
Impact of warrant exchanges		-		-			-		-			-		-
Accrued preferred dividends		-		-			-		-			-		-
Net loss		-		-			-		-			-		-
Balance at March 31, 2023		1	$	834			1	$	858			3	$	475

Three Months Ended

Nine Months Ended

September 30,

September 30,

2022

2021

2022

2021

Sales - devices and disposables

$ 3

$ 19

$ 13

$ 21

Cost of goods sold

-

42

2

42

Gross profit (loss)

3

(23 )

11

(21 )

Operating expenses:

Research and development

8

16

38

52

Sales and marketing

52

41

129

107

General and administrative

1,167

407

2,229

1,747

Total operating expenses

1,227

464

2,396

1,906

Loss from operations

(1,224 )

(487 )

(2,385 )

(1,927 )

Other income (expenses):

Interest expense

(155 )

(594 )

(512 )

(1,050 )
Change in fair value of derivative liability

5

(1 )

13

(89 )
Gain from extinguishment of debt

270

763

345

578

Change in fair value of warrants

-

-

-

448

Other income

2

387

5

414

Total other income (expense)

122

555

(149 )

301

Loss before income taxes

(1,102 )

68

(2,534 )

(1,626 )
Provision for income taxes

-

-

-

-

Net income (loss)

(1,102 )

68

(2,534 )

(1,626 )
Preferred stock dividends

48

(119 )

(581 )

(296 )

NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS

$ (1,054 )

$ (51 )

$ (3,115 )

$ (1,922 )

NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS

Basic

$ (0.03 )

$ (0.00 )

$ (0.11 )

$ (0.14 )
Diluted

$ (0.03 )

$ (0.00 )

$ (0.11 )

$ (0.14 )

Weighted average shares outstanding

Basic

34,829

13,417

27,335

13,291

Diluted

34,829

13,417

27,335

13,291

Table of Contents

					Additional
	Common Stock				Paid-In		Treasury			Accumulated
	Shares		Amount		Capital		Stock			Deficit			Total
Balance at December 31, 2022		48,596	$	3,437	$	138,090	$	(132	)	$	(147,359	)	$	(2,883	)
Common stock warrants exercised		1,072		1		221		-			-			222
Issuance of common stock for payment of Series D preferred dividends		26		-		6		-			-			6
Issuance of common stock for payment of Series E preferred dividends		26		-		8		-			-			8
Issuance of common stock for payment of Series F preferred dividends		233		-		53		-			-			53
Issuance of common stock for payment of Series F-2 preferred dividends		85		-		20		-			-			20
Conversion of Series E preferred stock to common stock		20		-		5		-			-			-
Conversion of Series F preferred stock to common stock		120		-		22		-			-			-
Conversion of Series F-2 preferred stock to common stock		60		-		14		-			-			-
Issuance of common stock for payment of interest		178		-		59		-			-			59
Issuance of common stock to consultants		400		-		116		-			-			116
Stock-based compensation		-		-		107		-			-			107
Expense for warrants issued to consultants		-		-		341		-			-			341
Impact of warrant exchanges		-		-		65		-			(65	)		-
Accrued preferred dividends		-		-		-		-			(35	)		(35	)
Net loss		-		-		-		-			(869	)		(869	)
Balance at March 31, 2023		50,814	$	3,438	$	139,127	$	(132	)	$	(148,328	)	$	(2,855	)

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

Table of Contents

GUIDED THERAPEUTICS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

FOR THE THREE MONTHS ENDED MARCH 31, 2022

(unaudited, in thousands)

	Preferred Stock Series C				Preferred Stock Series C1				Preferred Stock Series C2				Preferred Stock 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		-		-		-		-		-		-		-		-
Issuance of common stock for payment of Series D preferred dividends		-		-		-		-		-		-		-		-
Issuance of common stock for payment of Series E preferred dividends		-		-		-		-		-		-		-		-
Issuance of common stock for payment of Series F preferred dividends		-		-		-		-		-		-		-		-
Issuance of common stock for payment of Series F-2 preferred dividends		-		-		-		-		-		-		-		-
Issuance of common stock for payment of interest		-		-		-		-		-		-		-		-
Issuance of common stock for Series F and Series F-2 one-time 15% dividends		-		-		-		-		-		-		-		-
Conversion of Series E preferred stock to common stock		-		-		-		-		-		-		-		-
Conversion of Series F preferred stock to common stock		-		-		-		-		-		-		-		-
Stock-based compensation		-		-		-		-		-		-		-		-
Expense for warrants issued to consultants		-		-		-		-		-		-		-		-
Accrued preferred dividends		-		-		-		-		-		-		-		-
Net loss		-		-		-		-		-		-		-		-
Balance at March 31, 2022		-	$	105		1	$	170		3	$	531		1	$	276

	Preferred Stock Series E						Preferred Stock Series F					Preferred Stock 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		-			-			-		-			-		-
Issuance of common stock for payment of Series D preferred dividends		-			-			-		-			-		-
Issuance of common stock for payment of Series E preferred dividends		-			-			-		-			-		-
Issuance of common stock for payment of Series F preferred dividends		-			-			-		-			-		-
Issuance of common stock for payment of Series F-2 preferred dividends		-			-			-		-			-		-
Issuance of common stock for payment of interest		-			-			-		-			-		-
Issuance of common stock for Series F and Series F-2 one-time 15% dividends		-			-			-		-			-		-
Conversion of Series E preferred stock to common stock		(1	)		(725	)		-		-			-		-
Conversion of Series F preferred stock to common stock		-			-			-		(13	)		-		-
Stock-based compensation		-			-			-		-			-		-
Expense for warrants issued to consultants		-			-			-		-			-		-
Accrued preferred dividends		-			-			-		-			-		-
Net loss		-			-			-		-			-		-
Balance at March 31, 2022		1		$	914			1	$	1,174			3	$	2,963

Table of Contents

					Additional
	Common Stock				Paid-In		Treasury			Accumulated
	Shares		Amount		Capital		Stock			Deficit			Total
Balance at December 31, 2021		13,673	$	3,403	$	126,800	$	(132	)	$	(142,387	)	$	(5,445	)
Common stock warrants exercised		4,478		4		712		-			-			716
Issuance of common stock for payment of Series D preferred dividends		23		-		15		-			-			15
Issuance of common stock for payment of Series E preferred dividends		13		-		8		-			-			8
Issuance of common stock for payment of Series F preferred dividends		158		-		105		-			-			105
Issuance of common stock for payment of Series F-2 preferred dividends		96		-		64		-			-			64
Issuance of common stock for payment of interest		121		-		81		-			-			81
Issuance of common stock for Series F and Series F-2 one-time 15% dividends		624		-		399		-			-			399
Conversion of Series E preferred stock to common stock		3,070		3		722		-			-			-
Conversion of Series F preferred stock to common stock		60		-		13		-			-			-
Stock-based compensation		-		-		44		-			-			44
Expense for warrants issued to consultants		-		-		79		-			-			79
Accrued preferred dividends		-		-		-		-			(548	)		(548	)
Net loss		-		-		-		-			(507	)		(507	)
Balance at March 31, 2022		22,316	$	3,410	$	129,042	$	(132	)	$	(143,442	)	$	(4,989	)

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

Table of Contents

GUIDED THERAPEUTICS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF ~~STOCKHOLDERS DEFICIT~~

~~FOR THE THREE MONTHS ENDED SEPTERMBER 30, 2022~~CASH FLOWS

(unaudited, in thousands)

Preferred Stock

Preferred Stock

Preferred Stock

Series E

Series F

Series F2

Shares

Amount

Shares

Amount

Shares

Amount

Balance at June 30, 2022

1

$ 839

1

$ 892

3

$ 2,536

Issuances of common stock to investors

-

-

-

-

-

-

Issuances of warrants to investors

-

-

-

-

-

-

Issuance of common stock for payment of Series D preferred dividends

-

-

-

-

-

-

Issuance of common stock for payment of Series E preferred dividends

-

-

-

-

-

-

Issuance of common stock for payment of interest

-

-

-

-

-

-

Conversion of Series F-2 preferred stock to common stock

-

-

-

-

(3 )

(2,047 )
Stock-based compensation

-

-

-

-

-

-

Issuances of warrants to consultants

-

-

-

-

-

-

Accrued preferred dividends

-

-

-

-

-

-

Net loss

-

-

-

-

-

-

Balance at September 30, 2022

1

$ 839

1

$ 892

-

$ 489

~~Table of Contents~~

Additional

Common Stock

Paid-in

Treasury

Accumulated

Shares

Amount

Capital

Stock

Deficit

Total

Balance at June 30, 2022

27,583

$ 3,416

$ 130,166

$ (132 )

$ (144,448 )

$ (5,766 )
Issuances of common stock to investors

6,637

7

1,389

-

-

1,396

Issuances of warrants to investors

-

-

1,796

-

-

1,796

Issuance of common stock for payment of Series D preferred dividends

17

-

10

-

-

10

Issuance of common stock for payment of Series E preferred dividends

117

-

67

-

-

67

Issuance of common stock for payment of interest

121

-

70

-

-

70

Conversion of Series F-2 preferred stock to common stock

8,944

9

2,038

-

-

-

Stock-based compensation

-

-

44

-

-

44

Issuances of warrants to consultants

-

-

786

-

-

786

Accrued preferred dividends

-

-

-

-

48

48

Net loss

-

-

-

-

(1,102 )

(1,102 )
Balance at September 30, 2022

43,419

$ 3,432

$ 136,366

$ (132 )

$ (145,502 )

$ (2,651 )

	Three Months Ended March 31,
	2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(869	)	$	(507	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		2			-
Amortization of debt issuance costs and discounts		32			41
Stock based compensation		107			44
Change in fair value of derivatives		(5	)		6
Amortization of lease right-of-use-asset		18			16
Expense for common stock and warrants issued to consultants		457			79
Gain from forgiveness of debt		(35	)		(41	)
Other non-cash expenses (income)		6			6
Change in operating assets and liabilities:
Accounts receivable		(1	)		6
Inventory		(36	)		1
Other current assets		16			(76	)
Accounts payable and accrued liabilities		(152	)		84
Lease liabilities		(18	)		(15	)
Deferred revenue		(21	)		177
NET CASH USED IN OPERATING ACTIVITIES		(499	)		(179	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		-			(14	)
NET CASH USED FOR INVESTING ACTIVITIES		-			(14	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from warrant exercises		195			365
Payments made on notes payable		(172	)		(90	)
NET CASH PROVIDED BY FINANCING ACTIVITIES		23			275

NET CHANGE IN CASH		(476	)		82

Cash at beginning of period		2,313			643

CASH AT END OF PERIOD	$	1,837		$	725

SUPPLEMENTAL DISCLOSURE FOR OPERATING ACTIVITIES:
Cash paid for interest	$	47		$	6

SUPPLEMENTAL DISCLOSURE FOR NON-CASH INVESTING AND FINANCING ACTIVITIES:
Dividends on preferred stock	$	35		$	548
Deemed dividends for warrant exchanges	$	65		$	-
Common stock issued for payment of interest	$	59		$	81
Common stock issued for payment of accrued dividends	$	88		$	592
Conversion of Series E Preferred Shares into Common Stock	$	5		$	725
Conversion of Series F Preferred Shares into Common Stock	$	22		$	13
Conversion of Series F-2 Preferred Shares into Common Stock	$	14		$	-

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 NINE MONTHS ENDED SEPTEMBER 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

-

-

-

-

-

-

-

-

Issuances of common stock to investors

-

-

-

-

-

-

-

-

Issuances of warrants to investors

-

-

-

-

-

-

-

-

Issuance of common stock for payment of Series D preferred dividends

-

-

-

-

-

-

-

-

Issuance of common stock for payment of Series E preferred dividends

-

-

-

-

-

-

-

-

Issuance of common stock for payment of Series F preferred dividends

-

-

-

-

-

-

-

-

Issuance of common stock for payment of Series F-2 preferred dividends

-

-

-

-

-

-

-

-

Issuance of common stock for payment of interest

-

-

-

-

-

-

-

-

Issuance of common stock for Series F and Series F-2 one-time 15% dividends

-

-

-

-

-

-

-

-

Conversion of Series D preferred stock to common stock

-

-

-

-

-

-

-

(117 )
Conversion of Series E preferred stock to common stock

-

-

-

-

-

-

-
��

-

Conversion of Series F preferred stock to common stock

-

-

-

-

-

-

-

-

Conversion of Series F-2 preferred stock to common stock

-

-

-

-

-

-

-

-

Stock-based compensation

-

-

-

-

-

-

-

-

Issuances of warrants to consultants

-

-

-

-

-

-

-

-

Accrued preferred dividends

-

-

-

-

-

-

-

-

Net loss

-

-

-

-

-

-

-

-

Balance at September 30, 2022

-

$ 105

1

$ 170

3

$ 531

1

$ 159

~~Table of Contents~~

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

-

-

-

-

-

-

Issuances of common stock to investors

-

-

-

-

-

-

Issuances of warrants to investors

-

-

-

-

-

-

Issuance of common stock for payment of Series D preferred dividends

-

-

-

-

-

-

Issuance of common stock for payment of Series E preferred dividends

-

-

-

-

-

-

Issuance of common stock for payment of Series F preferred dividends

-

-

-

-

-

-

Issuance of common stock for payment of Series F-2 preferred dividends

-

-

-

-

-

-

Issuance of common stock for payment of interest

-

-

-

-

-

-

Issuance of common stock for Series F and Series F-2 one-time 15% dividends

-

-

-

-

-

-

Conversion of Series D preferred stock to common stock

-

-

-

-

-

-

Conversion of Series E preferred stock to common stock

(1 )

(800 )

-

-

-

-

Conversion of Series F preferred stock to common stock

-

-

-

(295 )

-

-

Conversion of Series F-2 preferred stock to common stock

-

-

-

-

(3 )

(2,474 )
Stock-based compensation

-

-

-

-

-

-

Issuances of warrants to consultants

-

-

-

-

-

-

Accrued preferred dividends

-

-

-

-

-

-

Net loss

-

-

-

-

-

-

Balance at September 30, 2022

1

$ 839

1

$ 892

-

$ 489

Table of Contents

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

-

-

846

Issuances of common stock to investors

6,637

7

1,389

-

-

1,396

Issuances of warrants to investors

-

-

1,796

-

-

1,796

Issuance of common stock for payment of Series D preferred dividends

65

-

39

-

-

39

Issuance of common stock for payment of Series E preferred dividends

181

-

102

-

-

102

Issuance of common stock for payment of Series F preferred dividends

161

-

107

-

-

107

Issuance of common stock for payment of Series F-2 preferred dividends

114

-

75

-

-

75

Issuance of common stock for payment of interest

242

-

150

-

-

150

Issuance of common stock for Series F and Series F-2 one-time 15% dividends

624

1

399

-

-

400

Conversion of Series D preferred stock to common stock

975

1

117

-

-

1

Conversion of Series E preferred stock to common stock

3,390

3

797

-

-

-

Conversion of Series F preferred stock to common stock

1,420

1

294

-

-

-

Conversion of Series F-2 preferred stock to common stock

10,808

11

2,463

-

-

-

Stock-based compensation

-

-

132

-

-

132

Issuances of warrants to consultants

-

-

865

-

-

865

Accrued preferred dividends

-

-

-

-

(581 )

(581 )
Net loss

-

-

-

-

(2,534 )

(2,534 )
Balance at September 30, 2022

43,419

$ 3,432

$ 136,366

$ (132 )

$ (145,502 )

$ (2,651 )

~~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 SEPTEMBER 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 June 30, 2021

-

$ 105

1

$ 170

3

$ 531

1

$ 276

Issuance of common stock for Series D preferred dividends

-

-

-

-

-

-

-

-

Issuance of common stock for Series E preferred dividends

-

-

-

-

-

-

-

-

Series G redemption

-

-

-

-

-

-

-

-

Stock-based compensation

-

-

-

-

-

-

-

-

Accrued preferred dividends

-

-

-

-

-

-

-

-

Net income

-

-

-

-

-

-

-

-

Balance at September 30, 2021

-

$ 105

1

$ 170

3

$ 531

1

$ 276

Additional

Common Stock

Paid-In

Treasury

Accumulated

Shares

Amount

Capital

Stock

Deficit

Total

Balance at June 30, 2021

13,297

$ 3,403

$ 126,353

$ (132 )

$ (141,878 )

$ (7,992 )
Issuance of common stock for Series D preferred dividends

22

-

11

-

-

11

Issuance of common stock for Series E preferred dividends

288

-

118

-

-

118

Series G redemption

-

-

-

-

-

-

Stock-based compensation

-

-

56

-

-

56

Accrued preferred dividends

-

-

-

-

(119 )

(119 )
Net income

-

-

-

68

68

Balance at September 30, 2021

13,607

$ 3,403

$ 126,650

$ (132 )

$ (141,929 )

$ (7,746 )

~~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 NINE MONTHS ENDING SEPTEMBER 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

-

-

-

-

-

-

-

-

Series F-2 preferred offering

-

-

-

-

-

-

-

-

Conversion of debt and expenses for Series F-2 preferred stock

-

-

-

-

-

-

-

-

Issuance of common stock for Series D preferred dividends

-

-

-

-

-

-

-

-

Issuance of common stock for Series E preferred dividends

-

-

-

-

-

-

-

-

Series G preferred offering

-

-

-

-

-

-

-

-

Series G redemption

-

-

-

-

-

-

-

-

Issuance of common stock to finders

-

-

-

-

-

-

-

-

Issuance of warrants to consultants

-

-

-

-

-

-

-

-

Warrants issued

-

-

-

-

-

-

-

-

Conversions of warrants from liability to equity

-

-

-

-

-

-

-

-

Stock-based compensation

-

-

-

-

-

-

-

-

Accrued preferred dividends

-

-

-

-

-

-

-

-

Net loss

-

-

-

-

-

-

-

-

Balance at September 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

-

$ -

-

$ -

-

$ -

Series F preferred offering

-

-

1

1,195

-

-

-

-

Series F-2 preferred offering

-

-

-

-

1

404

-

-

Conversion of debt and expenses for Series F-2 preferred stock

-

-

-

-

2

2,559

-

-

Issuance of common stock for Series D preferred dividends

-

-

-

-

-

-

-

-

Issuance of common stock for Series E preferred dividends

-

-

-

-

-

-

-

-

Series G preferred offering

-

-

-

-

-

-

153

-

Series G redemption

-

-

-

-

-

-

(153 )

-

Issuance of common stock to finders

-

-

-

-

-

-

-

-

Issuance of warrants to consultants

-

-

-

-

-

-

-

-

Warrants issued

-

-

-

-

-

-

-

-

Conversions of warrants from liability to equity

-

-

-

-

-

-

-

-

Stock-based compensation

-

-

-

-

-

-

-

-

Accrued preferred dividends

-

-

-

-

-

-

-

-

Net loss

-

-

-

-

-

-

-

-

Balance at September 30, 2021

2

$ 1,639

1

$ 1,195

3

$ 2,963

-

$ -

~~Table of Contents~~

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

-

-

-

-

-

1,195

Series F-2 preferred offering

-

-

-

-

-

404

Conversion of debt and expenses for Series F-2 preferred stock

-

-

-

-

2,559

Issuance of common stock for Series D preferred dividends

83

-

39

-

-

39

Issuance of common stock for Series E preferred dividends

288

-

118

-

-

118

Series G preferred offering

-

-

-

-

-

-

Series G redemption

-

-

-

-

-

-

Issuance of common stock to finders

98

-

54

-

-

54

Issuance of warrants to consultants

-

-

1,093

-

-

1,093

Warrants issued

-

-

304

-

-

304

Conversions of warrants from liability to equity

-

-

1,755

-

-

1,755

Stock-based compensation

-

-

178

-

-

178

Accrued preferred dividends

-

-

-

-

(296 )

(296 )
Net loss

-

-

-

(1,626 )

(1,626 )
Balance at September 30, 2021

13,607

$ 3,403

$ 126,650

$ (132 )

$ (141,878 )

$ (5,078 )

~~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)

Nine Months ended

September 30,

2022

2021

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss

$ (2,534 )

$ (1,626 )
Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation

1

1

Amortization of debt issuance costs and discounts

111

250

Amortization of beneficial conversion feature

-

37

Stock based compensation

132

178

Change in fair value of warrants

-

(448 )
Extinguishment of derivative liability

-

(84 )
Change in fair value of derivative liability

(13 )

89

Amortization of lease right-of-use-asset

50

66

Expense for warrants issued to consultants

865

585

Gain from extinguishment of debt

(345 )

(578 )
Other non-cash expenses

156

109

Change in operating assets and liabilities:

         Accounts receivable

16

-

         Inventory

(25 )

14

         Other current assets

332

(88 )
         Other non-current assets

-

(17 )
         Accounts payable and accrued liabilities

(7 )

(435 )
         Lease liabilities

(51 )

(41 )
         Deferred revenue

172

237

                  NET CASH USED IN OPERATING ACTIVITIES

(1,140 )

(1,751 )

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of property and equipment

(28 )

(10 )
                  NET CASH USED FOR INVESTING ACTIVITIES

(28 )

(10 )

CASH FLOWS FROM FINANCING ACTIVITIES:

       Proceeds from warrant exercises

495

-

       Proceeds from debt financing

-

1,248

       Payments made on notes payable

(465 )

(1,415 )
Payments of debt issuance costs

-

(86 )
       Note payable default penalty

-

398

       Proceeds from issuances of common stock, net of costs

1,396

-

       Proceeds from issuances of warrants, net of costs

1,796

-

       Proceeds from Series F offering, net of costs

-

1,436

       Proceeds from Series F-2 offering, net of costs

-

539

       Proceeds from Series G offering, net of costs

-

125

       Redemption of Series G preferred stock

-

(125 )
                 NET CASH PROVIDED BY FINANCING ACTIVITIES

3,222

2,120

NET CHANGE IN CASH

2,054

359

Cash at beginning of period

643

182

CASH AT END OF PERIOD

$ 2,697

$ 541

SUPPLEMENTAL DISCLOSURE FOR OPERATING ACTIVITIES:

Cash paid for interest

$ 89

$ 552

SUPPLEMENTAL DISCLOSURE FOR NON-CASH INVESTING AND FINANCING ACTIVITIES:

Dividends on preferred stock

$ 581

$ 296

Settlement of interest through common stock issuance

$ 151

$ -

Debt from related parties exchanged for Preferred series F-2 shares

$ -

$ 323

Issuance of series F-2 preferred stock

$ -

$ 2,236

Issuance of warrants to finders in connection with Series F and Series F-2 preferred stock

$ -

$ 377

Settlement of dividends through common stock issuance

$ 722

$ 157

Settlement of accounts payable through common stock issuance

$ -

$ 62

Warrants exchanged for fixed price warrants

$ -

$ 1,755

Warrants issued with debt

$ -

$ 304

Conversion of Series D Preferred Shares into common stock

$ 118

$ -

Conversion of Series E Preferred Shares into common stock

$ 800

$ -

Conversion of Series F Preferred Shares into common stock

$ 296

$ -

Conversion of Series F-2 Preferred Shares into common stock

$ 2,473

$ -

Directors and officers insurance obtained with financing

$ 124

$ -

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

~~Table of Contents~~

GUIDED THERAPEUTICS, INC. AND SUBSIDIARY

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

1. ORGANIZATION, BACKGROUND, AND BASIS OF PRESENTATION

Guided Therapeutics, Inc. (formerly SpectRx, Inc.), together with its wholly owned subsidiary, InterScan, Inc. (formerly Guided Therapeutics, Inc.), collectively referred to herein as the “Company”, is a medical technology company focused on developing innovative medical devices that have the potential to improve healthcare. The Company’s primary focus is the continued commercialization of its LuViva non-invasive cervical cancer detection device and extension of its cancer detection technology into other cancers, including esophageal. The Company’s technology, including products in research and development, primarily relates to biophotonics technology for the non-invasive detection of cancers.

During the year ended December 31, 2021, the Board simultaneously approved a 1-for-20 reverse stock split of our common stock and decreased the total number of authorized common shares to 500,000,000. On November 18, 2021, the Company submitted an Issuer Company Related Action Notification regarding the reverse stock split to the 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 accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. Therefore, these financial statements should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021~~2022 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~~2022 balances reported herein are derived from the audited consolidated financial statements for the year ended December 31, ~~2021.~~2022. The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year.

All intercompany transactions and balances have been eliminated in consolidation. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the Company as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, and the consolidated results of operations and cash flows for the ~~three and nine-month~~three-month periods ended ~~September 30,~~March 31, 2023 and 2022 ~~and 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 30, 2022,~~March 31, 2023, it had an accumulated deficit of approximately ~~$145.5~~$148.3 million. To date, the Company has engaged primarily in research and development efforts and the early stages of marketing its products. The Company may not be successful in growing sales for its products. Moreover, required regulatory clearances or approvals may not be obtained in a timely manner, or at all. The Company’s products may not ever gain market acceptance and the Company may not ever generate significant revenues or achieve profitability. The development and commercialization of the Company’s products requires substantial development, regulatory, sales and marketing, manufacturing and other expenditures. The Company expects operating losses to continue for the foreseeable future as it continues to expend substantial resources to complete development of its products, obtain regulatory clearances or approvals, build its marketing, sales, manufacturing and finance capabilities, and conduct further research and development.

The Company is not organized by multiple operating segments for the purpose of making operating decisions or assessing performance. Accordingly, the Company operates in one reportable operating segment. The Company’s principal decision ~~makers are~~maker is the Chief Executive Officer and ~~its~~acting Chief Financial Officer. Management believes that its business operates as one reportable segment because: a) the Company measures profit and loss as a whole; b) the principal decision makers do not 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 services, and e) the Company has not chosen to organize its business around geographic areas.

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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 30, 2022,~~March 31, 2023, the Company had a negative working capital of approximately ~~$1.8~~$1.5 million, accumulated deficit of ~~$145.5~~$148.3 million, and incurred a net loss including preferred dividends of ~~$3.1~~$1.0 million for the ~~nine~~three months then ended. Stockholders’ deficit totaled approximately ~~$2.7~~$2.9 million at ~~September 30, 2022,~~March 31, 2023, primarily due to recurring net losses from operations.

During the ~~nine-month period~~three months ended ~~September 30,~~March 31, 2023, the Company raised $195 thousand from warrant exercises. During the year ended December 31, 2022, the Company raised $3.2 million from the sale of common stock and warrants (net of expenses), and $495 thousand of proceeds from warrant exercises. The Company will need to continue to raise capital in order to provide funding for its operations and FDA approval process. If sufficient capital cannot be raised, the Company will continue its plans of curtailing operations by reducing discretionary spending and staffing levels and attempting to operate by only pursuing activities for which it has external financial support. However, there can be no assurance that such external financial support will be sufficient to maintain even limited operations or that the Company will be able to raise additional funds on acceptable terms, or at all. In such a case, the Company might be required to enter into unfavorable agreements or, if that is not possible, be unable to continue operations, and to the extent practicable, liquidate and/or file for bankruptcy protection.

The Company had warrants exercisable for approximately 40.1 million shares of its common stock outstanding at September 30, 2022, with exercise prices ranging between $0.15 and $0.80 per share. Exercises of in-the-money warrants would generate a total of approximately $8.6 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

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.

Accounting Standard Updates

In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-13, Financial Instruments – Credit Losses (Topic 326) – Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 replaces the “incurred loss” credit losses framework with a new accounting standard that requires management's measurement of the allowance for credit losses to be based on a broader range of reasonable and supportable information for lifetime credit loss estimates. This amendment was adopted effective January 1, 2023 with no impact to our financial statements.

A variety of proposed or otherwise potential accounting standards are currently under consideration by standard-setting organizations and certain regulatory agencies. Because of the tentative and preliminary nature of such proposed standards, management has not yet determined the effect, if any that the implementation of such proposed standards would have 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 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 receivables on past due accounts receivable.

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Concentrations of Credit Risk

The Company ~~from time~~maintains a cash balance in a financial institution that is insured by the Federal Deposit Insurance Corporation up to ~~time during~~certain federal limitations. At times, the ~~years covered by~~Company’s cash balance exceeds these ~~consolidated financial statements, may have bank balances~~federal limitations. The amount in excess of ~~its~~ insured ~~limits. Management has deemed this a normal business risk.~~limitations was approximately $1,591,276 and $2,064,772 as of March 31, 2023 and December 31, 2022, respectively.

Inventory Valuation

All inventories are stated at lower of cost or net realizable value, with cost determined substantially on a “first-in, first-out” basis. Selling, general, and administrative expenses are not inventoried, but are charged to expense when incurred. ~~The following is a summary~~As of ~~the Company’s inventories as of September 30, 2022~~March 31, 2023 and December 31, ~~2021:~~2022, our inventories were as follows:

	(in thousands)						(in thousands)
	September 30,			December 31,			March 31,			December 31,
	2022			2021			2023			2022

Raw materials	$	1,274		$	1,255		$	1,292		$	1,260
Work-in-progress		70			69			73			68
Finished goods		37			32			38			38
Inventory reserve		(785	)		(785	)		(818	)		(818	)

Total inventory	$	596		$	571		$	585		$	548

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 are included in general and administrative expense on the statement of operations. Expenditures for repairs and maintenance are expensed as incurred. ~~The following is a summary of the Company’s property~~Property and equipment are summarized as follows at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021:~~2022:

		(in thousands)						(in thousands)
		September 30,			December 31,			March 31,			December 31,
		2022			2021			2023			2022

Equipment	Equipment	$	1,085		$	1,048		$	1,083		$	1,083
Software	Software		653			652			656			656
Furniture and fixtures	Furniture and fixtures		41			41			41			41
Leasehold improvements	Leasehold improvements		12			12			12			12
Construction in progress			-			8

Subtotal	Subtotal		1,791			1,761			1,792			1,792
Less accumulated depreciation	Less accumulated depreciation		(1,749	)		(1,747	)		(1,752	)		(1,750	)
Property, equipment and leasehold improvements, net	Property, equipment and leasehold improvements, net							$	40		$	42
		$	42		$	14

Depreciation expense related to property and equipment for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ was not material.

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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 debt liability consistent with the debt discount.

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 were not material for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021.~~2022.

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 ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 are summarized as follows:

	(in thousands)				(in thousands)
	September 30, 2022			December 31, 2021	March 31, 2023		December 31, 2022

Compensation	$	488	$	621	$	399	$	444
Professional fees		126		98		178		285
Stock subscription payable		-		351
Stock Subscription Payable						10		36
Interest		182		261		112		189
Vacation		42		39		44		41
Preferred dividends		190		349		178		231
Other accrued expenses		22		49		7		21

Total	$	1,050	$	1,768	$	928	$	1,247

Stock Subscription Payable

Cash received from investors for shares of 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.

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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.

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The Company did not recognize material revenues during the ~~nine-month~~three-month periods ended ~~September 30, 2022~~March 31, 2023 or ~~2021.~~2022. 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.

Contract Balances

The Company defers payments received as revenue until earned based on the related contracts and applying ASC 606 as required. As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, deferred revenue ~~was~~totaled $487,882 and $509,101, ~~and $337,315,~~ respectively.

Significant ~~Distributors~~Customers

As of ~~September 30, 2022,~~March 31, 2023, accounts receivable outstanding was ~~approximately $77,634. The gross~~$55,314, the outstanding amount was netted against a $48,172 allowance, leaving a balance of ~~$29,462~~$7,142, which was from ~~two distributors.~~one customer. As of December 31, ~~2021,~~2022, accounts receivable outstanding was ~~$171,153;~~$54,484; the outstanding amount was netted against a ~~$125,584~~$48,172 allowance, leaving a balance of ~~$45,569,~~$6,312, which was from ~~two distributors.~~one customer.

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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 has filed for an extension for its ~~2021~~2022 federal and state corporate tax returns. The Company has entered into an agreed upon payment plan with the IRS for delinquent payroll taxes. The Company has an established payment arrangement for its delinquent state income 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 30, 2022,~~March 31, 2023, the Company had approximately ~~$61.6~~$65.6 million of net operating losses 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.

The Company recognizes uncertain tax positions based on a benefit recognition model. Provided that the tax position is deemed more likely than not of being sustained, the Company recognizes the largest amount of tax benefit that is greater than 50.0% likely of being ultimately realized upon settlement. 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 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 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 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 for all stock-based payment awards made to employees and directors. The Company determines the fair value of stock options using the Black-Scholes model. The fair value of restricted stock awards is based upon the quoted market price of the shares of common ~~shares~~stock on the date of grant. The fair value 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 the expected stock price volatility of the underlying stock. The assumptions used in calculating the fair value 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.

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Derivatives

The Company reviews the terms of convertible debt issued to determine whether there are embedded derivative instruments, including embedded conversion options, which are required to be bifurcated and accounted for 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 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 are then revalued at each reporting date with changes in the 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 all the bifurcated derivative instruments. The remaining proceeds, if any, are 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 life of the instrument through periodic charges to interest expense.

3. FAIR VALUE OF FINANCIAL INSTRUMENTS

The guidance for fair value measurements, 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 follow:

	·	Level 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–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. As of September 30, 2022 we had one instrument that we valued for the derivative liability associated with the bifurcated conversion option of a loan due to Auctus Funds, LLC (“Auctus”) in the amount of $298,884. There was no movement of instruments between fair value hierarchy tiers during the ~~nine~~three months ended ~~September 30, 2022.~~

March 31, 2023. Derivative liabilities measured on a recurring basis were not material as of March 31, 2023. The following tables present the fair value of ~~those~~derivative liabilities measured on a recurring basis as of ~~September 30, 2022 and~~ December 31, ~~2021:~~2022:

Fair Value at September 30, 2022
(in thousands)

Level 1

Level 2

Level 3

Total

Derivative liability/bifurcated conversion option in connection with Auctus $328,941 loan on December 17, 2019

$ -

$ -

$ (19 )

$ (19 )

Total short-term liabilities at fair value

$ -

$ -

$ (19 )

$ (19 )

	Fair Value at December 31, 2022 (in thousands)
	Level 1		Level 2		Level 3			Total

Derivative liability/bifurcated conversion option in connection with Auctus $326,016 loan on December 17, 2019		-		-		(5	)		(5	)

Total long-term liabilities at fair value	$	-	$	-	$	(5	)	$	(5	)

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

-

-

(32 )

(32 )

Total long-term liabilities at fair value

$ -

$ -

$ (32 )

$ (32 )

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The following is a summary of changes to Level 3 instruments during the ~~nine~~three months ended ~~September 30, 2022:~~March 31, 2023:

(in thousands)

Senior Secured

Derivative

Total

Balance, December 31, 2021

$ -

$ (32 )

$ (32 )
Change in fair value during the period

-

13

13

Balance, September 30, 2022

$ -

$ (19 )

$ (19 )

	(in thousands)
	Derivative

Balance, December 31, 2022	$	(5	)
Change in fair value during the period		5

Balance, March 31, 2023	$	-

4. STOCKHOLDERS’ DEFICIT

~~Recent Sales of Securities~~

On September 1, 2022, the Company entered into certain Securities Purchase Agreements (the “Agreement”) with certain accredited investors (the “Investors”), including Richard Blumberg, Michael James and John Imhoff, each a member of the Company’s Board of Directors, pursuant to which the Company issued 6,636,540 shares of its common stock, four year warrants to purchase an aggregate of 6,636,540 shares of Common Stock at $0.50 per share and 6,636,540 shares of Common Stock at $0.65 per share (the “Warrants”) for an aggregate purchase price of $3,318,270 (the “Transaction”).

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The Company has agreed that, as soon as practicable after the Closing Date, the Company shall file a Registration Statement on the appropriate form providing for the resale by the Investors of the Shares and the shares of Common Stock underlying the Warrants (the “Warrant Shares” and collectively with the Shares and the Warrants, the “Securities”) with the Securities and Exchange Commission. The Company shall use commercially reasonable efforts to cause such Registration Statement to become effective within 120 days of closing all rounds of this offering and to keep such Registration Statement effective at all times until the earlier of the date that the Shares and Warrant Shares may be resold pursuant to Rule 144 (assuming cashless exercise of the Warrants) and the date that no Investor owns any Securities. In the event that the Registration Statement is not effective on the 121st day following the Closing Date, the Company shall issue to each Investor an additional number of shares of Common Stock equal to 10% of the Shares issued to such Investor and an additional number of shares of Common Stock equal to 5% of the Shares issued to such Purchaser on each monthly anniversary thereafter until the earlier of the date the Registration Statement is effective and the date that the Shares and Warrant Shares may be resold pursuant to Rule 144 (assuming cashless exercise of the Warrants). The Company may avoid these penalties if, prior to the 121st day following the closing date of the last round of the offering, it files an application to list the Common Stock on a recognized Canadian Stock Exchange. In addition, if there is no effective Registration Statement covering the Warrant Shares after 180^th ~~day following the Closing Date, the Warrants may be exercised cashlessly as set forth in the Warrants.~~

After payment of all fees and expenses relating to the transaction, the Company received net proceeds of approximately $3.2 million. The primary use of proceeds is to fund the completion and filing of clinical study data needed for FDA approval of the Company’s LuViva Advanced Cervical Scan. Additional use of proceeds is to support international distribution partners to grow sales throughout the remainder of 2022 and into 2023, as well as for general and administrative expenses.

Common Stock

The Company has authorized 500,000,000 shares of common stock with $0.001 par value. As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021, 43,418,443~~2022, 50,814,258 and ~~13,673,583~~48,595,715 shares of common stock were issued and outstanding, respectively.

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During the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, the Company issued ~~29,744,860~~2,218,543 shares of common stock, as summarized below:

	Number of Shares
~~Issuances of common stock to investors~~			~~6,636,540~~
~~Issuances of common~~Common stock ~~for~~ warrants exercised		~~5,127,923~~1,071,794
~~Issuances~~Issuance of common stock for payment of Series D ~~Preferred~~preferred dividends		~~64,979~~25,635
~~Issuances~~Issuance of common stock for payment of Series E ~~Preferred~~preferred dividends		~~179,858~~25,729
~~Issuances~~Issuance of common stock for payment of Series F ~~Preferred~~preferred dividends		~~162,436~~232,889
~~Issuances~~Issuance of common stock for payment of Series F-2 ~~Preferred~~preferred dividends		~~114,304~~84,575
~~Issuances~~Issuance of common stock for payment of interest		~~241,914~~177,921
~~Issuances~~Issuance of common stock ~~for Series F one-time 15% dividend~~to consultants		~~255,401~~
~~Issuances of common stock for Series F-2 one-time 15% dividend~~		~~368,505~~400,000
Conversion of Series ~~D Preferred~~E preferred stock to common stock		~~975,000~~20,000
Conversion of Series ~~E Preferred~~F preferred stock to common stock		~~3,390,000~~120,000
Conversion of Series ~~F Preferred~~F-2 preferred stock to common stock		~~1,420,000~~
~~Conversion of Series F-2 Preferred stock to common stock~~		~~10,808,000~~60,000
Issued during the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023		~~29,744,860~~2,218,543

Summary table of common stock share transactions:
Shares outstanding at December 31, ~~2021~~		~~13,673,583~~
~~Issued in~~ 2022		~~29,744,860~~48,595,715
~~Shares outstanding at September 30, 2022~~Common shares issued during the three months ended March 31, 2023		~~43,418,443~~2,218,543
Common shares outstanding at March 31, 2023		50,814,258

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.

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Series C Convertible Preferred Stock

The board designated 9,000 shares of preferred stock as Series C Convertible Preferred Stock, (the “Series C Preferred Stock”). Pursuant to the Series C certificate of designations, shares of Series C ~~preferred stock~~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 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, there were 286 shares outstanding with a conversion price of $0.50 per share, such that each share of Series C ~~preferred stock~~Preferred Stock would convert into approximately 2,000 shares of the Company’s common stock; for a total ~~convertible~~ of 572,000 shares of 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~~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”), payable in cash or, subject to certain conditions, the Company’s common stock. Unpaid accrued dividends were $120,120 as of ~~September 30,~~March 31, 2023 and December 31, 2022. Upon conversion of the Series C ~~preferred stock~~Preferred Stock prior to the Dividend End Date, the Company will also pay to the converting holder a “make-whole payment” equal to the number of unpaid dividends through the Dividend End Date on the converted shares. At ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, the “make-whole payment” for a converted share of Series C ~~preferred stock~~Preferred Stock would convert to 200 shares of the Company’s common stock.

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The Series C ~~preferred stock~~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.

Series C1 Convertible Preferred Stock

The board designated 20,250 shares of preferred stock as Series C1 Preferred Stock, of which ~~1,049~~1,049.25 shares were issued and outstanding at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021.~~2022. In addition, some 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 September 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.

At September 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~~Preferred Stock has terms that are substantially the same as the Series C ~~preferred stock,~~Preferred Stock, except that the Series C1 ~~preferred stock~~Preferred Stock does not pay dividends (unless and to the extent declared on the common stock) or at-the-market “make-whole payments” and, while it has the same anti-dilution protections afforded the Series C ~~preferred stock,~~Preferred Stock, it does not automatically reset in connection with a reverse stock split or conversion of our outstanding convertible debt.

At March 31, 2023 and December 31, 2022, 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 of 2,098,500 shares of common stock.

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, and 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 September 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.

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At March 31, 2023 and December 31, 2022, there were 2,700 shares outstanding, each with 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 of 5,400,000 shares of common stock.

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 ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021, respectively.~~2022. 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 shares of 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 shares of common ~~stock shares.~~stock. 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~~Each share of Series D Preferred Stock ~~is $763. The 763 Series D Preferred Shares are convertible into debt at the option~~has a par value of ~~the holder during~~$0.001 per share and 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 September 30, 2022, none of the remaining 438 Series D Preferred Shares have been convertedStated Value equal to ~~secured debt.~~$750.

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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 ~~nine~~three months ended September 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 nine months ended September 30, 2022,~~March 31, 2023, the Company issued ~~975,000~~25,635 shares of common stock ~~shares for the conversion of 325 shares of Series D Preferred Stock. During the nine months ended September 30, 2022, the Company issued 64,979 common stock shares~~ for the payment of accrued Series D Preferred Stock dividends. As of ~~September 30,~~March 31, 2023 and December 31, 2022, the Company had accrued dividends for the Series D ~~preferred shares~~Preferred Stock of ~~$8,213.~~$8,360 and $8,213, respectively.

Series E Convertible Preferred Stock

The Board designated 5,000 shares of preferred stock as Series E Preferred Stock, ~~888~~883 and ~~1,736~~888 of which remained outstanding as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, 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 ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, the Company issued ~~3,390,000~~20,000 shares of common stock ~~shares~~ for the conversion of ~~848~~5 shares of Series E Convertible Preferred ~~Stock. During the nine months ended September 30, 2022, the Company issued 179,858~~Stock and 25,729 shares of common stock ~~shares~~ for the payment of accrued Series E Preferred Stock ~~dividends accrued.~~dividends. As of ~~September 30,~~March 31, 2023 and December 31, 2022, the Company had accrued dividends of $39,932 and $30,414 for the Series E ~~preferred shares of $12,654.~~Preferred Stock, respectively.

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Series F Convertible Preferred Stock

The Board designated 1,500 shares of preferred stock as Series F Preferred Stock, ~~1,071~~1,026 and ~~1,426~~1,056 of which were issued and outstanding as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, 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 shares of common ~~stock shares.~~stock. 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 Stock 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 ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, the Company issued ~~1,420,000~~120,000 shares of common stock ~~shares~~ for the conversion of ~~355~~30 shares of Series F Convertible Preferred ~~stock~~Stock and ~~162,436~~232,889 shares of common stock ~~shares~~ for the payment of annual Series F Preferred Stock dividends. During the nine months ended September 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 ~~September 30,~~March 31, 2023 and December 31, 2022, the Company had accrued dividends for Series F ~~Preferred~~preferred shares of ~~$32,943.~~$855 and $48,400, respectively.

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, ~~535~~520 and ~~3,237~~535 of which were issued and outstanding as of ~~September 30,~~March 31, 2022 and December 31, ~~2021, respectively.~~2021. 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 shares of common ~~stock shares.~~stock. 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 ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, the Company issued ~~10,808,000~~60,000 shares of common stock ~~shares~~ for the conversion of ~~2,702~~15 shares of Series F-2 Convertible Preferred ~~stock~~Stock and ~~114,304~~84,575 shares of common stock ~~shares~~ for the payment of annual Series F-2 Preferred Stock dividends. During the nine months ended September 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 ~~September 30,~~March 31, 2023 and December 31, 2022, the Company had accrued dividends for Series F-2 ~~Preferred~~preferred shares of ~~$16,242.~~$9,179 and $24,267, respectively.

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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 September 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 ~~nine~~three months ended ~~September 30, 2022:~~March 31, 2023:

Warrants
(Underlying Shares)

Weighted-Average Exercise Price Per Share

Outstanding, December 31, 2021

27,669,634

$ 0.29

Warrants issued

15,323,080

0.54

Warrants expired

(1,000 )

0.50

Warrants exercised

(2,934,324 )

0.17

Outstanding, September 30, 2022

40,057,390

$ 0.40

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	Warrants (Underlying Shares)			Weighted-Average Exercise Price Per Share

Outstanding, December 31, 2022		35,586,980		$	0.46
Warrants issued		1,873,750			0.25
Warrants exchanged		(1,025,000	)		0.25
Warrants expired		(7,410,000	)		0.20
Warrants exercised		(973,750	)	$	0.20
Outstanding, March 31, 2023		28,051,980		$	0.54

During the three months ended ~~September 30, 2022,~~March 31, 2023, the Company entered into various agreements with holders of the Company’s $0.20 strike price warrants, pursuant to which each holder separately agreed to exchange 1,025,000 common stock warrants with a strike price of $0.25 for 973,750 common stock warrants with a strike price of $0.20. During the three months ended March 31, 2023, the Company received approximately $194,750 from the holders for the exercise of the 973,750 warrants, of which $9,500 was included in Accrued Liabilities as of March 31, 2023, pending issuance of 47,500 shares of common stock. The Company measured the effect of the exchange as the excess of fair value of the exchanged instruments over the fair value of the original instruments and recorded a deemed dividend of approximately $65,296.

During the three months ended March 31, 2023, the Company issued ~~13,273,080~~900,000 warrants to ~~investors (see “~~~~Recent Sales of Securities”~~ ~~above); the proceeds from which were allocated~~Richard Blumberg, a related party, pursuant to ~~the warrants on an allocated fair-value basis. Additionally, the Company issued 2,050,000 warrants to consultants as consideration~~a consulting agreement. See Note 7, “Commitments and Contingencies” for ~~performing services. The expense for such warrants will be recognized on a pro-rata basis over the term of their respective agreements.~~ additional information.

~~The Black-Scholes option pricing model was utilized to calculate~~Management estimated the fair value of the warrants issued utilizing the Black-Scholes Option Pricing model with the following assumptions:

	~~September 30,~~March 31,
	~~2022~~2023
Expected term (years)	~~3.8 Years~~	1.47
Volatility		~~151.19~~140.4	%
Risk-free interest rate		~~3.30~~3.8	%
Dividend yield		~~0.00~~0.0	%

During the nine months ended September 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, 2021. 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.

5. STOCK OPTIONS

The ~~new~~Company’s Stock Plan (the “Plan”) 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 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 shares of common stock.

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On February 10, 2023, the Company granted 925,000 stock ~~shares.~~options to employees, executives and directors of the Company. The stock options, which have exercise prices of $0.2629, will expire on February 9, 2033. One fourth of the stock options vested immediately, while the remaining options will vest over a period of 33 months, beginning on May 10, 2023.

On March 7, 2023, the Company granted 100,000 stock options, which have exercise prices of $0.27 and will expire on March 6, 2033, to Alan Grujic, upon appointing him to the Board of Directors. One fourth of the stock options vested immediately, while the remaining options will vest over a period of 33 months, beginning on June 7, 2023.

During the three months ended March 31, 2023 and 2022, the Company recognized stock-based compensation expense of $107,068 and $43,912, respectively. There was no stock option activity during the ~~nine~~three months ended ~~September 30,~~March 31, 2022. The following table summarizes the Company’s ~~outstanding~~stock option activity and ~~exercisable stock options as of September 30,~~related information for the three months ended March 31, 2023 and 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 September 30, 2022

1,500,000

$ 0.49

7.8 years

$ -

Options exercisable as of September 30, 2022

1,227,136

$ 0.49

7.8 years

$ -

	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 December 31, 2022		1,500,000		$	0.49	7.5 years	$	-
Options granted		1,025,000		$	0.26
Options forfeited		(186,364	)	$	0.31
Options outstanding as of March 31, 2023		2,338,636		$	0.41	6.9 years	$	-
Options exercisable as of March 31, 2023		1,656,205		$	0.45	5.8 years	$	-

	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 March 31, 2022		1,500,000	$	0.49	8.3 years	$	240
Options exercisable as of March 31, 2022		1,045,227	$	0.49	8.3 years	$	167

The aggregate intrinsic value is calculated as the difference between the Company’s closing stock price as of ~~September 30, 2022~~March 31, 2023 and the exercise price, multiplied by the number of options. As of ~~September 30, 2022,~~March 31, 2023, there was ~~$131,735~~$193,947 of unrecognized stock-based compensation expense. Such costs are expected to be recognized over a weighted average period of approximately ~~one year.~~two years. The weighted-average fair value of awards granted was ~~nil~~$0.26 and ~~$0.47~~nil during the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively.

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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 awards granted during the three months ended March 31, 2023:

	March 31,
	2023
Expected term (years)		10.0
Volatility		366.4	%
Risk-free interest rate		3.8	%
Dividend yield		0.0	%

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 year.

As of ~~September 30, 2022,~~March 31, 2023, and December 31, ~~2021,~~2022, there was no accrual recorded for any potential losses related to pending litigation.

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7. COMMITMENTS AND CONTINGENCIES

Operating Leases

The below table presents total operating lease right-of-use assets and lease liabilities as of ~~September 30,~~March 31, 2023 and December 31, 2022:

(in thousands)

September 30,

2022

Operating lease right-of-use assets

$ 321

Operating lease liabilities

$ 343

	(in thousands)
	March 31, 2023		December 31, 2022
Operating lease right-of-use assets	$	285	$	303
Operating lease liabilities	$	307	$	325

The table below presents the maturities of operating lease liabilities as of ~~September 30, 2022:~~March 31, 2023:

	(in thousands)			(in thousands)
	Operating			Operating
	Lease Payments			Leases
2022 (remaining)	$	27
2023		112
2023 (remaining)				$	84
2024		115			115
2025		118			118
2026		50			50
Total future lease payments		422			367
Less: discount		(79	)		(60	)
Total lease liabilities	$	343		$	307

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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:~~liabilities as of March 31, 2023 and December 31, 2022:

	~~Nine Months Ended September 30,~~
	~~2022~~
~~Weighted average remaining lease term (years)~~		~~3.7~~
~~Weighted average discount rate~~		~~11.4~~	%

	(in thousands)
	March 31, 2023			December 31, 2022
Weighted average remaining lease term (years)		3.2			3.4
Weighted average discount rate		11.4	%		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. 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 (current director Richard Blumberg is the designee).

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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).

On January 22, 2020, the Company entered into a promotional agreement with Blumberg & Bowles Consulting, LLC (“BB”), which is partially owned by Mr. Blumberg (a related party), to provide investor and public relations services for a period of two years. As compensation for these services, the Company ~~will~~agreed to 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 vesting based upon the close of the Series D offering and 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 fair value of the warrants ~~were valued using~~was estimated utilizing the ~~Black Scholes~~Black-Scholes option pricing 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 nine months ended September 30, 2022, the Company recognized $79,444 of consulting expenses as~~As a result of this ~~agreement.~~agreement, the Company recognized nil and $79,444 of consulting expense during the three months ended March 31, 2023 and 2022, respectively. Unrecognized consulting expense to be recognized under this agreement iswas nil as of ~~September 30, 2022. During the three months ended September 30, 2022, the Company issued 875,000 warrants to Mr. Blumberg and 375,000 warrants Lee Bowles, a partial owner of BB.~~March 31, 2023.

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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 shares of common ~~stock shares;~~stock; (2) on March 26, 2022, 900,000 3-year warrants with an exercise price of $0.40 and 400,000 shares of common ~~stock shares;~~stock; (3) on September 26, 2022, 900,000 3-year warrants with an exercise price of $0.50 and 400,000 shares of common ~~stock shares;~~stock; and (4) on March 26, 2023, 900,000 3-year warrants with an exercise price of $0.60 and 400,000 shares of common stock. The Company estimated the fair value of the warrants using the Black-Scholes option pricing model and the following assumptions:

Expected term	3.0 Years
Volatility		108.7	%
Risk-free interest rate		4.3	%
Dividend yield		0.0	%

During the three months ended March 31, 2023 and 2022, the Company recognized $295,420 and nil expense for the warrants issued to Mr. Blumberg, respectively. Total unrecognized expense for the warrants was $445,097 as of March 31, 2022. During the three months ended March 31, 2023 and 2022, the Company recognized $65,611 and nil expense for the shares of common stock ~~shares.~~due to Mr. Blumberg. As the remaining shares had not been issued as of March 31, 2023, the Company estimated the total amount of expense using the closing price of the Company’s stock as of March 31, 2023.

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. The Company confirmed an obligation to provide Mr. Blumberg with 950,000 fully transferrable warrants, which will expire on January 1, 2024 and have an exercise price of $0.25. Issuance of the warrants owed to Mr. Blumberg for his services ~~is now~~was 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 investor relations, marketing services and assisting the Company with obtaining financing. During the ~~three months~~year ended ~~September 30,~~December 31, 2022, the Company obtained the requisite funding receipts and ~~began recording expense for~~estimated the fair value of the warrants ~~which will be issued to Mr. Blumberg over a period of 24 months subsequent to~~using the ~~financing.~~ Black-Scholes option pricing model with the following assumptions:

Expected term	1.3 Years
Volatility		164.6	%
Risk-free interest rate		4.1	%
Dividend yield		0.0	%

During the three months ended ~~September 30,~~March 31, 2023 and 2022, expense recorded for the warrants was nil. Unrecognized expense to be recognized for the warrants was nil as of March 31, 2023.

On August 24, 2022, the Company ~~recognized $200,959~~entered into an agreement with Ironstone Capital Corp. and Alan Grujic (the “Advisory Group”) whereby the Advisory Group agreed to perform marketing and investor relations services over a term of twelve months, commencing on the closing of a financing of at least $2.5 million. In consideration for these services, the Company issued 800,000 warrants with an exercise price of $0.50 to Mr. Grujic, which were due within 10 business days of closing the financing transaction (the “Transaction”) that took place in September 2022. In the event the Company’s 20 trading day variable weighted average price (“VWAP”) exceeds $1.00 within one year of the closing of the financing, the Company will issue 600,000 warrants with an exercise price of $0.75 to Mr. Grujic. In the event the Company’s 20 trading day VWAP exceeds $1.50, the Company will issue an additional 600,000 warrants to Mr. Grujic. Once issued, the warrants vest immediately and will expire two years from the date of issuance. If the Company’s U.S. clinical study is not completed and filed with the U.S. FDA or if the Chinese NMPA (formerly Chinese FDA) approval is not granted by each due date for reaching each respective pricing milestone, then the due date for reaching each milestone shall be extended by six months. Pursuant to the agreement, the Company also agreed to pay the Advisory Group $2,000 per month for 12 months, starting the month after the closing of the Transaction.

The Company estimated the fair value of the 800,000 warrants issued in September of 2022 using the Black-Scholes option pricing model. Unrecognized expense for the warrants ~~issued to Mr. Blumberg, which represents~~was nil as of March 31, 2023. Expense recorded for the ~~pro-rata~~warrants was nil during the three months ended March 31, 2023 and 2022.

The Company estimated the fair value of the warrants with market conditions using the Binomial Lattice model and recognized expense of $45,172 for the warrants (representing the pro rata expense over the ~~service~~expected term of ~~his agreement.~~the warrants) during the three months ended March 31, 2023.

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Other Commitments

On July 24, 2019, the Company agreed to grant 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.~~ conditions described below.

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 shares of common ~~stock shares.~~stock. 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 $26,965 as of September 30, 2022.SMI. 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. Although our Chinese partner SMI missed the date in the contract when they should have achieved commercialization, patients continue to be enrolled in the clinical studies in China which is sponsored and being paid for by SMI. We continue to work with SMI to finish the clinical study and are in discussions with them to provide additional time to achieve commercialization. We expect a revised contract reflecting these discussions to be signed in the fourth quarter of 2022.

On ~~August 24, 2022,~~March 3, 2023, the Company entered into ~~an agreement~~a third amendment with ~~Ironstone Capital Corp. and Alan Grujic (the “Advisory Group”) whereby the Advisory Group agreed~~SMI pursuant to ~~perform marketing and investor relations services over a term of twelve months, commencing on the closing of a financing of at least $2.5 million. In consideration for these services,~~which the Company ~~issued 800,000 warrants with an exercise price~~extended the deadline for SMI to achieve commercialization of ~~$0.50~~LuViva in China to ~~Mr. Grujic, which were due within 10 business days of closing the financing transaction (the “Transaction”) that took place in September 2022 (see Note 4, “~~~~Recent sales of securities”)~~. In the event the Company’s 20 trading day variable weighted average price (“VWAP”) exceeds $1.00 within one year of the closing of the financing, the Company will issue 600,000 warrants with an exercise price of $0.75 to Mr. Grujic. In the event the Company’s 20 trading day VWAP exceeds $1.50, the Company will issue an additional 600,000 warrants to Mr. Grujic. Once issued, the warrants vest immediately and will expire two years from the date of issuance. If the Company’s U.S. clinical study is not completed and filed with the U.S. FDA or if the Chinese NMPA (formerly Chinese FDA) approval is not granted by each due date for reaching each respective pricing milestone, then the due date for reaching each milestone shall be extended by six months. Pursuant to the agreement, the Company also agreed to pay the Advisory Group $2,000 per month for 12 months, starting the month after the closing of the Transaction.

The Company estimated the fair value of the 800,000 warrants issued in September 2022 using the Black-Scholes option pricing model and recognized expense of $364,800 for the warrants during the three months ended SeptemberApril 30, ~~2022.~~

The Company estimated the fair value of the warrants with market conditions using the Binomial Lattice model and recognized expense of $15,057 for the warrants (representing the pro rata expense over the expected term of the warrants) during the three months ended September 30, 2022.2024.

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.

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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.

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8. ~~SHORT TERM~~ NOTES PAYABLE

Short Term Notes Payable

On July 4, 2022, the Company entered into a premium finance agreement to finance its insurance policies totaling $123,889. Monthly payments of $11,409 are due on the note, including interest incurred at a rate of 5.0%. The note, which matures on May 4, 2023, had an outstanding balance of ~~$89,947~~$22,770 and $56,569 as of ~~September 30, 2022.~~

On July 4, 2021, the Company entered into a premium finance agreement to 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 September 30,March 31, 2023 and December 31, 2022, ~~the outstanding balance was nil.~~respectively.

During 2019, the Company issued promissory notes to Mr. Cartwright totaling $45,829. The notes were initially issued with 0% interest, however interest increased to 6.0% interest 90 days after the Company received $1,000,000 in financing proceeds. As of ~~September 30, 2022, the balance on~~March 31, 2023, the notes ~~was $17,154.~~

~~On December 21, 2016 and January 19, 2017, the Company issued promissory notes to Mr. Fowler,~~had been repaid 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 September 30, 2022, the outstanding balance was nil.full.

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

Short-term notes payable, including related parties

September 30, 2022

December 31, 2021

Dr. Cartwright

$ 17

$ 34

Mr. Fowler

-

6

Premium Finance (insurance)

90

48

Short-term notes payable

$ 107

$ 88

	Short-term notes payable, including related parties
	March 31, 2023		December 31, 2022
Dr. Cartwright	$	-	$	1
Premium Finance (insurance)		23		57
Short-term notes payable	$	23	$	58

~~The~~As of March 31, 2023 and December 31, 2022, the short-term notes payable due to related parties was ~~$17,154 at September 30, 2022~~nil and ~~$39,900 of the $87,514 balance at December 31, 2021.~~$619, respectively.

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9. AUCTUS CONVERTIBLE DEBT

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.

On September 1, 2022, the Company ~~has~~ agreed to exchange certain debt and equity owned by Auctus pursuant to an Exchange Agreement between the Company and Auctus (the “Exchange Agreement”). Immediately prior to the Exchange Agreement, Auctus held $1,228,183 of debt, including an early prepayment penalty of $350,000, default premiums of $281,256, and $91,555 in interest payable. Auctus agreed to ~~exchange~~reduce the ~~above balance for~~amount owed to $710,911 ~~in debt owed~~ and to revert the May 27, 2020 note to its original term. Additionally, Auctus ~~currently holds~~agreed to exchange 8,775,000 warrants that ~~are~~were priced between $0.15 and $0.20 and ~~for~~ the ~~value of $1,950,000, which includes the value of the warrant and~~ $350,000 ~~in early~~ prepayment penalty ~~agreed to exchange it~~ for 3,900,000 shares of common ~~shares,~~stock, warrants to purchase 3,900,000 shares of common ~~shares~~stock at $0.50 per share and warrants to purchase 3,900,000 shares of common ~~shares~~stock at $0.65 per share (the “Exchange”~~). Auctus agreed the equity instruments will be issued and exchanged in the fourth quarter of 2022 (see Note 12, “Subsequent Events”~~). As a result of the Exchange Agreement, Auctus forgave a default penalty of $225,444. In addition, the Company made a repayment of $221,467 to Auctus pursuant to the terms of the Exchange Agreement (the “Repayment”), of which $161,184 was applied to principal and penalties and $60,283 was applied to interest payable. Following the Exchange and Repayment, the Company will make payments to Auctus in four installments, over an 18-month period. The first installment of $125,000 was paid on September 8, 2022, of which $101,116 was applied to outstanding principal and $23,884 was applied to interest payable. The transaction was accounted for in accordance with ASC 470-60, Troubled Debt Restructurings (“TDR”) by Debtors. As a result of the Exchange Agreement, the Company recorded a gain on extinguishment of debt of $186,527 during the three months ended September 30, 2022.

The ~~following table summarizes the~~total balance of Auctus ~~Convertible Notes Payable:~~

September 30, 2022

December 31, 2021

Auctus Tranche 2

$ 329

$ 400

Auctus prepayment penalty

350

350

Auctus (March 31, 2020 Note)

-

161

Debt discount and issuance costs to be amortized

-

(14 )
Auctus convertible notes payable

$ 679

$ 897

convertible debt outstanding was $224,528 and $326,016 as of March 31, 2023 and December 31, 2022, respectively. As of ~~September 30, 2022, $579,000 of~~March 31, 2023, the ~~total~~ balance ~~owed to Auctus~~ is included inwithin “Short-term convertible notes ~~payable, including non-convertible penalty” within the unaudited consolidated balance sheet. The remaining balance is included in “Long-term convertible debt” within~~payable” on the unaudited consolidated balance sheet. As of December 31, ~~2021, the $161,000 Auctus note was~~2022, $230,482 is included ~~in “Convertible notes payable in default” while the remaining balances were included in~~within “Short-term convertible notes ~~payable, including non-convertible penalty”~~payable” and $95,534 is included within “Long-term convertible debt” on the consolidated balance sheet.

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10. LONG-TERM DEBT

Long-term Debt – Related Parties

On July 14, 2018, the Company entered into an exchange agreement with 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 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 debt restructuring exchange ~~agreement and~~agreement. Pursuant 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 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 on the new note was $267,085, matures on February 18, 2023, and will accrue interest at a rate of 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 exchanged $100,000 and $85,000 of long-term debt for Dr. Cartwright and Dr. Faupel in exchange for 100 and 85 shares of Series F2F-2 Preferred Stock, respectively.

~~The table below summarizes~~On February 18, 2023, the ~~detail~~Company amended the terms of the ~~exchange agreement:~~promissory notes held by Mark Faupel and Gene Cartwright. Under the terms of the new agreements, the promissory notes will mature on February 18, 2025.

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 September 30, 2022

7

Balance outstanding at September 30, 2022

$ 168

The tables below summarize the outstanding balance of long-term debt owed to Dr. Faupel and Dr. Cartwright:

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, 2022		48
Balance outstanding at December 31, 2022	$	170

Interest accrued through March 31, 2023		2
Balance outstanding at March 31, 2023	$	172

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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

12

Balance outstanding at September 30, 2022

$ 293

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 converted into shares of common stock and/or warrants valued at $70,000, upon successful completion of a financing of at least $4,000,000.

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, 2022		78
Balance outstanding at December 31, 2022	$	297

Payments on outstanding debt		(10	)
Interest accrued through March 31, 2023		4
Balance outstanding at March 31, 2023	$	291

On March 22, 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). 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 shares of common ~~stock shares)~~stock), and a $150,000 unsecured note. The note accrues interest at the rate of 6% (18% in the event of default) beginning on March 22, 2022 and 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 note is 6.18%.

During the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, Mr. Fowler forgave ~~$43,057~~$17,721 of the outstanding balance of deferred compensation and, as of March 31, 2023, may forgive up to ~~$216,604~~$180,889 of the remaining deferred compensation if the Company complies with the repayment plan described above. The ~~reduction~~reductions in the outstanding balance met the criteria for troubled debt because the future undiscounted cash flows under the new terms are less than the carrying value of the original 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~~As of March 31, 2023, the outstanding principal amount owed on the note was ~~$128,684 as of September 30, 2022,~~$110,811, of which ~~$36,286~~$37,382 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.~~

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

Year

Amount

2022

$ 10

2023

498

2024

39

2025

41

2026

2

Total

$ 590

~~As of September 30, 2022, $497,170 of the debt owed to related parties is included in “Current portion of long-term debt, related parties” and $92,399~~ is included in “Long-term debt, related parties” within the unaudited consolidated balance ~~sheet.~~sheets. As of December 31, ~~2021,~~2022, the outstanding principal amount owed on the note was $119,814, of which $36,830 is included in “Current portion of long-term debt, ~~owed was~~related parties” and the remainder is included in “Long-term debt, related parties” within the unaudited consolidated balance ~~sheet.~~sheets.

Future debt obligations at March 31, 2023 for debt owed to related parties is as follows:

Year	Amount
2023 (remaining)		28
2024		39
2025		504
2026		3
Total	$	574

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~~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. During the year ended December 31, 2021, $23,976 of the loan balance was forgiven. As of September 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 September 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 shares of 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 will automatically convert into the uplisting financing; 3) each debenture unit will have a right to 1,000 warrants for shares of 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 shares of common ~~shares,~~stock, 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 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 shares of common ~~shares~~stock at the Conversion Price; 5) Subject to a holder’s option of electing conversion prior to the Redemption Date (as such term is defined below), on or after the date that is 24 months from the Closing Date if the daily volume weighted average trading price of the shares of common ~~shares~~stock is $1.50 per share of common ~~share~~stock or more for each trading day over a 30 consecutive trading day period, the Company may, at any time (the “Redemption Date”), at its 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 Redemption Date; or (ii) by issuing and delivering shares of common ~~shares~~stock to the holders of Convertible Debentures at a deemed price of $0.50 per share of common ~~share~~stock that is equal to all outstanding principal and 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 the manner provided in the Debenture Certificate, to the holder of Convertible Debentures.

At ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, the balance due on the 10% Senior Secured Convertible Debenture was $1,130,000 and total accrued interest was ~~$28,878~~$29,712 and ~~$73,326,~~$58,494, respectively. The bond payable discount and unamortized debt issuance costs as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 are presented below (in thousands):

	Senior Secured Convertible Debenture
	September 30, 2022			December 31, 2021			March 31, 2023			December 31, 2022
10% Senior Unsecured Convertible Debentures	$	1,130		$	1,130		$	1,130		$	1,130
Debt Issuance costs to be amortized		(48	)		(69	)		(33	)		(40	)
Debt Discount		(165	)		(241	)		(115	)		(140	)
Senior Secured Convertible Debenture	$	917		$	820		$	982		$	950

As of ~~September 30, 2022~~March 31, 2023 and December 31, 2022, the entire balance of the Senior Secured Convertible Debenture is included in “Long-term convertible debt” within the ~~unaudited~~ consolidated balance ~~sheet.~~sheets.

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6% Unsecured Promissory Note

On July 9, 2020, we entered into an exchange agreement with Mr. Bill Wells, (aa former ~~employee).~~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~~payment totaling $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 and (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)~~required). Pursuant to the agreement, Mr. Wells agreed that the total amount forgiven of ~~forgiveness by creditor of approximately~~ $110,000 shall be prorated according to the amount ~~paid.~~paid to him.

During the year ended December 31, 2021, the Company closed a 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 issuance date and incurs interest at a rate of 6.0% per annum. During the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, the Company made principal payments of ~~$65,000~~$17,052 and $35,000 to Mr. Wells, ~~which resulted in forgiveness~~respectively. As a result of ~~$65,000~~these payments, Mr. Wells forgave equivalent amounts of the remaining ~~balance~~amount of ~~accrued~~ compensation. The ~~reduction~~reductions in the outstanding balance met the criteria for troubled debt because the future undiscounted cash flows under the new terms are less than the carrying value of the original 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.

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As of ~~September 30,~~March 31, 2023 and December 31, 2022, the outstanding principal balance on the note was ~~$32,052,~~nil and $17,052, respectively. As of December 31, 2022, the balance is included in “Current portion of long-term debt” within the consolidated balance ~~sheets.~~sheet. As of ~~December~~March 31, 2021, the outstanding balance on the note was $97,052, of which $75,000 was included in “Current portion of long-term debt” and $22,052 was included in “Long-term debt.” As of September 30, 20222023 and December 31, ~~2021,~~2022, accrued interest on the note was ~~$4,733~~nil and ~~$2,106,~~$5,139, respectively.

11. INCOME (LOSS) PER SHARE OF COMMON ~~SHARE~~STOCK

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 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 year, plus Series ~~C1, Series C2,~~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 shares of common ~~stock shares.~~stock.

The following table sets forth pertinent data relating to the computation of basic and diluted net loss per share attributable to common ~~shareholders~~stockholders (in thousands, except for per-share data):

	(in thousands)
	September 30,						March 31,
	2022			2021			2023			2022

Net loss		(3,115	)		(1,922	)		(969	)		(1,055	)
Basic weighted average number of shares outstanding		27,335			13,291			49,297			20,683
Net loss per share (basic)		(0.11	)		(0.14	)		(0.02	)		(0.05	)
Diluted weighted average number of shares outstanding		27,335			13,291			49,297			20,683
Net loss per share (diluted)		(0.11	)		(0.14	)		(0.02	)		(0.05	)

Dilutive equity instruments (number of equivalent units):
Stock options		982			2,252			2,092			917
Preferred stock		6,932			17,837			1,373			15,572
Convertible debt		1,092			908			203			2,018
Warrants		14,086			16,979			-			13,609
Total Dilutive instruments		23,092			37,976			3,668			32,116

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

~~Troubled Debt Restructurings - 2022~~

During the nine months ended September 30, 2022, four of the Company’s creditors forgave $344,584 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 September 30, 2022, the troubled debt restructurings in total decreased the net loss by $344,584, or $0.01 per 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 September 30, 2021, the total troubled debt restructuring decreased the net loss by $85,000, or $0.01 per share.

~~12. SUBSEQUENT EVENTS~~

~~Amendment to Auctus Exchange Agreement~~

On October 18, 2022, the Company and Auctus entered into an amendment to the Exchange Agreement signed on September 1, 2022. Pursuant to the amendment, the Company and Auctus agreed to execute the exchange of equity instruments on October 11, 2022. In satisfaction of the amended agreement, the Company issued 3.9 million common shares, 3.9 million warrants with an exercise price of $0.50, and 3.9 million warrants with an exercise price of $0.65 to Auctus. The newly issued warrants (“New Warrants”) will have a term of 4 years. The difference between the fair value of the warrants exchanged and the New Warrants will be recorded as a gain on extinguishment of debt in the fourth quarter of 2022.

~~Sales of Securities~~

Subsequent to September 30, 2022, the Company entered into certain Securities Purchase Agreements with two accredited investors, pursuant to which the Company issued 75,000 shares of its common stock, four year warrants to purchase an aggregate of 75,000 shares of Common Stock at $0.50 per share and 75,000 shares of Common Stock at $0.65 per share for an aggregate purchase price of $37,500.

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~~Additional Common Stock Issuances~~12. SUBSEQUENT EVENTS

On ~~October 6, 2022,~~April 3, 2023, the Company issued ~~60,000~~5,888 common shares for Preferred Series F-2 dividends.

On April 10, 2023, the Company issued 29,821 common shares for Preferred Series F-2 dividends.

On April 14, 2023, the Company issued 47,500 common shares for warrant exercises.

On April 18, 2023, the Company issued 32,693 common shares for Series D dividends.

On April 26, 2023, the Company issued 40,000 common shares for the conversion of 1510 Series F Preferred ~~shares.~~

~~On October 10, 2022, the Company issued 778~~shares and 206 common shares for accrued Series F Preferred dividends.

On ~~October 21, 2022,~~April 27, 2023, the Company issued ~~1,124,500~~40,000 common shares for the conversion of ~~562.25~~10 Series C2F Preferred ~~Shares~~shares and 213 common shares for accrued Series F Preferred dividends.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

In addition to historical information, this Quarterly Report on Form 10-Q may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act), which provides a “safe harbor” for forward-looking statements made by us. All statements, other than statements of historical facts, including statements concerning our plans, objectives, goals, beliefs, business strategies, future events, business conditions, results of operations, financial position, business outlook, business trends, and other information, may be forward-looking statements. Words such as “might,” “will,” “may,” “should,” “estimates,” “expects,” “continues,” “contemplates,” “anticipates,” “projects,” “plans,” “potential,” “predicts,” “intends,” “believes,” “forecasts,” “future,” and variations of such words or similar expressions are intended to identify forward-looking statements. The forward-looking statements are not historical facts, and are based upon our current expectations, beliefs, estimates and projections, and various assumptions, many of which, by their nature, are inherently uncertain and beyond our control. Our expectations, beliefs, estimates, and projections are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that management’s expectations, beliefs, estimates, and projections will occur or can be ~~can~~ achieved and actual results may vary materially from what is expressed in or indicated by the forward-looking statements.

These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or anticipated results, including those that may be set forth under “Risk Factors” below and elsewhere in this report, as well as in our annual report on Form 10-K for the year ended December 31, ~~2021~~2022 and this quarterly 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 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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These forward-looking statements reflect our management’s beliefs and views with respect to future events and are based on estimates and assumptions as of the date of this filing and are subject to risks and uncertainties. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. Given these uncertainties, you should not place undue reliance on these forward-looking statements.

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

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 operating losses since our inception and, as of ~~September 30, 2022~~March 31, 2023 we have an accumulated deficit of approximately ~~$145.0~~$148.3 million. To date, we have engaged primarily in research and development efforts and the early stages of marketing our products. We do not have significant experience in manufacturing, marketing or selling our products. We may not be successful in growing sales for our products. Moreover, required regulatory clearances or approvals may not be obtained in a timely manner, or at all. Our products may not ever gain market acceptance and we may not ever generate significant revenues or achieve profitability. The development and commercialization of our products requires substantial development, regulatory, sales and marketing, manufacturing and other expenditures. We expect our operating losses to continue for the foreseeable future as we continue to expend substantial resources to complete commercialization of our products, obtain regulatory clearances or approvals, build our marketing, sales, manufacturing and finance capabilities, and conduct further research and development.

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Our product revenues to date have been limited. ~~In 2021,~~During the three months ended March 31, 2023 and 2022, the majority of our revenues were from the sale of components of our LuViva devices and disposables. We expect that the majority of our revenue ~~going forward~~in the near future will be derived from ~~revenue from the sale~~sales of LuViva devices and disposables.

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Current Demand for LuViva

Based on written agreements and ongoing discussions with our distributors, we currently hold and expect to generate additional purchase orders for approximately $3.0 million in LuViva devices and disposables ~~in 2022~~ and expect those purchase orders to result in actual sales of $1.5 to $2.5 million ~~in the fourth quarter of 2022~~throughout 2023 and ~~throughout 2023,~~2024, representing what we view as current demand for our products. We cannot be assured that we will generate all or any of these additional purchase orders, or that existing orders will not be canceled by the distributors or that parts to build product will be available to meet demand, such that existing orders will result in actual sales. Because we have a short history of sales of our products, we cannot confidently predict future sales of our products beyond this time frame and cannot be assured of any particular number of sales. Accordingly, we have not identified any particular trends with regard to sales of our products. In order to increase demand for LuViva, the Company, in ~~2022~~2023 and ~~2023~~2024, 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 clinical trial protocol involving approximately 400 study participants. The protocol was drafted with input from FDA and at least two prestigious clinical centers that will participate in the study. Additional clinical centers may be added if needed to meet the study’s enrollment criteria. Budgets have been agreed to with both institutions. 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 designated central Institutional Review Board (“IRB”) and because of that, we initially expected to begin in September or October of 2022. ~~On November 9, 2022, we received~~Below is a ~~letter from one hospital’s IRB that we were conditionally approved to start~~summary of progress made toward starting the study ~~pending responses~~after delays due primarily to ~~three questions, which~~Covid-19, the resulting staffing shortages at medical institutions and the back log of clinical studies that were ~~provided~~put on the back burner in deference to that IRB on November 10, 2022. Currently, both clinical sites are finalizing correspondence with the designated central IRB and getting final signatures on contracts so that we can start the study before the end of 2022, which would allow the study to be completed in the third quarter of 2023, however, thereCovid-19 related studies.

	1)	Winship Cancer Center at Emory University (“Emory”) - On November 9, 2022, we received a letter from Emory’s IRB that we were conditionally approved to start the study, pending responses to three questions, which we provided to that IRB on November 10, 2022. We were subsequently notified by Emory’s scientific review committee and Institutional Review Board that our responses to these three questions were satisfactory, and we plan to begin enrolling patients in the second quarter of 2023.

	2)	University of Alabama at Birmingham (“UAB”) – In November of 2022 we were granted full scientific committee approval and local IRB approval. We signed the clinical research agreement with UAB on December 15, 2022 and began on site orientation and training in March of 2023. Recruiting of test subjects began in April 2023 and the first subjects were enrolled and tested on May 5, 2023.

	3)	The Company has signed a Clinical Trial Agreement and budget with a third site, Great Lakes Bay Health Centers, which has granted the Company approval to start the study, planned for either June or July 2023.

	4)	A fourth site has been engaged and is currently reviewing the study protocol for approval. A clinical trial agreement and budget have been executed, pending approval to start the study.
	5)	The U.S. FDA has required, as a part of the quality control for the study, that the pathology diagnoses for patients enrolled in the study be performed at an institution different than the one enrolling patients. To that end, we have signed a research contract with the University of Florida Pathology Department to provide those services.

There can be no assurance that the ~~study~~studies will be completed within ~~this timeframe.~~the timeframes described above.

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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 onin March ~~11, 2022,~~of 2023, testing of ~~150~~over 320 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 2023 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 attended a meeting in Bucharest, Romania on November 3-4, 2021, hosted by our central Eastern and 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 service and is expected to order additional Cervical Guides to test patients as part of her practice.

CRITICAL ACCOUNTING POLICIES

Our material accounting policies, which we believe are the most critical to investors understanding of our financial results and condition, are discussed below. Because we are still early in our enterprise development, the number of these policies requiring explanation is limited. When we begin to generate revenue from different sources, we expect that the number of applicable policies and complexity of the judgments required will increase.

Revenue Recognition: ASC 606, Revenue from Contracts with Customers establishes a single and comprehensive framework which sets out how much revenue is to be recognized, and when. The core principle is that a vendor should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the vendor expects to be entitled in exchange for those goods or services. Revenue will now be recognized by a vendor when control over the goods or services is transferred to the customer. In contrast, Revenue based revenue recognition around an analysis of the transfer of risks and rewards; this now forms one of a number of criteria that are assessed in determining whether control has been transferred. The application of the core principle in ASC 606 is carried out in five steps:

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

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Step 2 – Identify the performance obligations in the contract: a performance obligation in a contract is a promise (including implicit) to transfer a good or service to the customer. Each performance obligation should be capable of being distinct and is separately identifiable in the contract.

Step 3 – Determine the transaction price: transaction price is the amount of consideration that the entity can be entitled to, in exchange for transferring the promised goods and services to a customer, excluding amounts collected on behalf of third parties.

Step 4 – Allocate the transaction price to the performance obligations in the contract: for a contract that has more than one performance obligation, the entity will allocate the transaction price to each performance obligation separately, in exchange for satisfying each performance obligation. The acceptable methods of allocating the transaction price include adjusted market assessment approach, expected cost plus a margin approach, and the residual approach in limited circumstances. Discounts given should be allocated proportionately to all performance obligations unless certain criteria are met and reallocation of changes in standalone selling prices after inception is not permitted.

Step 5 – Recognize revenue as and when the entity satisfies a performance obligation: the entity should recognize revenue at a point in time, except if it meets any of the three criteria, which will require recognition of revenue over time: the entity’s performance creates or enhances an asset controlled by the customer, the customer simultaneously receives and consumes the benefit of the entity’s performance as the entity performs, and the entity does not create an asset that has an alternative use to the entity and the entity has the right to be paid for performance to date.

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Valuation of Deferred Taxes: We account for income taxes in accordance with the liability method. Under the liability method, we recognize deferred assets and liabilities based upon anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases. We establish a valuation allowance to the extent that it is more likely than not that deferred tax assets will not be utilized against future taxable income.

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

Allowance for Accounts Receivable: We estimate losses from the inability of our distributors to make required payments and periodically review the payment history of each of our distributors, as well as their financial condition, and revise our reserves as a result.

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

RESULTS OF OPERATIONS

COMPARISON OF THE THREE MONTHS ENDED ~~SEPTEMBER 30,~~MARCH 31, 2023 AND 2022 ~~AND 2021~~

Sales Revenue, Cost of ~~Sales~~Goods Sold and Gross Profit from Devices and Disposables:Revenues from the sale of LuViva devices and disposables for the three months ended ~~September 30, 2022~~March 31, 2023 were ~~$3,476,~~$22,049, compared to ~~$18,666~~$4,625 for the three months ended ~~September 30, 2021.~~March 31, 2022. Cost of goods sold was ~~$131~~$8,789 during the three months ended ~~September 30, 2022,~~March 31, 2023, compared to ~~$41,689~~$946 for the three months ended ~~September 30, 2021. This resulted~~March 31, 2022. The increase in ~~gross profit~~cost of ~~$3,345 during the three months ended September 30, 2022 and a gross loss of $23,024 during the three months ended September 30, 2021. The loss incurred~~goods sold in the ~~prior period~~current year was due to ~~write-offs of slow-moving inventory.~~

higher sales in the current quarter. While we currently hold and expect to generate purchase orders for approximately $3.0 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 ~~September 30, 2022,~~March 31, 2023, we have ~~received cash payments~~a deferred revenue balance of ~~$509,001~~$487,882 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 fourth quarter~~2023 due to increased availability of ~~2022 and in 2023.~~certain parts.

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Research and Development Expenses: Research and development expenses ~~for~~were $7,146 and $21,409 during the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~were $7,903, compared to $15,588 in the three months ended September 30, 2021.~~respectively. The decrease of ~~$7,685,~~$14,263, or ~~49%~~66.6%, was primarily due to a ~~reduction~~decrease in research and development clinical costs and ~~payroll~~payroll-related expenses.

Sales and Marketing Expenses: Sales and marketing expenses ~~for~~were $73,045 and $40,242 during the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~were $52,251, compared to $40,887 in the three months ended September 30, 2021.~~respectively. The increase of ~~$11,364,~~$32,803, or ~~28%~~81.5%, was primarily due to higher travel and payroll-related ~~expenses.~~expenses, including fees paid to consultants.

General and Administrative Expense: General and administrative expenses ~~for the three months September 30, 2022~~ were ~~$1,166,894, compared to $407,507 in~~$776,433 and $386,446 during the three months ended ~~September 30, 2021.~~March 31, 2023 and 2022, respectively. The increase of ~~$759,387~~$389,987, or ~~186%~~100.1%, was primarily due to $286,168 of additional ~~professional~~consulting and ~~consulting fees recorded for warrants issued as compensation for services. The services provided included investor relations and marketing services surrounding the Company’s successful completion~~legal expenses recognized, $67,546 of ~~a financing transaction during the current quarter. The Company also recorded~~ additional expense related to stock options, $28,575 of additional payroll expense (including benefits and taxes), and an overall increase of $7,698 for ~~professional services upon placing the planned Nasdaq uplist on hold, pending improvement in market conditions.~~other general expenses, such as for utilities and supplies.

Interest Expense:Interest expense ~~for~~during the three months ended ~~September 30,~~March 31, 2023 and 2022 was ~~$154,958, compared to $593,902 in the three months ended September 30, 2021.~~$65,680 and $101,026, respectively. The decrease of ~~$438,944, or 74%~~$35,346 (or 35.0%), was ~~primarily~~ due to a decrease in debt, which is a result of the Company’s concerted efforts to reduce debt through payoffs and exchanges.

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 ~~September 30, 2022~~March 31, 2023 was ~~$4,687,~~$4,818, compared to ~~($1,000)~~a loss of $6,240 during the three months ended September 30, 2021. The gain recorded in the current period was due to changes to our stock price during the period and a reduction in the principal amount of debt owed, which impacted the fair value of the derivative liability.

~~Gain from extinguishment of debt:~~ Gain from extinguishment of debt for the three months ended September 30, 2022 was $269,799, compared to $762,825 in the three months ended September 30, 2021. The decrease was primarily due to a higher amount of debt forgiven in the prior period.

~~Other Income:~~ Other income for the three months ended September 30, 2022 was $2,000, compared to $386,379 in the three months ended September 30, 2021. The income recorded in the prior period was primarily related to a write-off of a $350,000 liability.

~~Preferred Stock Dividends:~~Income from preferred stock dividends during the three months ended September 30, 2022 was $47,869, compared to $118,833 of expense for preferred stock dividends during the three months ended September 30, 2021. Income was recorded in the current period due to reversal of $128,943 of previously accrued preferred stock dividend expense, due to the conversion of Series F-2 Preferred Stock into common shares prior to the date annual dividends are due.

~~Net Loss:~~ Net loss attributable to common stockholders during the three months ended September 30, 2022 was $1,056,427 compared to $51,204 during the three months ended September 30, 2021. The reasons for the fluctuation are described above.

There was no income tax benefit recorded for the three months ended September 30, 2022 or 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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~~COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021~~

~~Sales Revenue, Cost of Sales and Gross Profit from Devices and Disposables:~~ Revenues from the sale of LuViva devices and disposables for the nine months ended September 30, 2022 were $13,459, compared to $20,666 for the nine months ended September 30, 2021. Cost of goods sold was $2,408 during the nine months ended September 30, 2022, compared to $41,689 for the nine months ended September 30, 2021. This resulted in gross profit of $11,051 and gross loss of $21,024 on the sales of devices and disposals during the nine months ended September 30, 2022 and September 30, 2021, respectively. While we currently hold and expect to generate purchase orders for approximately $3.0 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 September 30, 2022, we have received cash payments of $509,001 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 fourth quarter of 2022 and in 2023.

~~Research and Development Expenses:~~ Research and development expenses were $38,467 during the nine months ended September 30, 2022, compared to $51,588 during the nine months ended September 30, 2021, a decrease of $13,121 or 25%. 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 $129,194 during the nine months ended September 30, 2022, compared to $106,887 during the nine months ended September 30, 2021, an increase of $22,307 or 21%. The increase was primarily due to higher travel and payroll-related expenses.

~~General and Administrative Expense:~~ General and administrative expenses were $2,228,586 during the nine months ended September 30, 2022, compared to $1,747,507 during the nine months ended September 30, 2021, an increase of $481,079, or 28%. The increase was primarily due to $538,176 of additional consulting and legal expenses recognized and $32,757 of additional property taxes. These increases were offset by a reduction in payroll and benefits-related expenses of $87,631 and minor reductions in various miscellaneous expenses, such as rent and utilities.

~~Interest Expense:~~ Interest expense during the nine months ended September 30, 2022 was $511,600 compared to $1,049,902 during the nine months ended September 30, 2021, a decrease of $538,302, or 51%. was due to a decrease in debt, which is a result of the Company’s concerted efforts to reduce debt through payoffs and exchanges.

~~Other Income:~~ Other income for the nine months ended September 30, 2022 was $4,751, compared to $413,370 in the nine months ended September 30, 2021. Other income recorded in the prior period was primarily related to a write-off of a $350,000 liability and a $26,000 non-recurring write-off of accrued salaries.

~~Change in Fair Value of Derivative Liability:~~ The gain due to the change in fair value of the derivative liability during the nine months ended September 30, 2022 was $12,751, compared to a loss of $89,000 during the nine months ended September 30, 2021.March 31, 2022. The change in the fair value of the derivative liability was due to changes to our stock price during the period and a reduction in the principal amount of debt owed.

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Gain from ~~extinguishment~~Extinguishment of ~~debt:~~Debt: ~~Gain~~The gain from extinguishment of debt during the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022 was ~~$344,584 compared~~$34,773 and $41,232, respectively. The decrease in the current period was due to ~~$577,825 during~~a lower amount of debt forgiven as the ~~nine~~amount of debt owed has declined.

Other Income: Other income for the three months ended ~~September 30, 2021. The decrease~~March 31, 2023 and 2022 was nil and $2,377, respectively. Other income in the prior period was primarily due to ~~a higher amount of debt forgiven in the prior period.~~adjustments to accounts payable.

~~Change~~Deemed Dividend for Warrant Exchanges: Expense related to deemed dividends was $65,296 and nil for the periods ended March 31, 2023 and 2022, respectively. The expense in ~~Fair Value of Warrants:~~ ~~Change in~~the current period was recognized as the excess fair value of ~~warrants during~~warrant instruments exchanged over the ~~nine months ended September 30, 2022 was nil, compared to a $448,340 gain recorded during the nine months ended September 30, 2021. The decrease was primarily due to (i) a change in the terms~~fair value of the ~~warrants during 2021, which resulted in reclassification of the warrant instruments from liabilities to equity and (ii) expiration of the warrants previously outstanding.~~original warrants.

Preferred Stock Dividends: Expense related to preferred stock dividends ~~during~~was $34,758 and $547,923 for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~was $581,499, compared to $295,833 during the nine months ended September 30, 2021.~~respectively. The ~~increase~~decrease of $513,165, or 93.7%, was primarily due to payment of a one-time, non-recurring 15% dividends to the Series F and Series F-2 Preferred shareholders, as required by the Series F and Series F-2 Certificate of Designations 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.~~2021 paid in the first quarter of 2022. The decrease was also driven by a lower amount of outstanding preferred stock due to conversion of preferred shares into shares of common stock.

Net Loss: Net loss attributable to common stockholders was ~~$3,117,209 for~~$969,508 and $1,054,998 during the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~compared to net loss of $1,922,204 during the nine months ended September 30, 2021.~~respectively. The reasons for the fluctuation are outlined above.

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There was no income tax benefit recorded for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 or 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.

LIQUIDITY AND CAPITAL RESOURCES

Going Concern Considerations

We have incurred significant losses since our inception. At March 31, 2023, the Company had a negative working capital of approximately $1.5 million, accumulated deficit of $148.3 million, and incurred a net loss including preferred dividends of $1.0 million for the three months then ended. Stockholders’ deficit totaled approximately $2.9 million at March 31, 2023, primarily due to recurring net losses from operations.

During the three months ended March 31, 2023, the Company raised $195 thousand from warrant exercises. During the year ended December 31, 2022, the Company raised $3.2 million from the sale of common stock and warrants (net of expenses), and $495 thousand of proceeds from warrant exercises. The Company will need to continue to raise capital in order to provide funding for its operations and FDA approval process. If sufficient capital cannot be raised, the Company will continue its plans of curtailing operations by reducing discretionary spending and staffing levels and attempting to operate by only pursuing activities for which it has external financial support. However, there can be no assurance that such external financial support will be sufficient to maintain even limited operations or that the Company will be able to raise additional funds on acceptable terms, or at all. In such a case, the Company might be required to enter into unfavorable agreements or, if that is not possible, be unable to continue operations, and to the extent practicable, liquidate and/or file for bankruptcy protection.

Liquidity

Since our inception, we have raised capital through the public and private sale of debt and equity, funding from collaborative arrangements, and grants. As of ~~September 30, 2022,~~March 31, 2023, we had cash of approximately ~~$2,696,271~~$1,836,838 and negative working capital of ~~$1,756,126.~~$1,452,698.

Our major cash flows for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 consisted of cash used ~~for operations of $1,140,020, cash used for investing~~by operating activities of ~~$28,435,~~$498,897 and net cash provided by financing activities of ~~$3,222,485,~~$23,161, which ~~consisted of $3,192,174 of proceeds~~was derived from ~~the sale of common stock and warrants (net of costs), $495,492~~$194,750 of proceeds from warrant exercises, offset by ~~cash outflows for~~ payments made on outstanding debt.

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.

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~~Capital resources~~Our major cash flows for ~~2021~~

~~During 2021,~~ the ~~Company received $1,130,000~~three months ended March 31, 2022 consisted of cash used by operating activities of $179,000, cash used for investing activities of $14,000, and net cash provided by financing activities of $275,000, which primarily derived 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~~proceeds 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 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 (“Power Up”). Power Up 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 $150,000 unsecured note. The note accrues interest at the rate of 6.0% (18.0% in the event of 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 $259,661 of debt if the Company complies with the repayment plan described above.warrant exercises.

Contingencies

~~Based on the~~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~~led to supply chain issues that previously caused delays in our ability to procure the circuit boards needed to ship our products. While we continue to see delays in our ability to obtain necessary parts, we believe we will be able to meet our demand for the remainder of 2023. However, the outbreak could beresult 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.

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The future impact of the outbreak is highly uncertain and cannot be predicted, and we cannot provide any assurance that the outbreak will not have a material adverse impact on our operations or future results or filings with regulatory health authorities. The extent of the impact, if any, we will depend on future developments, including actions taken to contain the coronavirus.

Off-Balance Sheet Arrangements

We have no material off-balance sheet arrangements, no special purpose entities, and no activities that include non-exchange-traded contracts accounted for at fair value.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~Not applicable.~~As a smaller reporting company, we are not required to provide the information required by this item.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

~~The Company under the supervision and with the participation~~We maintain a set 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” (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of September 30, 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 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 30, 2022~~designed to ~~provide reasonable assurance~~ensure that ~~(1)~~ information required to be disclosed by us in ~~the~~ reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized, and reported, within the time periods specified in ~~the~~ Securities and Exchange ~~Commission’s~~Commission (“Commission”) rules and ~~forms, and (2) information required to be disclosed by us in the reports we file or submit~~forms. We carried out an evaluation under the ~~Exchange Act is accumulated~~supervision and ~~communicated to~~with the participation of our management, including ~~our~~the Chief Executive ~~Officer and~~Officer/Acting Chief Financial Officer, ~~as appropriate to allow timely decisions regarding required disclosures.~~

~~The~~Mark Faupel, of the effectiveness of ~~any system of~~its disclosure controls and procedures. Based on that evaluation, the Chief Executive Officer/Acting Chief Financial Officer has concluded that our disclosure controls and procedures were ineffective as of March 31, 2023, due to the existence of a material weakness in our internal control over financial reporting. The Company currently lacks the resources to properly research and account for complex transactions. While management is ~~subject~~currently in the early stages of developing a remediation plan, we have yet 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.fully remediate this material weakness.

Changes in Internal Control 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 30, 2022~~March 31, 2023 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 for additional information.

ITEM ~~1A. RISK FACTORS~~

~~Not applicable for a smaller reporting company.~~

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

~~On September 1, 2022,~~During the three months ended March 31, 2023, the Company entered into ~~certain Securities Purchase Agreements (the “Agreement”)~~various agreements with ~~certain accredited investors (the “Investors”), including Richard Blumberg, Michael James and John Imhoff, each a member~~holders of the Company’s ~~Board of Directors,~~$0.20 strike price warrants, pursuant to which each holder separately agreed to exchange 1,025,000 common stock warrants with a strike price of $0.25 for 973,750 common stock warrants with a strike price of $0.20. During the three months ended March 31, 2023, the Company received approximately $194,750 from the holders for the exercise of the 973,750 warrants, of which $9,500 was included in Accrued Liabilities as of March 31, 2023, pending issuance of 47,500 shares of common stock. The Company measured the effect of the exchange as the excess of fair value of the exchanged instruments over the fair value of the original instruments and recorded a deemed dividend of approximately $65,296.

During the three months ended March 31, 2023, the Company issued ~~6,636,540 shares of its common stock, four year~~900,000 warrants to ~~purchase~~Richard Blumberg, a related party, pursuant to a consulting agreement. The warrants, which will expire on March 1, 2026, have an ~~aggregate of 6,636,540 shares of Common Stock at $0.50 per share and 6,636,540 shares of Common Stock at $0.65 per share (the “Warrants”) for an aggregate purchase~~exercise price of ~~$3,318,270 (the “Transaction”).~~

The Company has agreed that, as soon as practicable after the Closing Date, the Company shall file a Registration Statement on the appropriate form providing for the resale by the Investors of the Shares and the shares of Common Stock underlying the Warrants (the “Warrant Shares” and collectively with the Shares and the Warrants, the “Securities”) with the Securities and Exchange Commission. The Company shall use commercially reasonable efforts to cause such Registration Statement to become effective within 120 days of closing all rounds of that offering and to keep such Registration Statement effective at all times until the earlier of the date that the Shares and Warrant Shares may be resold pursuant to Rule 144 (assuming cashless exercise of the Warrants) and the date that no Investor owns any Securities. In the event that the Registration Statement is not effective on the 121st day following the closing all rounds of the offering, the Company shall issue to each Investor an additional number of shares of Common Stock equal to 10% of the Shares issued to such Investor and an additional number of shares of Common Stock equal to 5% of the Shares issued to such Purchaser on each monthly anniversary thereafter until the earlier of the date the Registration Statement is effective and the date that the Shares and Warrant Shares may be resold pursuant to Rule 144 (assuming cashless exercise of the Warrants). The Company may avoid these penalties if, prior to the 121st day following the closing date, it files an application to list the Common Stock on a recognized Canadian Stock Exchange. In addition, if there is no effective Registration Statement covering the Warrant Shares after 180^th ~~day following the Closing Date, the Warrants may be exercised cashlessly as set forth in the Warrants.~~

As of September 30, 2022, after payment of all fees and expenses relating to the transaction, the Company received net proceeds of approximately $3.2 million. The primary use of proceeds is to fund the completion and filing of clinical study data needed for FDA approval of the Company’s LuViva Advanced Cervical Scan. Additional use of proceeds is to support international distribution partners to grow sales throughout the remainder of 2022 and into 2023, as well as for general and administrative expenses.$0.30.

On ~~October 18, 2022,~~February 10, 2023, the Company granted 925,000 stock options to employees, executives and ~~Auctus entered into an amendment~~directors of the Company. The stock options, which have exercise prices of $0.2629, will expire on February 9, 2033. One fourth of the stock options vested immediately, while the remaining options will vest over a period of 33 months, beginning on May 10, 2023.

On March 7, 2023, the Company granted 100,000 stock options, which have exercise prices of $0.27 and will expire on March 6, 2033, to Alan Grujic, upon appointing him to the ~~Exchange Agreement signed on September 1, 2022. Pursuant to the amendment, the Company and Auctus agreed to execute the exchange~~Board of ~~equity instruments on October 11, 2022. In satisfaction~~Directors. One fourth of the ~~amended agreement,~~stock options vested immediately, while the ~~Company issued 3.9 million common shares to Auctus.~~remaining options will vest over a period of 33 months, beginning on June 7, 2023.

Subsequent to September 30, 2022, the Company entered into certain Securities Purchase Agreements with two accredited investors, pursuant to which the Company issued 75,000 shares of its common stock, four-year warrants to purchase an aggregate of 75,000 shares of Common Stock at $0.50 per share and 75,000 shares of Common Stock at $0.65 per share, for an aggregate purchase price of $37,500.ITEM 6. EXHIBITS

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~~ITEM 6. EXHIBITS~~

			~~Incorporated by Reference~~
Exhibit Number		Exhibit Description
~~Form~~	~~File No.~~	~~Filing Date~~
3.1		Restated Certificate of Incorporation, as amended through November 3, 2016 (incorporated by reference to Exhibit 3.1 to the annual report on Form 10-K filed March 15, 2016)
3.2		Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 to the current report on Form 8-K, filed March 23, 2012)
3.3		Amended and Restated Certificate of Incorporation, (incorporated by reference to Exhibit 3.1 to the current report on Form 8-K, filed November 15, 2018)
3.4		Certificate of Designation of Preferences, Rights and Limitations of Series D Convertible Preferred Stock (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
3.5		Certificate of Designation of Preferences, Rights and Limitations of Series E Convertible Preferred Stock (incorporated by reference to Exhibit 3.5 to the annual report on Form 10-K filed April 5, 2021)
3.6		Certificate of Designation of Preferences, Rights and Limitations of Series F Convertible Preferred Stock (incorporated by reference to Exhibit 3.6 to the annual report on Form 10-K filed April 5, 2021)
3.7		Certificate of Designation of Preferences, Rights and Limitations of Series F-2 Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the current report on Form 8-K, filed on June 10, 2021)
3.8		Certificate of Designation of Preferences, Rights and Limitations of Series G Convertible Preferred Stock (incorporated by reference to Exhibit 3.8 to the annual report on Form 10-K filed March 30, 2022)
3.9		Certificate of Amendment to the Certificate of Incorporation of Guided Therapeutics, Inc. (incorporated by reference to Exhibit 3.1 to the current report on Form 8-K, filed on January 7, 2022)
~~10.1~~4.1*		Form of Common Stock Purchase Warrant Issued to Richard Blumberg	~~8-K~~	~~0-22179~~	~~September 15, 2022~~
~~10.2~~10.1*		Form of 2023 Warrant Exchange Agreements	~~8-K~~	~~0-22179~~	~~September 15, 2022~~
~~10.3~~10.2*		Form of ~~Securities Purchase Agreement~~Amended Promissory Note to Gene Cartwright	~~8-K~~	~~0-22179~~	~~September 15, 2022~~
~~10.4~~		~~Exchange Agreement between the Company and Auctus Fund, LLC~~	~~8-K~~	~~0-22179~~	~~September 15, 2022~~
~~10.5~~10.3*		Form of ~~Warrants~~Amended Promissory Note to ~~be issued to Auctus Fund, LLC~~Mark Faupel	~~8-K~~	~~0-22179~~	~~September 15, 2022~~
~~10.5~~31*		~~Form of Warrants to be issued to Auctus Fund, LLC~~Rule 13a-14(a)/15d-14(a) Certification	~~8-K~~	~~0-22179~~	~~September 15, 2022~~
~~10.6~~32*		~~Amendment #1 to Exchange Agreement between the Company and Auctus Fund, LLC~~Section 1350 Certification
101.1*			~~Filed herewith~~
31		Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002			~~Filed herewith~~
32		~~Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~			~~Filed herewith~~
~~101~~		~~Materials from the Company’s~~Interactive data files for Guided Therapeutics, Inc. 's Quarterly Report on Form 10-Q for the quarter ended ~~September 30, 2022,~~March 31, 2023, formatted in ~~Extensible Business Reporting Language (XBRL);~~Inline XBRL: (i) ~~Unaudited~~the Condensed Consolidated Balance ~~Sheet,~~Sheets (unaudited); (ii) ~~Unaudited~~the Condensed Consolidated Statements of ~~Operations,~~Income (unaudited); (iii) ~~Unaudited~~the Condensed Consolidated Statements in Stockholders' Deficit (unaudited); (iv) the Condensed Consolidated Statements of Cash Flows ~~(iv) Unaudited Consolidated Statements of Stockholders’ Equity (Deficit),~~(unaudited); and (v) ~~related~~the Notes to the Condensed Consolidated Financial ~~Statements.~~			~~Filed herewith~~Statements (unaudited).
104		~~Cover Page Interactive Data File (included~~The cover page from Guided Therapeutics, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 (formatted in Inline XBRL and included in Exhibit 101)			~~Filed herewith~~

______________

*Filed herewith

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the 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~~Mark Faupel
	~~Gene S. Cartwright~~Mark Faupel
	President, Chief Executive Officer, Chief Operating Officer and Acting Chief Financial Officer

Date: ~~November 14, 2022~~May 15, 2023

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