Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2013 | Nov. 11, 2013 | |
Document And Entity Information | ' | ' |
Entity Registrant Name | 'GUIDED THERAPEUTICS INC | ' |
Entity Central Index Key | '0000924515 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-13 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Is Entity a Well-known Seasoned Issuer? | 'No | ' |
Is Entity a Voluntary Filer? | 'No | ' |
Is Entity's Reporting Status Current? | 'Yes | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Common Stock, Shares Outstanding | ' | 66,303,996 |
Document Fiscal Period Focus | 'Q3 | ' |
Document Fiscal Year Focus | '2013 | ' |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
CURRENT ASSETS | ' | ' |
Cash and cash equivalents | $400 | $1,044 |
Accounts receivable, net of allowance for doubtful accounts of $18 and $12 at September 30, 2013 and December 31, 2012 | 112 | 107 |
Inventory, net of reserves of $99 and $52, at September 30, 2013 and December 31, 2012 | 810 | 524 |
Other current assets | 185 | 198 |
Total current assets | 1,507 | 1,873 |
Property and equipment, net | 1,030 | 1,274 |
Other assets | 394 | 331 |
Total noncurrent assets | 1,424 | 1,605 |
TOTAL ASSETS | 2,931 | 3,478 |
CURRENT LIABILITIES: | ' | ' |
Short-term notes payable | 70 | 79 |
Current portion of long-term note payable | 107 | 4 |
Notes payable - past due | 0 | 419 |
Accounts payable | 822 | 765 |
Accrued liabilities | 575 | 1,038 |
Deferred revenue | 37 | 40 |
Total current liabilities | 1,611 | 2,345 |
Warrants, at fair value | 663 | 0 |
Long-term debt payable, less current portion | 135 | 0 |
Total long-term liabilities | 798 | 0 |
TOTAL LIABILITIES | 2,409 | 2,345 |
COMMITMENTS & CONTINGENCIES | 0 | 0 |
STOCKHOLDERS' EQUITY : | ' | ' |
Series B convertible preferred stock, $.001 par value; 3,000 shares authorized, 2,457 and 2,527 shares issued and outstanding as of September 30, 2013 and December 31, 2012, respectively | 1,296 | 0 |
Common stock, $.001 Par value; 145,000 shares authorized, 66,303,996 and 62,282 shares issued and outstanding as of September 30, 2013 and December 31, 2012, respectively | 66 | 62 |
Additional paid-in capital | 97,562 | 93,273 |
Treasury stock, at cost | -132 | -104 |
Accumulated deficit | -98,270 | -92,098 |
TOTAL STOCKHOLDERS' EQUITY | 522 | 1,133 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $2,931 | $3,478 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, except Share data, unless otherwise specified | ||
CURRENT ASSETS | ' | ' |
Accounts receivable, net of allowance | $18 | $12 |
Inventory, net of reserves | $44 | $52 |
STOCKHOLDERS' EQUITY : | ' | ' |
Series B convertible preferred stock par value | $0.00 | $0.00 |
Series B convertible preferred stock shares authorized | 3,000 | 3,000 |
Series B convertible preferred stock, Issued | 2,457 | 2,527 |
Series B convertible preferred stock, Outstanding | 2,457 | 2,527 |
Common stock, par value | $0.00 | $0.00 |
Common stock, Authorized | 145,000 | 145,000 |
Common stock, Issued | 66,303,996 | 62,282,231 |
Common stock, outstanding | 66,303,996 | 62,282,231 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
REVENUE: | ' | ' | ' | ' |
Contract and grant revenue | $86 | $693 | $474 | $2,326 |
Sales - devices and disposables | 58 | 43 | 306 | 72 |
Cost of goods sold | 117 | 55 | 394 | 130 |
Gross Loss | -59 | -12 | -88 | -58 |
COSTS AND EXPENSES: | ' | ' | ' | ' |
Research and development | 596 | 787 | 2,243 | 2,397 |
Sales and marketing | 249 | 132 | 608 | 271 |
General and administrative | 822 | 732 | 2,791 | 2,714 |
Total | 1,667 | 1,651 | 5,642 | 5,382 |
Operating loss | -1,640 | -970 | -5,256 | -3,114 |
OTHER INCOME | 213 | 0 | 289 | 0 |
INTEREST EXPENSE | -11 | -16 | -35 | -52 |
LOSS BEFORE INCOME TAXES | -1,438 | -986 | -5,002 | -3,166 |
PROVISION FOR INCOME TAXES | 0 | 0 | 0 | 0 |
NET LOSS | -1,438 | -986 | -5,002 | -3,166 |
PREFERRED STOCK DIVIDENDS | 0 | 0 | -1,171 | 0 |
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS | ($1,438) | ($986) | ($6,173) | ($3,166) |
BASIC AND DILUTED NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS | ($0.02) | ($0.02) | ($0.10) | ($0.06) |
WEIGHTED AVERAGE SHARES OUTSTANDING | 66,261 | 60,827 | 65,212 | 55,810 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 |
CASH FLOWS FROM OPERATING ACTIVITIES: | ' | ' |
Net loss | ($5,002) | ($3,166) |
Adjustments to reconcile net loss to net cash used in operating activities | ' | ' |
Bad debt expense (recovery) | 7 | -8 |
Depreciation and amortization | 344 | 258 |
Stock based compensation | 699 | 493 |
Warrants | -210 | 0 |
Changes in operating assets and liabilities: | ' | ' |
Inventory | -296 | 60 |
Accounts receivable | -11 | 59 |
Other current assets | 12 | -64 |
Accounts payable | 57 | -62 |
Deferred revenue | -3 | 129 |
Accrued liabilities | 9 | 44 |
Other assets | -64 | 139 |
Total adjustments | 544 | 1,048 |
Net cash used in operating activities | -4,458 | -2,118 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ' | ' |
Additions to fixed assets | -111 | -496 |
Net cash used in investing activities | -111 | -496 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ' | ' |
Net proceeds from issuance of preferred stock and warrants | 2,214 | 0 |
Proceeds from options and warrants exercised | 1,916 | 3,072 |
Proceeds from issuance of short-term notes payable | 115 | 0 |
Payments on notes and loan payables | -320 | -50 |
Net cash provided by financing activities | 3,925 | 3,022 |
NET CHANGE IN CASH AND CASH EQUIVALENTS | -644 | 409 |
CASH AND CASH EQUIVALENTS, beginning of year | 1,044 | 2,200 |
CASH AND CASH EQUIVALENTS, end of period | 400 | 2,609 |
SUPPLEMENTAL SCHEDULE OF: | ' | ' |
Cash paid for Interest | 11 | 12 |
NONCASH INVESTING AND FINANCING ACTIVITIES: | ' | ' |
Deemed dividends in the form of convertible warrants into common stock | 0 | 2,654 |
Deemed dividends on preferred stock | 1,171 | 0 |
Issuance of common stock as board compensation | $463 | $148 |
1_BASIS_OF_PRESENTATION
1. BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2013 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
1. BASIS OF PRESENTATION | ' |
The accompanying unaudited condensed consolidated financial statements included herein have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) for interim financial reporting and with the instructions to Form 10-Q and Article 10 of Regulation S-X by Guided Therapeutics, Inc. (formerly SpectRx, Inc.), together with its wholly owned subsidiary InterScan, Inc., (“InterScan”) (formerly Guided Therapeutics, Inc.), collectively referred to herein as the “Company”. Accordingly, they do not include all information and footnotes required by GAAP for complete financial statements. These statements reflect adjustments, all of which are of a normal, recurring nature, and which are, in the opinion of management, necessary to present fairly the Company’s financial position as of September 30, 2013, results of operations for the three and nine months ended September 30, 2013 and 2012, and cash flows for the nine months ended September 30, 2013 and 2012. The results of operations for the three and nine months ended September 30, 2013 are not necessarily indicative of the results for a full fiscal year. Preparing financial statements requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and disclosure of contingent assets and liabilities. Actual results could differ from those estimates. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2012. | |
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, 2013, it had an accumulated deficit of approximately $98.3 million. Through September 30, 2013, the Company has devoted substantial resources to research and development efforts. The Company does not have significant experience in manufacturing, marketing or selling its products. The Company's development efforts may not result in commercially viable products and it may not be successful in introducing its products. Moreover, required regulatory clearances or approvals may not be obtained. The Company's products may not ever gain market acceptance and the Company may not ever achieve levels of revenue to sustain further development costs and support ongoing operations or achieve profitability. The development and commercialization of the Company's products will require substantial development, regulatory, sales and marketing, manufacturing and other expenditures. The Company expects operating losses to continue through the foreseeable future as it continues to expend substantial resources to complete development of its products, obtain regulatory clearances or approvals and conduct further research and development. | |
Going Concern | |
The Company’s consolidated financial statements have been prepared and presented on a basis assuming it will continue as a going concern. However, the Company has experienced operating losses since its inception and, as of September 30, 2013, had an accumulated deficit of approximately $98.3 million, a negative working capital of approximately $104,000 and stockholders’ equity of approximately $522,000. These factors raise 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. Notwithstanding the foregoing, the Company believes it has made progress in recent years in stabilizing its financial situation through ongoing capital-raising efforts, funding from past collaborative arrangements and grants from the National Institutes of Health (“NIH”) and the National Cancer Institute (“NCI”), while at the same time simplifying its capital structure and significantly reducing debt. On May 24, 2013, the Company completed a private placement of approximately $2.5 million of its Series B Convertible Preferred Stock (the “Series B Preferred Stock”). Additionally, the Company has warrants exercisable for approximately 11.6 million shares of its common stock outstanding at September 30, 2013, with a weighted average price of $0.85 per share. Exercises of these warrants would generate a total of approximately $9.9 million in cash, assuming full exercise, although the Company cannot be assured that holders will exercise any warrants (See Note 9). | |
Management may obtain additional funds through the private sale of preferred stock or debt securities, public and private sales of common stock, funding from collaborative arrangements, and grants, if available, and believes that such financing will be sufficient to support planned operations through the second quarter of 2014. If sufficient capital cannot be raised by the end of the second quarter of 2014, the Company has plans to curtail operations by reducing discretionary spending and staffing levels, and attempting to operate by only pursuing activities for which it has external financial support, such additional NCI, NHI or other grant funding. 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. |
2_SIGNIFICANT_ACCOUNTING_POLIC
2. SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Accounting Policies [Abstract] | ' | ||||||||
2. SIGNIFICANT ACCOUNTING POLICIES | ' | ||||||||
The Company’s significant accounting policies were set forth in the audited financial statements and notes thereto for the year ended December 31, 2012 included in its annual report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”). | |||||||||
Use of Estimates | |||||||||
The preparation of financial statements in conformity with GAAP 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 the valuation of options and warrants. | |||||||||
Principles of Consolidation | |||||||||
The accompanying consolidated financial statements, as of and for the quarter ended September 30, 2013, includes the accounts of Guided Therapeutics, Inc. and its wholly owned subsidiary. | |||||||||
Accounting Standards Updates | |||||||||
Newly effective accounting standards updates and those not effective until after September 30, 2013, are not expected to have a significant effect on the Company’s financial position or results of operations. | |||||||||
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. | |||||||||
Concentration of Credit Risk | |||||||||
The Company, from time to time during the periods covered by these consolidated financial statements, may have bank balances in excess of their insured limits. Management has deemed this as a normal business risk. | |||||||||
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 depreciated at the shorter of the useful life of the asset or the remaining lease term. Depreciation expense is included in general and administrative expense on the statement of operations. Expenditures for repairs and maintenance are expensed as incurred. | |||||||||
Inventory Valuation | |||||||||
All inventories are stated at lower of cost or market, 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. At September 30, 2013 and December 31, 2012, our inventories were as follows: | |||||||||
30-Sep-13 | 31-Dec-12 | ||||||||
Raw materials | $ | 674 | $ | 518 | |||||
Work in process | 165 | 21 | |||||||
Finished goods | 70 | 37 | |||||||
Inventory reserve | (99 | ) | (52 | ) | |||||
Total | $ | 810 | $ | 524 | |||||
7 | |||||||||
Revenues | |||||||||
Substantially all of the Company’s revenues for the nine months ended September 30, 2013 were from product sales, totaling approximately $306,000, grants with the NIH and NCI, totaling approximately $295,000, and other contract revenue from royalty and miscellaneous receipts, totaling approximately $169,000. Substantially all revenue for the same period in 2012 was from contracts with its prior collaborative partner, Konica Minolta Opto, Inc. (“Konica Minolta”) and grants with the NCI, totaling approximately $2.1 million or 99% of the Company’s revenues during the period. For the three months ended September 30, 2013, substantially all of the Company’s revenues were from product sales, totaling approximately $59,000, and from grants with the NIH and NCI, totaling approximately $89,000. Substantially all revenue for the same period in 2012 was from contracts with Konica Minolta and grants with the NIH and NCI, which totaled approximately $608,000 or 94.2% of the Company’s revenues for the period. | |||||||||
Accounts Receivable | |||||||||
The Company performs periodic credit evaluations of its customers’ financial condition 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. | |||||||||
Revenue Recognition | |||||||||
The Company recognizes revenue from contracts on a straight line basis, over the terms of the contract. The Company recognizes revenue from grants based on the grant agreement, at the time the expenses are incurred. Revenue from the sale of the Company’s products is recognized upon shipment of such products to its customers. | |||||||||
Deferred Revenue | |||||||||
The Company defers payments received as revenue until earned based on the related contracts on a straight line basis, over the terms of the contract. | |||||||||
Income Taxes | |||||||||
The Company accounts for income taxes in accordance with the liability method. Under the liability method, the Company recognizes 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. The Company establishes 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. As of December 31, 2012, the Company had approximately $61.8 million of net operating loss (“NOL”) carry forward. There was no provision for income taxes at September 30, 2013 due to the NOL. A full valuation allowance has been recorded related to any deferred tax assets created from the NOL. | |||||||||
Stock Option Plan | |||||||||
The Company measures the cost of employees services received in exchange for equity awards, including stock options, based on the grant date fair value of the awards. The cost will be recognized as compensation expense over the vesting period of the awards. | |||||||||
Warrants | |||||||||
The Company has issued warrants, which allow the warrant holder to purchase one share of stock at a specified price for a specified period of time. The Company records equity instruments including warrants issued to non-employees based on the fair value at the date of issue. The fair value of the warrants, classified as equity instruments, at date of issuance is estimated using the Black-Scholes Model. | |||||||||
Other Income | |||||||||
Other income consists of a one-time payment from an insurance company for policy dividends and the change in fair value of warrants classified as derivative instruments. |
3_FAIR_VALUE_OF_FINANCIAL_INST
3. FAIR VALUE OF FINANCIAL INSTRUMENTS | 9 Months Ended | ||||||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||||||
Investments, All Other Investments [Abstract] | ' | ||||||||||||||||||||||
3. FAIR VALUE OF FINANCIAL INSTRUMENTS | ' | ||||||||||||||||||||||
The guidance for fair value measurements, ASC820, 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 transactionbetween market participants at the measurement date. The Company uses a three-tier fair value hierarchy based upon observable and non-observable inputs as follow: | |||||||||||||||||||||||
8 | |||||||||||||||||||||||
· | 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. | ||||||||||||||||||||||
The Company records its derivative activities at fair value, which consisted of warrants as of September 30, 2013. Gains and losses from derivative contracts are included in net gain (loss) from derivative contracts in the statement of operations. The fair value of the Company’s derivative warrants is classified as a Level 3 measurement, since unobservable inputs are used in the valuation. | |||||||||||||||||||||||
The following table presents the fair value for those liabilities measured on a recurring basis as of September 30, 2013: | |||||||||||||||||||||||
FAIR VALUE MEASUREMENTS (In Thousands) | |||||||||||||||||||||||
Asset/ (Liability) | |||||||||||||||||||||||
Description | Level 1 | Level 2 | Level 3 | Total | Total | ||||||||||||||||||
Warrants | $ | — | $ | — | $ | (663 | ) | $ | (663 | ) | $ | (663 | ) | ||||||||||
4_STOCK_OPTIONS
4. STOCK OPTIONS | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Notes to Financial Statements | ' | ||||||||||||||||
4. STOCK OPTIONS | ' | ||||||||||||||||
The Company records compensation expense related to options granted to non-employees based on the fair value of the award. | |||||||||||||||||
Compensation cost is recorded as earned for all unvested stock options outstanding at the beginning of the first year based upon the grant date fair value estimates, and for compensation cost for all share-based payments granted or modified subsequently, based on fair value estimates. | |||||||||||||||||
For the three and nine months ended September 30, 2013, stock-based compensation for options attributable to employees, officers and directors was approximately $130,000 and $699,000, respectively, and has been included in the Company's third quarter 2013 statements of operations. For the three and nine months ended September 30, 2012, stock-based compensation for options attributable to employees, officers and directors was approximately $143,000 and $493,000, respectively, and has been included in the Company's third quarter 2012 statements of operations. Compensation costs for stock options, which vest over time, are recognized over the vesting period. As of September 30, 2013, the Company had approximately $1.0 million of unrecognized compensation cost related to granted stock options, to be recognized over the remaining vesting period of approximately three years. | |||||||||||||||||
The Company has a 1995 stock option plan (the “Plan”) approved by its stockholders for officers, directors and key employees of the Company and consultants to the Company. Participants are eligible to receive incentive and/or nonqualified stock options. The aggregate number of shares that may be granted under the Plan is 13,255,219 shares. The Plan is administered by the compensation committee of the board of directors. The selection of participants, grant of options, determination of price and other conditions relating to the exercise of options are determined by the compensation committee of the board of directors and administered in accordance with the Plan. | |||||||||||||||||
Both incentive stock options and non-qualified options granted to employees, officers and directors under the Plan are exercisable for a period of up to 10 years from the date of grant, at an exercise price that is not less than the fair market value of the common stock on the date of the grant. The options typically vest in installments of 1/48 of the options outstanding every month. | |||||||||||||||||
9 | |||||||||||||||||
A summary of the Company’s activity under the Plan as of September 30, 2013 and changes during the three months then ended, is as follows: | |||||||||||||||||
Weighted | |||||||||||||||||
Weighted | average | Aggregate | |||||||||||||||
average | remaining | intrinsic | |||||||||||||||
exercise | contractual | value | |||||||||||||||
Shares | price | (years) | (thousands) | ||||||||||||||
Outstanding, January 1, 2013 | 6,463,206 | $ | 0.67 | ||||||||||||||
Granted | 703,750 | $ | 0.69 | ||||||||||||||
Exercised / Expired | (856,790 | ) | $ | 0.57 | |||||||||||||
Outstanding, September 30, 2013 | 6,310,166 | $ | 0.69 | 6.33 | $ | 1,009 | |||||||||||
Vested and exercisable, September 30, 2013 | 4,748,034 | $ | 0.6 | 5.96 | $ | 899 | |||||||||||
The Company estimates the fair value of stock options using a Black-Scholes valuation model. Key input assumptions used to estimate the fair value of stock options include the expected term, expected volatility of the Company’s stock, the risk free interest rate, option forfeiture rates, and dividends, if any. The expected term of the options is based upon the historical term until exercise or expiration of all granted options. The expected volatility is derived from the historical volatility of the Company’s stock on the OTCBB market for a period that matches the expected term of the option. The risk-free interest rate is the constant maturity rate published by the U.S. Federal Reserve Board that corresponds to the expected term of the option. |
5_LITIGATION_AND_CLAIMS
5. LITIGATION AND CLAIMS | 9 Months Ended |
Sep. 30, 2013 | |
Notes to Financial Statements | ' |
5. LITIGATION AND CLAIMS | ' |
From time to time, the Company may be involved in various legal proceedings and claims arising in the ordinary course of business. Management believes that the dispositions of these matters, individually or in the aggregate, are not expected to have a material adverse effect on the Company’s financial condition. However, depending on the amount and timing of such disposition, an unfavorable resolution of some or all of these matters could materially affect the future results of operations or cash flows in a particular period. | |
As of September 30, 2013 and December 31, 2012, there was no accrual recorded for any potential losses related to pending litigation. |
6_STOCKHOLDERS_EQUITY
6. STOCKHOLDERS' EQUITY | 9 Months Ended | ||||
Sep. 30, 2013 | |||||
Equity [Abstract] | ' | ||||
6. STOCKHOLDERS' EQUITY | ' | ||||
Preferred Stock; Series B Convertible Preferred Stock | |||||
The Company has authorized 5,000,000 shares of preferred stock with a $.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. The board of directors designated 525,000 shares of preferred stock as redeemable convertible preferred stock, none of which remain outstanding, and 3,000 shares of preferred stock as Series B Preferred Stock, of which 2,457 shares were issued and outstanding as of September 30, 2013. | |||||
Pursuant to the terms of the Series B Preferred Stock set forth in the Certificate of Designations, Preferences and Rights designating the Preferred Stock (the “Preferred Stock Designation”), shares of Series B Preferred Stock are convertible into common stock by their holder at any time, and will be mandatorily convertible upon the achievement of certain conditions, including the receipt of certain approvals from the U.S. Food and Drug Administration and the achievement by the Company of specified average trading prices and volumes for the common stock. The conversion price currently is $0.68 per share, such that each share of Preferred Stock would convert into 1,471 shares of common stock, subject to customary adjustments, including for any accrued but unpaid dividends and pursuant to certain anti-dilution provisions, as set forth in the Preferred Stock Designation. Holders of the Series B Preferred Stock are entitled to quarterly dividends at an annual rate of 5.0%, for the quarter ended December 31, 2013, and at an annual rate of 10% thereafter, in each case, payable in cash or, subject to certain conditions, common stock, at the Company’s option. Each share of Series B Preferred Stock is entitled to a number of votes equal to the number of shares of common stock into which the Series B Preferred Stock is convertible. As long as shares of the Series B Preferred Stock are outstanding, and until the receipt of certain approvals from the U.S. Food and Drug Administration and the achievement by the Company of specified average trading prices and volumes for the common stock, the Company may not incur indebtedness for borrowed money secured by the Company’s intellectual property or in excess of $2.0 million without the prior consent of the holders of two-thirds of the outstanding shares of Series B Preferred Stock. The Company may redeem the Series B Preferred Stock after the second anniversary of issuance, subject to certain conditions. Upon the Company’s liquidation or sale to or merger with another corporation, each share of Series B Preferred Stock will be entitled to a liquidation preference of $1,000 per share, plus any accrued but unpaid dividends. | |||||
The Series B Preferred Stock was issued with warrants to purchase 3,716,177 shares of common stock at $1.08 per share. The exercise price of the warrants will be reduced, and the number of shares of common stock into which the warrants are exercisable will be increased, if the Company issues shares at a price below the then-current exercise price. As a result of this dilution protection, the Company is required to account for the warrants as a liability recorded at fair value each period. The Company values the warrants using a Monte Carlo Simulation model. Of the $2.6 million in proceeds fromissuance of the Series B Preferred Stock, the Company allocated $873,000 to the fair value of the warrants. The effective conversion price of the $1.7 million allocated to the Series B Preferred Stock resulted in an associated beneficial conversion feature totaling $1,171,000 that has been recorded as an increase to additional paid-in capital with an offsetting charge to retained earnings representing a deemed dividend. The deemed dividend has been subtracted from income (added to the loss) in computing earnings per common stockholder. | |||||
Common Stock | |||||
The Company has authorized 145,000,000 shares of common stock with $0.001 par value, 66,303,996 of which were outstanding as of September 30, 2013. During the nine months ended September 30, 2013, the Company issued 670,313 shares as board compensation, and 2,667,880 and 580,540 and 102,942 shares in connection with the exercise of outstanding warrants, options and preferred shares conversion, respectively. | |||||
Stock Options | |||||
See Note 4, Stock Options. | |||||
Warrants | |||||
The Company has issued warrants to purchase its common stock from time to time in connection with certain financing arrangements. Currently, there are warrants exercisable for an aggregate of 11,661,056 shares of common stock outstanding, as follows: | |||||
Warrants | Exercise Price | Expiration Date | |||
(Underlying Shares) | |||||
3,590,525 | -1 | $0.65 per share | 1-Mar-14 | ||
471,856 | -1 | $0.80 per share | 26-Jul-14 | ||
3,590,522 | -1 | $0.80 per share | 1-Mar-15 | ||
6,790 | -2 | $1.01 per share | 10-Sep-15 | ||
285,186 | -3 | $1.05 per share | 20-Nov-16 | ||
3,716,177 | -4 | $1.08 per share | 23-May-18 | ||
__________ | |||||
-1 | Consists of outstanding warrants issued in connection with a warrant exchange program in June 2012. | ||||
-2 | Consists of outstanding warrants issued in conjunction with a private placement on September 10, 2010. | ||||
-3 | Consists of outstanding warrants issued in conjunction with a private placement on November 21, 2011. | ||||
-4 | Consists of outstanding warrants issued in conjunction with a private placement on May 24, 2013. | ||||
7_LOSS_PER_COMMON_SHARE
7. LOSS PER COMMON SHARE | 9 Months Ended |
Sep. 30, 2013 | |
Earnings Per Share [Abstract] | ' |
7. LOSS PER COMMON SHARE | ' |
Basic net loss per share attributable to common stockholders was computed by dividing the net loss plus preferred stock dividends and deemed dividends on preferred stock by the weighted average number of common shares outstanding during the period. |
8_NOTES_PAYABLE
8. NOTES PAYABLE | 9 Months Ended |
Sep. 30, 2013 | |
Debt Disclosure [Abstract] | ' |
8. NOTES PAYABLE | ' |
Short Term Notes Payable | |
At December 31, 2012, the Company maintained a note payable to IQMS, an enterprise resources planning software provider, of approximately $34,000, as well as a note to Premium Assignment Corporation, an insurance premium financing company, of approximately $33,000. These notes are 8 and 12 months, straight-line amortizing loans dated June 29, 2012 and July 4, 2012, respectively, with monthly principal and interest payments of approximately $4,300 and $11,000 per month, respectively. The notes carry annual interest rates ranging between 5-6%. The Premium Assignment Corporate note was paid in full during the quarter ended March 31, 2013. The IQMS note was paid in full during the quarter ended September 30, 2013. | |
At September 30, 2013, the Company maintained an additional note payable to Premium Assignment Corporation of approximately $70,000. This note is an 8 months, straight-line amortizing loan dated July 4, 2013 with monthly principal and interest payments of approximately $12,000 per month. The note carries an annual interest rate of 5.34%. | |
Loan Payable | |
At December 31, 2009, the Company maintained a line of credit in the amount of $75,000 with Pacific International Bank (“PI Bank”) of Seattle, Washington. This line was converted to a 36 month, straight-line amortizing loan on February 24, 2010, with monthly principal and interest payments of $2,226 per month, due February 2013. Interest was charged at a rate of 7.5%. At December 31, 2012, a balance of approximately $4,000 was outstanding. This loan was paid in full during the quarter ended March 31, 2013. | |
Notes Payable | |
At December 31, 2012, the Company was past due on two short-term notes totaling approximately $419,000 of principal and accrued interest. Interest charged on these notes prior to amendment ranged between 15-18%. On February 27, 2013, the Company renegotiated one of the two past due notes. The new note accrued interest at 6% and was paid in full during the quarter ended June 30, 2013. On April 16, 2013, the Company renegotiated the other note. The renegotiated note accrues interest at 9.0%, requires monthly payments of $10,000 and matures November 2015. The balance due on this note was approximately $233,000 at September 30, 2013. |
9_SUBSEQUENT_EVENTS
9. SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2013 | |
Subsequent Events [Abstract] | ' |
8. SUBSEQUENT EVENTS | ' |
On October 10, 2013, the Company announced the signing of additional distributors for the LuViva ® Advanced Cervical Scan in territories that include France, Qatar, Malaysia, Indonesia and Bangladesh. Combined, these territories include approximately 86 million women aged 25 to 64 years. | |
On October 15, 2013, the Company commenced an offer to exchange some of its outstanding warrants exercisable to purchase up to an aggregate of 3,590,525 shares of its common stock, at an exercise price of $0.65 per share, with an exercise period ending March 1, 2014, for new warrants exercisable for the same number of shares of common stock, but with a reduced exercise price of $0.40 per share and a shortened exercise period ending on November 27, 2013. | |
On October 21, 2013, the Company announced that it received $250,000 in royalties, pursuant to a licensing agreement with Freedom Meditech, bringing the total amount received on the agreement to date to $300,000. The agreement has a lifetime maximum royalty payable of $4 million. |
2_SIGNIFICANT_ACCOUNTING_POLIC1
2. SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Accounting Policies [Abstract] | ' | ||||||||
Use of Estimates | ' | ||||||||
The preparation of financial statements in conformity with GAAP 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 the valuation of options and warrants. | |||||||||
Principles of Consolidation | ' | ||||||||
The accompanying consolidated financial statements, as of and for the quarter ended September 30, 2013, includes the accounts of Guided Therapeutics, Inc. and its wholly owned subsidiary. | |||||||||
Accounting Standards Updates | ' | ||||||||
Newly effective accounting standards updates and those not effective until after September 30, 2013, are not expected to have a significant effect on the Company’s financial position or results of operations. | |||||||||
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. | |||||||||
Concentration of Credit Risk | ' | ||||||||
The Company, from time to time during the periods covered by these consolidated financial statements, may have bank balances in excess of their insured limits. Management has deemed this as a normal business risk. | |||||||||
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 depreciated at the shorter of the useful life of the asset or the remaining lease term. Depreciation expense is included in general and administrative expense on the statement of operations. Expenditures for repairs and maintenance are expensed as incurred. | |||||||||
Inventory Valuation | ' | ||||||||
All inventories are stated at lower of cost or market, 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. At September 30, 2013 and December 31, 2012, our inventories were as follows: | |||||||||
30-Sep-13 | 31-Dec-12 | ||||||||
Raw materials | $ | 674 | $ | 518 | |||||
Work in process | 165 | 21 | |||||||
Finished goods | 70 | 37 | |||||||
Inventory reserve | (99 | ) | (52 | ) | |||||
Total | $ | 810 | $ | 524 | |||||
Revenues | ' | ||||||||
Substantially all of the Company’s revenues for the nine months ended September 30, 2013 were from product sales, totaling approximately $306,000, grants with the NIH and NCI, totaling approximately $295,000, and other contract revenue from royalty and miscellaneous receipts, totaling approximately $169,000. Substantially all revenue for the same period in 2012 was from contracts with its prior collaborative partner, Konica Minolta Opto, Inc. (“Konica Minolta”) and grants with the NCI, totaling approximately $2.1 million or 99% of the Company’s revenues during the period. For the three months ended September 30, 2013, substantially all of the Company’s revenues were from product sales, totaling approximately $59,000, and from grants with the NIH and NCI, totaling approximately $89,000. Substantially all revenue for the same period in 2012 was from contracts with Konica Minolta and grants with the NIH and NCI, which totaled approximately $608,000 or 94.2% of the Company’s revenues for the period. | |||||||||
Accounts Receivable | ' | ||||||||
The Company performs periodic credit evaluations of its customers’ financial condition 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. | |||||||||
Revenue Recognition | ' | ||||||||
The Company recognizes revenue from contracts on a straight line basis, over the terms of the contract. The Company recognizes revenue from grants based on the grant agreement, at the time the expenses are incurred. Revenue from the sale of the Company’s products is recognized upon shipment of such products to its customers. | |||||||||
Deferred Revenue | ' | ||||||||
The Company defers payments received as revenue until earned based on the related contracts on a straight line basis, over the terms of the contract. | |||||||||
Income Taxes | ' | ||||||||
The Company accounts for income taxes in accordance with the liability method. Under the liability method, the Company recognizes 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. The Company establishes 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. As of December 31, 2012, the Company had approximately $61.8 million of net operating loss (“NOL”) carry forward. There was no provision for income taxes at September 30, 2013 due to the NOL. A full valuation allowance has been recorded related to any deferred tax assets created from the NOL. | |||||||||
Stock Option Plan | ' | ||||||||
The Company measures the cost of employees services received in exchange for equity awards, including stock options, based on the grant date fair value of the awards. The cost will be recognized as compensation expense over the vesting period of the awards. | |||||||||
Warrants | ' | ||||||||
The Company has issued warrants, which allow the warrant holder to purchase one share of stock at a specified price for a specified period of time. The Company records equity instruments including warrants issued to non-employees based on the fair value at the date of issue. The fair value of the warrants, classified as equity instruments, at date of issuance is estimated using the Black-Scholes Model. | |||||||||
Other Income | ' | ||||||||
Other income consists of a one-time payment from an insurance company for policy dividends and the change in fair value of warrants classified as derivative instruments. |
2_SIGNIFICANT_ACCOUNTING_POLIC2
2. SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | ||||||||
Inventory Valuation | ' | ||||||||
30-Sep-13 | 31-Dec-12 | ||||||||
Raw materials | $ | 674 | $ | 518 | |||||
Work in process | 165 | 21 | |||||||
Finished goods | 70 | 37 | |||||||
Inventory reserve | (99 | ) | (52 | ) | |||||
Total | $ | 810 | $ | 524 |
3_FAIR_VALUE_OF_FINANCIAL_INST1
3. FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 9 Months Ended | ||||||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||||||
Investments, All Other Investments [Abstract] | ' | ||||||||||||||||||||||
Schedule fo fair value for liabilities measured on a recurring basis | ' | ||||||||||||||||||||||
Asset/ (Liability) | |||||||||||||||||||||||
Description | Level 1 | Level 2 | Level 3 | Total | Total | ||||||||||||||||||
Warrants | $ | — | $ | — | $ | (663 | ) | $ | (663 | ) | $ | (663 | ) |
4_STOCK_OPTIONS_Tables
4. STOCK OPTIONS (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Stock Options Tables | ' | ||||||||||||||||
Stock Options activity | ' | ||||||||||||||||
Weighted | |||||||||||||||||
Weighted | average | Aggregate | |||||||||||||||
average | remaining | intrinsic | |||||||||||||||
exercise | contractual | value | |||||||||||||||
Shares | price | (years) | (thousands) | ||||||||||||||
Outstanding, January 1, 2013 | 6,463,206 | $ | 0.67 | ||||||||||||||
Granted | 703,750 | $ | 0.69 | ||||||||||||||
Exercised / Expired | (856,790 | ) | $ | 0.57 | |||||||||||||
Outstanding, September 30, 2013 | 6,310,166 | $ | 0.69 | 6.33 | $ | 1,009 | |||||||||||
Vested and exercisable, September 30, 2013 | 4,748,034 | $ | 0.6 | 5.96 | $ | 899 |
6_STOCKHOLDERS_EQUITY_Tables
6. STOCKHOLDERS' EQUITY (Tables) | 9 Months Ended | ||||
Sep. 30, 2013 | |||||
Equity [Abstract] | ' | ||||
Outstanding warrants | ' | ||||
Warrants | Exercise Price | Expiration Date | |||
(Underlying Shares) | |||||
3,590,525 | -1 | $0.65 per share | 1-Mar-14 | ||
471,856 | -1 | $0.80 per share | 26-Jul-14 | ||
3,590,522 | -1 | $0.80 per share | 1-Mar-15 | ||
6,790 | -2 | $1.01 per share | 10-Sep-15 | ||
285,186 | -3 | $1.05 per share | 20-Nov-16 | ||
3,716,177 | -4 | $1.08 per share | 23-May-18 | ||
__________ | |||||
-1 | Consists of outstanding warrants issued in connection with a warrant exchange program in June 2012. | ||||
-2 | Consists of outstanding warrants issued in conjunction with a private placement on September 10, 2010. | ||||
-3 | Consists of outstanding warrants issued in conjunction with a private placement on November 21, 2011. | ||||
-4 | Consists of outstanding warrants issued in conjunction with a private placement on May 24, 2013. |
2_SIGNIFICANT_ACCOUNTING_POLIC3
2. SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Accounting Policies [Abstract] | ' | ' |
Raw materials | $674 | $518 |
Work in process | 165 | 21 |
Finished goods | 70 | 37 |
Inventory reserve | -99 | -52 |
Total | $810 | $524 |
5_STOCKHOLDERS_EQUITY_Details
5. STOCKHOLDERS' EQUITY (Details ) (USD $) | Sep. 30, 2013 |
Warrant1Member | ' |
Warrants outstanding | 471,856 |
Warrants exercise price | $0.65 |
Expiration date | 26-Jul-13 |
Warrant 2 [Member] | ' |
Warrants outstanding | 3,590,525 |
Warrants exercise price | $0.65 |
Expiration date | 1-Mar-14 |
Warrant 3 [Member] | ' |
Warrants outstanding | 471,856 |
Warrants exercise price | $0.80 |
Expiration date | 26-Jul-14 |
Warrant 4 [Member] | ' |
Warrants outstanding | 3,590,522 |
Warrants exercise price | $0.80 |
Expiration date | 1-Mar-15 |
Warrant 5 [Member] | ' |
Warrants outstanding | 6,790 |
Warrants exercise price | $1.01 |
Expiration date | 10-Sep-15 |
Warrant 6 [Member] | ' |
Warrants outstanding | 285,186 |
Warrants exercise price | $1.05 |
Expiration date | 20-Nov-16 |
3_FAIR_VALUE_OF_FINANCIAL_INST2
3. FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Warrants | ($663) | $0 |
Level 1 | ' | ' |
Warrants | 0 | ' |
Level 2 | ' | ' |
Warrants | 0 | ' |
Level 3 | ' | ' |
Warrants | ($663) | ' |
4_STOCK_OPTIONS_Details_Narrat
4. STOCK OPTIONS (Details Narrative) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Notes to Financial Statements | ' | ' | ' | ' |
Stock based compensation | $130,000 | $143,000 | $699,000 | $493,000 |
Unrecognized compensation cost | $1,000 | ' | $1,000 | ' |
7_NOTES_PAYABLE_Details_Narrat
7. NOTES PAYABLE (Details Narrative) (USD $) | Sep. 30, 2013 |
Debt Disclosure [Abstract] | ' |
Notes payble | $233,000 |
Interest rate | 9.00% |