Guided Therapeutics (GTHP) 10-Q 19 May 16 2016 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2016	May. 17, 2016
Document And Entity Information
Entity Registrant Name	GUIDED THERAPEUTICS INC
Entity Central Index Key	924,515
Document Type	10-Q
Document Period End Date	Mar. 31, 2016
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		29,880,904
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2,016

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
CURRENT ASSETS
Cash and cash equivalents	$ 56	$ 35
Accounts receivable, net of allowance for doubtful accounts of $75 and $95 at March 31, 2016 and December 31, 2015, respectively	230	190
Inventory, net of reserves of $156 and $118, at March 31, 2016 and December 31, 2015, respectively	1,253	1,119
Prepaid expenses and deposits	509	780
Total current assets	2,048	2,124
Property and equipment, net	264	318
Other assets	54	121
Total noncurrent assets	318	439
TOTAL ASSETS	2,366	2,563
CURRENT LIABILITIES:
Short-term notes payable, including related parties	259	752
Note payable in default, including related parties	590	133
Convertible note – current portion	479	0
Short-term convertible notes payable, net	591	686
Accounts payable	1,977	1,824
Accrued liabilities	2,069	1,907
Deferred revenue	66	217
Total current liabilities	6,031	5,519
LONG-TERM LIABILITIES:
Warrants, at fair value	1,588	2,606
Long-term convertible notes payable, net	197	0
Total long-term liabilities	1,785	2,606
TOTAL LIABILITIES	7,816	8,125
STOCKHOLDERS' EQUITY :
Series C convertible preferred stock, $.001 par value; 9.0 shares authorized, 5.0 and 5.6 shares issued and outstanding as of March 31, 2016 and December 31, 2015, (Liquidation preference of $4,966 and $5,555 at March 31, 2016 and December 31, 2015)	1,817	2,052
Common stock, $.001 Par value; 1,000,000 shares authorized, 5,322 and 2,371 shares issued and outstanding as of March, 31 2016 and December 31, 2015	297	236
Additional paid-in capital	115,471	114,845
Treasury stock, at cost	(132)	(132)
Accumulated deficit	(122,903)	(122,563)
TOTAL STOCKHOLDERS' DEFICIT	(5,450)	(5,562)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 2,366	$ 2,563

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
CURRENT ASSETS
Accounts receivable, net of allowance	$ 75	$ 95
Inventory, net of reserves	$ 156	$ 118
STOCKHOLDERS' EQUITY :
Series C convertible preferred stock par value	$ .001	$ .001
Series C convertible preferred stock shares authorized	9	9
Series C convertible preferred stock, Issued	5	5.6
Series C convertible preferred stock, Outstanding	5	5.6
Series C convertible preferred stock, Liquidation preference	$ 4,966	$ 5,555
Common stock, par value	$ 0.001	$ 0.001
Common stock, Authorized	1,000,000	1,000,000
Common stock, Issued	5,322	2,371
Common stock, outstanding	5,322	2,371

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
REVENUE:
Sales - devices and disposables	$ 262	$ 127
Cost of goods sold	68	107
Gross profit	194	20
COSTS AND EXPENSES:
Research and development	290	373
Sales and marketing	117	172
General and administrative	917	963
Total operating expenses	1,324	1,508
Operating loss	(1,130)	(1,488)
Other income	23	21
Interest expense	(158)	(492)
Changes in fair value of warrants	1,395	714
Total other income	1,260	243
INCOME (LOSS) FROM OPERATIONS	130	(1,245)
PROVISION FOR INCOME TAXES	0	0
NET INCOME (LOSS)	130	(1,245)
PREFERRED STOCK DIVIDENDS	(470)	(31)
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS	$ (340)	$ (1,276)
NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS, BASIC	$ (0.11)	$ (1.31)
NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS, DILUTED	$ 0	$ (1.31)
WEIGHTED AVERAGE SHARES OUTSTANDING, BASIC	3,084	973
WEIGHTED AVERAGE SHARES OUTSTANDING, DILUTED	109,899	973

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$ 130	$ (1,245)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Bad debt expense	17	0
Depreciation	54	72
Amortization	54	402
Stock based compensation	30	192
Change in fair value of warrants	(1,395)	(714)
Changes in operating assets and liabilities:
Inventory	(135)	(20)
Accounts receivable	(56)	31
Other current assets	271	47
Other assets	18	8
Accounts payable	153	(169)
Deferred revenue	(151)	0
Accrued liabilities	55	508
Other long-term liabilities	0	262
Total adjustments	(1,085)	619
Net cash used in operating activities	(955)	(626)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock and warrants, net	0	451
Proceeds from debt financing, net of discounts and debt issuance costs	1,029	62
Payments on notes payable	(53)	(31)
Net cash provided by financing activities	976	482
NET CHANGE IN CASH AND CASH EQUIVALENTS	21	(144)
CASH AND CASH EQUIVALENTS, beginning of year	35	162
CASH AND CASH EQUIVALENTS, end of period	56	18
SUPPLEMENTAL SCHEDULE OF:
Cash paid for Interest	1	22
NONCASH INVESTING AND FINANCING ACTIVITIES:
Issuance of common stock as debt repayment	125	50
Dividends on preferred stock	$ 470	$ 31

1. BASIS OF PRESENTATION

1. BASIS OF PRESENTATION	3 Months Ended
	Mar. 31, 2016
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 March 31, 2016, results of operations for the three months ended March 31, 2016 and 2015, and cash flows for the three months ended March 31, 2016 and 2015. The results of operations for the three months ended March 31, 2016 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, 2015. On February 24, 2016, the Company implemented a 1:100 reverse stock split of its issued and outstanding common stock. The reverse stock split decreased the Company’s issued and outstanding shares of common stock from 237,101,702 shares of Common Stock to 2,371,007 shares as of that date. See Note 4, Stockholders’ Deficit. Unless otherwise specified, all per share amounts are reported on a post-stock split basis, as of March 31, 2016. 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 March 31, 2016, it had an accumulated deficit of approximately $122.9 million. Through March 31, 2016, 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. 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. If the Company is unable to continue operations, it may have to the extent practicable, liquidate and/or file for bankruptcy protection. Liquidity At March 31, 2016, the Company had a working capital deficit of approximately $4.0 million and the stockholders’ deficit was approximately $5.5 million, primarily due to recurring net losses from operations and dividends on preferred stock, offset by proceeds from the exercise of options and warrants and proceeds from the sales of stock. The Company’s plans with respect to its liquidity management include the following: • The Company has curtailed operations and reduced discretionary spending and staffing levels. • The Company is only pursuing activities where it has financial support. However, there can be no assurance that such external financial support will be sufficient to maintain even limited operations. • The Company is seeking additional capital in the private and/or public equity markets to continue operations and build sales, marketing, and distribution. The Company is currently evaluating additional equity and debt financing opportunities and may execute them when appropriate. However, there can be no assurances that the Company can consummate such a transaction, or consummate a transaction at favorable pricing. • The Company is seeking additional sources of cash flow with strategic businesses. • The Company had warrants exercisable for approximately 31.8 million shares of its common stock outstanding at March 31, 2016, with exercise prices of $0.09375 to $105.00 per share. Exercises of these warrants would generate a total of approximately $7.1 million in cash, assuming full exercise, although the Company cannot be assured that holders will exercise any warrants

2. SIGNIFICANT ACCOUNTING POLIC

2. SIGNIFICANT ACCOUNTING POLICIES	3 Months Ended
	Mar. 31, 2016
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, 2015 included in its annual report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”). Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant areas where estimates are used include the allowance for doubtful accounts, inventory valuation and input variables for Black-Scholes, Monte Carlo simulations and binomial calculations. Principles of Consolidation The accompanying consolidated financial statements include the accounts of Guided Therapeutics, Inc. and its wholly owned subsidiary. Accounting Standard Updates In April 2015, the FASB issued Accounting Standards Update No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, or ASU 2015-03. ASU 2015-03 amends current presentation guidance by requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. Prior to the issuance of ASU 2015-03 debt issuance costs were required to be presented as an asset in the balance sheet. On January 1, 2016, the Company adopted the provisions of ASU 2015-03 and prior period amounts have been reclassified to conform to the current period presentation. Accounts Receivable The Company performs periodic credit evaluations of its customers’ 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. The Company does not accrue interest receivable on past due accounts receivable. Revenue Recognition Revenue from the sale of the Company’s products is recognized upon shipment of such products to its customers. The Company recognizes revenue from contracts on a straight line basis, over the terms of the contract. The Company recognizes revenue from grants based on the grant agreement, at the time the expenses are incurred. During the three months ended March 31, 2016, the majority of the Company’s revenues were from four customers. Revenue from these customers totaled approximately $262,000 or 100% for the period ended March 31, 2016 and approximately $127,000 or 73% of total revenue for the period ended March 31, 2015. Accounts receivable due from those customers represents 59% for the period ended March 31, 2016. 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. 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 March 31, 2016 and December 31, 2015, our inventories were as follows (in thousands): March 31, December 31, 2016 2015 Raw materials $ 827 $ 686 Work in process 256 186 Finished goods 326 365 Inventory reserve (156 ) (118 ) Total $ 1,253 $ 1,119 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. Property and equipment are summarized as follows at March 31, 2016 and December 31, 2015 (in thousands): March 31, December 31, 2016 2015 Equipment $ 1,377 $ 1,377 Software 740 740 Furniture and fixtures 124 124 Leasehold Improvement 199 199 2,440 2,440 Less accumulated depreciation (2,174 ) (2,122 ) Total $ 264 $ 318 Accrued Liabilities Accrued liabilities are summarized as follows (in thousands): March 31, 2016 December 31, 2015 Accrued compensation $ 1,249 $ 1,235 Accrued professional fees 71 154 Deferred rent 31 36 Accrued warranty 70 82 Accrued vacation 190 177 Accrued interest 33 — Accrued dividends 332 167 Other accrued expenses 93 56 Total $ 2,069 $ 1,907 Significant Customers 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 Company uses the liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Management provides valuation allowances against the deferred tax assets for amounts that are not considered more likely than not to be realized. The Company is current with its federal and applicable state tax returns filings. Although we have been experiencing recurring losses, we are obligated to file tax returns for compliance with Internal Revenue Service (“IRS”) regulations and that of applicable state jurisdictions. As December 31, 2015, the Company has approximately $28.0 million of net operating loss 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. None of the Company’s federal or state income tax returns are currently under examination by the IRS or state authorities. Uncertain Tax Positions Effective January 1, 2007 the Company adopted ASC guidance regarding accounting for uncertainty in income taxes. This guidance clarifies the accounting for income taxes by prescribing the minimum recognition threshold an income tax position is required to meet before being recognized in the financial statements and applies to all income tax positions. Each income tax position is assessed using a two-step process. A determination is first made as to whether it is more likely than not that the income tax position will be sustained, based upon technical merits, upon examination by the taxing authorities. If the income tax position is expected to meet the more likely than not criteria, the benefit recorded in the financial statements equals the largest amount that is greater than 50% likely to be realized upon its ultimate settlement. At March 31, 2016 and December 31, 2015 there were no uncertain tax positions. Warrants The Company has issued warrants, which allow the warrant holder to purchase one share of stock at a specified price for a specified period of time. The Company records equity instruments including warrants issued to non-employees based on the fair value at the date of issue. The fair value of warrants classified as equity instruments at the date of issuance is estimated using the Black-Scholes Model. The fair value of warrants classified as liabilities at the date of issuance is estimated using the Monte Carlo Simulation or Binomial model. Stock Based Compensation The Company records 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 ended March 31, 2016 and 2015 share-based compensation for options attributable to employees, officers and Board members were approximately $30,053 and $191,570. These amounts have been included in the Company’s statements of operations. Compensation costs for stock options which vest over time are recognized over the vesting period. As of March 31, 2016, the Company had approximately $202,000 of unrecognized compensation costs related to granted stock options that will be recognized over the remaining vesting period of approximately three years.

3. FAIR VALUE OF FINANCIAL INST

3. FAIR VALUE OF FINANCIAL INSTRUMENTS	3 Months Ended
	Mar. 31, 2016
Investments, All Other Investments [Abstract]
3. FAIR VALUE OF FINANCIAL INSTRUMENTS	The guidance for fair value measurements, ASC820, Fair Value Measurements and Disclosures · 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 March 31, 2016. The fair value of the warrants was estimated using the Binomial Simulation model. Gains and losses from derivative contracts are included in net gain (loss) from derivative contracts in the statement of operations. The fair value of the Company’s derivative warrants is classified as a Level 3 measurement, since unobservable inputs are used in the valuation. The following table presents the fair value for those liabilities measured on a recurring basis as of March 31, 2016 and December 31, 2015: FAIR VALUE MEASUREMENTS (In Thousands) The following is summary of items that the Company measures at fair value on a recurring basis: Fair Value at March 31, 2016 Level 1 Level 2 Level 3 Total Warrants issued in connection with the issuance of Series C preferred stock $ — $ — $ (70 ) $ (70 ) Warrants issued in connection with the issuance of Series B preferred stock — — (612 ) (612 ) Warrants issued in connection with Senior Secured Debt — — (906 ) (906 ) Total long-term liabilities at fair value $ — $ — $ (1,588 ) $ (1,588 ) Fair Value at December 31, 2015 Level 1 Level 2 Level 3 Total Warrants issued in connection with the issuance of Series C preferred stock $ — $ — $ (1,145 ) $ (1,145 ) Warrants issued in connection with the issuance of Series B preferred stock — — (1,461 ) (1,461 ) Total long-term liabilities at fair value $ — $ — $ (2,606 ) $ (2,606 ) The following is a summary of changes to Level 3 instruments during the three months ended March 31, 2016: Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Senior Secured Debt Series B Warrants Series C Warrants Total Balance, December 31, 2015 $ — $ (1,461 ) $ (1,145 ) (2,606 ) Warrants issued during the period (377 ) — — (377 ) Change in fair value during the period (529 849 1,075 1,395 Balance, March 31, 2016 $ (906 $ (612 ) $ (70 ) $ (1,588 ) As of March 31, 2016, the fair value of warrants was approximately $1.6 million. A net change of approximately $1.4 million has been recorded to the accompanying statement of operations for the three months ended.

4. STOCKHOLDERS' DEFICIT

4. STOCKHOLDERS' DEFICIT	3 Months Ended
	Mar. 31, 2016
Equity [Abstract]
4. STOCKHOLDERS' DEFICIT	Common Stock The Company has authorized 1,000,000,000 shares of common stock with $0.001 par value, of which 5,322,003 were issued and outstanding as of March 31, 2016. For the year ended December 31, 2015, there were 1,000,000,000 authorized shares of common stock, of which 2,371,017 were issued and outstanding. On February 24, 2016, the Company implemented a 1:100 reverse stock split of all of its issued and outstanding common stock. As a result of the reverse stock split, every 100 shares of issued and outstanding common stock of the Company were converted into 1 share. All fractional shares created by the reverse stock split were rounded to the nearest whole share. The number of the authorized shares did not change. For the three months ended March 31, 2016, the Company issued 2,950,986 shares of common stock as listed below: Series C Preferred Stock Conversions 1,511,350 Series C Preferred Stock Dividends 631,047 Convertible Debt Conversions 808,589 Total 2,950,986 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 redeemable convertible preferred stock, none of which remain outstanding, 3,000 shares of preferred stock as Series B Preferred Stock, of which zero shares were issued and outstanding at both March 31, 2016 and December 31, 2015 and 9,000 shares of preferred stock as Series C Convertible Preferred Stock, of which 4,966 and 5,555 were issued and outstanding at March 31, 2016 and December 31, 2015, respectively. On May 3, 2016, the board of directors designated 20,250 shares of preferred stock as Series C1 Convertible Preferred Stock. See Note 10, Subsequent Events. Series C Convertible Preferred Stock On June 29, 2015, the Company entered into a securities purchase agreement with certain accredited investors for the issuance and sale of an aggregate of 6,737 shares of Series C convertible preferred stock, at a purchase price of $750 per share and a stated value of $1,000 per share. On September 3, 2015 the Company entered into an interim agreement amending the securities purchase agreement to provide for certain of the investors to purchase an additional aggregate of 1,166 shares. Total cash and non-cash expenses were valued at $853,000, resulting in net proceeds of $3,698,000. Pursuant to the Series C certificate of designations, shares of Series C preferred stock are convertible into common stock by their holder at any time, and may be mandatorily convertible upon the achievement of specified average trading prices for the Company’s common stock. At March 31, 2016, there were 4,966 shares outstanding with a conversion price of $0.09375 per share, such that each share of Series C preferred stock would convert into approximately 52,977,774 shares of the Company’s 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 Series C certificate of designations. The conversion price will automatically adjust downward to 80% of the then-current market price of the Company’s common stock 15 trading days after any reverse stock split of the Company’s common stock, and 5 trading days after any conversions of the Company’s outstanding convertible debt. Holders of the Series C preferred stock are entitled to quarterly cumulative dividends at an annual rate of 12.0% until 42 months after the original issuance date (the “Dividend End Date”), payable in cash or, subject to certain conditions, the Company’s common stock. In addition, upon conversion of the Series C Preferred Stock prior to the Dividend End Date, the Company will also pay to the converting holder a “make-whole payment” equal to the amount of unpaid dividends through the Dividend End Date on the converted shares. The Series C preferred stock generally has no voting rights except as required by Delaware law. Upon the Company’s liquidation or sale to or merger with another corporation, each share will be entitled to a liquidation preference of $1,000, plus any accrued but unpaid dividends. In addition, the purchasers of the Series C preferred stock received, on a pro rata basis, warrants exercisable to purchase an aggregate of approximately 1,247,737 shares of Company’s common stock. The warrants contain anti-dilution adjustments in the event that the Company issues shares of common stock, or securities exercisable or convertible into shares of common stock, at prices below the exercise price of such warrants. As a result of the anti-dilution protection, the Company is required to account for the warrants as a liability recorded at fair value each reporting period. At March 31, 2016, the exercise price per share was $0.09375. Warrants The following table summarizes transactions involving the Company’s outstanding warrants to purchase common stock for the quarter ended March 31, 2016: Warrants (Underlying Shares) Outstanding, January 1, 2016 2,802,384 Issuances 28,952,716 Canceled / Expired - Exercised - Outstanding, March 31, 2016 31,755,100 The Company had the following shares reserved for the warrants as of March 31, 2016: Warrants (Underlying Shares) Exercise Price Expiration Date 4,399 (1) $68.00 per share April 1, 2016 2,852 (2) $105.00 per share November 20, 2016 18,581 (3) $10.46 per share May 23, 2018 14,176,202 (3) $0.09375 per share May 23, 2018 2,000 (4) $50.00 per share April 23, 2019 5,618 (4) $45.00 per share May 22, 2019 1,842 (5) $38.00 per share September 10, 2019 3,255 (6) $46.081 per share September 27, 2019 7,553 (7) $28.13 per share December 2, 2019 83,927 (8) $9.00 per share December 2, 2020 83,927 (8) $11.00 per share December 2, 2020 20,000 (9) $25.50 per share March 30, 2018 17,547 (10) $11.88 per share June 29, 2020 526,421 (11) $1.03 per share June 29, 2020 273,684 (12) $1.03 per share September 4, 2020 289,737 (13) $1.03 per share September 21, 2020 5,163 (14) $11.88 per share September 4, 2020 157,895 (15) $1.03 per share October 23, 2020 5,163 (16) $11.88 per share October 23, 2020 16,069,333 (17) $0.09375 per share February 12, 2021 31,755,100 (1) Issued in February 2014 as part of a buy-back of a minority interest in Interscan in December 2012. (2) Issued as part of a November 2011 private placement. (3) Issued in June 2015 in exchange for warrants originally issued as part of a May 2013 private placement. These warrants have anti-dilution and price protection and adjust periodically as described later in the notes. (4) Issued to a placement agent in conjunction with an April 2014 private placement. (5) Issued to a placement agent in conjunction with a September 2014 private placement. (6) Issued as part of a September 2014 Regulation S offering. (7) Issued to a placement agent in conjunction with a 2014 public offering. (8) Issued in June 2015 in exchange for warrants originally issued as part of a 2014 public offering. (9) Issued as part of a March 2015 private placement. (10) Issued to a placement agent in conjunction with a June 2015 private placement. (11) Issued as part of a June 2015 private placement. (12) Issued as part of a June 2015 private placement. (13) Issued as part of a June 2015 private placement. (14) Issued to a placement agent in conjunction with a June 2015 private placement. (15) Issued as part of a June 2015 private placement. (16) Issued to a placement agent in conjunction with a June 2015 private placement. (17) Issued to a placement agent and a senior secured convertible note holder. These warrants have anti-dilution and price protection and adjust periodically as described later in the notes.

5. STOCK OPTIONS

5. STOCK OPTIONS	3 Months Ended
	Mar. 31, 2016
Notes to Financial Statements
5. STOCK OPTIONS	Under the Company’s 1995 Stock Plan (the “Plan”), a total of 26,616 shares remained available at March 31, 2016 and 98,451 shares were subject to stock options outstanding as of that date, bringing the total number of shares subject to stock options outstanding and those remaining available for issue to 132,552 shares of common stock as of March 31, 2016. The Plan allows the issuance of incentive stock options, nonqualified stock options, and stock purchase rights. The exercise price of options is determined by the Company’s board of directors, but incentive stock options must be 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 fair value of stock options granted in the period ended March 31, 2015 were estimated using the Black-Scholes option pricing model. No options were issued during the period ended March 31, 2016. Stock option activity for March 31, 2016 as follows: 2016 Weighted Average Exercise Shares Price Outstanding at beginning of year 105,936 $ 45.00 Options granted - $ - Options exercised - $ - Options expired/forfeited (7,485 ) $ 43.00 Outstanding at end of year 98,451 $ 45.00

6. LITIGATION AND CLAIMS

6. LITIGATION AND CLAIMS	3 Months Ended
	Mar. 31, 2016
Notes to Financial Statements
6. LITIGATION AND CLAIMS	From time to time, the Company may be involved in various legal proceedings and claims arising in the ordinary course of business. Management believes that the dispositions of these matters, individually or in the aggregate, are not expected to have a material adverse effect on the Company’s financial condition. However, depending on the amount and timing of such disposition, an unfavorable resolution of some or all of these matters could materially affect the future results of operations or cash flows in a particular period. As of March 31, 2016 and December 31, 2015, there was no accrual recorded for any potential losses related to pending litigation.

7. NOTES PAYABLE

7. NOTES PAYABLE	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Debt Disclosure [Abstract]
7. NOTES PAYABLE	Short Term Notes Payable At March 31, 2016 and December 31, 2015, the Company maintained notes payable and accrued interest to related parties totaling $241,000 and $682,000, respectively. These notes are short term, straight-line amortizing notes. The notes carry an annual interest rate of between 5% and 10%. At March 31, 2016, the Company maintained a note payable to Premium Assignment Corporation, an insurance premium financing company, of approximately $17,500. This note is 10 month straight-line amortizing loan dated June 24, 2015. The note carries annual interest of 5.2%. The balance due to on the Premium Assignment note was approximately $17,500 and $70,000 at March 31, 2016 and December 31, 2015, respectively. Notes Payable in Default At March 31, 2016, and December 31, 2015 the Company maintained notes payable and accrued interest to related and unrelated parties totaling $590,000 and $133,000, respectively. The notes carry interest at 5% to 10% and have default rates as high a 16.5%. As of March 31, 2016 the notes are accruing interest at the default rate.	On September 10, 2014, the Company sold a secured promissory note to an accredited investor with an initial principal amount of $1,275,000, for a purchase price of $700,000 (an original issue discount of $560,000). The Company may prepay the note at any time. The note is secured by the Company’s current and future accounts receivable and inventory, pursuant to a security agreement entered into in connection with the sale. On March 10, 2015, May 4, 2015, June 1, 2015, June 16, 2015, June 29, 2015, January 21, January 29 and February 12, 2016 the Company amended the terms of the note to extend the maturity ultimately until August 31, 2016. During the extension, interest accrues on the note at a rate of the lesser of 18% per year or the maximum rate permitted by applicable law. On February 11, 2016, the Company consented to an assignment of the note to two accredited investors. In connection with the assignment, the holders waived an ongoing event of default under the notes related to the Company’s minimum market capitalization, and agreed to eliminate the requirement going forward. Pursuant to the terms of the amended note, the holder may convert the outstanding balance into shares of common stock at a conversion price per share equal to the lower of (1) $25.0 or (2) 75% of the lowest daily volume weighted average price of the common stock during the five days prior to conversion. If the conversion price at the time of any conversion is lower than $15.00, the Company has the option of delivering the conversion amount in cash in lieu of shares of common stock. On March 7, 2016, the Company further amended the notes to eliminate the volume limitations on sales of common stock issued or issuable upon conversion of the notes. The balance due related to this note was $591,244 and $685,864 at March 31, 2016 and December 31, 2015, respectively. Total debt issuance costs originally capitalized was approximately $130,000. This amount was being amortized over six months and is fully amortized as of March 31, 2015. Total amortized expense for the three months ended March 31, 2015 was approximately $49,000. For the three months ended March 31, 2015, the Company recorded amortization of approximately $213,000 on the discount. The original issue discount of $560,000 was fully amortized as of March 31, 2015. On February 11, 2016, the Company entered into a securities purchase agreement with an accredited investor for the issuance and sale on February 12, 2016 of $1.4375 million in aggregate principal amount of a senior secured convertible note for an aggregate purchase price of $1.15 million (a 20% original issue discount of $287,500) and a discount for debt issuance costs paid at closing of $121,000 for a total of $408,500. In addition, the investor received a warrant exercisable to purchase an aggregate of approximately 1,796,875 million shares of the Company’s common stock. The Company allocated proceeds totaling 359,555 to the fair value of the warrants at issuance. This was recorded as an additional discount on the debt. The convertible note matures on the second anniversary of issuance and, in addition to the 20% original issue discount, accrues interest at a rate of 17% per year. The Company will pay monthly interest coupons and, beginning six months after issuance, will pay amortized quarterly principal payments. If the Company does not receive, on or before the first anniversary after issuance, an aggregate of at least $3.0 million from future equity or debt financings or non-dilutive grants, then the holder will have the option of accelerating the maturity date to the first anniversary of issuance. The Company may prepay the convertible note, in whole or in part, without penalty, upon 20 days’ prior written notice. Subject to resale restrictions under Federal securities laws and the availability of sufficient authorized but unissued shares of the Company’s common stock, the convertible note is convertible at any time, in whole or in part, at the holder’s option, into shares of the Company’s common stock, at a conversion price equal to the lesser of $0.80 per share or 70% of the average closing price per share for the five trading days prior to issuance, subject to certain customary adjustments and anti-dilution provisions contained in the convertible note. As of March 31, 2016, the balance on the convertible debt was $676,110 (net of debt issuance costs of $44,540 and debt discount of $716,850). The convertible note includes customary event of default provisions and a default interest rate of the lesser of 22% or the maximum amount permitted by law. Upon the occurrence of an event of default, the holder may require the Company to redeem the convertible note at 120% of the outstanding principal balance. The convertible note is secured by a lien on all of the Company’s assets, including its intellectual property, pursuant to a security agreement entered into by the Company and GPB in connection with the transaction. The warrant is exercisable at any time, pending availability of sufficient authorized but unissued shares of the Company’s common stock, at an exercise price per share equal to the conversion price of the convertible note, subject to certain customary adjustments and anti-dilution provisions contained in the warrant. The warrant has a five-year term. As of March 31, 2016, the exercise price had been adjusted to $0.09375 and the number of common stock shares exchangeable for was 15,333,333. As of March 31, 2016, the effective interest rate considering debt costs was 29%. The Company used a placement agent in connection with the transaction. For its services, the placement agent received a cash placement fee equal to 4% of the aggregate gross proceeds from the transaction and a warrant to purchase shares of common stock equal to an aggregate of 6% of the total number of shares underlying the securities sold in the transaction, at an exercise price equal to, and terms otherwise identical to, the warrant issued to the investor. Finally, the Company agreed to reimburse the placement agent for its reasonable out-of-pocket expenses. In connection with the transaction, on February 12, 2016, the Company and the investor entered into a four-year consulting agreement, pursuant to which the investor will provide management consulting services to the Company in exchange for a royalty payment, payable quarterly, equal to 3.5% of the Company’s revenues from the sale of products. As of March 31, 2016 the investor had earned approximately $3,000 of royalties.

8. CONVERTIBLE DEBT

8. CONVERTIBLE DEBT	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Convertible Debt
8. CONVERTIBLE DEBT	Short Term Notes Payable At March 31, 2016 and December 31, 2015, the Company maintained notes payable and accrued interest to related parties totaling $241,000 and $682,000, respectively. These notes are short term, straight-line amortizing notes. The notes carry an annual interest rate of between 5% and 10%. At March 31, 2016, the Company maintained a note payable to Premium Assignment Corporation, an insurance premium financing company, of approximately $17,500. This note is 10 month straight-line amortizing loan dated June 24, 2015. The note carries annual interest of 5.2%. The balance due to on the Premium Assignment note was approximately $17,500 and $70,000 at March 31, 2016 and December 31, 2015, respectively. Notes Payable in Default At March 31, 2016, and December 31, 2015 the Company maintained notes payable and accrued interest to related and unrelated parties totaling $590,000 and $133,000, respectively. The notes carry interest at 5% to 10% and have default rates as high a 16.5%. As of March 31, 2016 the notes are accruing interest at the default rate.	On September 10, 2014, the Company sold a secured promissory note to an accredited investor with an initial principal amount of $1,275,000, for a purchase price of $700,000 (an original issue discount of $560,000). The Company may prepay the note at any time. The note is secured by the Company’s current and future accounts receivable and inventory, pursuant to a security agreement entered into in connection with the sale. On March 10, 2015, May 4, 2015, June 1, 2015, June 16, 2015, June 29, 2015, January 21, January 29 and February 12, 2016 the Company amended the terms of the note to extend the maturity ultimately until August 31, 2016. During the extension, interest accrues on the note at a rate of the lesser of 18% per year or the maximum rate permitted by applicable law. On February 11, 2016, the Company consented to an assignment of the note to two accredited investors. In connection with the assignment, the holders waived an ongoing event of default under the notes related to the Company’s minimum market capitalization, and agreed to eliminate the requirement going forward. Pursuant to the terms of the amended note, the holder may convert the outstanding balance into shares of common stock at a conversion price per share equal to the lower of (1) $25.0 or (2) 75% of the lowest daily volume weighted average price of the common stock during the five days prior to conversion. If the conversion price at the time of any conversion is lower than $15.00, the Company has the option of delivering the conversion amount in cash in lieu of shares of common stock. On March 7, 2016, the Company further amended the notes to eliminate the volume limitations on sales of common stock issued or issuable upon conversion of the notes. The balance due related to this note was $591,244 and $685,864 at March 31, 2016 and December 31, 2015, respectively. Total debt issuance costs originally capitalized was approximately $130,000. This amount was being amortized over six months and is fully amortized as of March 31, 2015. Total amortized expense for the three months ended March 31, 2015 was approximately $49,000. For the three months ended March 31, 2015, the Company recorded amortization of approximately $213,000 on the discount. The original issue discount of $560,000 was fully amortized as of March 31, 2015. On February 11, 2016, the Company entered into a securities purchase agreement with an accredited investor for the issuance and sale on February 12, 2016 of $1.4375 million in aggregate principal amount of a senior secured convertible note for an aggregate purchase price of $1.15 million (a 20% original issue discount of $287,500) and a discount for debt issuance costs paid at closing of $121,000 for a total of $408,500. In addition, the investor received a warrant exercisable to purchase an aggregate of approximately 1,796,875 million shares of the Company’s common stock. The Company allocated proceeds totaling 359,555 to the fair value of the warrants at issuance. This was recorded as an additional discount on the debt. The convertible note matures on the second anniversary of issuance and, in addition to the 20% original issue discount, accrues interest at a rate of 17% per year. The Company will pay monthly interest coupons and, beginning six months after issuance, will pay amortized quarterly principal payments. If the Company does not receive, on or before the first anniversary after issuance, an aggregate of at least $3.0 million from future equity or debt financings or non-dilutive grants, then the holder will have the option of accelerating the maturity date to the first anniversary of issuance. The Company may prepay the convertible note, in whole or in part, without penalty, upon 20 days’ prior written notice. Subject to resale restrictions under Federal securities laws and the availability of sufficient authorized but unissued shares of the Company’s common stock, the convertible note is convertible at any time, in whole or in part, at the holder’s option, into shares of the Company’s common stock, at a conversion price equal to the lesser of $0.80 per share or 70% of the average closing price per share for the five trading days prior to issuance, subject to certain customary adjustments and anti-dilution provisions contained in the convertible note. As of March 31, 2016, the balance on the convertible debt was $676,110 (net of debt issuance costs of $44,540 and debt discount of $716,850). The convertible note includes customary event of default provisions and a default interest rate of the lesser of 22% or the maximum amount permitted by law. Upon the occurrence of an event of default, the holder may require the Company to redeem the convertible note at 120% of the outstanding principal balance. The convertible note is secured by a lien on all of the Company’s assets, including its intellectual property, pursuant to a security agreement entered into by the Company and GPB in connection with the transaction. The warrant is exercisable at any time, pending availability of sufficient authorized but unissued shares of the Company’s common stock, at an exercise price per share equal to the conversion price of the convertible note, subject to certain customary adjustments and anti-dilution provisions contained in the warrant. The warrant has a five-year term. As of March 31, 2016, the exercise price had been adjusted to $0.09375 and the number of common stock shares exchangeable for was 15,333,333. As of March 31, 2016, the effective interest rate considering debt costs was 29%. The Company used a placement agent in connection with the transaction. For its services, the placement agent received a cash placement fee equal to 4% of the aggregate gross proceeds from the transaction and a warrant to purchase shares of common stock equal to an aggregate of 6% of the total number of shares underlying the securities sold in the transaction, at an exercise price equal to, and terms otherwise identical to, the warrant issued to the investor. Finally, the Company agreed to reimburse the placement agent for its reasonable out-of-pocket expenses. In connection with the transaction, on February 12, 2016, the Company and the investor entered into a four-year consulting agreement, pursuant to which the investor will provide management consulting services to the Company in exchange for a royalty payment, payable quarterly, equal to 3.5% of the Company’s revenues from the sale of products. As of March 31, 2016 the investor had earned approximately $3,000 of royalties.

9. INCOME (LOSS) PER COMMON SHA

9. INCOME (LOSS) PER COMMON SHARE	3 Months Ended
	Mar. 31, 2016
Earnings Per Share [Abstract]
9. INCOME (LOSS) PER COMMON SHARE	Basic net income (loss) per share attributable to common stockholders amounts are computed by dividing the net income (loss) plus preferred stock dividends and deemed dividends on preferred stock by the weighted average number of shares outstanding during the period. Diluted net income (loss) per share attributable to common stockholders amounts are computed by dividing the net income (loss) plus preferred stock dividends, deemed dividends on preferred stock, after-tax interest on convertible debt and convertible dividends by the weighted average number of shares outstanding during the period, plus Series C convertible preferred stock, convertible debt, convertible preferred dividends and warrants convertible into common stock shares.

10. SUBSEQUENT EVENTS

10. SUBSEQUENT EVENTS	3 Months Ended
	Mar. 31, 2016
Subsequent Events [Abstract]
10. SUBSEQUENT EVENTS	Between April 27, 2016 and May 3, 2016, the Company entered into various agreements with certain holders of Series C preferred stock, including John Imhoff, the chairman of the Company’s board of directors, pursuant to which those holders separately agreed to exchange each share of Series C preferred stock held for 2.25 shares of the Company’s newly created Series C1 preferred stock and 9,600 shares of the Company’s common stock (the “Series C Exchanges”). In connection with the Series C Exchanges, each holder also agreed to roll over the $1,000 stated value per share of the holder’s shares of Series C1 preferred stock into the next qualifying financing undertaken by the Company on a dollar-for-dollar basis and, except in the event of an additional $50,000 cash investment in the Company by the holder, to execute a customary “lockup” agreement in connection with the financing. In total, for 1,916 shares of Series C preferred stock surrendered, the Company issued 4,312 shares of Series C1 preferred stock and 18,396,800 shares of common stock. The Series C1 preferred stock has terms that are substantially the same as the Series C preferred stock, except that the Series C1 preferred stock does not pay dividends (unless and to the extent declared on the common stock) or at-the-market “make-whole payments.” Separately, on April 27, 2016, the Company entered into a Rollover and Amendment Agreement with another holder of Series C preferred stock pursuant to which the holder agreed to roll over any shares of Series C preferred stock (stated value plus make-whole dividend), as well as any remaining principal and accrued interest on the Company’s convertible promissory note the holder holds, into the Company’s next financing, all on a dollar-for-dollar basis, as long as the next financing involves at least $1 million in cash from investors unaffiliated with the holder. The holder also agreed to return to the Company for cancelation warrants exercisable for 7,148,813 shares of the Company’s common stock that it holds. Except in the event of an additional $50,000 cash investment by the holder in the Company’s next financing, the holder has agreed to execute a customary “lockup” agreement in connection with the financing. Finally, the holder, as the holder of a majority of the outstanding Series C preferred stock, agreed to amend the Series C stock purchase agreement to eliminate any participation rights held by the Series C shareholders and to waive operation of certain anti-dilution provisions of the Series C that would otherwise be triggered by the transactions. On May 5, 2016 and May 9, 2016 respectively, Jonathan Niloff, age 62, and Linda Rosenstock, age 65, formally announced their decisions not to stand for reelection to the Company’s board of directors at the Company’s 2016 annual meeting of stockholders. Dr. Niloff was appointed to the board in 2010 and Dr. Rosenstock was appointed in 2012. Both of their decisions to resign were for personal reasons and were not a result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.

2. SIGNIFICANT ACCOUNTING POL16

2. SIGNIFICANT ACCOUNTING POLICIES (Policies)	3 Months Ended
	Mar. 31, 2016
Accounting Policies [Abstract]
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.
Principles of Consolidation	The accompanying consolidated financial statements include the accounts of Guided Therapeutics, Inc. and its wholly owned subsidiary.
Accounting Standards Updates	In April 2015, the FASB issued Accounting Standards Update No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, or ASU 2015-03. ASU 2015-03 amends current presentation guidance by requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. Prior to the issuance of ASU 2015-03 debt issuance costs were required to be presented as an asset in the balance sheet. On January 1, 2016, the Company adopted the provisions of ASU 2015-03 and prior period amounts have been reclassified to conform to the current period presentation.
Accounts Receivable	The Company performs periodic credit evaluations of its customers’ 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. The Company does not accrue interest receivable on past due accounts receivable.
Revenue Recognition	Revenue from the sale of the Company’s products is recognized upon shipment of such products to its customers. The Company recognizes revenue from contracts on a straight line basis, over the terms of the contract. The Company recognizes revenue from grants based on the grant agreement, at the time the expenses are incurred. During the three months ended March 31, 2016, the majority of the Company’s revenues were from four customers. Revenue from these customers totaled approximately $262,000 or 100% for the period ended March 31, 2016 and approximately $127,000 or 73% of total revenue for the period ended March 31, 2015. Accounts receivable due from those customers represents 59% for the period ended March 31, 2016.
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.
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 March 31, 2016 and December 31, 2015, our inventories were as follows (in thousands): March 31, December 31, 2016 2015 Raw materials $ 827 $ 686 Work in process 256 186 Finished goods 326 365 Inventory reserve (156 ) (118 ) Total $ 1,253 $ 1,119
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. Property and equipment are summarized as follows at March 31, 2016 and December 31, 2015 (in thousands): March 31, December 31, 2016 2015 Equipment $ 1,377 $ 1,377 Software 740 740 Furniture and fixtures 124 124 Leasehold Improvement 199 199 2,440 2,440 Less accumulated depreciation (2,174 ) (2,122 ) Total $ 264 $ 318
Accrued Liabilities	Accrued liabilities are summarized as follows (in thousands): March 31, 2016 December 31, 2015 Accrued compensation $ 1,249 $ 1,235 Accrued professional fees 71 154 Deferred rent 31 36 Accrued warranty 70 82 Accrued vacation 190 177 Accrued interest 33 — Accrued dividends 332 167 Other accrued expenses 93 56 Total $ 2,069 $ 1,907
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 Company uses the liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Management provides valuation allowances against the deferred tax assets for amounts that are not considered more likely than not to be realized. The Company is current with its federal and applicable state tax returns filings. Although we have been experiencing recurring losses, we are obligated to file tax returns for compliance with Internal Revenue Service (“IRS”) regulations and that of applicable state jurisdictions. As December 31, 2015, the Company has approximately $28.0 million of net operating loss 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. None of the Company’s federal or state income tax returns are currently under examination by the IRS or state authorities.
Uncertain Tax Positions	Effective January 1, 2007 the Company adopted ASC guidance regarding accounting for uncertainty in income taxes. This guidance clarifies the accounting for income taxes by prescribing the minimum recognition threshold an income tax position is required to meet before being recognized in the financial statements and applies to all income tax positions. Each income tax position is assessed using a two-step process. A determination is first made as to whether it is more likely than not that the income tax position will be sustained, based upon technical merits, upon examination by the taxing authorities. If the income tax position is expected to meet the more likely than not criteria, the benefit recorded in the financial statements equals the largest amount that is greater than 50% likely to be realized upon its ultimate settlement. At March 31, 2016 and December 31, 2015 there were no uncertain tax positions.
Warrants	The Company has issued warrants, which allow the warrant holder to purchase one share of stock at a specified price for a specified period of time. The Company records equity instruments including warrants issued to non-employees based on the fair value at the date of issue. The fair value of warrants classified as equity instruments at the date of issuance is estimated using the Black-Scholes Model. The fair value of warrants classified as liabilities at the date of issuance is estimated using the Monte Carlo Simulation or Binomial model.
Stock Based Compensation	The Company records 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 ended March 31, 2016 and 2015 share-based compensation for options attributable to employees, officers and Board members were approximately $30,053 and $191,570. These amounts have been included in the Company’s statements of operations. Compensation costs for stock options which vest over time are recognized over the vesting period. As of March 31, 2016, the Company had approximately $202,000 of unrecognized compensation costs related to granted stock options that will be recognized over the remaining vesting period of approximately three years.

2. SIGNIFICANT ACCOUNTING POL17

2. SIGNIFICANT ACCOUNTING POLICIES (Tables)	3 Months Ended
	Mar. 31, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Inventory Valuation	March 31, December 31, 2016 2015 Raw materials $ 827 $ 686 Work in process 256 186 Finished goods 326 365 Inventory reserve (156 ) (118 ) Total $ 1,253 $ 1,119
Property and Equipment	March 31, December 31, 2016 2015 Equipment $ 1,377 $ 1,377 Software 740 740 Furniture and fixtures 124 124 Leasehold Improvement 199 199 2,440 2,440 Less accumulated depreciation (2,174 ) (2,122 ) Total $ 264 $ 318
Accrued Liabilities	March 31, 2016 December 31, 2015 Accrued compensation $ 1,249 $ 1,235 Accrued professional fees 71 154 Deferred rent 31 36 Accrued warranty 70 82 Accrued vacation 190 177 Accrued interest 33 — Accrued dividends 332 167 Other accrued expenses 93 56 Total $ 2,069 $ 1,907

3. FAIR VALUE OF FINANCIAL IN18

3. FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)	3 Months Ended
	Mar. 31, 2016
Investments, All Other Investments [Abstract]
Schedule fo fair value for liabilities measured on a recurring basis	The following is summary of items that the Company measures at fair value on a recurring basis: Fair Value at March 31, 2016 Level 1 Level 2 Level 3 Total Warrants issued in connection with the issuance of Series C preferred stock $ — $ — $ (70 ) $ (70 ) Warrants issued in connection with the issuance of Series B preferred stock — — (612 ) (612 ) Warrants issued in connection with Senior Secured Debt — — (906 ) (906 ) Total long-term liabilities at fair value $ — $ — $ (1,588 ) $ (1,588 ) Fair Value at December 31, 2015 Level 1 Level 2 Level 3 Total Warrants issued in connection with the issuance of Series C preferred stock $ — $ — $ (1,145 ) $ (1,145 ) Warrants issued in connection with the issuance of Series B preferred stock — — (1,461 ) (1,461 ) Total long-term liabilities at fair value $ — $ — $ (2,606 ) $ (2,606 ) The following is a summary of changes to Level 3 instruments during the three months ended March 31, 2016: Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Senior Secured Debt Series B Warrants Series C Warrants Total Balance, December 31, 2015 $ — $ (1,461 ) $ (1,145 ) (2,606 ) Warrants issued during the period (377 ) — — (377 ) Change in fair value during the period (529 849 1,075 1,395 Balance, March 31, 2016 $ (906 $ (612 ) $ (70 ) $ (1,588 )

4. STOCKHOLDERS' DEFICIT (Table

4. STOCKHOLDERS' DEFICIT (Tables)	3 Months Ended
	Mar. 31, 2016
Equity [Abstract]
Common stock issued	Series C Preferred Stock Conversions 1,511,350 Series C Preferred Stock Dividends 631,047 Convertible Debt Conversions 808,589 Total 2,950,986
Outstanding warrants	Warrants (Underlying Shares) Outstanding, January 1, 2016 2,802,384 Issuances 28,952,716 Canceled / Expired - Exercised - Outstanding, March 31, 2016 31,755,100
Shares reserved for warrants	Warrants (Underlying Shares) Exercise Price Expiration Date 4,399 (1) $68.00 per share April 1, 2016 2,852 (2) $105.00 per share November 20, 2016 18,581 (3) $10.46 per share May 23, 2018 14,176,202 (3) $0.09375 per share May 23, 2018 2,000 (4) $50.00 per share April 23, 2019 5,618 (4) $45.00 per share May 22, 2019 1,842 (5) $38.00 per share September 10, 2019 3,255 (6) $46.081 per share September 27, 2019 7,553 (7) $28.13 per share December 2, 2019 83,927 (8) $9.00 per share December 2, 2020 83,927 (8) $11.00 per share December 2, 2020 20,000 (9) $25.50 per share March 30, 2018 17,547 (10) $11.88 per share June 29, 2020 526,421 (11) $1.03 per share June 29, 2020 273,684 (12) $1.03 per share September 4, 2020 289,737 (13) $1.03 per share September 21, 2020 5,163 (14) $11.88 per share September 4, 2020 157,895 (15) $1.03 per share October 23, 2020 5,163 (16) $11.88 per share October 23, 2020 16,069,333 (17) $0.09375 per share February 12, 2021 31,755,100 (1) Issued in February 2014 as part of a buy-back of a minority interest in Interscan in December 2012. (2) Issued as part of a November 2011 private placement. (3) Issued in June 2015 in exchange for warrants originally issued as part of a May 2013 private placement. These warrants have anti-dilution and price protection and adjust periodically as described later in the notes. (4) Issued to a placement agent in conjunction with an April 2014 private placement. (5) Issued to a placement agent in conjunction with a September 2014 private placement. (6) Issued as part of a September 2014 Regulation S offering. (7) Issued to a placement agent in conjunction with a 2014 public offering. (8) Issued in June 2015 in exchange for warrants originally issued as part of a 2014 public offering. (9) Issued as part of a March 2015 private placement. (10) Issued to a placement agent in conjunction with a June 2015 private placement. (11) Issued as part of a June 2015 private placement. (12) Issued as part of a June 2015 private placement. (13) Issued as part of a June 2015 private placement. (14) Issued to a placement agent in conjunction with a June 2015 private placement. (15) Issued as part of a June 2015 private placement. (16) Issued to a placement agent in conjunction with a June 2015 private placement. (17) Issued to a placement agent and a senior secured convertible note holder. These warrants have anti-dilution and price protection and adjust periodically as described later in the notes.

5. STOCK OPTIONS (Tables)

5. STOCK OPTIONS (Tables)	3 Months Ended
	Mar. 31, 2016
Stock Options Tables
Stock Options activity	2016 Weighted Average Exercise Shares Price Outstanding at beginning of year 105,936 $ 45.00 Options granted - $ - Options exercised - $ - Options expired/forfeited (7,485 ) $ 43.00 Outstanding at end of year 98,451 $ 45.00

2. SIGNIFICANT ACCOUNTING POL21

2. SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Accounting Policies [Abstract]
Raw materials	$ 827	$ 686
Work in process	256	186
Finished goods	326	365
Inventory reserve	(156)	(118)
Total	$ 1,253	$ 1,119

2. SIGNIFICANT ACCOUNTING POL22

2. SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Property and equipment	$ 2,440	$ 2,440
Less accumulated depreciation	(2,174)	(2,122)
Total	264	318
Equipment
Property and equipment	1,377	1,377
Software
Property and equipment	740	740
Furniture and fixtures
Property and equipment	124	124
Leasehold Improvement
Property and equipment	$ 199	$ 199

2. SIGNIFICANT ACCOUNTING POL23

2. SIGNIFICANT ACCOUNTING POLICIES (Details 2) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Significant Accounting Policies Details 2
Accrued compensation	$ 1,249	$ 1,235
Accrued professional fees	71	154
Deferred rent	31	36
Accrued warranty	70	82
Accrued vacation	190	177
Accrued interest	33	0
Accrued dividends	332	167
Other accrued expenses	93	56
Total	$ 2,069	$ 1,907

3. FAIR VALUE OF FINANCIAL IN24

3. FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Series C Warrants	$ (70)	$ (1,145)
Series B warrants	(612)	(1,461)
Warrants issued in connection with Senior Secured Debt	(906)
Total long-term liabilities at fair value	(1,588)	(2,606)
Level 1
Series C Warrants	0	0
Series B warrants	0	0
Warrants issued in connection with Senior Secured Debt	0
Total long-term liabilities at fair value	0	0
Level 2
Series C Warrants	0	0
Series B warrants	0	0
Warrants issued in connection with Senior Secured Debt	0
Total long-term liabilities at fair value	0	0
Level 3
Series C Warrants	(70)	(1,145)
Series B warrants	(612)	(1,461)
Warrants issued in connection with Senior Secured Debt	(906)
Total long-term liabilities at fair value	$ (1,588)	$ (2,606)

3. FAIR VALUE OF FINANCIAL IN25

3. FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 1) - Level 3 $ in Thousands	3 Months Ended
	Mar. 31, 2016USD ($)shares
Beginning Balance	$ (2,606)
Warrants issued during the period	(377)
Change in fair value during the period	$ 1,395
Ending Balance | shares	(1,588)
Senior Secured Debt
Beginning Balance	$ 0
Warrants issued during the period	(377)
Change in fair value during the period	$ (529)
Ending Balance | shares	(906)
Series B Warrants
Beginning Balance	$ (1,461)
Warrants issued during the period	0
Change in fair value during the period	$ 849
Ending Balance | shares	(612)
Series C Warrants
Beginning Balance	$ (1,145)
Warrants issued during the period	0
Change in fair value during the period	$ 1,075
Ending Balance | shares	(70)

4. STOCKHOLDERS' DEFICIT (Detai

4. STOCKHOLDERS' DEFICIT (Details 1)	3 Months Ended
	Mar. 31, 2016shares
Equity [Abstract]
Series C Preferred Stock Conversions	1,511,350
Series C Preferred Stock Dividends	631,047
Convertible Debt Conversions	808,589
Total	2,950,986

4. STOCKHOLDERS' DEFICIT (Det27

4. STOCKHOLDERS' DEFICIT (Details 2)	3 Months Ended
	Mar. 31, 2016shares
Outstanding, March 31, 2016	31,755,100
Warrants
Outstanding, January 1, 2016	2,802,384
Issuances	28,952,716
Canceled / Expired	0
Exercised	0
Outstanding, March 31, 2016	31,755,100

4. STOCKHOLDERS' DEFICIT (Det28

4. STOCKHOLDERS' DEFICIT (Details 3) - $ / shares		3 Months Ended
		Mar. 31, 2016	Dec. 31, 2015
Warrants outstanding		31,755,100
Warrants exercise price		$ 45	$ 45
Warrant1Member
Warrants outstanding	[1]	4,399
Warrants exercise price		$ 68
Expiration date		Apr. 1, 2016
Warrant 2 [Member]
Warrants outstanding	[2]	2,852
Warrants exercise price		$ 105
Expiration date		Nov. 20, 2016
Warrant 3 [Member]
Warrants outstanding	[3]	18,581
Warrants exercise price		$ 10.46
Expiration date		May 23, 2018
Warrant 4 [Member]
Warrants outstanding	[3]	14,176,202
Warrants exercise price		$ .09375
Expiration date		May 23, 2018
Warrant 5 [Member]
Warrants outstanding	[4]	2,000
Warrants exercise price		$ 50
Expiration date		Apr. 23, 2019
Warrant 6 [Member]
Warrants outstanding		5,618
Warrants exercise price		$ 45
Expiration date		May 22, 2019
Warrant 7 [Member]
Warrants outstanding	[5]	1,842
Warrants exercise price		$ 38
Expiration date		Sep. 10, 2019
Warrant 8 [Member]
Warrants outstanding	[6]	3,255
Warrants exercise price		$ 46.081
Expiration date		Sep. 27, 2019
Warrant 9 [Member]
Warrants outstanding	[7]	7,553
Warrants exercise price		$ 28.13
Expiration date		Dec. 2, 2019
Warrant 10 [Member]
Warrants outstanding	[8]	83,927
Warrants exercise price		$ 9
Expiration date		Dec. 2, 2020
Warrant 11 [Member]
Warrants outstanding	[8]	83,927
Warrants exercise price		$ 11
Expiration date		Dec. 2, 2020
Warrant 12 [Member]
Warrants outstanding	[9]	20,000
Warrants exercise price		$ 25.50
Expiration date		Mar. 30, 2018
Warrant 13 [Member]
Warrants outstanding	[10]	17,547
Warrants exercise price		$ 11.88
Expiration date		Jun. 29, 2020
Warrant 14 [Member]
Warrants outstanding	[11]	526,421
Warrants exercise price		$ 1.03
Expiration date		Jun. 29, 2020
Warrant 15 [Member]
Warrants outstanding	[11]	273,684
Warrants exercise price		$ 1.03
Expiration date		Sep. 4, 2020
Warrant 16 [Member]
Warrants outstanding	[11]	289,737
Warrants exercise price		$ 1.03
Expiration date		Sep. 21, 2020
Warrant 17 [Member]
Warrants outstanding	[10]	5,163
Warrants exercise price		$ 11.88
Expiration date		Sep. 4, 2020
Warrant 18 [Member]
Warrants outstanding	[11]	157,895
Warrants exercise price		$ 1.03
Expiration date		Oct. 23, 2020
Warrant 19 [Member]
Warrants outstanding	[10]	5,163
Warrants exercise price		$ 11.88
Expiration date		Oct. 23, 2020
Warrant 20 [Member]
Warrants outstanding	[12]	16,069,333
Warrants exercise price		$ .09375
Expiration date		Feb. 12, 2021
[1]	Issued in February 2014 as part of a buy-back of a minority interest in Interscan in December 2012.
[2]	Issued as part of a November 2011 private placement.
[3]	Issued in June 2015 in exchange for warrants originally issued as part of a May 2013 private placement. These warrants have anti-dilution and price protection and adjust periodically as described later in the notes.
[4]	Issued to a placement agent in conjunction with an April 2014 private placement.
[5]	Issued to a placement agent in conjunction with a September 2014 private placement.
[6]	Issued as part of a September 2014 Regulation S offering.
[7]	Issued to a placement agent in conjunction with a 2014 public offering.
[8]	Issued in June 2015 in exchange for warrants originally issued as part of a 2014 public offering.
[9]	Issued as part of a March 2015 private placement.
[10]	Issued to a placement agent in conjunction with a June 2015 private placement.
[11]	Issued as part of a June 2015 private placement.
[12]	Issued to a placement agent and a senior secured convertible note holder. These warrants have anti-dilution and price protection and adjust periodically as described later in the notes.

5. STOCK OPTIONS (Details)

5. STOCK OPTIONS (Details)	3 Months Ended
	Mar. 31, 2016$ / sharesshares
Equity [Abstract]
Outstanding beginning balance, Shares | shares	105,936
Options granted, Shares | shares	0
Options exercised, Shares | shares	0
Options expired/forfeited, Shares | shares	(7,485)
Outstanding ending balance, Shares | shares	98,451
Outstanding beginning balance, Weighted average exercise price | $ / shares	$ 45
Options granted, Weighted average exercise price | $ / shares	0
Options exercised, Weighted average exercise price | $ / shares	0
Options expired/forfeited, Weighted average exercise price | $ / shares	43
Outstanding ending balance, Weighted average exercise price | $ / shares	$ 45

7. NOTES PAYABLE (Details Narra

7. NOTES PAYABLE (Details Narrative) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Debt Disclosure [Abstract]
Related party notes and accrued interest	$ 241	$ 682
Note payable in default, including related parties	$ 590	$ 133