Document and Entity Information
Document and Entity Information - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Apr. 08, 2018 | Jun. 30, 2017 | |
Document And Entity Information | |||
Entity Registrant Name | GUIDED THERAPEUTICS INC | ||
Entity Central Index Key | 924,515 | ||
Document Type | 10-K/A | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | true | ||
Amendment Description | This Amendment No. 1 is being filed solely for the purpose of correcting the number of shares of common stock outstanding as of April 8, 2018 on the cover page to 143,912,938. Except for this correction, there have been no changes in any of the financial or other information contained in the report. For convenience, the entire Annual Report on Form 10-K, as amended, is being re-filed. Currently-dated certifications from the Company’s Chief Executive Officer and Chief Financial Officer have been included as exhibits to this Amendment No. 1. | ||
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 Public Float | $ 300,000 | ||
Entity Common Stock, Shares Outstanding | 143,912,938 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,017 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 1 | $ 14 |
Accounts receivable, net of allowance for doubtful accounts of $160 and $279 at December 31, 2017 and 2016, respectively | 3 | 0 |
Inventory, net of reserves of $716 and $278 at December 31, 2017 and 2016, respectively | 265 | 773 |
Other current assets | 111 | 259 |
Total current assets | 380 | 1,046 |
Property and equipment, net | 49 | 126 |
Other assets | 60 | 320 |
Total noncurrent assets | 109 | 446 |
TOTAL ASSETS | 489 | 1,492 |
CURRENT LIABILITIES: | ||
Notes payable in default, including related parties | 1,091 | 1,008 |
Short-term notes payable, including related parties | 447 | 197 |
Convertible note in default | 2,321 | 2,361 |
Convertible notes payable, net | 783 | 468 |
Accounts payable | 3,019 | 2,600 |
Accrued liabilities | 4,247 | 2,670 |
Deferred revenue | 21 | 34 |
Total current liabilities | 11,929 | 9,338 |
Warrants, at fair value | 7,962 | 1,420 |
TOTAL LIABILITIES | 19,891 | 10,758 |
COMMITMENTS & CONTINGENCIES (Note 8) | ||
STOCKHOLDERS' EQUITY : | ||
Series C convertible preferred stock, $.001 par value; 9.0 shares authorized, 0.9 and 1.6 shares issued and outstanding as of December 31, 2017 and 2016, respectively. (Liquidation preference of $970 and $1,643 at December 31, 2017 and 2016, respectively). | 355 | 601 |
Series C1 convertible preferred stock, $.001 par value; 20.3 shares authorized, 4.3 shares issued and outstanding as of December 31, 2017 and 2016, respectively. (Liquidation preference of $4,312 at December 31, 2017 and 2016, respectively). | 701 | 701 |
Common stock, $.001 par value; 1,000,000 shares authorized, 49,563 and 669 shares issued and outstanding as of December 31, 2017 and 2016, respectively | 791 | 742 |
Additional paid-in capital | 117,416 | 116,380 |
Treasury stock, at cost | (132) | (132) |
Accumulated deficit | (138,533) | (127,558) |
TOTAL STOCKHOLDERS’ DEFICIT | (19,402) | (9,266) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $ 489 | $ 1,492 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
CURRENT ASSETS | ||
Accounts receivable, net of allowance | $ 160 | $ 279 |
Inventory, net of reserves | $ 716 | $ 278 |
STOCKHOLDERS' EQUITY : | ||
Series C convertible preferred stock, par value | $ 0.001 | $ 0.001 |
Series C convertible preferred stock, authorized | 9 | 9 |
Series C convertible preferred stock, issued | .9 | 1.6 |
Series C convertible preferred stock, outstanding | .9 | 1.6 |
Series C convertible preferred stock, liquidation preference | $ 970 | $ 1,643 |
Series C1 convertible preferred stock, par value | $ 0.001 | $ 0.001 |
Series C1 convertible preferred stock, authorized | 20.3 | 20.3 |
Series C1 convertible preferred stock, issued | 4.3 | 4.3 |
Series C1 convertible preferred stock, outstanding | 4.3 | 4.3 |
Series C1 convertible preferred stock, liquidation preference | $ 4,312 | $ 4,312 |
Common stock, par value | $ .001 | $ 0.001 |
Common stock, authorized | 1,000,000 | 1,000,000 |
Common stock, issued | 49,563 | 669 |
Common stock, outstanding | 49,563 | 669 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
REVENUE: | ||
Sales - devices and disposables | $ 244 | $ 605 |
Cost of goods sold | 530 | 493 |
Gross (loss) profit | (286) | 112 |
OPERATING EXPENSES: | ||
Research and development | 334 | 733 |
Sales and marketing | 245 | 393 |
General and administrative | 2,256 | 2,806 |
Total operating expenses | 2,835 | 3,932 |
Operating loss | (3,121) | (3,820) |
OTHER INCOME (EXPENSES) | ||
Other income | 18 | 68 |
Interest expense | (1,106) | (1,895) |
Change in fair value of warrants | (6,487) | 1,677 |
Total other income (expenses) | (7,575) | (150) |
LOSS FROM OPERATIONS | (10,696) | (3,970) |
PROVISION FOR INCOME TAXES | 0 | 0 |
NET LOSS | (10,696) | (3,970) |
DEEMED DIVIDENDS | 0 | 0 |
PREFERRED STOCK DIVIDENDS | (278) | (1,025) |
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ (10,974) | $ (4,995) |
BASIC AND DILUTED NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ (1.29) | $ (24.62) |
WEIGHTED AVERAGE SHARES OUTSTANDING | 8,479 | 203 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY - USD ($) $ in Thousands | Preferred Stock Series C | Preferred Stock Series C1 | Common Stock | Additional Paid-In Capital | Treasury Stock | Accumulated Deficit | Total |
Beginning Balance, Amount at Dec. 31, 2015 | $ 2,052 | $ 0 | $ 236 | $ 114,845 | $ (132) | $ (122,563) | $ (5,562) |
Beginning Balance, Shares at Dec. 31, 2015 | 6 | 0 | 3 | ||||
Preferred dividends | (191) | (191) | |||||
Issuance of common stock and warrants | 54 | 54 | |||||
Conversion of Series C preferred stock to common stock, Amount | $ (750) | $ 456 | 1,128 | (834) | 0 | ||
Conversion of Series C preferred stock to common stock, Shares | (2) | 531 | |||||
Conversion of debt into common stock, Amount | $ 20 | 238 | 258 | ||||
Conversion of debt into common stock, Shares | 53 | ||||||
Issuance of common stock due to Series B, Tranche B warrants exchanged for shares and rights to shares, Amount | $ 12 | (12) | 0 | ||||
Issuance of common stock due to Series B, Tranche B warrants exchanged for shares and rights to shares, Shares | 19 | ||||||
Series C preferred stock exchanged for Series C1 preferred stock, Amount | $ (751) | $ 701 | $ 18 | (18) | 0 | ||
Series C preferred stock exchanged for Series C1 preferred stock, Shares | (2) | 4 | 23 | ||||
Issuance of common stock for cash, Amount | 50 | 50 | |||||
Issuance of common stock for cash, Shares | 40 | ||||||
Stock-based compensation | 95 | 95 | |||||
Net Loss | (3,970) | (3,970) | |||||
Ending Balance, Amount at Dec. 31, 2016 | $ 601 | $ 701 | $ 742 | 116,380 | (132) | (127,558) | (9,266) |
Ending Balance, Shares at Dec. 31, 2016 | 2 | 4 | 669 | ||||
Preferred dividends | (2) | (2) | |||||
Conversion of Series C preferred stock to common stock, Amount | $ (246) | $ 17 | 506 | (277) | 0 | ||
Conversion of Series C preferred stock to common stock, Shares | (1) | 17,272 | |||||
Conversion of debt into common stock, Amount | $ 32 | 436 | 468 | ||||
Conversion of debt into common stock, Shares | 31,572 | ||||||
Issuance of common stock for note agreement, Amount | 35 | 35 | |||||
Issuance of common stock for note agreement, Shares | 50 | ||||||
Stock-based compensation | 59 | 59 | |||||
Net Loss | (10,696) | (10,696) | |||||
Ending Balance, Amount at Dec. 31, 2017 | $ 355 | $ 701 | $ 791 | $ 117,416 | $ (132) | $ (138,553) | $ (19,402) |
Ending Balance, Shares at Dec. 31, 2017 | 1 | 4 | 49,563 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (10,696) | $ (3,970) |
Adjustments to reconcile net loss to net cash used in operating activities | ||
Bad debt expense | 174 | 221 |
Depreciation and Amortization | 213 | 1,223 |
Stock-based compensation | 59 | 95 |
Change in fair value of warrants | 6,487 | (1,677) |
Changes in operating assets and liabilities: | ||
Accounts receivable | (9) | (31) |
Inventory | 508 | 345 |
Other current assets | 152 | 519 |
Other assets | 260 | (247) |
Accounts payable | 420 | 775 |
Deferred revenue | (13) | (183) |
Accrued liabilities | 1,301 | 1,128 |
Total adjustments | 9,552 | 2,168 |
Net cash used in operating activities | (1,144) | (1,802) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Net proceeds from issuance of common stock and warrants | 1,572 | 50 |
Proceeds from debt financing, net of discount and debt issuance costs | 0 | 1,958 |
Payments on notes | (441) | (227) |
Net cash provided by financing activities | 1,131 | 1,781 |
NET CHANGE IN CASH AND CASH EQUIVALENTS | (13) | (21) |
CASH AND CASH EQUIVALENTS, beginning of year | 14 | 35 |
CASH AND CASH EQUIVALENTS, end of year | 1 | 14 |
SUPPLEMENTAL SCHEDULE OF: | ||
Cash paid for Interest | 46 | 0 |
NONCASH INVESTING AND FINANCING ACTIVITIES: | ||
Issuance of common stock as debt repayment | 468 | 258 |
Dividends on preferred stock | $ 278 | $ 1,025 |
1. ORGANIZATION, BACKGROUND, AN
1. ORGANIZATION, BACKGROUND, AND BASIS OF PRESENTATION | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
1. ORGANIZATION, BACKGROUND, AND BASIS OF PRESENTATION | Guided Therapeutics, Inc. (formerly SpectRx, Inc.), together with its wholly owned subsidiary, InterScan, Inc. (formerly Guided Therapeutics, Inc.), collectively referred to herein as the “Company”, is a medical technology company focused on developing innovative medical devices that have the potential to improve healthcare. The Company’s primary focus is the continued commercialization of its LuViva non-invasive cervical cancer detection device and extension of its cancer detection technology into other cancers, including esophageal. The Company’s technology, including products in research and development, primarily relates to biophotonics technology for the non-invasive detection of cancers. Basis of Presentation All information and footnote disclosures included in the consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States. A 1:800 reverse stock split of all of the Company’s issued and outstanding common stock was implemented on November 7, 2016. As a result of the reverse stock split, every 800 shares of issued and outstanding common stock was converted into 1 share of common stock. All fractional shares created by the reverse stock split were rounded to the nearest whole share. The number of authorized shares of common stock did not change. The reverse stock split decreased the Company’s issued and outstanding shares of common stock from 453,694,400 shares to 570,707 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 December 31, 2017. On February 24, 2016, the Company had also implemented a 1:100 reverse stock split of its issued and outstanding common stock. 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 December 31, 2017, it had an accumulated deficit of approximately $138.5 million. To date, the Company has engaged primarily in research and development efforts and the early stages of marketing its products. The Company may not be successful in growing sales for its products. Moreover, required regulatory clearances or approvals may not be obtained in a timely manner, or at all. The Company’s products may not ever gain market acceptance and the Company may not ever generate significant revenues or achieve profitability. The development and commercialization of the Company’s products requires substantial development, regulatory, sales and marketing, manufacturing and other expenditures. The Company expects operating losses to continue for the foreseeable future as it continues to expend substantial resources to complete development of its products, obtain regulatory clearances or approvals, build its marketing, sales, manufacturing and finance capabilities, and conduct further research and development. Going Concern The Company’s consolidated financial statements have been prepared and presented on a basis assuming it will continue as a going concern. The factors below raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary from the outcome of this uncertainty. At December 31, 2017, the Company had a negative working capital of approximately $11.6 million, accumulated deficit of $138.5 million, and incurred a net loss of $10.7 million for the year then ended. Stockholders’ deficit totaled approximately $19.4 million at December 31, 2017, primarily due to recurring net losses from operations, deemed dividends on warrants and preferred stock, offset by proceeds from the exercise of options and warrants and proceeds from sales of stock. The Company’s capital-raising efforts are ongoing. If sufficient capital cannot be raised during 2018, the Company will continue its plans of curtailing operations by reducing discretionary spending and staffing levels, and attempting to operate by only pursuing activities for which it has external financial support. However, there can be no assurance that such external financial support will be sufficient to maintain even limited operations or that the Company will be able to raise additional funds on acceptable terms, or at all. In such a case, the Company might be required to enter into unfavorable agreements or, if that is not possible, be unable to continue operations, and to the extent practicable, liquidate and/or file for bankruptcy protection. The Company had warrants exercisable for approximately 294.1 million shares of its common stock outstanding at December 31, 2017, with exercise prices ranging between $0.005 and $40,000 per share. Exercises of these warrants would generate a total of approximately $6.2 million in cash, assuming full exercise, although the Company cannot be assured that holders will exercise any warrants. Management may obtain additional funds through the public or private sale of debt or equity, and grants, if available. However, please refer to Footnote 11 - CONVERTIBLE DEBT IN DEFAULT in the paragraph: Debt Restructuring for more information regarding our warrants. |
2. SUMMARY OF SIGNIFICANT ACCOU
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant areas where estimates are used include the allowance for doubtful accounts, inventory valuation and input variables for Black-Scholes, Monte Carlo simulations and binomial calculations. The Company uses the Monte Carlo simulations and binomial calculations in the calculation of the fair value of the warrant liabilities and the valuation of embedded conversion options and freestanding warrants. Principles of Consolidation The accompanying consolidated financial statements include the accounts of Guided Therapeutics, Inc. and its wholly owned subsidiary. All intercompany transactions are eliminated. Accounting Standard Updates In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, “Revenue from Contracts with Distributors (Topic 606),” (“ASU 2014-09”). ASU 2014-09 outlines a new, single comprehensive model for entities to use in accounting for revenue arising from contracts with distributors and supersedes most current revenue recognition guidance, including industry-specific guidance. This new revenue recognition model provides a five-step analysis in determining when and how revenue is recognized. The new model requires revenue recognition to depict the transfer of promised goods or services to distributors in an amount that reflects the consideration a company expects to receive. ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In August 2015, the FASB issued ASU 2015-14, “Deferral of the Effective Date”, which amends ASU 2014-09. As a result, the effective date will be the first quarter of fiscal year 2018 with early adoption permitted in the first quarter of fiscal year 2017. Subsequently, the FASB has issued the following standards related to ASU 2014-09: ASU 2016-08, “Revenue from Contracts with Distributors (Topic 606), Principal versus Agent Considerations (Reporting Revenue Gross versus Net),” (“ASU 2016-08”); ASU 2016-10, “Revenue from Contracts with Distributors (Topic 606), Identifying Performance Obligations and Licensing,” (“ASU 2016-10”); ASU 2016-12, “Revenue from Contracts with Distributors (Topic 606) Narrow-Scope Improvements and Practical Expedients,” (“ASU 2016-12”); and ASU 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Distributors,” (“ASU 2016-20”), which are intended to provide additional guidance and clarity to ASU 2014-09. The Company must adopt ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20 along with ASU 2014-09 (collectively, the “New Revenue Standards”). The New Revenue Standards may be applied using one of two retrospective application methods: (1) a full retrospective approach for all periods presented, or (2) a modified retrospective approach that presents a cumulative effect as of the adoption date and additional required disclosures. The Company has evaluated the adoption of this guidance and will take a modified retrospective approach to the presentation of revenue from contracts with distributors. The Company adopted this standard on January 1, 2018, using the modified retrospective method, with no impact on its 2017 financial statements. The cumulative effect of initially applying the new guidance had no impact on its financial statements in future periods. However, additional disclosures will be included in future reporting periods in accordance with requirements of the new guidance. In July 2015, the FASB issued ASU 2015-11, “Simplifying the Measurement of Inventory,” (“ASU 2015-11”). ASU 2015-11 requires inventory be measured at the lower of cost and net realizable value and options that currently exist for market value be eliminated. ASU 2015-11 defines net realizable value as estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The guidance is effective for reporting periods beginning after December 15, 2016 and interim periods within those fiscal years with early adoption permitted. ASU 2015-11 should be applied prospectively. The Company has adopted this guidance during the year ended December 31, 2017 on a prospective basis. The adoption of this guidance did not have a significant impact on the operating results for the period ended December 31, 2017. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” that requires lessees to recognize on the balance sheet the assets and liabilities associated with the rights and obligations created by those leases. Under the new guidance, a lessee will be required to recognize assets and liabilities for leases with lease terms of more than 12 months. Consistent with current U.S. GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as finance or operating lease. The update is effective for reporting periods beginning after December 15, 2018. Early adoption is permitted. The Company is evaluating the impact adoption of this guidance will have on determination or reporting of its financial results. In March 2016, the FASB issued ASU 2016-05, “Derivatives and Hedging (Topic 815),” (“ASU 2016-05”). ASU 2016-05 provides guidance clarifying that novation of a derivative contract (i.e., a change in counterparty) in a hedge accounting relationship does not, in and of itself, require dedesignation of that hedge accounting relationship. The effective date was the first quarter of fiscal year 2017, with early adoption permitted. The Company adopted this guidance during the quarter ended March 31, 2017 on a prospective basis. The adoption of this guidance did not have a significant impact on the operating results for the period ended December 31, 2017. In March 2016, the FASB issued ASU 2016-06, “Derivatives and Hedging (Topic 815),” (“ASU 2016-06”). ASU 2016-06 simplifies the embedded derivative analysis for debt instruments containing contingent call or put options by clarifying that an exercise contingency does not need to be evaluated to determine whether it relates to interest rates and credit risk in an embedded derivative analysis. The effective date was the first quarter of fiscal year 2017, with early adoption permitted. The Company adopted this guidance during the quarter ended March 31, 2017 on a prospective basis. The adoption of this guidance did not have a significant impact on the operating results for the year ended December 31, 2017. In March 2016, the FASB issued ASU 2016-09, “Compensation-Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting,” (“ASU 2016-09”). ASU 2016-09 is intended to simplify several aspects related to how share-based payments are accounted for and presented in the financial statements, such as requiring all income tax effects of awards to be recognized in the income statement when the awards vest or are settled and allowing a policy election to account for forfeitures as they occur. In addition, all related cash flows resulting from share-based payments will be reported as operating activities on the statement of cash flows. ASU 2016-09 could result in increased volatility of the Company’s provision for income taxes and earnings per share, depending on the Company’s share price at exercise or vesting of share-based awards compared to grant date. The effective date was the first quarter of fiscal year 2017, with early adoption permitted. The Company adopted this guidance during the quarter ended March 31, 2017 on a prospective basis. The adoption of this guidance did not have a significant impact on the operating results for the year ended December 31, 2017. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses,” (“ASU 2016-13”). ASU 2016-13 sets forth a “current expected credit loss” model which requires the Company to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable supportable forecasts. The guidance in this new standard replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures. The effective date will be the first quarter of fiscal year 2020. The Company is evaluating the impact that adoption of this new standard will have on its consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments,” (“ASU 2016-15”). ASU 2016-15 reduces the existing diversity in practice in financial reporting by clarifying existing principles in ASC 230, “Statement of Cash Flows,” and provides specific guidance on certain cash flow classification issues. The effective date for ASU 2016-15 will be the first quarter of fiscal year 2018, with early adoption permitted. The Company adopted this guidance during the quarter ended March 31, 2018 on a prospective basis. The adoption of this guidance did not have a significant impact on the operating results for the year ended December 31, 2017. In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230) - Restricted Cash,” (“ASU 2016-18”). ASU 2016-18 requires a statement of cash flows to explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-year and end-of-year total amounts shown on the statement of cash flows. The guidance is effective for annual periods, and interim periods within those annual periods beginning after December 15, 2017, with early adoption permitted. The Company adopted this guidance during the quarter ended March 31, 2018 on a prospective basis. The adoption of this guidance did not have a significant impact on the operating results for the year ended December 31, 2017. In January 2017, the FASB issued ASU 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” (“ASU 2017-04”). ASU 2017-04 eliminates Step 2 from the goodwill impairment test. Instead, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, if any. The loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment. The effective date will be the first quarter of fiscal year 2020, with early adoption permitted in 2017. Adoption is not expected to have a material effect on the Company’s consolidated financial statements. In May 2017, the FASB issued ASU 2017-09, “Compensation – Stock Compensation (Topic 718), Scope of Modification Accounting)” (“ASU 2017-09”) which clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. The new guidance will reduce diversity in practice and result in fewer changes to the terms of an award being accounted for as modifications. ASU 2017-09 will be applied prospectively to awards modified on or after the adoption date. The guidance is effective for annual periods, and interim periods within those annual periods beginning after December 15, 2017, with early adoption permitted. The Company adopted this guidance during the quarter ended March 31, 2018 on a prospective basis. The adoption of this guidance did not have a significant impact on the operating results for the year ended December 31, 2017. Except as noted above, the guidance issued by the FASB during the current year is not expected to have a material effect on the Company’s consolidated financial statements. Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be a cash equivalent. Accounts Receivable The Company performs periodic credit evaluations of its distributors’ financial conditions and generally does not require collateral. The Company reviews all outstanding accounts receivable for collectability on a quarterly basis. An allowance for doubtful accounts is recorded for any amounts deemed uncollectable. The Company does not accrue interest receivable on past due accounts receivable. Concentrations of Credit Risk The Company, from time to time during the years covered by these consolidated financial statements, may have bank balances in excess of its insured limits. Management has deemed this a normal business risk. The Company performs periodic credit evaluations of its distributors’ financial conditions and generally does not require collateral. The Company reviews all outstanding accounts receivable for collectability on a quarterly basis. An allowance for doubtful accounts is recorded for any amounts deemed uncollectable. The Company does not accrue interest receivable on past due accounts receivable. Inventory Valuation All inventories are stated at lower of cost or net realizable value, with cost determined substantially on a “first-in, first-out” basis. Selling, general, and administrative expenses are not inventoried, but are charged to expense when incurred. At December 31, 2017 and 2016, our inventories were as follows (in thousands): Year Ended December 31, 2017 2016 Raw materials $ 789 $ 795 Work in process 82 115 Finished goods 27 141 Consigned inventory 83 - Inventory reserve (716 ) (278 ) Total $ 265 $ 773 Property and Equipment Property and equipment are recorded at cost. Depreciation is computed using the straight-line method over estimated useful lives of three to seven years. Leasehold improvements are amortized at the shorter of the useful life of the asset or the remaining lease term. Depreciation and amortization expense 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 December 31, 2017 and 2016 (in thousands): Year Ended December 31, 2017 2016 Equipment $ 1,378 $ 1,378 Software 740 740 Furniture and fixtures 124 124 Leasehold Improvement 199 199 2,441 2,441 Less accumulated depreciation (2,392 ) (2,315 ) Total $ 49 $ 126 Debt Issuance Costs Debt issuance costs are capitalized and amortized over the term of the associated debt. Debt issuance costs are presented in the balance sheet as a direct deduction from the carrying amount of the debt liability consistent with the debt discount. Other Assets Other assets primarily consist of short- and long-term deposits for various tooling inventory that are being constructed for the Company. Patent Costs (Principally Legal Fees) Costs incurred in filing, prosecuting, and maintaining patents are recurring, and expensed as incurred. Maintaining patents are expensed as incurred as the Company has not yet received U.S. FDA approval and recovery of these costs is uncertain. Such costs aggregated approximately $15,000 and $23,000 in 2017 and 2016, respectively. Accrued Liabilities Accrued liabilities are summarized as follows at December 31, 2017 and 2016 (in thousands): Year Ended December 31, 2017 2016 Accrued compensation $ 2,122 $ 1,656 Accrued professional fees 223 161 Accrued interest 511 109 Deferred rent - 13 Accrued warranty 39 58 Accrued vacation 152 175 Accrued dividends 291 296 Stock subscription 276 - Accrued expenses for licensee 429 - Other accrued expenses 204 202 Total $ 4,247 $ 2,670 Revenue Recognition Revenue from the sale of the Company’s products is recognized upon shipment of such products to its distributors. The Company recognizes revenue from contracts on a straight-line basis, over the terms of the contracts. The Company recognizes revenue from grants based on the grant agreements, at the time the expenses are incurred. Significant Distributors In 2017 and 2016, the majority of the Company’s revenues were from one and three distributors, respectively. Revenue from these distributors totaled approximately $216,000 or 89% and approximately $534,000 or 73% of gross revenue for the year ended December 31, 2017 and 2016, respectively. Accounts receivable due from those distributors represents 43% of unreserved accounts receivable as of December 31, 2016. There were no amounts due from these distributors as of December 31, 2017. 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. As of December 31, 2017 and 2016, the Company has received prepayments for devices and disposables and deferred revenue in the amount of $21,000 and $34,000, respectively. 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 currently delinquent with its federal and applicable state tax return filings, payments and certain Federal and State Unemployment Tax filings. Some of the federal income tax returns are currently under examination by the U.S. Internal Revenue Service (“IRS”). The Company has entered into an agreed upon payment plan with the IRS for delinquent payroll taxes. The Company is currently in process of setting up a payment arrangement for its delinquent state income taxes with the State of Georgia and the returns are currently under review by state authorities. Although the Company has been experiencing recurring losses, it is obligated to file tax returns for compliance with IRS regulations and that of applicable state jurisdictions. At December 31, 2017 and 2016, the Company has approximately $82.9 and $84.4 million of net operating losses, respectively. This net operating loss will be eligible to be carried forward for tax purposes at federal and applicable states level. A full valuation allowance has been recorded related the deferred tax assets generated from the net operating losses. Corporate tax rates in the U.S. have decreased from 34% to 21%. Uncertain Tax Positions The Company assesses 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 December 31, 2017 and 2016 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 years ended December 31, 2017 and 2016, share-based compensation for options attributable to employees, officers and Board members were approximately $59,000 and $95,000, respectively. 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 December 31, 2017, the Company had approximately $50,000 of unrecognized compensation costs related to granted stock options to be recognized over the remaining vesting period of approximately two years. |
3. FAIR VALUE OF FINANCIAL INST
3. FAIR VALUE OF FINANCIAL INSTRUMENTS | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [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 transaction between market participants at the measurement date. The Company uses a three-tier fair value hierarchy based upon observable and non-observable inputs as follow: ● Level 1 – Quoted market prices in active markets for identical assets and liabilities; ● Level 2 – Inputs, other than level 1 inputs, either directly or indirectly observable; and ● Level 3 – Unobservable inputs developed using internal estimates and assumptions (there is little or no market date) which reflect those that market participants would use. The Company records its derivative activities at fair value, which consisted of warrants as of December 31, 2017. 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 December 31, 2017 and 2016: 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 December 31, 2017 Level 1 Level 2 Level 3 Total Warrants issued in connection with Distributor Debt - - (114 ) (114 ) Warrants issued in connection with Short-Term Loans - - (11 ) (11 ) Warrants issued in connection with Senior Secured Debt - - (7,837 ) (7,837 ) Total long-term liabilities at fair value $ - $ - $ (7,962 ) $ (7,962 ) Fair Value at December 31, 2016 Level 1 Level 2 Level 3 Total Warrants issued in connection with Distributor Debt $ — $ — $ (114 ) $ (114 ) Warrants issued in connection with Senior Secured Debt — — (1,306 ) (1,306 ) Total long-term liabilities at fair value $ — $ — $ (1,420 ) $ (1,420 ) The following is a summary of changes to Level 3 instruments during the year ended December 31, 2017: Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Series C Warrants Series B Warrants Senior Secured Debt Distributor Debt Total Balance, December 31, 2016 $ - $ - $ (1,306 ) $ (114 ) $ (1,420 ) Warrants issued during the year - - (55 ) - (55 ) Change in fair value during the year - - (6,487 ) - (6,487 ) Balance, December 31, 2017 $ - $ - $ (7,848 ) $ (114 ) $ (7,962 ) As of December 31, 2017, the fair value of warrants was approximately $8.0 million. A net change of approximately $6.5 million has been recorded to the accompanying statement of operations for the year ended. |
4. STOCKHOLDER_S DEFICIT
4. STOCKHOLDER’S DEFICIT | 12 Months Ended |
Dec. 31, 2017 | |
Equity [Abstract] | |
4. STOCKHOLDER’S DEFICIT | Common Stock The Company has authorized 1,000,000,000 shares of common stock with $0.001 par value, of which 49,562,810 were issued and outstanding as of December 31, 2017. For the year ended December 31, 2016, there were 1,000,000,000 authorized shares of common stock, of which 668,651 were issued and outstanding. A 1:800 reverse stock split of all of our issued and outstanding common stock was implemented on November 7, 2016. As a result of the reverse stock split, every 800 shares of issued and outstanding common stock was converted into 1 share of common stock. All fractional shares created by the reverse stock split were rounded to the nearest whole share. The number of authorized shares of common stock did not change. On February 24, 2016, the Company had also implemented a 1:100 reverse stock split of its issued and outstanding common stock. The number of the authorized shares did not change. For the year ended December 31, 2017, the Company issued 48,894,159 shares of common stock as listed below: Series C Preferred Stock Conversions 11,906,931 Series C Preferred Stock Dividends 5,365,298 Convertible Debt Conversions 31,571,930 Issuance of shares for note agreement 50,000 Total 48,894,159 On January 22, 2017, the Company entered into a license agreement with Shandong Yaohua Medical Instrument Corporation, or SMI, pursuant to which the Company granted SMI an exclusive global license to manufacture the LuViva device and related disposables (subject to a carve-out for manufacture in Turkey) and exclusive distribution rights in the Peoples Republic of China, Macau, Hong Kong and Taiwan. In exchange for the license, SMI will pay a $1.0 million licensing fee, payable in five installments through November 2017, as well as a royalty on each disposable sold in the territories. As of December 31, 2017, SMI had paid $750,000. SMI will also underwrite the cost of securing approval of LuViva with the Chinese Food and Drug Administration, or CFDA. Pursuant to the SMI agreement, SMI must become capable of manufacturing LuViva in accordance with ISO 13485 for medical devices by the second anniversary of the SMI agreement, or else forfeit the license. Based on the agreement, SMI must purchase no fewer than ten devices (with up to two devices pushed to 2018 if there is a delay in obtaining approval from the CFDA). SMI purchased five devices in 2017 and have not purchased any in 2018. In the three years following CFDA approval, SMI must purchase a minimum of 3,500 devices (500 in the first year, 1,000 in the second, and 2,000 in the third) or else forfeit the license. As manufacturer of the devices and disposables, SMI will be obligated to sell each to us at costs no higher than our current costs. As partial consideration for, and as a condition to, the license, and to further align the strategic interests of the parties, the Company agreed to issue $1.0 million in shares of its common stock to SMI, in five installments through October 2017, at a price per share equal to the lesser of the average closing price for the five days prior to issuance and $1.25. These shares have not been issued as of December 31, 2017. In order to facilitate the SMI agreement, immediately prior to its execution the Company entered into an agreement with Shenghuo Medical, LLC, regarding its previous license to Shenghuo (see Note 8, Commitments and Contingencies). Under the terms of the new agreement, Shenghuo agreed to relinquish its manufacturing license and its distribution rights in SMI’s territories, and to waive its rights under the original Shenghuo agreement, all for as long as SMI performs under the SMI agreement. As consideration, the Company agreed to split with Shenghuo the licensing fees and net royalties from SMI that the Company will receive under the SMI agreement. Should the SMI agreement be terminated, the Company have agreed to re-issue the original license to Shenghuo under the original terms. The Company’s COO and director, Mark Faupel, is a shareholder of Shenghuo, as well as Dr. John Imhoff, a director and another director, Richard Blumberg, is a managing member of Shenghuo . Preferred Stock The Company has authorized 5,000,000 shares of preferred stock with a $.001 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; 33,000 shares of preferred stock as Series B Preferred Stock, none of which remained outstanding, 9,000 shares of preferred stock as Series C Convertible Preferred Stock, of which 970 and 1,643 were issued and outstanding at December 31, 2017 and 2016, respectively, and 20,250 shares of Series C1 Convertible Preferred Stock, of which 4,312 were issued and outstanding at December 31, 2017 and 2016. Series B Convertible Preferred Stock Holders of the Series B Preferred Stock were entitled to quarterly dividends at an annual rate of 10.0%, payable in cash or, subject to certain conditions, common stock, at the Company’s option. The Series B Preferred Stock were issued with Tranche A warrants to purchase 24 shares of common stock and Tranche B warrants purchasing 7,539 shares of common stock, at an exercise price of $8,364 and $75 per share, respectively. At December 31, 2015, as a result of the operation of certain anti-dilution provisions, the Tranche B warrants were convertible into 1 shares of common stock. These warrants were re-measured based upon their fair value each reporting period and classified as a liability on the Balance Sheet. Between June 13, 2016 and June 14, 2016, the Company entered into various agreements with holders of the Company’s “Series B Tranche B” warrants, pursuant to which each holder separately agreed to exchange the warrants for either (1) shares of common stock equal to 166% of the number of shares of common stock underlying the surrendered warrants, or (2) new warrants exercisable for 200% of the number of shares underlying the surrendered warrants, but without certain anti-dilution protections included with the surrendered warrants. Series C Convertible Preferred Stock On June 29, 2015, the Company entered into a securities purchase agreement with certain accredited investors, including John Imhoff and Mark Faupel, members of the Board, for the issuance and sale of an aggregate of 6,737 shares of Series C convertible preferred stock, at a purchase price of $750 per share and a stated value of $1,000 per share. On September 3, 2015 the Company entered into an interim agreement amending the securities purchase agreement to provide for certain of the investors to purchase an additional aggregate of 1,166 shares. Total cash and non-cash expenses were valued at $853,000, resulting in net proceeds of $3,698,000. 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 December 31, 2017, there were 970 shares outstanding with a conversion price of $0.017 per share, such that each share of Series C preferred stock would convert into approximately 58,824 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. At December 31, 2017, the “make-whole payment” for a converted share of Series C preferred stock would convert to 24,706 shares of the Company’s common stock. The Series C preferred stock generally has no voting rights except as required by Delaware law. Upon the Company’s liquidation or sale to or merger with another corporation, each share will be entitled to a liquidation preference of $1,000, plus any accrued but unpaid dividends. In addition, the purchasers of the Series C preferred stock received, on a pro rata basis, warrants exercisable to purchase an aggregate of approximately 150 shares of Company’s common stock. The warrants contain anti-dilution adjustments in the event that the Company issues shares of common stock, or securities exercisable or convertible into shares of common stock, at prices below the exercise price of such warrants. As a result of the anti-dilution protection, the Company is required to account for the warrants as a liability recorded at fair value each reporting period. At December 31, 2017, the exercise price per share was $640. On May 23, 2016, an investor canceled certain of these warrants, exercisable into 903 shares of common stock. The same investor also transferred certain of these warrants, exercisable for 150 shares of common stock, to two investors who also had participated in the 2015 Series C financing. Series C1 Convertible Preferred Stock Between April 27, 2016 and May 3, 2016, the Company entered into various agreements with certain holders of Series C preferred stock, including directors John Imhoff and Mark Faupel, 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 12 (9,600 pre-split) 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 22,996 shares of common stock. At December 31, 2017, there were 4,312 shares outstanding with a conversion price of $0.017 per share, such that each share of Series C preferred stock would convert into approximately 58,824 shares of the Company’s 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” and, while it has the same anti-dilution protections afforded the Series C preferred stock, it does not automatically reset in connection with a reverse stock split or conversion of our outstanding convertible debt. Warrants The following table summarizes transactions involving the Company’s outstanding warrants to purchase common stock for the year ended December 31, 2017: Warrants (Underlying Shares) Outstanding, January 1, 2017 4,349,762 Issuances 289,739,376 Exercised - Canceled / Expired - Outstanding, December 31, 2017 294,089,138 The Company had the following shares reserved for the warrants as of December 31, 2017: Warrants (Underlying Shares) Exercise Price Expiration Date 23 (1) $8,368.00 per share May 23, 2018 7,538 (2) $75.00 per share June 14, 2021 3 (3) $40,000.00 per share April 23, 2019 7 (4) $36,000.00 per share May 22, 2019 4 (5) $30,400.00 per share September 10, 2019 2 (6) $36,864.80 per share September 27, 2019 9 (7) $22,504.00 per share December 2, 2019 105 (8) $7,200.00 per share December 2, 2020 105 (9) $8,800.00 per share December 2, 2020 25 (11) $20,400.00 per share March 30, 2018 22 (12) $9,504.00 per share June 29, 2020 145 (10) $640.00 per share June 29, 2020 150 (11) $640.00 per share September 4, 2020 362 (12) $640.00 per share September 21, 2020 6 (13) $9,504.00 per share September 4, 2020 1 (14) $640.00 per share October 23, 2020 6 (15) $9,504.00 per share October 23, 2020 279,669,261 (16) $0.00514 per share June 14, 2021 13,424,125 (17) $0.00514 per share February 21, 2021 17,239 (18) $13.92 per share June 6, 2021 200,000 (19) $0.00514 per share February 13, 2022 20,000 (20) $0.18 per share May 16, 2022 550,000 (21) $0.019 per share November 16, 2020 200,000 (22) $0.029 per share December 28, 2020 294,089,138* * Footnote 11 - CONVERTIBLE DEBT IN DEFAULT (1) Issued in June 2015 in exchange for warrants originally issued as part of a May 2013 private placement. (2) Issued in June 2015 in exchange for warrants originally issued as part of a May 2013 private placement. (3) Issued to a placement agent in conjunction with an April 2014 private placement. (4) Issued to a placement agent in conjunction with a September 2014 private placement. (5) Issued as part of a September 2014 Regulation S offering. (6) Issued to a placement agent in conjunction with a 2014 public offering. (7) Issued in June 2015 in exchange for warrants originally issued as part of a 2014 public offering. (8) Issued as part of a March 2015 private placement. (9) Issued to a placement agent in conjunction with a June 2015 private placement. (10) Issued as part of a June 2015 private placement. (11) Issued as part of a June 2015 private placement. (12) Issued as part of a June 2015 private placement. (13) Issued to a placement agent in conjunction with a June 2015 private placement. (14) Issued as part of a June 2015 private placement. (15) Issued to a placement agent in conjunction with a June 2015 private placement. (16) Issued as part of a February 2016 private placement. (17) Issued to a placement agent in conjunction with a February 2016 private placement. (18) (19) Issued pursuant to a strategic license agreement. Issued as part of a February 2017 private placement. (20) Issued as part of a May 2017 private placement. (21) Issued to investors for a loan in November 2017. (22) Issued to investors for a loan in December 2017. All outstanding warrant agreements provide for anti-dilution adjustments in the event of certain mergers, consolidations, reorganizations, recapitalizations, stock dividends, stock splits or other changes in the Company’s corporate structure; except for (9). In addition, warrants subject to footnotes (2) and (10)-(12), (14), and (16) – (22) in the table above are subject to “lower price issuance” anti-dilution provisions that automatically reduce the exercise price of the warrants (and, in the cases of warrants subject to footnote (2), (16) and (17) in the table above, increase the number of shares of common stock issuable upon exercise), to the offering price in a subsequent issuance of the Company’s common stock, unless such subsequent issuance is exempt under the terms of the warrants. For the warrants to footnote (16), the Company further agreed to amend the warrant issued with the original senior secured convertible note, to adjust the number of shares issuable upon exercise of the warrant to equal the number of shares that will initially be issuable upon conversion of the new convertible note (without giving effect to any beneficial ownership limitations set forth in the terms of the new convertible note). The warrants subject to footnote (2) are subject to a mandatory exercise provision. This provision permits the Company, subject to certain limitations, to require exercise of such warrants at any time following (a) the date that is the 30th day after the later of the Company’s receipt of an approvable letter from the U.S. FDA for LuViva and the date on which the common stock achieves an average market price for 20 consecutive trading days of at least $1,040.00 with an average daily trading volume during such 20 consecutive trading days of at least 250 shares, or (b) the date on which the average market price of the common stock for 20 consecutive trading days immediately prior to the date the Company delivers a notice demanding exercise is at least $129,600 and the average daily trading volume of the common stock exceeds 250 shares for such 20 consecutive trading days. If these warrants are not timely exercised upon demand, they will expire. Upon the occurrence of certain events, the Company may be required to repurchase these warrants, as well as the warrants subject to footnote (2) in the table above. The warrants subject to footnote (5) in the table above are also subject to a mandatory exercise provision. This provision permits the Company, subject to certain limitations; to require the exercise of such warrants should the average trading price of its common stock over any 30 consecutive day trading period exceed $92.16. The warrants subject to footnote (7) in the table above are also subject to a mandatory exercise provision. This provision permits the Company, subject to certain limitations, to require exercise of 50% of the then-outstanding warrants if the trading price of its common stock is at least two times the initial warrant exercise price for any 20-day trading period. Further, in the event that the trading price of the Company’s common stock is at least 2.5 times the initial warrant exercise price for any 20-day trading period, the Company will have the right to require the immediate exercise of 50% of the then-outstanding warrants. Any warrants not exercised within the prescribed time periods will be canceled to the extent of the number of shares subject to mandatory exercise. The holders of the warrants subject to footnote (2) in the table above have agreed to surrender the warrants, upon consummation of a qualified public financing, for new warrants exercisable for 200% of the number of shares underlying the surrendered warrants, but without certain anti-dilution protections included with the surrendered warrants. Series B Tranche B Warrants As discussed in Note 3, Fair Value Measurements, between June 13, 2016 and June 14, 2016, the Company entered into various agreements with holders of the Company’s “Series B Tranche B” warrants, pursuant to which each holder separately agreed to exchange the warrants for either (1) shares of common stock equal to 166% of the number of shares of common stock underlying the surrendered warrants, or (2) new warrants exercisable for 200% of the number of shares underlying the surrendered warrants, but without certain anti-dilution protections included with the surrendered warrants. In total, for surrendered warrants then-exercisable for an aggregate of 1,185,357 shares of common stock (but subject to exponential increase upon operation of certain anti-dilution provisions), the Company issued or is obligated to issue 16,897 shares of common stock and new warrants that, if exercised as of the date hereof, would be exercisable for an aggregate of 216,707 shares of common stock. As of December 31, 2017, the Company had issued 14,766 shares of common stock and rights to common stock shares for 2,131. In certain circumstances, in lieu of presently issuing all of the shares (for each holder that opted for shares of common stock), the Company and the holder further agreed that the Company will, subject to the terms and conditions set forth in the applicable warrant exchange agreement, from time to time, be obligated to issue the remaining shares to the holder. No additional consideration will be payable in connection with the issuance of the remaining shares. The holders that elected to receive shares for their surrendered warrants have agreed that they will not sell shares on any trading day in an amount, in the aggregate, exceeding 20% of the composite aggregate trading volume of the common stock for that trading day. The holders that elected to receive new warrants will be required to surrender their old warrants upon consummation of the Company’s next financing resulting in net cash proceeds to the Company of at least $1 million. The new warrants will have an initial exercise price equal to the exercise price of the surrendered warrants as of immediately prior to consummation of the financing, subject to customary “downside price protection” for as long as the Company’s common stock is not listed on a national securities exchange, and will expire five years from the date of issuance. |
5. INCOME TAXES
5. INCOME TAXES | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
5. INCOME TAXES | The Company has incurred net operating losses ("NOLs") since inception. As of December 31, 2017, the company had NOL carryforwards available through 2036 of approximately $82.9 million to offset its future income tax liability. The NOL carryforwards began to expire in 2008. The company has recorded deferred tax assets but reserved against, due to uncertainties related to utilization of NOLs as well as calculation of effective tax rate. Utilization of existing NOL carryforwards may be limited in future years based on significant ownership changes. The company is in the process of analyzing their NOL and has not determined if the company has had any change of control issues that could limit the future use of NOL. Components of deferred taxes are as follow at December 31 (in thousands): 2017 2016 Deferred tax assets: Warrant liability $ 1,990 $ 697 Accrued executive compensation 447 540 Reserves and other 301 255 Net operating loss carryforwards 20,726 27,958 23,464 29,450 Valuation allowance (23,464 ) (29,450 ) $ 0 $ 0 The following is a summary of the items that caused recorded income taxes to differ from taxes computed using the statutory federal income tax rate for the years ended December 31: 2017 2016 Statutory federal tax rate 34 % 34 % State taxes, net of federal benefit 4 4 Nondeductible expenses - - Valuation allowance (38 ) (38 ) 0 % 0 % On December 22, 2017, the U.S. government enacted comprehensive tax reform commonly referred to as the Tax Cuts and Jobs Act (“TCJA”). Under ASC 740, the effects of changes in tax rates and laws are recognized in the period which the new legislation is enacted. Among other things, the TCJA (1) reduces the U.S. statutory corporate income tax rate from 34% to 21% effective January 1, 2018 (2) eliminates the corporate alternative minimum tax (3) eliminates the Section 199 deduction (4) changes rules related to uses and limitations of net operating loss carryforwards beginning after December 31, 2017. The SEC staff issued SAB 118, which provides guidance on accounting for the tax effects of TCJA. SAB 118 provides a measurement period that should not extend beyond one year from the TCJA enactment date for companies to complete the accounting under ASC 740. To the extent that a company’s accounting for certain income tax effects of the TCJA is incomplete but is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. The TCJA reduces the corporate tax rate to 21% effective January 1, 2018. The Company has recorded a provisional decrease in its deferred tax assets and liabilities for the year ended December 31, 2017. While the Company may be able to make a reasonable estimate of the impact of the reduction in the corporate rate, it may be affected by other analyses related to the TCJA. The Company applies the applicable authoritative guidance which prescribes a comprehensive model for the manner in which a company should recognize, measure, present and disclose in its financial statements all material uncertain tax positions that the Company has taken or expects to take on a tax return. As of December 31, 2017, the Company has no uncertain tax positions. There are no uncertain tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase or decrease within twelve months from December 31, 2017. The Company files federal income tax returns and income tax returns in various state tax jurisdictions with varying statutes of limitations. The provision for income taxes as of the dates indicated consisted of the following (in thousands) December 31: 2017 2016 Current $ - $ - Deferred - - Deferred provision - - Impact of change in enacted tax rates 12,139 - Change in valuation allowance (12,139 ) - Total provision for income taxes $ - $ - In 2017, our effective tax rate differed from the U.S. federal statutory rate primarily due to re-measuring deferred income taxes at the new statutory tax rate and the related change of the valuation allowance over our deferred tax assets. At the date of enactment of the Tax Cuts and Jobs Act, we re-measured our deferred tax assets and liabilities using a rate of 21%, which is the rate expected to be in place when such deferred assets and liabilities are expected to reverse in the future. The re-measurement reduced our net deferred tax assets by $12,139,043. |
6. STOCK OPTIONS
6. STOCK OPTIONS | 12 Months Ended |
Dec. 31, 2017 | |
Stock Options | |
6. STOCK OPTIONS | The Company’s 1995 Stock Plan (the “Plan”) has expired pursuant to its terms, so zero shares remained available for issuance at December 31, 2017 and 2016. The Plan allowed for the issuance of incentive stock options, nonqualified stock options, and stock purchase rights. The exercise price of options was determined by the Company’s board of directors, but incentive stock options were granted at an exercise price equal to the fair market value of the Company’s common stock as of the grant date. Options historically granted have generally become exercisable over four years and expire ten years from the date of grant. As of December 31, 2017, the Company has issued and outstanding options to purchase a total of 116 shares of common stock pursuant to the Plan, at a weighted average exercise price of $37,090 per share. The fair value of stock options granted in the year ended December 31, 2017 were estimated using the Black-Scholes option pricing model. No options were issued during the year ended December 31, 2017. Stock option activity for December 31, 2017 and 2016 as follows: 2016 Weighted Average Shares Exercise Price Outstanding at beginning of year 132 $ 36,000 Options granted - $ - Options exercised - $ - Options expired/forfeited (7 ) $ 74,160 Outstanding at end of year 125 $ 37,920 Options available for issue - 2017 Weighted Average Shares Exercise Price Outstanding at beginning of year 125 $ 37,920 Options granted - $ - Options exercised - $ - Options expired/forfeited (7 ) $ 48,613 Outstanding at end of year 118 $ 37,090 Options available for issue - Weighted Average Shares Exercise Price Options Vested as of December 31, 2016 117 $ 38,640 Options vested in 2017 - $ - Options vested as of December 31, 2017 117 $ 38,640 Weighted Average Shares Exercise Price Options Unvested as of December 31, 2016 8 $ 39,200 Options vested in 2017 (- ) $ - Options expired/forfeited in 2017 (7 ) $ 48,613 Options Unvested as of December 31, 2017 1 |
7. LITIGATION AND CLAIMS
7. LITIGATION AND CLAIMS | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
7. LITIGATION AND CLAIMS | From time to time, the Company may be involved in various legal proceedings and claims arising in the ordinary course of business. Management believes that the dispositions of these matters, individually or in the aggregate, are not expected to have a material adverse effect on the Company’s financial condition. However, depending on the amount and timing of such disposition, an unfavorable resolution of some or all of these matters could materially affect the future results of operations or cash flows in a particular year. As of December 31, 2017 and 2016, there was no accrual recorded for any potential losses related to pending litigation. |
8. COMMITMENTS AND CONTINGENCIE
8. COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
8. COMMITMENTS AND CONTINGENCIES | Operating Leases In December 2009, the Company moved its offices, which comprise its administrative, research and development, marketing and production facilities to 5835 Peachtree Corners East, Suite B, Norcross, Georgia 30092. The Company leased approximately 23,000 square feet under a lease that expired in June 2017. In July 2017, the Company leased the offices on a month to month basis. On February 23, 2018, the Company modified its lease to reduce its occupancy to 12,835 square feet. The fixed monthly lease expense will be: $13,859 each month for the period beginning January 1, 2018 and ending March 31, 2018; $8,022 each month for the period beginning April 1, 2018 and ending March 31, 2019; $8,268 each month for the period beginning April 1, 2019 and ending March 31, 2020; and $8,514 each month for the period beginning April 1, 2020 and ending March 31, 2021. The Company recognizes rent expense on a straight-line basis over the estimated lease term. Future minimum rental payments at December 31, 2017 under non-cancellable operating leases for office space and equipment are as follows (in thousands): Year Amount 2018 114 2019 98 2020 101 2021 26 Related Party Contracts On June 5, 2016, the Company entered into a license agreement with Shenghuo Medical, LLC pursuant to which the Company granted Shenghuo an exclusive license to manufacture, sell and distribute LuViva in Taiwan, Brunei Darussalam, Cambodia, Laos, Myanmar, Philippines, Singapore, Thailand, and Vietnam. Shenghuo was already the Company’s exclusive distributor in China, Macau and Hong Kong, and the license extended to manufacturing in those countries as well. Under the terms of the license agreement, once Shenghuo was capable of manufacturing LuViva in accordance with ISO 13485 for medical devices, Shenghuo would pay the Company a royalty equal to $2.00 or 20% of the distributor price (subject to a discount under certain circumstances), whichever is higher, per disposable distributed within Shenghuo’s exclusive territories. In connection with the license grant, Shenghuo was to underwrite the cost of securing approval of LuViva with Chinese Food and Drug Administration. At its option, Shenghuo also would provide up to $1.0 million in furtherance of the Company’s efforts to secure regulatory approval for LuViva from the U.S. Food and Drug Administration, in exchange for the right to receive payments equal to 2% of the Company’s future sales in the United States, up to an aggregate of $4.0 million. Pursuant to the license agreement, Shenghuo had the option to have a designee appointed to the Company’s board of directors (director Richard Blumberg is that designee). As partial consideration for, and as a condition to, the license, and to further align the strategic interests of the parties, the Company agreed to issue a convertible note to Shenghuo, in exchange for an aggregate cash investment of $200,000. The note will provide for a payment to Shenghuo of $300,000, expected to be due the earlier of 90 days from issuance and consummation of any capital raising transaction by the Company with net cash proceeds of at least $1.0 million. The note will accrue interest at 20% per year on any unpaid amounts due after that date. The note will be convertible into shares of the Company’s common stock at a conversion price per share of $13.92, subject to customary anti-dilution adjustment. The note will be unsecured, and is expected to provide for customary events of default. The Company will also issue Shenghuo a five-year warrant exercisable immediately for approximately 21,549 shares of common stock at an exercise price equal to the conversion price of the note, subject to customary anti-dilution adjustment. On January 22, 2017, the Company entered into a license agreement with Shandong Yaohua Medical Instrument Corporation, or SMI, pursuant to which the Company granted SMI an exclusive global license to manufacture the LuViva device and related disposables (subject to a carve-out for manufacture in Turkey) and exclusive distribution rights in the Peoples Republic of China, Macau, Hong Kong and Taiwan. In order to facilitate the SMI agreement, immediately prior to its execution the Company entered into an agreement with Shenghuo Medical, LLC, regarding its previous license to Shenghuo. Under the terms of the new agreement, Shenghuo agreed to relinquish its manufacturing license and its distribution rights in SMI’s territories, and to waive its rights under the original Shenghuo agreement, all for as long as SMI performs under the SMI agreement. On September 6, 2016, the Company entered into a royalty agreement with one of its directors, John Imhoff, and another stockholder, Dolores Maloof, pursuant to which the Company sold to them a royalty of future sales of single-use cervical guides for LuViva. Under the terms of the royalty agreement, and for consideration of $50,000, the Company will pay them an aggregate perpetual royalty initially equal to $0.10, and from and after October 2, 2016, equal to $0.20, for each disposable that the Company sells (or that is sold by a third party pursuant to a licensing arrangement with the Company). |
9. NOTES PAYABLE
9. NOTES PAYABLE | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
9. NOTES PAYABLE | Notes Payable in Default At December 31, 2017 and 2016, the Company maintained notes payable and accrued interest to both related and non-related parties totaling $1,091,000 and $1,008,000, respectively. These notes are short term, straight-line amortizing notes. The notes carry annual interest rates between 5% and 10% and have default rates as high a 16.5%. The Company is accruing interest at the default rate of 16.5%. Short Term Notes Payable At December 31, 2017 and 2016, the Company maintained short term notes payable and accrued interest to both related and non-related parties totaling $354,000 and $127,000, respectively. These notes are short term, straight-line amortizing notes. The notes carry annual interest rates between 5% and 10%. In July 2017, the Company entered into a premium finance agreement to finance its insurance policies totaling $206,293. The note requires monthly payments of $18,766, including interest at 4.89% and matures in May 2018. The balance due on this note totaled $93,000 at December 31, 2017. In June 2016, the Company entered into a premium finance agreement to finance its insurance policies totaling $193,862. The note required monthly payments of $17,622, including interest at 4.87% and matured in April 2017. |
10. SHORT-TERM CONVERTIBLE DEBT
10. SHORT-TERM CONVERTIBLE DEBT | 12 Months Ended |
Dec. 31, 2017 | |
Short-term Convertible Debt | |
10. SHORT-TERM CONVERTIBLE DEBT | Related Party Convertible Note Payable – Short-Term On June 5, 2016, the Company entered into a license agreement with a distributor pursuant to which the Company granted the distributor an exclusive license to manufacture, sell and distribute the Company’s LuViva Advanced Cervical Cancer device and related disposables in Taiwan, Brunei Darussalam, Cambodia, Laos, Myanmar, Philippines, Singapore, Thailand, and Vietnam. The distributor was already the Company’s exclusive distributor in China, Macau and Hong Kong, and the license will extend to manufacturing in those countries as well. As partial consideration for, and as a condition to, the license, and to further align the strategic interests of the parties, the Company agreed to issue a convertible note to the distributor, in exchange for an aggregate cash investment of $200,000. The note will provide for a payment to the distributor of $240,000, due upon consummation of any capital raising transaction by the Company within 90 days and with net cash proceeds of at least $1.0 million. As of December 31, 2017, the Company had a note due of $417,160. The note accrues interest at 20% per year on any unpaid amounts due after that date. The note will be convertible into shares of the Company’s common stock at a conversion price per share of $13.92, subject to customary anti-dilution adjustment. The note will be unsecured, and is expected to provide for customary events of default. The Company will also issue the distributor a five-year warrant exercisable immediately for 17,239 shares of common stock at an exercise price equal to the conversion price of the note, subject to customary anti-dilution adjustment. Convertible Note Payable – Short-Term On February 13, 2017, the Company entered into a securities purchase agreement with Auctus Fund, LLC for the issuance and sale to Auctus of $170,000 in aggregate principal amount of a 12% convertible promissory note for an aggregate purchase price of $156,400 (representing a $13,600 original issue discount). On February 13, 2017, the Company issued the note to Auctus. Pursuant to the purchase agreement, the Company also issued to Auctus a warrant exercisable to purchase an aggregate of 200,000 shares of the Company’s common stock. The warrant is exercisable at any time, at an exercise price per share equal to $0.00514 (110% of the closing price of the common stock on the day prior to issuance), subject to certain customary adjustments and price-protection provisions contained in the warrant. The warrant has a five-year term. The note matured nine months from the date of issuance and, in addition to the original issue discount, accrues interest at a rate of 12% per year. The Company could have prepaid the note, in whole or in part, for 115% of outstanding principal and interest until 30 days from issuance, for 125% of outstanding principal and interest at any time from 31 to 60 days from issuance, and for 130% of outstanding principal and interest at any time from 61 days from issuance to 180 days from issuance. After six months from the date of issuance, Auctus may convert the note, at any time, in whole or in part, into shares of the Company’s common stock, at a conversion price equal to the lower of the price offered in the Company’s next public offering or a 40% discount to the average of the two lowest trading prices of the common stock during the 20 trading days prior to the conversion, subject to certain customary adjustments and price-protection provisions contained in the note. The note includes customary events of default provisions and a default interest rate of 24% per year. Upon the occurrence of an event of default, Auctus may require the Company to redeem the note (or convert it into shares of common stock) at 150% of the outstanding principal balance plus accrued and unpaid interest. In connection with the transaction, the Company agreed to reimburse Auctus for $30,000 in legal and diligence fees, of which we paid $10,000 in cash and $20,000 in restricted shares of common stock, valued at $0.40 per share (a 42.86% discount to the closing price of the common stock on the day prior to issuance). The Company allocated proceeds of $90,000 to the warrants and common stock issued in connection with the financing. As of December 31, 2017, the Company has net debt of $76,664. On May 17, 2017, the Company entered into a securities purchase agreement with Eagle Equities, LLC, providing for the purchase by Eagle of two convertible redeemable notes in the aggregate principal amount of $88,000, with the first note being in the amount of $44,000, and the second note being in the amount of $44,000. The first note was fully funded on May 19, 2017, upon which the Company received $40,000 of net proceeds (net of a 10% original issue discount). The second note was issued on December 21, 2017 and was initially paid for by the issuance of an offsetting $40,000 secured note issued by Eagle. Eagle was required to pay the principal amount of its secured note in cash and in full prior to executing any conversions under the second note the Company issued. The notes bear an interest rate of 8%, and are due and payable on May 17, 2018. The notes may be converted by Eagle at any time after five months from issuance into shares of our common stock (as determined in the notes) calculated at the time of conversion, except for the second note, which also requires full payment by Eagle of the secured note it issued to us before conversions may be made. The conversion price of the notes will be equal to 60% of the lowest trading price of the common stock for the 20 prior trading days including the day upon which the Company receive a notice of conversion. The notes may be prepaid in accordance with the terms set forth in the notes. The notes also contain certain representations, warranties, covenants and events of default including if the Company are delinquent in our periodic report filings with the SEC, and increases in the amount of the principal and interest rates under the notes in the event of such defaults. In the event of default, at Eagle’s option and in its sole discretion, Eagle may consider the notes immediately due and payable. As of December 31, 2017, the Company has net debt of $41,322, including unamortized original issue discount of $5,214, unamortized and debt issuance costs of $11,160. On May 17, 2017, the Company entered into a securities purchase agreement with Adar Bays, LLC, providing for the purchase by Adar of two convertible redeemable notes in the aggregate principal amount of $88,000, with the first note being in the amount of $44,000, and the second note being in the amount of $44,000. The first note was fully funded on May 19, 2017, upon which the Company received $40,000 of net proceeds (net of a 10% original issue discount). The second note was issued on December 21, 2017 and was initially paid for by the issuance of an offsetting $40,000 secured note issued by Adar. Adar was required to pay the principal amount of its secured note in cash and in full prior to executing any conversions under the second note the Company issued. The notes bear an interest rate of 8%, and are due and payable on May 17, 2018. The notes may be converted by Adar at any time after five months from issuance into shares of our common stock (as determined in the notes) calculated at the time of conversion, except for the second note, which also requires full payment by Adar of the secured note it issued to us before conversions may be made. The conversion price of the notes will be equal to 60% of the lowest trading price of the common stock for the 20 prior trading days including the day upon which the Company receive a notice of conversion. The notes may be prepaid in accordance with the terms set forth in the notes. The notes also contain certain representations, warranties, covenants and events of default including if the Company are delinquent in our periodic report filings with the SEC, and increases in the amount of the principal and interest rates under the notes in the event of such defaults. In the event of default, at Adar’s option and in its sole discretion, Adar may consider the notes immediately due and payable. As of December 31, 2017, the Company has net debt of $42,216, including unamortized original issue discount of $5,214, unamortized and debt issuance costs of $11,160. On May 18, 2017, the Company entered into a securities purchase agreement with GHS Investments, LLC, an existing investor, providing for the purchase by GHS of a convertible promissory note in the aggregate principal amount of $66,000, for $60,000 in net proceeds (representing a 10% original issue discount). The transaction closed on May 19, 2017. The note matures upon the earlier of our receipt of $100,000 from revenues, loans, investments, or any other means (other than the Eagle and Adar bridge financings) and December 31, 2017. In addition to the 10% original issue discount, the note accrues interest at a rate of 8% per year. The Company may prepay the note, in whole or in part, for 110% of outstanding principal and interest until 30 days from issuance, for 120% of outstanding principal and interest at any time from 31 to 60 days from issuance and for 140% of outstanding principal and interest at any time from 61 days to 180 days from issuance. The note may not be prepaid after 180 days. After six months from the date of issuance, the note will become convertible, at any time thereafter, in whole or in part, at the holder’s option, into shares of our common stock, at a conversion price equal to 60% of the lowest trading price during the 25 trading days prior to conversion. The note includes customary event of default provisions and a default interest rate of the lesser of 20% per year or the maximum amount permitted by law. Upon the occurrence of an event of default, the holder of the note may require us to redeem the note (or convert it into shares of common stock) at 150% of the outstanding principal balance. As of December 31, 2017, the Company has net debt of $66,000. On August 18, 2017, the Company entered into a securities purchase agreement with Power Up Lending Group Ltd., providing for the purchase by Power Up from the Company of a convertible note in the aggregate principal amount of $53,000. The note bears an interest rate of 12%, and is due and payable on May 19, 2018. The note may be converted by Power Up at any time after 180 days from issuance into shares of Company’s common stock at a conversion price equal to 58% of the average of the lowest two-day trading prices of the common stock during the 15 trading days prior to conversion. The note may be prepaid in accordance with its terms, at premiums ranging from 15% to 40%, depending on the time of prepayment. The note contains certain representations, warranties, covenants and events of default, including if the Company is delinquent in its periodic report filings with the SEC, and provides for increases in principal and interest in the event of such defaults. As of December 31, 2017, the Company has a net debt of $46,405, including unamortized debt issuance costs of $6,595. On October 12, 2017, the Company entered into a securities purchase agreement with Power Up Lending Group Ltd. (“Power Up”), providing for the purchase by Power Up from the Company of a convertible note in the aggregate principal amount of $53,000. The note bears an interest rate of 12%, and is due and payable on July 20, 2018. The note may be converted by Power Up at any time after 180 days from issuance into shares of Company’s common stock at a conversion price equal to 58% of the average of the lowest two-day trading prices of the common stock during the 15 trading days prior to conversion. The note may be prepaid in accordance with its terms, at premiums ranging from 15% to 40%, depending on the time of prepayment. The note contains certain representations, warranties, covenants and events of default, including if the Company is delinquent in its periodic report filings with the SEC, and provides for increases in principal and interest in the event of such defaults. As of December 31, 2017, the Company has a net debt of $47,288, including unamortized debt issuance costs of $5,722. On December 11, 2017, the Company entered into a securities purchase agreement with Power Up Lending Group Ltd. (“Power Up”), providing for the purchase by Power Up from the Company of a convertible note in the aggregate principal amount of $53,000. The note bears an interest rate of 12%, and is due and payable on September 20, 2018. The note may be converted by Power Up at any time after 180 days from issuance into shares of Company’s common stock at a conversion price equal to 58% of the average of the lowest two-day trading prices of the common stock during the 15 trading days prior to conversion. The note may be prepaid in accordance with its terms, at premiums ranging from 15% to 40%, depending on the time of prepayment. The note contains certain representations, warranties, covenants and events of default, including if the Company is delinquent in its periodic report filings with the SEC, and provides for increases in principal and interest in the event of such defaults. As of December 31, 2017, the Company has a net debt of $45,565, including unamortized debt issuance costs of $7,435. On December 28, 2016, the Company entered into a securities purchase agreement with an investor for the issuance and sale to investor of up to $330,000 in aggregate principal amount of 10% original issuance discount convertible promissory notes, for an aggregate purchase price of $300,000. On that date, the Company issued to the investor a note in the principal amount of $222,000, for a purchase price of $200,000. The note matures six months from their date of issuance and, in addition to the 10% original issue discount, accrue interest at a rate of 10% per year. The Company may prepay the notes, in whole or in part, for 115% of outstanding principal and interest until 30 days from issuance, for 125% of outstanding principal and interest at any time from 31 to 60 days from issuance, and for 130% of outstanding principal and interest at any time from 61 days from issuance until immediately prior to the maturity date. After six months from the date of issuance (i.e., if the Company fails to repay all principal and interest due under the notes at the maturity date), the investor may convert the notes, at any time, in whole or in part, into shares of the Company’s common stock, at a conversion price equal to 60% of the lowest volume weighted average price of our common stock during the 20 trading days prior to conversion, subject to certain customary adjustments and anti-dilution provisions contained in the note. As of December 31, 2017, the Company has fully amortized debt issuance costs $30,000 and original issue discount of $22,000. As of December 31, 2017, the balance due to the investor for the December 28, 2016 note, is zero. |
11. CONVERTIBLE DEBT IN DEFAULT
11. CONVERTIBLE DEBT IN DEFAULT | 12 Months Ended |
Dec. 31, 2017 | |
Convertible Debt In Default | |
11. CONVERTIBLE DEBT IN DEFAULT | Secured Promissory Note. On September 10, 2014, the Company sold a secured promissory note to an accredited investor with an initial principal amount of $1,275,000, for a purchase price of $700,000 (an original issue discount of $560,000). The Company may prepay the note at any time. The note is secured by the Company’s current and future accounts receivable and inventory, pursuant to a security agreement entered into in connection with the sale. On March 10, 2015, May 4, 2015, June 1, 2015, June 16, 2015, June 29, 2015, January 21, 2016, January 29, 2016, and February 12, 2016 the Company amended the terms of the note to extend the maturity ultimately until August 31, 2016. During the extension, interest accrues on the note at a rate of the lesser of 18% per year or the maximum rate permitted by applicable law. On February 11, 2016, the Company consented to an assignment of the note to two accredited investors. In connection with the assignment, the holders waived an ongoing event of default under the notes related to the Company’s minimum market capitalization, and agreed to eliminate the requirement going forward. Pursuant to the terms of the amended note, the holder may convert the outstanding balance into shares of common stock at a conversion price per share equal to the lower of (1) $25.0 or (2) 75% of the lowest daily volume weighted average price of the common stock during the five days prior to conversion. If the conversion price at the time of any conversion is lower than $15.00, the Company has the option of delivering the conversion amount in cash in lieu of shares of common stock. On March 7, 2016, the Company further amended the note to eliminate the volume limitations on sales of common stock issued or issuable upon conversion. On July 13, 2016, the Company consented to the assignment by one of the accredited investors of its portion of the note of to a third accredited investor. The balance due on the note was $184,245 and $530,691 at December 31, 2017 and December 31, 2016, respectively. The balance was reduced by $306,863 as part of a debt restructuring on December 7, 2016. Total debt issuance costs as originally capitalized were approximately $130,000. This amount was amortized over nine months and was fully amortized as of December 31, 2015. The original issue discount of $560,000 was fully amortized as of December 31, 2015. On November 2, 2016, the Company entered into a lockup and exchange agreement with GHS Investments, LLC, holder of approximately $221,000 in outstanding principal amount of the Company’s secured promissory note and all of the outstanding shares of the its Series C preferred stock. Pursuant to the agreement, upon the effectiveness of the 1:800 reverse stock split and continuing for 45 days after, GHS and its affiliates were prohibited from converting any portion of the secured promissory note or any of the shares of Series C preferred stock or selling any of the Company’s securities that they beneficially owned. The Company agreed that, upon consummation of its next financing, the Company would use $260,000 of net cash proceeds first, to repay GHS’s portion of the secured promissory note and second, with any remaining amount from the $260,000, to repurchase a portion of GHS’s shares of Series C preferred stock. In addition, GHS has agreed to exchange the stated value per share (plus any accrued but unpaid dividends) of its remaining shares of Series C preferred stock for new securities of the same type that the Company separately issue in the next qualifying financing it undertakes, on a dollar-for-dollar basis in a private placement exchange. Senior Secured Promissory Note On February 11, 2016, the Company entered into a securities purchase agreement with GPB Debt Holdings II LLC for the issuance and sale on February 12, 2016 of $1.4375 million in aggregate principal amount of a senior secured convertible note for an aggregate purchase price of $1.15 million (a 20% original issue discount of $287,500) and a discount for debt issuance costs paid at closing of $121,000 for a total of $408,500. In addition, GPB received a warrant exercisable to purchase an aggregate of approximately 2,246 shares of the Company’s common stock. The Company allocated proceeds totaling $359,555 to the fair value of the warrants at issuance. This was recorded as an additional discount on the debt. The convertible note matures on the second anniversary of issuance and, in addition to the 20% original issue discount, accrues interest at a rate of 17% per year. The Company is required to pay monthly interest coupons and beginning nine months after issuance, the Company is required to pay amortized quarterly principal payments. If the Company does not receive, on or before the first anniversary after issuance, an aggregate of at least $3.0 million from future equity or debt financings or non-dilutive grants, then the holder will have the option of accelerating the maturity date to the first anniversary of issuance. The Company may prepay the convertible note, in whole or in part, without penalty, upon 20 days’ prior written notice. Subject to resale restrictions under Federal securities laws and the availability of sufficient authorized but unissued shares of the Company’s common stock, the convertible note is convertible at any time, in whole or in part, at the holder’s option, into shares of the Company’s common stock, at a conversion price equal to the lesser of $0.80 per share or 70% of the average closing price per share for the five trading days prior to issuance, subject to certain customary adjustments and anti-dilution provisions contained in the convertible note. On May 28, 2016, in exchange for an additional $87,500 in cash from GPB to the Company, the principal balance was increased by the same amount. The Company is currently in default as they are past due on the required monthly interest payments. In the event of default, the Company shall accrue interest at a rate the lesser of 22% or the maximum permitted by law. The Company has accrued $117,000 for past due interest payments at December 31, 2016. Upon the occurrence of an event of default, the holder may require the Company to redeem the convertible note at 120% of the outstanding principal balance (but as of December 31, 2017, had not done so). As of December 31, 2017, the balance due on the convertible debt was $2,136,863 as the Company has fully amortized debt issuance costs of $47,675 and the debt discount of $768,055 and recorded a 20% penalty totaling $305,000. In addition, the Company has accrued $424,011 of interest expense. The convertible note is secured by a lien on all of the Company’s assets, including its intellectual property, pursuant to a security agreement entered into by the Company and GPB. The warrant is exercisable at any time, pending availability of sufficient authorized but unissued shares of the Company’s common stock, at an exercise price per share equal to the conversion price of the convertible note, subject to certain customary adjustments and anti-dilution provisions contained in the warrant. The warrant has a five-year term. As of December 31, 2017, the exercise price had been adjusted to $0.00514 and the number of common stock shares exchangeable for was 279,669,261. As of December 31, 2017, the effective interest rate considering debt costs was 29%. The Company used a placement agent in connection with the transaction. For its services, the placement agent received a cash placement fee equal to 4% of the aggregate gross proceeds from the transaction and a warrant to purchase shares of common stock equal to an aggregate of 6% of the total number of shares underlying the securities sold in the transaction, at an exercise price equal to, and terms otherwise identical to, the warrant issued to the investor. Finally, the Company agreed to reimburse the placement agent for its reasonable out-of-pocket expenses. In connection with the transaction, on February 12, 2016, the Company and GPB entered into a four-year consulting agreement, pursuant to which the investor will provide management consulting services to the Company in exchange for a royalty payment, payable quarterly, equal to 3.5% of the Company’s revenues from the sale of products. As of December 31, 2017, GPB had earned approximately $29,000 in royalties. Debt Restructuring On December 7, 2016, the Company entered into an exchange agreement with GPB with regard to the $1,525,000 in outstanding principal amount of senior secured convertible note originally issued to GPB on February 11, 2016, and the $306,863 in outstanding principal amount of the Company’s secured promissory note that GPB holds (see “—Secured Promissory Note”). Pursuant to the exchange agreement, upon completion of the next financing resulting in at least $1 million in cash proceeds, GPB will exchange both securities for a new convertible note in principal amount of $1,831,863. The new convertible note will mature on the second anniversary of issuance and will accrue interest at a rate of 19% per year. The Company will pay monthly interest coupons and, beginning one year after issuance, will pay amortized quarterly principal payments. Subject to resale restrictions under Federal securities laws and the availability of sufficient authorized but unissued shares of the Company’s common stock, the new convertible note will be convertible at any time, in whole or in part, at the holder’s option, into shares of common stock, at a conversion price equal to the price offered in the qualifying financing that triggers the exchange, subject to certain customary adjustments and anti-dilution provisions contained in the new convertible note. The new convertible note will include customary event of default provisions and a default interest rate of the lesser of 21% or the maximum amount permitted by law. Upon the occurrence of an event of default, GPB will be entitled to require the Company to redeem the new convertible note at 120% of the outstanding principal balance. The new convertible note will be secured by a lien on all of the Company’s assets, including its intellectual property, pursuant to the security agreement entered into by the Company and GPB in connection with the issuance of the original senior secured convertible note. Additionally, the Company further agreed to amend the warrant issued with the original senior secured convertible note, to adjust the number of shares issuable upon exercise of the warrant to equal the number of shares that will initially be issuable upon conversion of the new convertible note (without giving effect to any beneficial ownership limitations set forth in the terms of the new convertible note). As an inducement to GPB to enter into these transactions, the Company agreed to increase the royalty payable to GPB pursuant to its consulting agreement with us from 3.5% to 3.85% of revenues from the sales of the Company’s products. On August 7, 2017, the Company entered into a forbearance agreement with GPB, with regard to the senior secured convertible note. Under the forbearance agreement, GPB has agreed to forbear from exercising certain of its rights and remedies (but not waive such rights and remedies), arising as a result of the Company’s failure to pay the monthly interest due and owing on the note. In consideration for the forbearance, the Company agreed to waive, release, and discharge GPB from all claims against GPB based on facts existing on or before the date of the forbearance agreement in connection with the note, or the dealings between the Company and GPB, or the Company’s equity holders and GPB, in connection with the note. Pursuant to the forbearance agreement, the Company has reaffirmed its obligations under the note and related documents and executed a confession of judgment regarding the amount due under the note, which GPB may file upon any future event of default by the Company. During the forbearance period, the Company must continue to comply will all the terms, covenants, and provisions of the note and related documents. The “Forbearance Period” shall mean the period beginning on the date hereof and ending on the earliest to occur of: (i) the date on which Lender delivers to Company a written notice terminating the Forbearance Period, which notice may be delivered at any time upon or after the occurrence of any Forbearance Default (as hereinafter defined), and (ii) the date Company repudiates or asserts any defense to any Obligation or other liability under or in respect of this Agreement or the Transaction Documents or applicable law, or makes or pursues any claim or cause of action against Lender; (the occurrence of any of the foregoing clauses (i) and (ii), a “Termination Event”). As used herein, the term “Forbearance Default” shall mean: (A) the occurrence of any Default or Event of Default other than the Specified Default; (B) the failure of Company to timely comply with any material term, condition, or covenant set forth in this Agreement; (C) the failure of any representation or warranty made by Company under or in connection with this Agreement to be true and complete in all material respects as of the date when made; or (D) Lender’s reasonable belief that Company: (1) has ceased or is not actively pursuing mutually acceptable restructuring or foreclosure alternatives with Lender; or (2) is not negotiating such alternatives in good faith. Any Forbearance Default will not be effective until one (1) Business Day after receipt by Company of written notice from Lender of such Forbearance Default. Any effective Forbearance Default shall constitute an immediate Event of Default under the Transaction Documents. |
12. INCOME (LOSS) PER COMMON SH
12. INCOME (LOSS) PER COMMON SHARE | 12 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |
12. 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 year. Diluted net income (loss) per share attributable to common stockholders amounts are computed by dividing the net income (loss) plus preferred stock dividends, deemed dividends on preferred stock, after-tax interest on convertible debt and convertible dividends by the weighted average number of shares outstanding during the year, plus Series C convertible preferred stock, convertible debt, convertible preferred dividends and warrants convertible into common stock shares. Diluted net loss per common share is the same as basic net loss per common share since the Company was operating in a loss position for 2017 and 2016. |
13. SUBSEQUENT EVENTS
13. SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
13. SUBSEQUENT EVENTS | During February and March 2018, the Company entered into short-term convertible notes similar to those detailed in Note 10 - Short-Term Convertible Debt. The notes with Adar, Power-Up, Eagle and Auctus were for $87,000, $53,000, $66,000 and $150,000, respectively. Additionally, John Imhoff loaned the Company $150,000. |
2. SIGNIFICANT ACCOUNTING POLIC
2. SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
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. The Company uses the Monte Carlo simulations and binomial calculations in the calculation of the fair value of the warrant liabilities and the valuation of embedded conversion options and freestanding warrants. |
Principles of Consolidation | The accompanying consolidated financial statements include the accounts of Guided Therapeutics, Inc. and its wholly owned subsidiary. All intercompany transactions are eliminated. |
Accounting Standards Updates | In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, “Revenue from Contracts with Distributors (Topic 606),” (“ASU 2014-09”). ASU 2014-09 outlines a new, single comprehensive model for entities to use in accounting for revenue arising from contracts with distributors and supersedes most current revenue recognition guidance, including industry-specific guidance. This new revenue recognition model provides a five-step analysis in determining when and how revenue is recognized. The new model requires revenue recognition to depict the transfer of promised goods or services to distributors in an amount that reflects the consideration a company expects to receive. ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In August 2015, the FASB issued ASU 2015-14, “Deferral of the Effective Date”, which amends ASU 2014-09. As a result, the effective date will be the first quarter of fiscal year 2018 with early adoption permitted in the first quarter of fiscal year 2017. Subsequently, the FASB has issued the following standards related to ASU 2014-09: ASU 2016-08, “Revenue from Contracts with Distributors (Topic 606), Principal versus Agent Considerations (Reporting Revenue Gross versus Net),” (“ASU 2016-08”); ASU 2016-10, “Revenue from Contracts with Distributors (Topic 606), Identifying Performance Obligations and Licensing,” (“ASU 2016-10”); ASU 2016-12, “Revenue from Contracts with Distributors (Topic 606) Narrow-Scope Improvements and Practical Expedients,” (“ASU 2016-12”); and ASU 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Distributors,” (“ASU 2016-20”), which are intended to provide additional guidance and clarity to ASU 2014-09. The Company must adopt ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20 along with ASU 2014-09 (collectively, the “New Revenue Standards”). The New Revenue Standards may be applied using one of two retrospective application methods: (1) a full retrospective approach for all periods presented, or (2) a modified retrospective approach that presents a cumulative effect as of the adoption date and additional required disclosures. The Company has evaluated the adoption of this guidance and will take a modified retrospective approach to the presentation of revenue from contracts with distributors. The Company adopted this standard on January 1, 2018, using the modified retrospective method, with no impact on its 2017 financial statements. The cumulative effect of initially applying the new guidance had no impact on its financial statements in future periods. However, additional disclosures will be included in future reporting periods in accordance with requirements of the new guidance. In July 2015, the FASB issued ASU 2015-11, “Simplifying the Measurement of Inventory,” (“ASU 2015-11”). ASU 2015-11 requires inventory be measured at the lower of cost and net realizable value and options that currently exist for market value be eliminated. ASU 2015-11 defines net realizable value as estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The guidance is effective for reporting periods beginning after December 15, 2016 and interim periods within those fiscal years with early adoption permitted. ASU 2015-11 should be applied prospectively. The Company has adopted this guidance during the year ended December 31, 2017 on a prospective basis. The adoption of this guidance did not have a significant impact on the operating results for the period ended December 31, 2017. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” that requires lessees to recognize on the balance sheet the assets and liabilities associated with the rights and obligations created by those leases. Under the new guidance, a lessee will be required to recognize assets and liabilities for leases with lease terms of more than 12 months. Consistent with current U.S. GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as finance or operating lease. The update is effective for reporting periods beginning after December 15, 2018. Early adoption is permitted. The Company is evaluating the impact adoption of this guidance will have on determination or reporting of its financial results. In March 2016, the FASB issued ASU 2016-05, “Derivatives and Hedging (Topic 815),” (“ASU 2016-05”). ASU 2016-05 provides guidance clarifying that novation of a derivative contract (i.e., a change in counterparty) in a hedge accounting relationship does not, in and of itself, require dedesignation of that hedge accounting relationship. The effective date was the first quarter of fiscal year 2017, with early adoption permitted. The Company adopted this guidance during the quarter ended March 31, 2017 on a prospective basis. The adoption of this guidance did not have a significant impact on the operating results for the period ended December 31, 2017. In March 2016, the FASB issued ASU 2016-06, “Derivatives and Hedging (Topic 815),” (“ASU 2016-06”). ASU 2016-06 simplifies the embedded derivative analysis for debt instruments containing contingent call or put options by clarifying that an exercise contingency does not need to be evaluated to determine whether it relates to interest rates and credit risk in an embedded derivative analysis. The effective date was the first quarter of fiscal year 2017, with early adoption permitted. The Company adopted this guidance during the quarter ended March 31, 2017 on a prospective basis. The adoption of this guidance did not have a significant impact on the operating results for the year ended December 31, 2017. In March 2016, the FASB issued ASU 2016-09, “Compensation-Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting,” (“ASU 2016-09”). ASU 2016-09 is intended to simplify several aspects related to how share-based payments are accounted for and presented in the financial statements, such as requiring all income tax effects of awards to be recognized in the income statement when the awards vest or are settled and allowing a policy election to account for forfeitures as they occur. In addition, all related cash flows resulting from share-based payments will be reported as operating activities on the statement of cash flows. ASU 2016-09 could result in increased volatility of the Company’s provision for income taxes and earnings per share, depending on the Company’s share price at exercise or vesting of share-based awards compared to grant date. The effective date was the first quarter of fiscal year 2017, with early adoption permitted. The Company adopted this guidance during the quarter ended March 31, 2017 on a prospective basis. The adoption of this guidance did not have a significant impact on the operating results for the year ended December 31, 2017. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses,” (“ASU 2016-13”). ASU 2016-13 sets forth a “current expected credit loss” model which requires the Company to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable supportable forecasts. The guidance in this new standard replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures. The effective date will be the first quarter of fiscal year 2020. The Company is evaluating the impact that adoption of this new standard will have on its consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments,” (“ASU 2016-15”). ASU 2016-15 reduces the existing diversity in practice in financial reporting by clarifying existing principles in ASC 230, “Statement of Cash Flows,” and provides specific guidance on certain cash flow classification issues. The effective date for ASU 2016-15 will be the first quarter of fiscal year 2018, with early adoption permitted. The Company adopted this guidance during the quarter ended March 31, 2018 on a prospective basis. The adoption of this guidance did not have a significant impact on the operating results for the year ended December 31, 2017. In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230) - Restricted Cash,” (“ASU 2016-18”). ASU 2016-18 requires a statement of cash flows to explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-year and end-of-year total amounts shown on the statement of cash flows. The guidance is effective for annual periods, and interim periods within those annual periods beginning after December 15, 2017, with early adoption permitted. The Company adopted this guidance during the quarter ended March 31, 2018 on a prospective basis. The adoption of this guidance did not have a significant impact on the operating results for the year ended December 31, 2017. In January 2017, the FASB issued ASU 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” (“ASU 2017-04”). ASU 2017-04 eliminates Step 2 from the goodwill impairment test. Instead, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, if any. The loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment. The effective date will be the first quarter of fiscal year 2020, with early adoption permitted in 2017. Adoption is not expected to have a material effect on the Company’s consolidated financial statements. In May 2017, the FASB issued ASU 2017-09, “Compensation – Stock Compensation (Topic 718), Scope of Modification Accounting)” (“ASU 2017-09”) which clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. The new guidance will reduce diversity in practice and result in fewer changes to the terms of an award being accounted for as modifications. ASU 2017-09 will be applied prospectively to awards modified on or after the adoption date. The guidance is effective for annual periods, and interim periods within those annual periods beginning after December 15, 2017, with early adoption permitted. The Company adopted this guidance during the quarter ended March 31, 2018 on a prospective basis. The adoption of this guidance did not have a significant impact on the operating results for the year ended December 31, 2017. Except as noted above, the guidance issued by the FASB during the current year is not expected to have a material effect on the Company’s consolidated financial statements. |
Cash Equivalents | The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be a cash equivalent. |
Accounts Receivable | The Company performs periodic credit evaluations of its distributors’ financial conditions and generally does not require collateral. The Company reviews all outstanding accounts receivable for collectability on a quarterly basis. An allowance for doubtful accounts is recorded for any amounts deemed uncollectable. The Company does not accrue interest receivable on past due accounts receivable. |
Concentration of Credit Risk | The Company, from time to time during the years covered by these consolidated financial statements, may have bank balances in excess of its insured limits. Management has deemed this a normal business risk. The Company performs periodic credit evaluations of its distributors’ financial conditions and generally does not require collateral. The Company reviews all outstanding accounts receivable for collectability on a quarterly basis. An allowance for doubtful accounts is recorded for any amounts deemed uncollectable. The Company does not accrue interest receivable on past due accounts receivable. |
Inventory Valuation | All inventories are stated at lower of cost or net realizable value, with cost determined substantially on a “first-in, first-out” basis. Selling, general, and administrative expenses are not inventoried, but are charged to expense when incurred. At December 31, 2017 and 2016, our inventories were as follows (in thousands): Year Ended December 31, 2017 2016 Raw materials $ 789 $ 795 Work in process 82 115 Finished goods 27 141 Consigned inventory 83 - Inventory reserve (716 ) (278 ) Total $ 265 $ 773 |
Property and Equipment | Property and equipment are recorded at cost. Depreciation is computed using the straight-line method over estimated useful lives of three to seven years. Leasehold improvements are amortized at the shorter of the useful life of the asset or the remaining lease term. Depreciation and amortization expense 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 December 31, 2017 and 2016 (in thousands): Year Ended December 31, 2017 2016 Equipment $ 1,378 $ 1,378 Software 740 740 Furniture and fixtures 124 124 Leasehold Improvement 199 199 2,441 2,441 Less accumulated depreciation (2,392 ) (2,315 ) Total $ 49 $ 126 |
Debt Issuance Costs | Debt issuance costs are capitalized and amortized over the term of the associated debt. Debt issuance costs are presented in the balance sheet as a direct deduction from the carrying amount of the debt liability consistent with the debt discount. |
Other Assets | Other assets primarily consist of short- and long-term deposits for various tooling inventory that are being constructed for the Company. |
Patent Costs (Principally Legal Fees) | Costs incurred in filing, prosecuting, and maintaining patents are recurring, and expensed as incurred. Maintaining patents are expensed as incurred as the Company has not yet received U.S. FDA approval and recovery of these costs is uncertain. Such costs aggregated approximately $15,000 and $23,000 in 2017 and 2016, respectively. |
Accrued Liabilities | Accrued liabilities are summarized as follows at December 31, 2017 and 2016 (in thousands): Year Ended December 31, 2017 2016 Accrued compensation $ 2,122 $ 1,656 Accrued professional fees 223 161 Accrued interest 511 109 Deferred rent - 13 Accrued warranty 39 58 Accrued vacation 152 175 Accrued dividends 291 296 Stock subscription 276 - Accrued expenses for licensee 429 - Other accrued expenses 204 202 Total $ 4,247 $ 2,670 |
Revenue Recognition | Revenue from the sale of the Company’s products is recognized upon shipment of such products to its distributors. The Company recognizes revenue from contracts on a straight-line basis, over the terms of the contracts. The Company recognizes revenue from grants based on the grant agreements, at the time the expenses are incurred. |
Significant Distributors | In 2017 and 2016, the majority of the Company’s revenues were from one and three distributors, respectively. Revenue from these distributors totaled approximately $216,000 or 89% and approximately $534,000 or 73% of gross revenue for the year ended December 31, 2017 and 2016, respectively. Accounts receivable due from those distributors represents 43% of unreserved accounts receivable as of December 31, 2016. There were no amounts due from these distributors as of December 31, 2017. |
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. As of December 31, 2017 and 2016, the Company has received prepayments for devices and disposables and deferred revenue in the amount of $21,000 and $34,000, respectively. |
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 currently delinquent with its federal and applicable state tax return filings, payments and certain Federal and State Unemployment Tax filings. Some of the federal income tax returns are currently under examination by the U.S. Internal Revenue Service (“IRS”). The Company has entered into an agreed upon payment plan with the IRS for delinquent payroll taxes. The Company is currently in process of setting up a payment arrangement for its delinquent state income taxes with the State of Georgia and the returns are currently under review by state authorities. Although the Company has been experiencing recurring losses, it is obligated to file tax returns for compliance with IRS regulations and that of applicable state jurisdictions. At December 31, 2017 and 2016, the Company has approximately $82.9 and $84.4 million of net operating losses, respectively. This net operating loss will be eligible to be carried forward for tax purposes at federal and applicable states level. A full valuation allowance has been recorded related the deferred tax assets generated from the net operating losses. Corporate tax rates in the U.S. have decreased from 34% to 21%. |
Uncertain Tax Positions | The Company assesses 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 December 31, 2017 and 2016 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 years ended December 31, 2017 and 2016, share-based compensation for options attributable to employees, officers and Board members were approximately $59,000 and $95,000, respectively. 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 December 31, 2017, the Company had approximately $50,000 of unrecognized compensation costs related to granted stock options to be recognized over the remaining vesting period of approximately two years. |
2. SIGNIFICANT ACCOUNTING POL21
2. SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Inventory Valuation | Year Ended December 31, 2017 2016 Raw materials $ 789 $ 795 Work in process 82 115 Finished goods 27 141 Consigned inventory 83 - Inventory reserve (716 ) (278 ) Total $ 265 $ 773 |
Property and Equipment | Year Ended December 31, 2017 2016 Equipment $ 1,378 $ 1,378 Software 740 740 Furniture and fixtures 124 124 Leasehold Improvement 199 199 2,441 2,441 Less accumulated depreciation (2,392 ) (2,315 ) Total $ 49 $ 126 |
Accrued Liabilities | Year Ended December 31, 2017 2016 Accrued compensation $ 2,122 $ 1,656 Accrued professional fees 223 161 Accrued interest 511 109 Deferred rent - 13 Accrued warranty 39 58 Accrued vacation 152 175 Accrued dividends 291 296 Stock subscription 276 - Accrued expenses for licensee 429 - Other accrued expenses 204 202 Total $ 4,247 $ 2,670 |
3. FAIR VALUE OF FINANCIAL IN22
3. FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Of Financial Instruments Tables | |
Schedule of fair value measurements | Fair Value at December 31, 2017 Level 1 Level 2 Level 3 Total Warrants issued in connection with Distributor Debt - - (114 ) (114 ) Warrants issued in connection with Short-Term Loans - - (11 ) (11 ) Warrants issued in connection with Senior Secured Debt - - (7,837 ) (7,837 ) Total long-term liabilities at fair value $ - $ - $ (7,962 ) $ (7,962 ) Fair Value at December 31, 2016 Level 1 Level 2 Level 3 Total Warrants issued in connection with Distributor Debt $ — $ — $ (114 ) $ (114 ) Warrants issued in connection with Senior Secured Debt — — (1,306 ) (1,306 ) Total long-term liabilities at fair value $ — $ — $ (1,420 ) $ (1,420 ) |
Summary of changes to Level 3 instruments | Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Series C Warrants Series B Warrants Senior Secured Debt Distributor Debt Total Balance, December 31, 2016 $ - $ - $ (1,306 ) $ (114 ) $ (1,420 ) Warrants issued during the year - - (55 ) - (55 ) Change in fair value during the year - - (6,487 ) - (6,487 ) Balance, December 31, 2017 $ - $ - $ (7,848 ) $ (114 ) $ (7,962 ) |
4. STOCKHOLDER_S DEFICIT (Table
4. STOCKHOLDER’S DEFICIT (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Equity [Abstract] | |
Common stock issued | Series C Preferred Stock Conversions 11,906,931 Series C Preferred Stock Dividends 5,365,298 Convertible Debt Conversions 31,571,930 Issuance of shares for note agreement 50,000 Total 48,894,159 |
Outstanding warrants | Warrants (Underlying Shares) Outstanding, January 1, 2017 4,349,762 Issuances 289,739,376 Exercised - Canceled / Expired - Outstanding, December 31, 2017 294,089,138 |
Shares reserved for warrants | Warrants (Underlying Shares) Exercise Price Expiration Date 23 (1) $8,368.00 per share May 23, 2018 7,538 (2) $75.00 per share June 14, 2021 3 (3) $40,000.00 per share April 23, 2019 7 (4) $36,000.00 per share May 22, 2019 4 (5) $30,400.00 per share September 10, 2019 2 (6) $36,864.80 per share September 27, 2019 9 (7) $22,504.00 per share December 2, 2019 105 (8) $7,200.00 per share December 2, 2020 105 (9) $8,800.00 per share December 2, 2020 25 (11) $20,400.00 per share March 30, 2018 22 (12) $9,504.00 per share June 29, 2020 145 (10) $640.00 per share June 29, 2020 150 (11) $640.00 per share September 4, 2020 362 (12) $640.00 per share September 21, 2020 6 (13) $9,504.00 per share September 4, 2020 1 (14) $640.00 per share October 23, 2020 6 (15) $9,504.00 per share October 23, 2020 279,669,261 (16) $0.00514 per share June 14, 2021 13,424,125 (17) $0.00514 per share February 21, 2021 17,239 (18) $13.92 per share June 6, 2021 200,000 (19) $0.00514 per share February 13, 2022 20,000 (20) $0.18 per share May 16, 2022 550,000 (21) $0.019 per share November 16, 2020 200,000 (22) $0.029 per share December 28, 2020 294,089,138* * Footnote 11 - CONVERTIBLE DEBT IN DEFAULT |
5. INCOME TAXES (Tables)
5. INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Components of deferred taxes | 2017 2016 Deferred tax assets: Warrant liability $ 1,990 $ 697 Accrued executive compensation 447 540 Reserves and other 301 255 Net operating loss carryforwards 20,726 27,958 23,464 29,450 Valuation allowance (23,464 ) (29,450 ) $ 0 $ 0 |
Income taxes | 2017 2016 Statutory federal tax rate 34 % 34 % State taxes, net of federal benefit 4 4 Nondeductible expenses - - Valuation allowance (38 ) (38 ) 0 % 0 % |
Provision for income taxes | 2017 2016 Current $ - $ - Deferred - - Deferred provision - - Impact of change in enacted tax rates 12,139 - Change in valuation allowance (12,139 ) - Total provision for income taxes $ - $ - |
6. STOCK OPTIONS (Tables)
6. STOCK OPTIONS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Working capital | |
Stock options activity | 2016 Weighted Average Shares Exercise Price Outstanding at beginning of year 132 $ 36,000 Options granted - $ - Options exercised - $ - Options expired/forfeited (7 ) $ 74,160 Outstanding at end of year 125 $ 37,920 Options available for issue - 2017 Weighted Average Shares Exercise Price Outstanding at beginning of year 125 $ 37,920 Options granted - $ - Options exercised - $ - Options expired/forfeited (7 ) $ 48,613 Outstanding at end of year 118 $ 37,090 Options available for issue - Weighted Average Shares Exercise Price Options Vested as of December 31, 2016 117 $ 38,640 Options vested in 2017 - $ - Options vested as of December 31, 2017 117 $ 38,640 Weighted Average Shares Exercise Price Options Unvested as of December 31, 2016 8 $ 39,200 Options vested in 2017 (- ) $ - Options expired/forfeited in 2017 (7 ) $ 48,613 Options Unvested as of December 31, 2017 1 |
8. COMMITMENTS AND CONTINGENC26
8. COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of operating leases | Year Amount 2018 114 2019 98 2020 101 2021 26 |
1. ORGANIZATION, BACKGROUND, 27
1. ORGANIZATION, BACKGROUND, AND BASIS OF PRESENTATION (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Working capital | $ (11,600) | ||
Accumulated deficit | (138,533) | $ (127,558) | |
Net Loss | (10,696) | (3,970) | |
Stockholders deficit | $ (19,402) | $ (9,266) | $ (5,562) |
2. SUMMARY OF SIGNIFICANT ACC28
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Accounting Policies [Abstract] | ||
Raw materials | $ 789 | $ 795 |
Work in process | 82 | 115 |
Finished goods | 27 | 141 |
Consigned inventory | 83 | 0 |
Inventory reserve | (716) | (278) |
Total | $ 265 | $ 773 |
2. SUMMARY OF SIGNIFICANT ACC29
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Gross Value of property plant and equipment | $ 2,441 | $ 2,441 |
Less: accumulated depreciation and amortization | (2,392) | (2,315) |
Total property and equipment, net | 49 | 126 |
Equipment | ||
Gross Value of property plant and equipment | 1,378 | 1,378 |
Software | ||
Gross Value of property plant and equipment | 740 | 740 |
Furniture and fixtures | ||
Gross Value of property plant and equipment | 124 | 124 |
Leasehold improvements | ||
Gross Value of property plant and equipment | $ 199 | $ 199 |
2. SUMMARY OF SIGNIFICANT ACC30
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accrued compensation | $ 2,122 | $ 1,656 |
Accrued professional fees | 223 | 161 |
Accrued interest | 511 | 109 |
Deferred rent | 0 | 13 |
Accrued warranty | 39 | 58 |
Accrued vacation | 152 | 175 |
Accrued dividends | 291 | 296 |
Stock subscription | 276 | 0 |
Accrued expenses for licensee | 429 | 0 |
Other accrued expenses | 204 | 202 |
Total | $ 4,247 | $ 2,670 |
2. SUMMARY OF SIGNIFICANT ACC31
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Accounting Policies [Abstract] | ||
Patent Costs | $ 15 | $ 23 |
Deferred revenue | 21 | 34 |
Net Operating loss carry forward | 82,900 | 84,400 |
Share-based compensation | $ 59 | $ 95 |
3. FAIR VALUE OF FINANCIAL IN32
3. FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Warrants | $ (7,962) | $ (1,420) |
Warrants Distributor Debt | ||
Warrants | (114) | (114) |
Warrants Short-Term Loans | ||
Warrants | (11) | |
Warrants Senior Secured Debt | ||
Warrants | (7,837) | (1,306) |
Level 1 | ||
Warrants | 0 | 0 |
Level 1 | Warrants Distributor Debt | ||
Warrants | 0 | 0 |
Level 1 | Warrants Short-Term Loans | ||
Warrants | 0 | |
Level 1 | Warrants Senior Secured Debt | ||
Warrants | 0 | 0 |
Level 2 | ||
Warrants | 0 | 0 |
Level 2 | Warrants Distributor Debt | ||
Warrants | 0 | 0 |
Level 2 | Warrants Short-Term Loans | ||
Warrants | 0 | |
Level 2 | Warrants Senior Secured Debt | ||
Warrants | 0 | 0 |
Level 3 | ||
Warrants | (7,962) | (1,420) |
Level 3 | Warrants Distributor Debt | ||
Warrants | (114) | (114) |
Level 3 | Warrants Short-Term Loans | ||
Warrants | (11) | |
Level 3 | Warrants Senior Secured Debt | ||
Warrants | $ (7,837) | $ (1,306) |
3. FAIR VALUE OF FINANCIAL IN33
3. FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 1) - Level 3 $ in Thousands | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Beginning Balance | $ (1,420) |
Warrants issued during the period | (55) |
Change in fair value during the period | (6,487) |
Ending Balance | (7,962) |
Series C Warrants | |
Beginning Balance | 0 |
Warrants issued during the period | 0 |
Change in fair value during the period | 0 |
Ending Balance | 0 |
Series B Warrants | |
Beginning Balance | 0 |
Warrants issued during the period | 0 |
Change in fair value during the period | 0 |
Ending Balance | 0 |
Warrants Senior Secured Debt | |
Beginning Balance | (1,306) |
Warrants issued during the period | (55) |
Change in fair value during the period | (6,487) |
Ending Balance | (7,848) |
Warrants Distributor Debt | |
Beginning Balance | (114) |
Warrants issued during the period | 0 |
Change in fair value during the period | 0 |
Ending Balance | $ (114) |
4. STOCKHOLDER_S DEFICIT (Detai
4. STOCKHOLDER’S DEFICIT (Details) | 12 Months Ended |
Dec. 31, 2017shares | |
Stockholders Equity Details Narrative | |
Series C Preferred Stock Conversions | 11,906,931 |
Series C Preferred Stock Dividends | 5,365,298 |
Convertible Debt Conversions | 31,571,930 |
Issuance of shares for note agreement | 50,000 |
Total | 48,894,159 |
4. STOCKHOLDERS' DEFICIT (Detai
4. STOCKHOLDERS' DEFICIT (Details 1) - Warrant [Member] | 12 Months Ended |
Dec. 31, 2017shares | |
Outstanding, January 1, 2017 | 4,349,762 |
Issuances | 289,739,376 |
Exercised | 0 |
Canceled / Expired | 0 |
Outstanding, December 31, 2017 | 294,089,138 |
4. STOCKHOLDER_S DEFICIT (Det36
4. STOCKHOLDER’S DEFICIT (Details 2) $ / shares in Units, $ in Thousands | 12 Months Ended |
Dec. 31, 2017USD ($)$ / shares | |
Warrants | $ 294,089,138 |
Warrants 1 | |
Warrants | $ 23 |
Exercise Price | $ / shares | $ 8,368 |
Expiration Date | 23-May-18 |
Warrants 2 | |
Warrants | $ 7,538 |
Exercise Price | $ / shares | $ 75 |
Expiration Date | 14-Jun-21 |
Warrants 3 | |
Warrants | $ 3 |
Exercise Price | $ / shares | $ 40,000 |
Expiration Date | 23-Apr-19 |
Warrants 4 | |
Warrants | $ 7 |
Exercise Price | $ / shares | $ 36,000 |
Expiration Date | 22-May-19 |
Warrants 5 | |
Warrants | $ 4 |
Exercise Price | $ / shares | $ 30,400 |
Expiration Date | 10-Sep-19 |
Warrants 6 | |
Warrants | $ 2 |
Exercise Price | $ / shares | $ 36,864.80 |
Expiration Date | 27-Sep-19 |
Warrants 7 | |
Warrants | $ 9 |
Exercise Price | $ / shares | $ 22,504 |
Expiration Date | 2-Dec-19 |
Warrants 8 | |
Warrants | $ 105 |
Exercise Price | $ / shares | $ 7,200 |
Expiration Date | 2-Dec-20 |
Warrant 9 | |
Warrants | $ 105 |
Exercise Price | $ / shares | $ 8,800 |
Expiration Date | 2-Dec-20 |
Warrant 10 | |
Warrants | $ 25 |
Exercise Price | $ / shares | $ 20,400 |
Expiration Date | 30-Mar-18 |
Warrant 11 | |
Warrants | $ 22 |
Exercise Price | $ / shares | $ 9,504 |
Expiration Date | 29-Jun-20 |
Warrants 12 | |
Warrants | $ 145 |
Exercise Price | $ / shares | $ 640 |
Expiration Date | 29-Jun-20 |
Warrants 13 | |
Warrants | $ 150 |
Exercise Price | $ / shares | $ 640 |
Expiration Date | 4-Sep-20 |
Warrants 14 | |
Warrants | $ 362 |
Exercise Price | $ / shares | $ 640 |
Expiration Date | 21-Sep-20 |
Warrants 15 | |
Warrants | $ 6 |
Exercise Price | $ / shares | $ 9,504 |
Expiration Date | 4-Sep-20 |
Warrants 16 | |
Warrants | $ 1 |
Exercise Price | $ / shares | $ 640 |
Expiration Date | 23-Oct-20 |
Warrants 17 | |
Warrants | $ 6 |
Exercise Price | $ / shares | $ 9,504 |
Expiration Date | 23-Oct-20 |
Warrants 18 | |
Warrants | $ 279,669,261 |
Exercise Price | $ / shares | $ 0.00514 |
Expiration Date | 14-Jun-21 |
Warrants 19 | |
Warrants | $ 13,424,125 |
Exercise Price | $ / shares | $ 0.00514 |
Expiration Date | 21-Feb-21 |
Warrants 20 | |
Warrants | $ 17,239 |
Exercise Price | $ / shares | $ 13.92 |
Expiration Date | 6-Jun-21 |
Warrants 21 | |
Warrants | $ 200,000 |
Exercise Price | $ / shares | $ 0.00514 |
Expiration Date | 13-Feb-22 |
Warrants 22 | |
Warrants | $ 20,000 |
Exercise Price | $ / shares | $ 0.18 |
Expiration Date | 16-May-22 |
Warrants 23 | |
Warrants | $ 550,000 |
Exercise Price | $ / shares | $ 0.019 |
Expiration Date | 16-Nov-20 |
Warrants 24 | |
Warrants | $ 200,000 |
Exercise Price | $ / shares | $ 0.029 |
Expiration Date | 28-Dec-20 |
4. STOCKHOLDER_S DEFICIT (Det37
4. STOCKHOLDER’S DEFICIT (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Stockholders Equity Details Narrative | ||
Common stock, par value | $ .001 | $ 0.001 |
Common stock, authorized | 1,000,000 | 1,000,000 |
Common stock, issued | 49,563 | 669 |
Common stock, outstanding | 49,563 | 669 |
Series C convertible preferred stock, par value | $ 0.001 | $ 0.001 |
Series C convertible preferred stock, authorized | 9 | 9 |
Series C convertible preferred stock, issued | .9 | 1.6 |
Series C convertible preferred stock, outstanding | .9 | 1.6 |
Series C convertible preferred stock, liquidation preference | $ 970 | $ 1,643 |
Series C1 convertible preferred stock, par value | $ 0.001 | $ 0.001 |
Series C1 convertible preferred stock, authorized | 20.3 | 20.3 |
Series C1 convertible preferred stock, issued | 4.3 | 4.3 |
Series C1 convertible preferred stock, outstanding | 4.3 | 4.3 |
Series C1 convertible preferred stock, liquidation preference | $ 4,312 | $ 4,312 |
5. INCOME TAXES (Details)
5. INCOME TAXES (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Deferred tax assets: | ||
Warrant liability | $ 1,990 | $ 697 |
Accrued executive compensation | 447 | 540 |
Reserves and other | 301 | 255 |
Net operating loss carryforwards | 20,726 | 27,958 |
Gross | 23,464 | 29,450 |
Valuation allowance | (23,464) | (29,450) |
Net | $ 0 | $ 0 |
5. INCOME TAXES (Details 1)
5. INCOME TAXES (Details 1) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
Statutory federal tax rate | 34.00% | 34.00% |
State taxes, net of federal benefit | 4.00% | 4.00% |
Nondeductible expenses | 0.00% | 0.00% |
Valuation allowance | (38.00%) | (38.00%) |
Effective rate | 0.00% | 0.00% |
5. INCOME TAXES (Details 2)
5. INCOME TAXES (Details 2) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Taxes Details 2 | ||
Current | $ 0 | $ 0 |
Deferred | 0 | 0 |
Deferred provision | 0 | 0 |
Impact of change in enacted tax rates | 12,139 | 0 |
Change in valuation allowance | (12,139) | 0 |
Total provision for income taxes | $ 0 | $ 0 |
5. INCOME TAXES (Details Narrat
5. INCOME TAXES (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Taxes Details Narrative | ||
NOL carryforwards | $ 82,900 | $ 84,400 |
NOL carryforwards available through | Dec. 31, 2036 |
6. STOCK OPTIONS (Details)
6. STOCK OPTIONS (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Equity [Abstract] | ||
Outstanding beginning balance, Shares | 125 | 132 |
Options granted, Shares | 0 | 0 |
Options exercised, Shares | 0 | 0 |
Options expired/forfeited, Shares | (7) | (7) |
Outstanding ending balance, Shares | 118 | 125 |
Options available for issue, Shares | 0 | 0 |
Outstanding beginning balance, Weighted average exercise price | $ 37,920 | $ 36,000 |
Options granted, Weighted average exercise price | 0 | 0 |
Options exercised, Weighted average exercise price | 0 | 0 |
Options expired/forfeited, Weighted average exercise price | 48,613 | 74,160 |
Outstanding ending balance, Weighted average exercise price | $ 37,090 | $ 37,920 |
Options Vested | ||
Options vested beginning balance, Shares | 117 | |
Options vested in period, Shares | 0 | |
Options vested ending balance, Shares | 117 | 117 |
Options vested beginning balance, Weighted average exercise price | $ 38,640 | |
Options vested in period, Weighted average exercise price | 0 | |
Options vested ending balance, Weighted average exercise price | $ 38,640 | $ 38,640 |
Options Unvested | ||
Options unvested, beginning balance, Shares | 8 | |
Options vested in period, Shares | 0 | |
Options expired/forfeited, Shares | (7) | |
Options unvested, ending balance, Shares | 1 | 8 |
Options unvested, beginning balance, weighted average exercise price | $ 39,200 | |
Options vested in period, Weighted average exercise price | 0 | |
Options expired/forfeited, Weighted average exercise price | 48,613 | |
Options unvested, ending balance, weighted average exercise price | $ 0 | $ 39,200 |
8. COMMITMENTS AND CONTINGENC43
8. COMMITMENTS AND CONTINGENCIES (Details) $ in Thousands | Dec. 31, 2017USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,018 | $ 114 |
2,019 | 98 |
2,020 | 101 |
2,021 | $ 26 |
9. NOTES PAYABLE (Details Narra
9. NOTES PAYABLE (Details Narrative) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Debt Disclosure [Abstract] | ||
Note payable in default, including related parties | $ 1,091 | $ 1,008 |
Related party notes and accrued interest | $ 354 | $ 127 |