10-Q: Guided Therapeutics Secures $149,500 in Convertible Note Financing Amidst Ongoing Efforts for LuViva Commercialization

Guided Therapeutics enters into a securities purchase agreement for a $149,500 convertible note to bolster working capital as it navigates commercialization and regulatory pathways for its LuViva device.

Summary

• Guided Therapeutics, Inc. has entered into a Securities Purchase Agreement with 1800 Diagonal Lending LLC, securing a convertible promissory note with a principal amount of $149,500, inclusive of an original issue discount of $19,500.
• The agreement, dated April 1, 2025, outlines the terms for the note, which matures on January 30, 2026, and includes a one-time interest charge of 11%, amounting to $16,445.
• The company is obligated to make five payments starting September 30, 2025, totaling $165,945.
• The lender has the option to convert the note into common stock upon an event of default, with the conversion price set at 65% of the lowest trading price in the ten days prior to conversion.
• The company must reserve four times the number of shares issuable upon full conversion.
• The proceeds from the note will be used for general working capital purposes.
• The company's financial statements reflect a net loss attributable to common stockholders of $462,742 for the three months ended March 31, 2025.
• The company is actively pursuing FDA approval for its LuViva Advanced Cervical Scan device and is working towards commercialization in China and other international markets.

Sentiment

Score: 4

Explanation: The sentiment is neutral to slightly negative. While the company secured financing, it is still operating at a loss and faces significant challenges in commercializing its products and maintaining its financial stability. The company's disclosure controls and procedures were ineffective as of March 31, 2025, due to the existence of material weaknesses in its internal control over financial reporting.

Positives

• The financing provides Guided Therapeutics with additional working capital.
• The company retains the right to accelerate payments or prepay the note in full without penalty.
• The company is actively pursuing FDA approval for its LuViva device.
• The company is working towards commercialization in China and other international markets.

Negatives

• The company has a history of net losses and a significant accumulated deficit of $154.2 million as of March 31, 2025.
• The company's disclosure controls and procedures were ineffective as of March 31, 2025, due to the existence of material weaknesses in its internal control over financial reporting.
• The company is dependent on potential strategic partners or outside investors for funding, development assistance, clinical trials, distribution and marketing of some of its products.
• The company has a significant amount of debt outstanding, including a $1.13 million senior unsecured convertible debenture that is currently in default.

Risks

• The company's ability to continue as a going concern is dependent on raising additional capital.
• The company may not be successful in growing sales for its products.
• 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.
• The company is subject to the risk of dilution of existing stockholders upon the issuance, conversion or exercise of securities issued as part of its capital raising efforts.
• The company is subject to the risk that certain debt holders may call the notes to be paid.
• The company is subject to the impact of the conflict between Russia and Ukraine on economic conditions in general and on its business operations.

Future Outlook

The company expects to generate additional purchase orders which it expects to result in actual sales of approximately $2.0 million within the next twelve months. The company expects to spend another $300 thousand to complete and file its US FDA study. The company estimates that approximately $2.5 million will be needed to fund the business over the next 12 months.

Industry Context

The medical device industry is characterized by increasing competition and a high failure rate, requiring substantial expenditures for development, regulatory approvals, sales, and marketing.

Comparison to Industry Standards

• It is difficult to compare Guided Therapeutics directly to industry standards due to its unique focus on cervical cancer detection using biophotonics.
• However, similar companies in the medical device space, such as Hologic and Exact Sciences, have achieved significant market capitalization through successful product commercialization and strategic partnerships.
• Hologic, for example, is a leader in women's health, offering a range of diagnostic and surgical products.
• Exact Sciences focuses on early cancer detection through non-invasive screening tests.
• Guided Therapeutics' success will depend on its ability to secure regulatory approvals, establish strong distribution channels, and demonstrate the clinical and economic value of its LuViva device compared to existing screening methods.

Related Party Transactions

• During 2024, the Company issued $75,000 in promissory notes to members of the Board of Directors.
• The company entered into exchange agreements with two members of the Board of Directors to exchange $50,000 of notes payable and accrued interest of $2,602 for 526,014 shares of common stock and 526,014 warrants to purchase up to 526,014 shares of common stock.
• Dr. Mark Faupel and Dr. Gene Cartwright held promissory notes originally issued in 2018 and most recently amended in 2023 and 2025.
• A note issued to Richard Fowler in 2021 had a remaining principal balance of $33,753 as of March 31, 2025.

Stakeholder Impact

• Shareholders face potential dilution from the conversion of convertible notes and the issuance of new equity.
• Employees' job security is contingent on the company's ability to secure funding and achieve commercial success.
• Customers in developing countries could benefit from access to a more affordable and accessible cervical cancer screening tool.
• Suppliers and creditors face the risk of non-payment if the company's financial situation deteriorates.

Next Steps

• Continue pursuing FDA approval for the LuViva Advanced Cervical Scan device.
• Work towards commercialization of LuViva in China and other international markets.
• Manage debt obligations and maintain compliance with reporting requirements.
• Remediate material weaknesses in internal control over financial reporting.

Key Dates

Keywords

convertible note, Guided Therapeutics, LuViva, financing, working capital, FDA approval, commercialization, 1800 Diagonal Lending LLC, Securities Purchase Agreement, common stock