GUIDED THERAPEUTICS INC - Quarter Report: 2010 March (Form 10-Q)

 

 

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Delaware (State or other jurisdiction of incorporation or organization)

58-2029543 (I.R.S. Employer Identification No.)

 

 

	5835 Peachtree Corners East, Suite D		30092
	Norcross, Georgia		(Zip Code)
	(Address of principal executive offices)

 

Large Accelerated filer

Accelerated filer

Non-accelerated filer

Smaller Reporting Company

X

Part I.  Financial Information	3
Item 1.     Financial Statements	3
Condensed Consolidated Balance Sheets -
March 31, 2010 (Unaudited) and December 31, 2009	3
Condensed  Consolidated Statements of Operations (Unaudited)
Three months ended March 31, 2010 and 2009	4
Condensed Consolidated Statements of Cash Flows (Unaudited)
Three months ended March 31, 2010 and 2009	5
Notes to Condensed Financial Statements (Unaudited)	6
Item 2.      Management's Discussion and Analysis of Financial Condition and Results of Operations	11
Item 3.     Quantitative and Qualitative Disclosures About Market Risk	15
Item 4.     Controls and Procedures	15
Part II. Other Information	16
Item 1.     Legal Proceedings	16
Item 1A.  Risk Factors (N/A)	16
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds	16
Item 5.    Other Information	16
Item 6.    Exhibits	16
Signatures	17

GUIDED THERAPEUTICS, INC. (FORMERLY SPECTRX, INC.) AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands Except Per Share Data)
		AS OF
ASSETS		March 31, 2010				December 31, 2009
CURRENT ASSETS:		(Unaudited)				(Audited)
Cash and cash equivalents		$	137			$	230
Accounts receivable, net of allowance for doubtful accounts of  $41 at March 31, 2010 and        December 31, 2009			159				132
Other current assets			45				48
Total current assets			341				410
Property and equipment, net			3				4
Deferred debt issuance costs, net			-				101
Capitalized cost of internally developed software for internal use			155				113
Other assets			126				161
Total noncurrent assets			284				379
TOTAL ASSETS		$	625			$	789
LIABILITIES AND CAPITAL DEFICIT
CURRENT LIABILITIES:
Short term notes payable		$	175			$	74
Notes payable – past due			458				438
Accounts payable			992				1,158
Accrued liabilities			795				831
Deferred revenue			213				250
Dividends payable – Series A			-				1,824
Convertible notes payable, including accrued interest and net of debt discount and        unfunded subscriptions  of $1.0 million and at December 31, 2009 to former related        party debt holders-related parties			-				8,189
Total current liabilities			2,633				12,764
TOTAL LIABILITIES			2,633				12,764
COMMITMENTS & CONTINGENCIES (Note 6)
CAPITAL DEFICIT:
Series A convertible preferred stock, $.001 Par value; 5,000 Shares authorized,  no Shares        issued as of March 31, 2010. 243 Shares issued and outstanding as of December 31, 2009        (liquidation preference $5,599 as of December 31, 2009)			-				1,962
Common stock, $.001 Par value; 100,000 Shares authorized, 42,184 and 19,961 Shares        issued and outstanding as of March 31, 2010 and December 31, 2009, respectively.			42				20
Additional paid-in capital			75,014				61,642
Treasury stock, at cost			(104	)			(104	)
Accumulated deficit			(77,064	)			(75,599	)
TOTAL STOCKHOLDER'S DEFICIT			(2,112	)			(12,079	)
Non-controlling interest in subsidiaries			104				104
TOTAL CAPITAL DEFICIT			(2,008	)			(11,975	)
TOTAL LIABILITIES AND CAPITAL DEFICIT		$	625			$	789
The accompanying notes are an integral part of these condensed consolidated financial statements.

GUIDED THERAPEUTICS INC. (FORMERLY SPECTRX, INC.) AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in Thousands Except Per Share Data)
		FOR THE THREE MONTHS ENDED MARCH 31,
		2010				2009
REVENUE:
Service revenue		$	821			$	181
COSTS AND EXPENSES:
Research and development			407				304
Sales and Marketing			34				14
General and administrative			570				465
Total			1,011				783
Operating loss			(190	)			(602	)
INTEREST EXPENSE			(1,272	)			(711	)
LOSS  INCOME FROM CONTINUING OPERATIONS			(1,465	)			(1,313	)
PROVISION FOR INCOME TAXES			-				-
NET LOSS			(1,465	)			(1,313	)
PREFERRED STOCK DIVIDENDS			(1,700	)			(63	)
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS		$	(3,165	)		$	(1,376	)
BASIC AND DILUTED NET (LOSS) PER SHARE  ATTRIBUTABLE TO COMMON STOCKHOLDERS, FROM CONTINUING OPERATIONS
		$	(0.15	)		$	(0.09	)
WEIGHTED AVERAGE SHARES OUTSTANDING			21,400				15,700
The accompanying notes are an integral part of these condensed consolidated financial statements.

GUIDED THERAPEUTICS INC. (FORMERLY SPECTRX, INC.) AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousand)
		FOR THE THREE MONTHS MARCH 31,
		2010				2009
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(1,465	)		$	(1,313	)
Adjustments to reconcile net loss to net cash used in operating          activities:
Depreciation and amortization			1				2
Amortization and accretion of deferred financing costs,           notes and warrants			1,095				590
Stock based compensation			255				88
Changes in operating assets and liabilities:
Accounts receivable			(27	)			4
Other current assets			38				(4	)
Accounts payable			(166	)			36
Deferred Revenue			(37	)			(125	)
Accrued liabilities			157				457
Total adjustments			1,316				1,048
Net cash used in operations			(149	)			(265	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to capitalized software costs			(42	)			(6	)
Net cash used in activities			(42	)			(6	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of convertible notes payable to former          debt holders -  related parties			101				45
Proceeds from third party investment in subsidiary			-				104
Proceeds from subscription receivable			-				63
Payments on notes payables			(3	)			-
Net cash provided by financing activities			98				212
NET CHANGE IN CASH AND CASH EQUIVALENTS			(93	)			(59	)
CASH AND CASH EQUIVALENTS, beginning of year			230				68
CASH AND CASH EQUIVALENTS, end of period		$	137			$	9
SUPPLEMENTAL SCHEDULE OF:
Cash paid for:
Interest		$	5			$	300
NONCASH INVESTING AND FINANCING ACTIVITIES:
Conversion of preferred stock into common stock		$	1,962			$	48
Dividends payable in the form of preferred stock converted into common       stock		$	1,824			$	-
Conversion of notes payable into common stock		$	9,346			$	-
Dividends in the form of preferred stock and redeemable convertible      preferred stock		$	-			$	63
Deemed Dividends in the form of preferred stock and redeemable convertible preferred stock		$	1,700			$	-
The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

 

 

		Shares				Weighted average exercise price				Weighted average remaining contractural (years)				Aggregate intrinsic value (thousands)
Outstanding, January 1, 2010			5,480,076			$	0.38
Granted			371,000			$	0.82
Exercised			(21,000	)		$	0.30
Outstanding, March 31, 2010			5,830,076			$	0.36				5.35			$	3,391
Vested and exercisable, March 31, 2010			4,207,312			$	0.38				5.81			$	2,362

 

		Convertible
		Debt Warrants
Stock price - Closing on 02-26-2010		$	0.85
Exercise price		$	0.65
Term			2.50
Risk-free rate			1.43	%
Volatility			1.22
Dividend yield			0.0	%
Warrant  value		$	0.61
# of warrants to be issued			2,799,327
Value of inducement warrants issued		$	1,699,504

 

 

 

 

	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number of Shares	Weighted Average Exercise Price	Weighted Average Contractual Life (years)		Number of Shares	Weighted Average Price
$ 0.00 - $ 0.26	1,799,076	$   0.15	7.28		1,580,326	$   0.14
$ 0.30 - $ 0.33	2,485,000	$   0.19	5.63		1,834,208	$   0.21
$ 0.34 - $ 1.00	1,159,000	$   0.11	1.19		606,778	$   0.09
$ 1.10 - $ 4.46	284,000	$   1.36	9.12		83,000	$   1.46
$ 5.00 - $ 9.00	58,000	$   5.38	1.85		58,000	$   5.38
$ 10.13 - $ 16.50	45,000	$ 11.25	0.15		45,000	$ 11.25
Total	5,830,076	$   0.36	5.35		4,207,312	$   0.38

 

	Warrants		Exercise Price
	179,000	(1)	0.65
	385,000	(2)	0.65
	25,000	(2)	0.65
	68,000	(3)	0.65
	7,485,061	(4)	0.65
	15,000	(5)	0.65
	400,000	(6)	0.65
	240,385	(7)	0.65
	11,558,878	(8)	0.65
	5,428,524	(9)	0.65
	661,000	(10)	0.65
	2,799,327	(11)	0.65
	29,245,175

(1)

Consists of amended and restated warrants to purchase common stock at an original purchase price of $1.50 per share associated with the settlement of a dispute in August of 2005, the warrant modification required adding 5 years to the warrant terms. These warrants are exercisable either in cash or in stock, if the fair market value is greater than the exercise price.  As of March 2007, the exercise price was adjusted from $1.50 to $0.65 per share, as a result of the repricing of the then-outstanding series A preferred stock. At March 31, 2007, approximately $6,000 was charged to expense, based on the repricing. On February 26, 2010, these warrants were amended to expire on March 1, 2013.

(2)

Consists of amended and restated warrants to purchase common stock at an original purchase price of $1.50 per share associated with the settlement of a dispute in August 2005, which settlement resulted in adding 5 years to the warrant terms. These warrants are exercisable either in cash or in stock, if the fair market value is greater than the exercise price.  As of March 2007, the exercise price was adjusted from $1.50 to $0.65 per share, as a result of the repricing of the then-outstanding series A preferred stock. At March 31, 2007, approximately $11,000 was charged to expense, based on the repricing. On February 26, 2010, these warrants were amended to expire on March 1, 2013.

(3)

Consists of amended and restated warrants to purchase common stock at an original purchase price of $1.50 per share associated with the settlement of a dispute in August 2005, which settlement resulted in adding 5 years to the warrant terms. These warrants are exercisable either in cash or in stock, if the fair market value is greater than the exercise price.  As of March 2007, the exercise price was adjusted from $1.50 to $0.65 per share, as a result of the repricing of the then-outstanding series A preferred stock. At March 31, 2007, approximately $2,000 was charged to expense, based on the repricing. On February 26, 2010, these warrants were amended to expire on March 1, 2013.

 

 

 

 

(4)

Consists of warrants to purchase common stock at an original purchase price of $0.78 per share issued in conjunction with an amended and restated loan agreement, executed in March 2007. On February 26, 2010, these warrants were amended to expire on March 1, 2013 and the exercise price was lowered to $0.65.

 

 

 

 

	·	access to sufficient debt or equity capital to meet our operating and financial needs;
	·	the effectiveness and ultimate market acceptance of our products;

	·	whether our products in development will prove safe, feasible and effective;
	·	whether and when we or any potential strategic partners will obtain approval from the U.S FDA and corresponding foreign agencies;

 

 

 

	·	our need to achieve manufacturing scale-up in a timely manner, and our need to provide for the efficient manufacturing of sufficient quantities of our products;
	·	the lack of immediate alternate sources of supply for some critical components of our products;

	·	our patent and intellectual property position;
	·	the need to fully develop the marketing, distribution, customer service and technical support and other functions critical to the success of our product lines; and

·

the dependence on potential strategic partners or outside investors for funding, development assistance, clinical trials, distribution and marketing of some of our products.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit Number	Exhibit Description
3.4	Certificates of Incorporation, as amended on February 26, 2010 (incorporated by reference to Exhibit 4.9(1) to the Annual Report on Form 10-K, for the year ended December 31, 2009)
4.9	Amendment to the Amended and Restated Loan Agreement
10.17	Assigned Task Agreement between Konica Minolta Opto, Inc, and Guided Therapeutics, Inc. dated February 1, 2010.
10.18	Collaborative option and development Agreement for Collaboration in the Development of Spectroscopic Technology between Konica Minolta Opto, Inc,  and Guided Therapeutics, Inc.  dated April 27, 2010.
31	Rule 13a-14(a)/15d-14(a) Certification
32	Section 1350 Certification

GUIDED THERAPEUTICS, INC.
/s/ MARK L. FAUPEL
By:	Mark L. Faupel
	President, Chief Executive Officer and
	Acting Chief Financial Officer
Date:	May 13, 2010