Document and Entity Information
Document and Entity Information - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Apr. 05, 2021 | |
Cover [Abstract] | ||
Entity Registrant Name | GUIDED THERAPEUTICS INC | |
Entity Central Index Key | 0000924515 | |
Document Type | 10-K | |
Document Period End Date | Dec. 31, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Interactive Data Current | Yes | |
Entity Incorporation State Country Code | DE | |
Entity File Number | 58-2029543 | |
Entity Public Float | $ 4,000,000 | |
Entity Common Stock, Shares Outstanding | 13,180,417 | |
Document Fiscal Period Focus | FY | |
Document Fiscal Year Focus | 2020 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 182,000 | $ 899,000 |
Accounts receivable, net of allowance for doubtful accounts of $126 and $114 at December 31, 2020 and 2019, respectively | 24,000 | 13,000 |
Inventory, net of reserves of $758 and $831 at December 31, 2020 and 2019, respectively | 605,000 | 48,000 |
Other current assets | 85,000 | 70,000 |
Total current assets | 896,000 | 1,030,000 |
NONCURRENT ASSETS: | ||
Property and equipment, net | 1,000 | 0 |
Lease asset-right, net of amortization | 453,000 | 132,000 |
Other assets | 0 | 18,000 |
Total noncurrent assets | 454,000 | 150,000 |
Total assets | 1,350,000 | 1,180,000 |
CURRENT LIABILITIES: | ||
Current portion of long-term debt | 28,000 | 0 |
Note payable in default, related parties | 1,000 | 349,000 |
Note payable in default | 328,000 | 427,000 |
Short-term notes payable | 45,000 | 380,000 |
Short-term notes payable, related parties, past due | 51,000 | 646,000 |
Convertible notes in default | 0 | 2,915,000 |
Convertible note, past due | 1,930,000 | 0 |
Short-term convertible notes payable | 951,000 | 73,000 |
Short-term convertible notes payable, related parties | 0 | 513,000 |
Accounts payable | 2,419,000 | 2,897,000 |
Accounts payable, related parties | 116,000 | 136,000 |
Accrued liabilities | 2,995,000 | 3,235,000 |
Subscription receivable | 0 | 635,000 |
Current portion of lease liability | 56,000 | 103,000 |
Deferred revenue | 42,000 | 101,000 |
Total current liabilities | 8,962,000 | 12,410,000 |
LONG-TERM LIABILITIES: | ||
Warrants, at fair value | 2,203,000 | 5,092,000 |
Lease liability | 392,000 | 29,000 |
Derivative liability | 25,000 | 0 |
Long-term convertible notes payable, net | 0 | 15,000 |
Long-term debt | 23,000 | 0 |
Long-term debt-related parties | 600,000 | 569,000 |
Total long-term liabilities | 3,243,000 | 5,705,000 |
Total liabilities | 12,205,000 | 18,115,000 |
Commitments & contingencies (Note 8) | ||
STOCKHOLDERS' DEFICIT: | ||
Common stock, $.001 par value; 3,000,000 shares authorized, 13,138 and 3,319 shares issued and outstanding as of December 31, 2020 and 2019, respectively | 3,403,000 | 3,394,000 |
Additional paid-in capital | 123,109,000 | 118,552,000 |
Treasury stock, at cost | (132,000) | (132,000) |
Accumulated deficit | (139,956,000) | (139,555,000) |
Total stockholders' deficit | (10,855,000) | (16,935,000) |
Total liabilities and stockholders' deficit | 1,350,000 | 1,180,000 |
Series C Convertible Preferred Stock | ||
STOCKHOLDERS' DEFICIT: | ||
Convertible preferred stock | 105,000 | 105,000 |
Series C-1 Convertible Preferred Stock | ||
STOCKHOLDERS' DEFICIT: | ||
Convertible preferred stock | 170,000 | 170,000 |
Series C-2 Convertible Preferred Stock | ||
STOCKHOLDERS' DEFICIT: | ||
Convertible preferred stock | 531,000 | 531,000 |
Series D Convertible Preferred Stock | ||
STOCKHOLDERS' DEFICIT: | ||
Convertible preferred stock | 276,000 | 0 |
Series E Convertible Preferred Stock | ||
STOCKHOLDERS' DEFICIT: | ||
Convertible preferred stock | $ 1,639,000 | $ 0 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
CURRENT ASSETS: | ||
Accounts receivable, net of allowance | $ 126 | $ 114 |
Inventory, net of reserves | $ 758 | $ 831 |
STOCKHOLDERS' DEFICIT: | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, authorized (in thousands) | 3,000,000 | 3,000,000 |
Common stock, issued (in thousands) | 13,138 | 3,319 |
Common stock, outstanding (in thousands) | 13,138 | 3,319 |
Series C Convertible Preferred Stock | ||
STOCKHOLDERS' DEFICIT: | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, authorized (in thousands) | 9 | 9 |
Preferred stock, issued (in thousands) | 0.3 | 0.3 |
Preferred stock, outstanding (in thousands) | 0.3 | 0.3 |
Preferred stock, liquidation preference | $ 286 | $ 286 |
Series C-1 Convertible Preferred Stock | ||
STOCKHOLDERS' DEFICIT: | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, authorized (in thousands) | 20.3 | 20.3 |
Preferred stock, issued (in thousands) | 1 | 1 |
Preferred stock, outstanding (in thousands) | 1 | 1 |
Preferred stock, liquidation preference | $ 1,049 | $ 1,049 |
Series C-2 Convertible Preferred Stock | ||
STOCKHOLDERS' DEFICIT: | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, authorized (in thousands) | 5 | 5 |
Preferred stock, issued (in thousands) | 3.3 | 3.3 |
Preferred stock, outstanding (in thousands) | 3.3 | 3.3 |
Preferred stock, liquidation preference | $ 3,263 | $ 3,263 |
Series D Convertible Preferred Stock | ||
STOCKHOLDERS' DEFICIT: | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, authorized (in thousands) | 6 | 6 |
Preferred stock, issued (in thousands) | .8 | 0 |
Preferred stock, outstanding (in thousands) | .8 | 0 |
Preferred stock, liquidation preference | $ 763 | $ 0 |
Series E Convertible Preferred Stock | ||
STOCKHOLDERS' DEFICIT: | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, authorized (in thousands) | 5 | 0 |
Preferred stock, issued (in thousands) | 1.7 | 0 |
Preferred stock, outstanding (in thousands) | 1.7 | 0 |
Preferred stock, liquidation preference | $ 1,736 | $ 0 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
REVENUE: | ||
Sales - devices and disposables, net | $ 102,000 | $ 36,000 |
Cost of goods recovered (sold) | 41,000 | (70,000) |
Gross profit (loss) | 143,000 | (34,000) |
OPERATING EXPENSES: | ||
Research and development | 143,000 | 122,000 |
Sales and marketing | 139,000 | 87,000 |
General and administrative | 913,000 | 694,000 |
Total operating expenses | 1,195,000 | 903,000 |
Operating loss | (1,052,000) | (937,000) |
OTHER INCOME (EXPENSES) | ||
Other income | 271,000 | 48,000 |
Interest expense | (1,056,000) | (1,412,000) |
Loss from extinguishment of debt | (296,000) | 0 |
Change in fair value of derivative liability | (25,000) | 0 |
Change in fair value of warrants | 1,879,000 | 380,000 |
Total other income (expenses) | 773,000 | (984,000) |
Loss before income taxes | (279,000) | (1,921,000) |
Provision for income taxes | 0 | 0 |
Net loss | (279,000) | (1,921,000) |
Preferred stock dividends | (122,000) | 0 |
Net loss attributable to common stockholders | $ (401,000) | $ (1,921,000) |
NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS | ||
Basic | $ (0.04) | $ (0.58) |
Diluted | $ (0.04) | $ (0.58) |
WEIGHTED AVERAGE SHARES OUTSTANDING | ||
Basic (in thousands) | 10,767 | 3,302 |
Diluted (in thousands) | 10,767 | 3,302 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT - USD ($) $ in Thousands | Series C Convertible Preferred Stock | Series C-1 Convertible Preferred Stock | Series C-2 Convertible Preferred Stock | Series D Convertible Preferred Stock | Series E Convertible Preferred Stock | Common Stock | Additional Paid-In Capital | Treasury Stock | Accumulated Deficit | Total |
Beginning balance, shares (in thousands) at Dec. 31, 2018 | 0 | 1 | 3 | 0 | 0 | 2,669 | ||||
Beginning balance, amount at Dec. 31, 2018 | $ 105 | $ 170 | $ 531 | $ 0 | $ 0 | $ 2,877 | $ 118,259 | $ (132) | $ (137,634) | $ (15,824) |
Shares in transit | 692 | 692 | ||||||||
Conversion of debt into common stock, shares (in thousands) | 650 | |||||||||
Conversion of debt into common stock, amount | $ 517 | (484) | 33 | |||||||
Beneficial conversion feature of convertible debt | 77 | 77 | ||||||||
Stock-based compensation | 8 | 8 | ||||||||
Accrued preferred dividends | 0 | |||||||||
Net loss | (1,921) | (1,921) | ||||||||
Ending balance, shares (in thousands) at Dec. 31, 2019 | 0 | 1 | 3 | 0 | 0 | 3,319 | ||||
Ending balance, amount at Dec. 31, 2019 | $ 105 | $ 170 | $ 531 | $ 0 | $ 0 | $ 3,394 | 118,552 | (132) | (139,555) | (16,935) |
Series D preferred offering, shares (in thousands) | 1 | 1,526 | ||||||||
Series D preferred offering, amount | $ 276 | $ 1 | 460 | 737 | ||||||
Series E preferred offering, shares (in thousands) | 2 | |||||||||
Series E preferred offering, amount | $ 1,639 | 1,639 | ||||||||
Conversion of debt into common stock - exchange agreements, shares (in thousands) | 7,957 | |||||||||
Conversion of debt into common stock - exchange agreements, amount | $ 8 | 2,871 | 2,879 | |||||||
Conversion of debt into common stock - convertible debt, shares (in thousands) | 175 | |||||||||
Conversion of debt into common stock - convertible debt, amount | 50 | 50 | ||||||||
Issuance of common stock for manufacturing agreements, shares (in thousands) | 12 | |||||||||
Issuance of common stock for manufacturing agreements, amount | 0 | |||||||||
Issuance of common stock for payment of Series D preferred dividends, shares (in thousands) | 149 | |||||||||
Issuance of common stock for payment of Series D preferred dividends, amount | 40 | 40 | ||||||||
Beneficial conversion feature of convertible debt | 82 | 82 | ||||||||
Warrants exchanged for fixed price warrants | 117 | 117 | ||||||||
Adjustment to warrant liability for adoption of ASU 2017-11 | 627 | 627 | ||||||||
Stock-based compensation | 310 | 310 | ||||||||
Accrued preferred dividends | (122) | (122) | ||||||||
Net loss | (279) | (279) | ||||||||
Ending balance, shares (in thousands) at Dec. 31, 2020 | 0 | 1 | 3 | 1 | 2 | 13,138 | ||||
Ending balance, amount at Dec. 31, 2020 | $ 105 | $ 170 | $ 531 | $ 276 | $ 1,639 | $ 3,403 | $ 123,109 | $ (132) | $ (139,956) | $ (10,855) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (279) | $ (1,921) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Bad debt expense | 12 | 0 |
Inventory reserve | (73) | 0 |
Depreciation | 0 | 21 |
Amortization of debt issuance costs and discounts | 394 | 105 |
Amortization of beneficial conversion feature | 102 | 92 |
Stock-based compensation | 310 | 8 |
Change in fair value of warrants | (1,879) | (380) |
Loss on extinguishment of debt | 296 | 0 |
Change in fair value of derivative | 25 | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (23) | 0 |
Inventory | (483) | 66 |
Other current assets | (15) | (2) |
Other assets | 18 | 1 |
Accounts payable | (372) | 20 |
Deferred revenue | (59) | 35 |
Accrued liabilities | 151 | 1,149 |
Total adjustments | (1,596) | 1,115 |
Net cash used in operating activities | (1,875) | (806) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Additions to property and equipment | (1) | 0 |
Net cash used in investing activities | (1) | 0 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from Series D offering, net of costs | 102 | 635 |
Proceeds from Series E offering, net of costs | 1,639 | 0 |
Proceeds from debt financing, net of discounts and debt issuance costs | 519 | 1,351 |
Payments made on notes and loans payable | (1,101) | (281) |
Net cash provided by financing activities | 1,159 | 1,705 |
Net change in cash and cash equivalents | (717) | 899 |
Cash and cash equivalents, beginning of year | 899 | 0 |
Cash and cash equivalents, end of year | 182 | 899 |
SUPPLEMENTAL SCHEDULE OF: | ||
Cash paid for: interest | 295 | 14 |
NONCASH INVESTING AND FINANCING ACTIVITIES: | ||
Issuance of common stock as debt repayment | 2,929 | 33 |
Dividends on preferred stock | 122 | 0 |
Subscription receivable | 635 | 0 |
Warrants exchanged for fixed price warrants | 131 | 0 |
Settlement of dividends through common stock issuance | $ 40 | $ 0 |
1. ORGANIZATION, BACKGROUND, AN
1. ORGANIZATION, BACKGROUND, AND BASIS OF PRESENTATION | 12 Months Ended |
Dec. 31, 2020 | |
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 March 29, 2019. As a result of the reverse stock split, every 800 shares of issued and outstanding common stock were 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 2,652,309,322 shares to 3,319,486 shares as of that date with rounding. See Note 4, Stockholders’ Deficit. Unless otherwise specified, all per share amounts are reported on a post-stock split basis, as of December 31, 2020 and 2019. 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, 2020, it had an accumulated deficit of approximately $140.0 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. Certain prior year amounts have been reclassified in order to conform to the current year presentation. 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, 2020, the Company had a negative working capital of approximately $8.0 million, accumulated deficit of $140.0 million, and incurred a net loss of $0.4 million for the year then ended. Stockholders’ deficit totaled approximately $10.9 million at December 31, 2020, 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 has taken the following steps to improve certain factors that are generating the going concern opinion, including: ● During the end of 2019 and during 2020, the Company was able to raise over $3.5 million in equity and debt investments; ● The Company has executed several exchange agreements that converted of approximately $2.7 million of debt for equity; and ● During the quarter ended September 30, 2020, the Company uplisted to the Over the Counter (OTC) bulletin board; If sufficient capital cannot be raised during 2021, 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 28.3 million shares of its common stock outstanding at December 31, 2020, with exercise prices ranging between $0.04 and $1.82 per share. Exercises of in the money warrants would generate a total of approximately $5.0 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. |
2. SUMMARY OF SIGNIFICANT ACCOU
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2020 | |
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 Recently Adopted Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires that expected credit losses relating to financial assets are measured on an amortized cost basis and available-for-sale debt securities be recorded through an allowance for credit losses. ASU 2016-13 limits the amount of credit losses to be recognized for available-for-sale debt securities to the amount by which carrying value exceeds fair value and also requires the reversal of previously recognized credit losses if fair value increases. The Company adopted the standard on January 1, 2020. The adoption of ASU 2016-13 did not have a material impact on the Company. In July, 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2017-11 (“ASU 2017-11”), which addressed accounting for (I) certain financial instruments with down round features and (II) replacement of the indefinite deferral for mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily redeemable non-controlling interests with a scope exception. The main provisions of Part I of ASU 2017-11 is to “change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. For freestanding equity classified financial instruments, the amendments require entities that present earnings per share (EPS) to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS.” Under previous US GAAP, warrants with a down round feature are not being considered indexed to the entity’s own stock, which results in classification of the warrant as a derivative liability. Under ASU 2017-11, the down round feature qualifies for a scope exception from derivative treatment. ASU 2017-11 is effective for public companies as of December 15, 2018 and interim periods within that fiscal year. Early adoption is permitted, including adoption in an interim period, with adjustments reflected as of the beginning of the fiscal year. The Company has issued financial instruments with down round features. The Company opted to adopt ASU 2017-11 as of December 31, 2020. If the Company had adopted the standard on the effective date the impact would have been immaterial to the financial statements. The impact of this adoption on the quarterly reports for 2020 would require the following debits and (credits) as shown in the schedule below: March 31, 2020 June 30, 2020 September 30, 2020 Warrant liability decrease $ 870,499 $ 3,512,254 $ 2,594,111 Long-term debt increase (244,941 ) (209,096 ) (173,251 ) Interest expense decrease (35,845 ) (71,690 ) (107,535 ) Accumulated deficit increase 13,437 2,691,036 1,808,738 Additional paid in capital increase (625,558 ) (3,303,158 ) (2,420,860 ) Change in fair value of warrants during the year 22,408 2,619,347 1,701,203 In August 2018, the FASB issued Accounting Standards Update No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, or ASU 2018-13. The amendments in ASU 2018-13 eliminate, add, and modify certain disclosure requirements for fair value measurements. The amendments are effective for the Company’s interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted for either the entire ASU or only the provisions that eliminate or modify requirements. The amendments with respect to changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty are to be applied prospectively. All other amendments are to be applied retrospectively to all periods presented. The adoption of ASU 2016-13 did not have a material impact on the Company. A variety of proposed or otherwise potential accounting standards are currently under consideration by standard-setting organizations and certain regulatory agencies. Because of the tentative and preliminary nature of such proposed standards, management has not yet determined the effect, if any, that the implementation of such proposed standards would have 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. Uncollectibility, is determined based on the determination that a distributor will not be able to make payment and the time frame has exceeded one year. The Company does not accrue interest receivables 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. 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, 2020 and 2019, our inventories were as follows (in thousands): December 31, December 31, 2020 2019 Raw materials $ 1,276 $ 781 Work in process 80 81 Finished goods 7 17 Inventory reserve (758 ) (831 ) Total $ 605 $ 48 The company periodically reviews the value of items in inventory and provides write-downs or write-offs of inventory based on its assessment of market conditions. Write-downs and write-offs are charged to cost of goods sold. Deposits made for long-term inventory parts were recorded in Other Assets. On September 4, 2020, the Company paid and additional deposit of $200,000 for the deposit of a major part in the assembly of the Company’s devices. The Company had a prior deposit of $292,000 with this vendor that was being held until the Company could pay the entire balance of the $493,000 order. The Company had reserved and recorded an expense for the entire balance of $292,000 in prior periods as it was unsure when it would have the financial resources to pay the balance. Upon the payment of the additional deposit the Company reversed the reserve of $292,000. The parts were received during the year ended December 31, 2020. 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 are 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, 2020 and 2019 (in thousands): December 31, December 31, 2020 2019 Equipment $ 1,042 $ 1,349 Software 652 740 Furniture and fixtures 41 124 Leasehold Improvement 12 180 1,747 2,393 Less accumulated depreciation and amortization (1,746 ) (2,393 ) Total $ 1 $ During the year ended December 31, 2020, the Company disposed of approximately $647,000 of property and equipment that was fully depreciated. 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. 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 $17,000 and $15,000 for the year ended December 31, 2020 and 2019, respectively. Leases With the implementation of ASU 2016-02, “Leases (Topic 842)”, the Company recorded a lease-right-of-use asset and a lease liability. The Company adopted the standard on January 1, 2019. The implementation required the analysis of certain criteria in determining its treatment. The Company determined that its corporate office lease met those criteria. The Company implemented the guidance using the alternative transition method. Under this alternative, the effective date would be the date of initial application. The Company analyzed the lease at its effective date and calculated an initial lease payment amount of $267,380 with a present value of $213,000 using a 20% discount. See Note 8: Commitments and Contingencies The cumulative effect of initially applying the new guidance had an immaterial impact on the opening balance of retained earnings. The Company elected the practical expedients permitted under the transition guidance within the new standards, which allowed the Company to carry forward the historical lease classification. Accrued Liabilities Accrued liabilities are summarized as follows (in thousands): December 31, 2020 December 31, Compensation $ 1,094 $ 1,123 Professional fees 83 181 Interest 1,517 1,603 Warranty 2 Vacation 34 41 Preferred dividends 202 120 Other accrued expenses 65 165 Total $ 2,995 $ 3,235 Subscription receivables Cash received from investors for common stock shares that has not completed processing is recorded as a liability to subscription receivables. As of December 31, 2020, all common stock shares were issued to investors. As of December 31, 2020, the outstanding subscription receivable was nil. As of December 31, 2019, the Company had reserved 635 Series D preferred shares and 1,270,000 common stock shares in exchange for $635,000. Revenue recognition The Company follows, ASC 606 Revenue from Contracts with Customers establishes a single and comprehensive framework which sets out how much revenue is to be recognized, and when. The core principle is that a vendor should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the vendor expects to be entitled in exchange for those goods or services. Revenue will now be recognized by a vendor when control over the goods or services is transferred to the customer. In contrast, revenue based revenue recognition around an analysis of the transfer of risks and rewards; this now forms one of a number of criteria that are assessed in determining whether control has been transferred. The application of the core principle in ASC 606 is carried out in five steps: Step 1 – Identify the contract with a customer: a contract is defined as an agreement (including oral and implied), between two or more parties, that creates enforceable rights and obligations and sets out the criteria for each of those rights and obligations. The contract needs to have commercial substance and it is probable that the entity will collect the consideration to which it will be entitled. Step 2 – Identify the performance obligations in the contract: a performance obligation in a contract is a promise (including implicit) to transfer a good or service to the customer. Each performance obligation should be capable of being distinct and is separately identifiable in the contract. Step 3 – Determine the transaction price: transaction price is the amount of consideration that the entity can be entitled to, in exchange for transferring the promised goods and services to a customer, excluding amounts collected on behalf of third parties. Step 4 – Allocate the transaction price to the performance obligations in the contract: for a contract that has more than one performance obligation, the entity will allocate the transaction price to each performance obligation separately, in exchange for satisfying each performance obligation. The acceptable methods of allocating the transaction price include adjusted market assessment approach, expected cost plus a margin approach, and, the residual approach in limited circumstances. Discounts given should be allocated proportionately to all performance obligations unless certain criteria are met and reallocation of changes in standalone selling prices after inception is not permitted. Step 5 – Recognize revenue as and when the entity satisfies a performance obligation: the entity should recognize revenue at a point in time, except if it meets any of the three criteria, which will require recognition of revenue over time: the entity’s performance creates or enhances an asset controlled by the customer, the customer simultaneously receives and consumes the benefit of the entity’s performance as the entity performs, and the entity does not create an asset that has an alternative use to the entity and the entity has the right to be paid for performance to date. Revenue by product line (in thousands): December 31, 2020 2019 Devices $ 17 Disposables 2 2 Major part components 100 15 Warranty 2 Total $ 102 $ 36 Revenue by geographic location (in thousands): December 31, 2020 2019 Asia $ 102 $ 22 Europe 14 Total $ 102 $ 36 Significant Distributors Accounts receivable, that netted to a balance of $24,000, and were reserved against, were from one distributor as of December 31, 2020. The Allowance on Accounts Receivable was recorded on all but one distributor. During the year ended December 31, 2020, $100,000 or 98% of the total revenue was from one distributor for the sale of parts and cerival guides. During the year ended December 31, 2019, revenues were from two distributors and for extended warranties. Sales revenues from these distributors totaled $34,000 or 94% of the total revenue for the period ended December 31, 2019. Deferred revenue The Company defers payments received as revenue until earned based on the related contracts and applying ASC 606 as required. As of December 31, 2020, and 2019, the Company had $42,000 and $101,000 in deferred revenue, 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 has filed its 2019 federal and state corporate tax returns. The current corporate tax rates in the U.S. is 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, 2020 and, 2019, there were no uncertain tax positions. The Company has entered into an agreed upon payment plan with the IRS for delinquent payroll taxes. The Company has an established payment arrangement for its delinquent state income taxes with the State of Georgia. 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 employees and 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 stock based payments granted or modified subsequently based on fair value estimates. On July 14, 2020, the Company granted stock options to employees and consultants. The new Stock Plan (the “Plan”) allows 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. Stock options granted have a 10-year life and expire 90 days after employment or upon termination of consulting agreement. Vesting schedule varies per grantee. Generally stock options granted vest as follows: 25% vest immediately, and the remaining stock options vest over 33 months, beginning three months after grant. For the year ended December 31, 2020 and 2019, stock based compensation for options attributable to employees, non-employees, officers and Board members was approximately $310,000 and $8,000, respectively. These amounts have been included in the Company’s statements of operations under general and administrative expense. Compensation costs for stock options which vest over time are recognized over the vesting period. As of December 31, 2020, and 2019 the Company had $559,000 and nil, of unrecognized compensation costs related to granted stock options that will be recognized, respectively. Beneficial Conversion Features of Convertible Securities The Company has adopted the provisions of ASU 2017-11 to account for the down round features of warrants issued with private placements effective as of January 1, 2020. In doing so, warrants with a down round feature previously treated as a derivative liabilities in the consolidated balance sheet and measured at fair value are henceforth treated as equity, with no adjustment for changes in fair value at each reporting period. Previously, the Company accounted for conversion options embedded in convertible notes in accordance with ASC 815. ASC 815 generally requires companies to bifurcate conversion options embedded in convertible notes from their host instruments and to account for them as free standing derivative financial instruments. ASC 815 provides for an exception to this rule when convertible notes, as host instruments, are deemed to be conventional, as defined by ASC 815-40. The Company accounts for convertible notes deemed conventional and conversion options embedded in non-conventional convertible notes which qualify as equity under ASC 815, in accordance with the provisions of ASC 470-20, which provides guidance on accounting for convertible securities with beneficial conversion features. Accordingly, the Company records, as a discount to convertible notes, the intrinsic value of such conversion options based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt. Conversion options that are not bifurcated as a derivative pursuant to ASC 815 and not accounted for as a separate equity component under the cash conversion guidance are evaluated to determine whether they are beneficial to the investor at inception (a beneficial conversion feature) or may become beneficial in the future due to potential adjustments. The beneficial conversion feature guidance in ASC 470-20 applies to convertible stock as well as convertible debt which are outside the scope of ASC 815. A beneficial conversion feature is defined as a nondetachable conversion feature that is in the money at the commitment date. The beneficial conversion feature guidance requires recognition of the conversion option’s in-the-money portion, the intrinsic value of the option, in equity, with an offsetting reduction to the carrying amount of the instrument. The resulting discount is amortized as a dividend over either the life of the instrument, if a stated maturity date exists, or to the earliest conversion date, if there is no stated maturity date. If the earliest conversion date is immediately upon issuance, the dividend must be recognized at inception. When there is a subsequent change to the conversion ratio based on a future occurrence, the new conversion price may trigger the recognition of an additional beneficial conversion feature on occurrence. Derivatives The Company reviews the terms of convertible debt issued to determine whether there are embedded derivative instruments, including embedded conversion options, which are required to be bifurcated and accounted for separately as derivative financial instruments. In circumstances where the host instrument contains more than one embedded derivative instrument, including the conversion option, that is required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument. Bifurcated embedded derivatives are initially recorded at fair value and are then revalued at each reporting date with changes in the fair value reported as non-operating income or expense. When the equity or convertible debt instruments contain embedded derivative instruments that are to be bifurcated and accounted for as liabilities, the total proceeds received are first allocated to the fair value of all the bifurcated derivative instruments. The remaining proceeds, if any, are then allocated to the host instruments themselves, usually resulting in those instruments being recorded at a discount from their face value. The discount from the face value of the convertible debt, together with the stated interest on the instrument, is amortized over the life of the instrument through periodic charges to interest expense. |
3. FAIR VALUE OF FINANCIAL INST
3. FAIR VALUE OF FINANCIAL INSTRUMENTS | 12 Months Ended |
Dec. 31, 2020 | |
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, 2020 and 2019. 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, 2020 and 2019: 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, 2020 Level 1 Level 2 Level 3 Total Warrants issued in connection with Senior Secured Debt (2,203 ) (2,203 ) Derivative liability/bifurcated conversion option in connection with Auctus $1,100,000 loan on December 17, 2019 (25 ) (25 ) Total long-term liabilities at fair value $ $ $ (2,228 ) $ (2,228 ) Fair Value at December 31, 2019 Level 1 Level 2 Level 3 Total Warrants issued in connection with Distributor Debt (114 ) (114 ) Warrants issued in connection with Short-term loans (83 ) (83 ) Warrants issued in connection with Long-term loans (893 ) (893 ) Warrants issued in connection with Senior Secured Debt (4,002 ) (4,002 ) Derivative liability/bifurcated conversion option in connection with Auctus $1,100,000 loan on December 17, 2019 Total long-term liabilities at fair value $ $ $ (5,092 ) $ (5,092 ) The following is a summary of changes to Level 3 instruments during the year ended December 31, 2020: Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Distributor Debt Short-Term Loans Long-Term Loans Senior Secured Debt Derivative Total Balance, December 31, 2019 $ (114 ) $ (83 ) $ (893 ) $ (4,002 ) $ $ (5,092 ) Transfer to equity as a result of warrants exchanged for fixed price warrants 67 50 117 Change in fair value of derivatives during the year (25 ) (25 ) Transfer to equity as a result of adoption of ASU 2017-11 627 627 Reduction of debt discount as result of adoption of ASU 2017-11 266 266 Change in fair value of warrants during the year 47 33 1,799 1,879 Balance, December 31, 2020 $ $ $ $ (2,203 ) $ (25 ) $ (2,228 ) As of December 31, 2020, the fair value of warrants was approximately $2.2 million and the fair value of the derivative liability was $25,000. |
4. STOCKHOLDER'S DEFICIT
4. STOCKHOLDER'S DEFICIT | 12 Months Ended |
Dec. 31, 2020 | |
STOCKHOLDERS' DEFICIT: | |
4. STOCKHOLDER'S DEFICIT | Common Stock The Company has authorized 3,000,000,000 shares of common stock with $0.001 par value, of which 13,138,282 were issued and outstanding as of December 31, 2020. As of December 31, 2019, there were 3,000,000,000 authorized shares of common stock, of which 3,319,469 were issued and outstanding. For the year ended December 31, 2020, the Company issued 9,818,813 shares of common stock as listed below: Conversion of debt into common shares exchange agreements 7,957,013 Conversion of debt into common shares 175,000 Shares issued for manufacturing agreements 12,147 Shares issued for payment of Series D dividends 148,653 Investments 1,526,000 Issued during the year ended December 31, 2020 9,818,813 Summary table of common stock share transactions: Balance at December 31, 2019 3,319,469 Issued in 2020 9,818,813 Balance at December 31, 2020 13,138,282 Investments During 2020, the Company received equity investments in the amount of $1,735,500 and incurred fees due on these investments of $96,985. These investors received a total of 1,736 Series E preferred stock (if the Investor elects to convert their Series E preferred stock, each Series E preferred stock shares converts into 4,000 shares of the Company’s common stock shares). During January and April 2020, the Company received equity investments in the amount of $128,000. These investors received a total of 256,000 common stock shares and 256,000 warrants issued to purchase common stock shares at a strike price of $0.25, 256,000 warrants to purchase common stock shares at a strike price of $0.75 and 128 Series D preferred stock (if the Investor elects to convert their Series D preferred stock, each Series D preferred stock shares converts into 3,000 shares of the Company’s common stock shares). Of the amount invested $38,000 was from related parties. During December 2019, the Company received equity investments in the amount of $635,000. The $635,000 of investments were recorded as a subscription liability in December 2019. The common stock shares were issued in January 2020. These investors received a total of 1,270,000 common stock shares and 1,270,000 warrants to purchase common stock shares at a strike price of $0.25, 1,270,000 warrants issued to purchase common stock shares at a strike price of $0.75 and 635 Series D preferred stock (each Series D preferred stock shares converts into 3,000 shares of the Company’s common stock shares). Of the amount invested $350,000 was from related parties. For the Series D preferred stock, the Company received equity investments in the amount of $763,000 and incurred fees due on these investments of $26,000. Debt Exchanges On January 8, 2020, the Company exchanged $2,064,366 in debt for several equity instruments (noted below) that were determined to have a total fair value of $2,065,548, resulting in a loss on extinguishment of debt of $1,183 which is recorded in other income (expense) on the accompanying consolidated statements of operations. The Company also issued 6,957,013 warrants to purchase common stock shares; with exercise prices of $0.25, $0.75 and $0.20. In addition, one of the investors forgave approximately $29,000 of debt, which was recorded as a gain for extinguishment of debt. On June 3, 2020, the Company exchanged $328,422 in debt from Auctus, (summarized in footnote 10: Convertible Notes), On June 30, 2020, the Company exchanged $125,000 in debt (during June 2020, $125,000 in payables had been converted into short-term debt) from Mr. James Clavijo, for 500,000 common stock shares and 250,000 warrants to purchase common stock shares. The fair value of the common stock shares was $250,000 (based on a $0.50 fair value for the Company’s stock) and of the warrants to purchase common stock shares was $99,963 (based on a $0.40 black scholes fair valuation). This resulted in a net loss on extinguishment of debt of $224,963 ($349,963 fair value less the $125,000 of exchanged debt). After the exchange transaction a balance was due to Mr. Clavijo of $10,213 which was paid. On July 9, 2020, the Company entered into an exchange agreement with Mr. Bill Wells (one of its former employees) for an outstanding debt to him of $220,000. In lieu of agreeing to dismiss approximately half of what is owed by the Company, Mr. Wells will receive the following: (i) cash payments of $20,000 within 60 days of the signing of the agreement; cash payments over time in the amount of $90,000 in the form of an unsecured note with the Company to be executed within 30 days of a new financing(s) totaling at least $3.0 million. The note shall bear interest of 6.0% and mature over 18 months; (ii) 66,000 common share stock options that vest at a rate of 3,667 per month and have a $0.49 exercise price (if two consecutive payments in (iii) are not made the stock options will be canceled and a cash payment will be required; and (iv) the total amount of forgiveness by creditor of approximately $110,000 shall be prorated according to amount paid. During the year ended December 31, 2020, the Company made a payment of $20,000; this payment allowed the Company to reduce $40,000 in debt, with the corresponding $20,000 difference recorded as a gain. The following table summarizes the debt exchanges: Total Debt and Accrued Interest Total Debt Total Accrued Interest Common Stock Shares Warrants (Exercise $0.25) Warrants (Exercise $0.75) Warrants (Exercise $0.20) Warrants (Exercise $0.15) Warrants (Exercise $0.50) Aquarius $ 145,544 $ 107,500 38,044 $ 291,088 145,544 145,544 K2 Medical (Shenghuo)3 803,653 771,927 31,726 1,905,270 704,334 704,334 496,602 Mr. Blumberg 305,320 292,290 13,030 1,167,630 119,656 119,656 928,318 Mr. Case 179,291 150,000 29,291 896,456 896,456 Mr. Grimm 51,050 50,000 1,050 255,548 255,548 Mr. Gould 111,227 100,000 11,227 556,136 556,136 Mr. Mamula 15,577 15,000 577 77,885 77,885 Dr. Imhoff2 400,417 363,480 36,937 1,699,255 100,944 100,944 1,497,367 Ms. Rosenstock1 50,000 50,000 100,000 50,000 50,000 Mr. James2 2,286 2,000 286 7,745 1,227 1,227 5,291 Auctus 328,422 249,119 79,303 500,000 700,000 Mr. Clavijo 125,000 125,000 500,000 500,000 Mr. Wells4 220,000 220,000 $ 2,737,787 $ 2,496,316 $ 241,471 7,957,013 1,121,705 1,121,705 4,713,603 700,000 500,000 1 Ms. Rosenstock also forgave $28,986 in debt to the Company. 2 Mr. Imhoff and Mr. James are members of the board of directors and therefore related parties. 3 The Company’s COO and director, Mark Faupel, is a shareholder of Shenghuo, and a former director, Richard Blumberg, is a managing member of Shenghuo. 4 Mr. Wells will also receive 66,000 common share stock options; the details of which are explained above. Preferred Stock The Company has authorized 5,000,000 shares of preferred stock with a $.001 par value. The board of directors has the authority to issue these shares and to set dividends, voting and conversion rights, redemption provisions, liquidation preferences, and other rights and restrictions. The board of directors designated 525,000 shares of preferred stock redeemable convertible preferred stock, none of which remain outstanding, 33,000 shares of preferred stock as Series B Preferred Stock, none of which remain outstanding, 9,000 shares of preferred stock as Series C Convertible Preferred Stock, (the “Series C Preferred Stock”), of which 286 were issued and outstanding at December 31, 2020 and 2019, respectively and 20,250 shares of preferred stock as Series C1 Preferred Stock, of which 1,050 shares were issued and outstanding at December 31, 2020 and 2019. In addition, some holders separately agreed to exchange each share of the Series C1 Preferred Stock held for one (1) share of the Company’s newly created Series C2 Preferred Stock. In total, for 3,262.25 shares of Series C1 Preferred Stock to be surrendered, the Company issued 3,262.25 shares of Series C2 Preferred Stock. At December 31, 2020, shares of Series C2 had a conversion price of $0.50 per share, such that each share of Series C preferred stock would convert into approximately 2,000 shares of the Company’s common stock. In 2019 and 2020, the board of directors designated 6,000 shares of preferred stock as Series D Preferred Stock, 763 of which remain outstanding, and 6,000 shares of preferred stock as Series E Preferred Stock, 1,736 of which remain outstanding. Series C Convertible Preferred Stock 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, 2020 and 2019, there were 286 shares outstanding with a conversion price of $0.50 per share, such that each share of Series C preferred stock would convert into approximately 2,000 shares of the Company’s common stock; for a total convertible of 572,000 common stock shares, 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 number of unpaid dividends through the Dividend End Date on the converted shares. At December 31, 2020, the “make-whole payment” for a converted share of Series C preferred stock would convert to 200 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 1 share 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, 2020, the exercise price per share was $512,000. 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 29 shares of common stock. On August 31, 2018, 3,262.25 shares of Series C1 Preferred Stock were surrendered, and the Company issued 3,262.25 shares of Series C2 Preferred Stock. At December 31, 2020, there were 1,049.25 shares outstanding with a conversion price of $0.50 per share, such that each share of Series C1 preferred stock would convert into approximately 2,000 shares of the Company’s common stock; for a total convertible of 2,098,500 common stock shares. 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. Series C2 Convertible Preferred Stock On August 31, 2018, the Company entered into agreements with certain holders of the Company’s Series C1 Preferred Stock, including the chairman of the Company’s board of directors, and the Chief Operating Officer and a director of the Company pursuant to which those holders separately agreed to exchange each share of the Series C1 Preferred Stock held for one (1) share of the Company’s newly created Series C2 Preferred Stock. In total, for 3,262.25 shares of Series C1 Preferred Stock to be surrendered, the Company issued 3,262.25 shares of Series C2 Preferred Stock. At December 31, 2020, shares of Series C2 had a conversion price of $0.50 per share, such that each share of Series C preferred stock would convert into approximately 2,000 shares of the Company’s common stock; for a total convertible of 6,524,500 common stock shares. The terms of the Series C2 Preferred Stock are substantially the same as the Series C1 Preferred Stock, except that (i) shares of Series C1 Preferred Stock may not be convertible into the Company’s common stock by their holder for a period of 180 days following the date of the filing of the Certificate of Designation (the “Lock-Up Period”); (ii) the Series C2 Preferred Stock has the right to vote as a single class with the Company’s common stock on an as-converted basis, notwithstanding the Lock-Up Period; and (iii) the Series C2 Preferred Stock will automatically convert into that number of securities sold in the next Qualified Financing (as defined in the Exchange Agreement) determined by dividing the stated value ($1,000 per share) of such share of Series C2 Preferred Stock by the purchase price of the securities sold in the Qualified Financing. Series D Convertible Preferred Stock On January 8, 2020, the Company entered into a Security Agreement with the Series D Investors (the “Series D Security Agreement”) pursuant to which all obligations under the Series D Certificate of Designation are secured by all of the Company’s assets and personal properties, with certain accredited investors, including the Chief Executive Officer, Chief Operating Officer and a director of the Company. In total, for $763,000 the Company issued 763 shares of Series D Preferred Stock, 1,526,000 common stock shares, 1,526,000 common stock warrants, exercisable at $0.25, and 1,526,000 common stock warrants, exercisable $0.75. Each Series D Preferred Stock is convertible into 3,000 common stock shares. The Series D Preferred Stock will have cumulative dividends at the rate per share of 10% per annum. The stated value and liquidation preference on the Series D Preferred Stock is $554. Each share of Series D Preferred is convertible, at any time for a period of 5 years after issuance, into that number of shares of Common Stock, determined by dividing the Stated Value by $0.25, subject to certain adjustments set forth in the Series D Certificate of Designation (the “Series D Conversion Price”). The conversion of Series D Preferred is subject to a 4.99% beneficial ownership limitation, which may be increased to 9.99% at the election of the holder of the Series D Preferred. If the average of the VWAPs (as defined in the Series D Certificate of Designation) for any consecutive 5 trading day period (“Measurement Period”) exceeds 200% of the then Series D Conversion Price and the average daily trading volume of the Common Stock on the primary trading market exceeds 1,000 shares per trading day during the Measurement Period (subject to adjustments), the Company may redeem the then outstanding Series D Preferred, for cash in an amount equal to aggregate Stated Value then outstanding plus accrued but unpaid dividends . The Series D Warrants may be exercised cashlessly if there is no effective registration statement covering the Common Stock issuable upon exercise of the Series D Warrants. The Series D Warrants contain a 4.99% beneficial ownership blocker which may be increased to 9.99% at the holder’s election. On January 8, 2020, the Company also entered into a Registration Rights Agreement (the “Series D Registration Rights Agreement “) with the Series D Investors pursuant to which the Company agreed to file with the SEC, a registration statement on a Form S-3 (or on other appropriate form if a Form S-3 is not available) covering the Common Stock issuable upon conversion of the Series D Warrants within 90 days of the date of the Registration Rights Agreement and cause such registration statement to be declared effective within 120 days of the date of the Registration Rights Agreement. All reasonable expenses related to such registration shall be borne by the Company. During August 2020, the Company issued 148,653 common stock shares for the payment of Series D Preferred Stock dividends accrued. As of December 31, 2020, the Company had accrued dividends of $14,306. Series E Convertible Preferred Stock During year ended December 31, 2020, the Company entered into a Security Agreement with the Series E Investors (the “Series E Security Agreement”) pursuant to which all obligations under the Series E Certificate of Designation are secured by all of the Company’s assets and personal properties, with certain accredited investors. In total, for $1,736,000 the Company issued 1,736 shares of Series E Preferred Stock. Each Series E Preferred Stock is convertible into 4,000 common stock shares. The Series E Preferred Stock will have cumulative dividends at the rate per share of 6% per annum. The stated value and liquidation preference on the Series E Preferred Stock is $1,736. The Company incurred fees due on these investments of $91,895. Each share of Series E Preferred is convertible, at any time for a period of 5 years after issuance, into that number of shares of Common Stock, determined by dividing the Stated Value by $0.25, subject to certain adjustments set forth in the Series E Certificate of Designation (the “Series E Conversion Price”). The conversion of Series E Preferred is subject to a 4.99% beneficial ownership limitation, which may be increased to 9.99% at the election of the holder of the Series E Preferred. If the average of the VWAPs (as defined in the Series E Certificate of Designation) for any consecutive 5 trading day period (“Measurement Period”) exceeds 200% of the then Series E Conversion Price and the average daily trading volume of the Common Stock on the primary trading market exceeds 1,000 shares per trading day during the Measurement Period (subject to adjustments), the Company may redeem the then outstanding Series E Preferred, for cash in an amount equal to aggregate Stated Value then outstanding plus accrued but unpaid dividends. As of December 31, 2020, the Company had not issued shares as payment of Series E Preferred Stock dividends. As of December 31, 2020, the Company had accrued dividends of $67,247. Warrants The following table summarizes transactions involving the Company’s outstanding warrants to purchase common stock for the year ended December 31, 2020: Warrants (Underlying Shares) Outstanding, January 1, 2020 46,016,840 Issuances 11,270,013 Cancelled / Expired (70 ) Exchanged in debt restructuring (28,962,508 ) Exercised Outstanding, December 31, 2020 28,324,275 The Company had the following shares reserved for the warrants as of December 31, 2020: Warrants (Underlying Shares) Exercise Price Expiration Date 4,262 (1) $1.824 per share March 19, 2021 7,185,000 (2) $0.20 per share February 12, 2023 1,725,000 (3) $0.04 per share February 21, 2021 325,000 (4) $0.18 per share April 4, 2022 215,000 (5) $0.25 per share July 1, 2022 100,000 (6) $0.25 per share September 1, 2022 7,500,000 (7) $0.20 per share December 17, 2024 250,000 (8) $0.16 per share March 31, 2025 2,597,705 (9) $0.25 per share December 30, 2022 2,597,705 (10) $0.75 per share December 30, 2022 4,713,603 (11) $0.20 per share December 30, 2022 60,000 (12) $0.25 per share April 23, 2023 50,000 (13) $0.25 per share December 30, 2022 50,000 (14) $0.75 per share December 30, 2022 700,000 (15) $0.15 per share May 21, 2023 250,000 (16) $0.50 per share June 23, 2023 1,000 (17) $0.50 per share August 10, 2022 28,324,275 (1) Issued to investors for a loan in March 2018. (2) Exchanged in January 2020 from amount issued as part of a February 2016 private placement with senior secured debt holder (3) Issued to a placement agent in conjunction with a February 2016 private placement with senior secured debt holder (4) Issued to investors for a loan in April 2019 (5) Issued to investors for a loan in July 2019 (6) Issued to investors for a loan in September 2019 (7) Issued to investors for a loan in December 2019 (8) Issued to investors for a loan in January 2020 (9) Issued to investors as part of Series D Preferred Stock Capital raise in December 2020 (10) Issued to investors as part of Series D Preferred Stock Capital raise in December 2020 (11) (12) (13) (14) (15) (16) Issued to investors as part of Series D Preferred Stock Capital raise in December 2020 Issued to a consultant for services in April 2020 Issued to an investor as part of Series D Preferred Stock Capital raise in April 2020 Issued to an investor as part of Series D Preferred Stock Capital raise in April 2020 Issued to an investor for a loan in May 2020 Issued to an investor in exchange of debt in June 2020 (17) Issued to a consultant for services in August 2020 Footnote (2) - On January 16, 2020, the Company entered into an exchange agreement with GPB. This exchange agreement canceled the existing outstanding warrants, which were subject to anti-dilution and ratchet provisions, to purchase 35,937,500 shares of common stock at an exercise price of $0.04 per share and resulted in the issuance of new warrants to purchase 7,185,000 share of common stock at a price of $0.20 per share. The new warrants have fixed exercise prices of $0.20. On January 8, 2021, the Company met the requirement by making the final payment of $750,000 as required by the exchange agreement with GPB, which canceled the previously issued warrants. Warrant to purchase 70 shares of common stock were not recorded as their exercise price after considering reverse stock splits, were greater than $60,000 and deemed to be immaterial for disclosure On January 6, 2020, the Company entered into a finder’s fee agreement. The finder will receive 5% cash and 5% warrants on all funds it raises including bridge loans. The three-year common stock share warrants will have an exercise price of $0.25. During 2019 and 2020, the finder helped the Company raise $300,000, therefore a fee of $31,650 was paid and 126,600 warrants will be issued. On January 22, 2020, the Company entered into a promotional agreement with a consultant. The consultant will provide the Company investor and public relations services. As compensation for these services, the Company will issue a total of 5,000,000 common stock warrants at a $0.25 strike price and expiring in three years, if the following conditions occur: 1,250,000 common stock warrants, 6 months after the close of the Series D Preferred Stock units, if the minimum common stock share price is a at least $0.50 based on a 30-day VWAP, with a two year term; 1,250,000 common stock warrants, 12 months after the close of the Series D Preferred Stock units, if the minimum common stock share price is at least $0.75 based on a 30-day VWAP, with a one and half year term; 1,250,000 common stock warrants, 18 months after the close of the Series D Preferred Stock units, if the minimum common stock share price is a minimum of $1.00 based on a 30-day VWAP, with a one year term; and 1,250,000 common stock warrants, 24 months after the close of the Series D Preferred Stock units, if the minimum common stock share price is a minimum of $1.25 based on a 30-day VWAP, with a one year term. The consultant agrees to a 10.0% blocker at any single point in time it cannot own 10.0% of the total common stock shares outstanding. |
5. INCOME TAXES
5. INCOME TAXES | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
5. INCOME TAXES | The Company has incurred net operating losses ("NOLs") since inception. As of December 31, 2020, the company had NOL carryforwards available through 2038 of approximately $71.4 million to offset its future income tax liability. 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. NOL carryforwards that were generated after 2017 of approximately $6.2 million may only be used to offset 80% of taxable income and are carried forward indefinitely. Components of deferred taxes are as follow at December 31 (in thousands): 2020 2019 Deferred tax assets: Warrant liability $ 617 $ 1,087 Accrued executive compensation 519 515 Reserves and other 421 468 Net operating loss carryforwards 17,851 18,961 19,408 21,031 Valuation allowance (19,408 ) (21,031 ) Net deferred tax assets $ 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: 2020 2019 Statutory federal tax rate 21 % 21 % State taxes, net of federal benefit 4 4 Nondeductible expenses Valuation allowance (25 ) (25 ) Effective tax rate 0 % 0 % 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, 2020, 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, 2020. The Company files federal income tax returns and income tax returns in various state tax jurisdictions with varying statutes of limitations. The Company has filed its 2019 federal and state corporate tax returns. The provision for income taxes as of the dates indicated consisted of the following (in thousands) December 31: 2020 2019 Current $ $ Deferred Deferred provision (credit) 1,623 434 Change in valuation allowance (1,623 ) (434 ) Total provision for income taxes $ $ In 2020 and 2019, our effective tax rate differed from the U.S. federal statutory rate due to the valuation allowance over our deferred tax assets. |
6. STOCK OPTIONS
6. STOCK OPTIONS | 12 Months Ended |
Dec. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
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, 2020 and 2019. 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, 2020, and 2019, there were no stock options outstanding and exercisable. On July 14, 2020, the Company granted 1,800,000 stock options to employees and consultants. The new Stock Plan (the “Plan”) allows 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. The plan provides for stock options to be granted up to 10% of the outstanding common stock shares. The fair value of options issued during the year ended December 31, 2020 was estimated using the Black-Scholes option-pricing model and the following assumptions: ● a dividend yield of 0%; ● an expected life of 10 years; ● volatility of 153.1%; and ● risk-free interest rate of 0.98%. The fair value of each option grant made during 2020 was estimated on the date of each grant using the Black-Scholes option pricing model and recognized as stock based compensation rateably over the option vesting periods, which approximates the service period. The following lists the stock options granted: Grant Date Expiration Date Vesting Period Number of Stock Options Granted Exercise Price Black Scholes Valuation Cartwright, Gene 07/14/2020 07/13/2030 Vesting(1) 400,000 $ 0.49 $ 0.483 Faupel, Mark 07/14/2020 07/13/2030 Vesting(1) 400,000 $ 0.49 $ 0.483 Imhoff, John 07/14/2020 07/13/2030 Immediate 50,000 $ 0.49 $ 0.483 James, Michael 07/14/2020 07/13/2030 Immediate 50,000 $ 0.49 $ 0.483 Clavijo, James 07/14/2020 07/13/2030 Vesting(1) 300,000 $ 0.49 $ 0.483 Battle, Lisa 07/14/2020 07/13/2030 Vesting(1) 178,000 $ 0.49 $ 0.483 Sufka, Melissa 07/14/2020 07/13/2030 Vesting(1) 178,000 $ 0.49 $ 0.483 Waterstreet, Alesandra 07/14/2020 07/13/2030 Vesting(1) 178,000 $ 0.49 $ 0.483 Wells, William 07/14/2020 07/13/2030 18 months 66,000 $ 0.49 $ 0.483 1,800,000 (1) 25% immediate and 25% each year thereafter; 36 months in total As of December 31, 2020, the Company has issued and outstanding options to purchase a total of 1,800,000 shares of common stock pursuant to the plan, at a weighted average exercise price of $0.49 per share. As of December 31, 2020, Stock options vested 641,909 Stock options unvested 1,158,091 Total stock options granted at December 31, 2020 1,800,000 Stock option activity for the year ended December 31, 2020 is as follows: December 31, 2020 Shares Weighted Average Exercise Price Outstanding at beginning of year Options granted 1,800,000 $ 0.49 Options exercised Options expired/forfeited Outstanding at end of the period 1,800,000 $ 0.49 |
7. LITIGATION AND CLAIMS
7. LITIGATION AND CLAIMS | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
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, 2020, and 2019, 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, 2020 | |
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, Peachtree Corners, 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 June 30, 2018; $8,022 each month for the period beginning April 1, 2018 and ending June 30, 2019; $8,268 each month for the period beginning April 1, 2019 and ending June 30, 2020; and $8,514 each month for the period beginning April 1, 2020 and ending March 31, 2021. On October 27, 2020, the Company amended the lease of its offices in Norcross, Georgia. The Company has extended the lease for sixty-two (62) months. The lease will begin on April 1, 2021 and end on May 31, 2026. Rents for the one-year periods beginning on April 1, 2021 and ending on May 31, 2026 are: $8,824, $9,091, $9,370, $9,648, $9,936, and $10,236. Also, the Company will pay any additional rent for the Company’s proportionate share of basic costs and all other charges when due and payable under the lease. These costs are accounted for as variable costs and are not determinable at the lease commencement date and are not included in the measurement of the lease asset and liabilities. The landlord will abate the rent for the first two months. In addition, the Company will have a five-year renewal option effective June 1, 2026. The rent for the renewal option will be based upon prevailing market rate and shall escalate by three percent (3%). As of December 31, 2020, the right of use asset calculated for the amended lease was $453,322. The Company recognizes lease expense on a straight-line basis over the estimated lease term and combine lease and non-lease components. Future minimum rental payments at December 31, 2020 under non-cancellable operating leases for office space and equipment are as follows (in thousands): Year Amount 2021 $ 91 2022 108 2023 112 2024 115 2025 119 Thereafter 50 Total 595 Less: Interest 147 Present value of lease liability $ 448 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 (current director Richard Blumberg is the designee). 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). Other Commitments On July 24, 2019, Shandong Yaohua Medical Instrument Corporation (“SMI”), agreed to modify its existing agreement. Under the terms of this modification, the Company agreed to grant (1) exclusive manufacturing rights, excepting the disposable cervical guides for the Republic of Turkey, and the final assembly rights for Hungary, and (2) exclusive distribution and sales for LuViva in jurisdictions, subject to the following terms and conditions. First, SMI shall complete the payment for parts, per the purchase order, for five additional LuViva devices. Second, in consideration for the $885,144 that the Company received, SMI will receive 12,147 common stock shares. Third, SMI shall honor all existing purchase orders it has executed to date with the Company, in order to maintain jurisdiction sales and distribution rights. If SMI needs to purchase cervical guides then it will do so at a cost including labor, plus ten percent markup. The Company will provide 200 cervical guides at no cost for the clinical trials. Fourth, the Company and SMI will make best efforts to sell devices after CFDA approval. With an initial estimate of year one sales of 200 LuViva devices; year two sales of 500 LuViva devices; year three sales of 1,000 LuViva devices; and year four sales of 1,250 LuViva devices. Fifth, SMI shall pay for entire costs of securing approval of LuViva with the Chinese FDA. Sixth, SMI shall arrange, at its sole cost, for a manufacturer in China to build tooling to support manufacture. In addition, SMI retains the right to manufacture for China, Hong Kong, Macau and Taiwan, where SMI has distribution and sales rights. For each single-use cervical guide sold by SMI in the jurisdictions, SMI shall transfer funds to escrow agent at a rate of $1.90 per device chip. If within 18 months of the license’s effective date, SMI fails to achieve commercialization of LuViva in China, SMI shall no longer have any rights to manufacture, distribute or sell LuViva. Commercialization is defined as: filing an application with the Chinese FDA for the approval of LuViva; any assembly or manufacture of the devices or disposables that begins in China; and purchase of at least 10 devices and disposables for clinical evaluations and regulatory use and or sales in the jurisdictions. On March 5, 2020 the Company had recorded an accrued liability for SMI of $692,335, which was reclassified to additional paid in capital and 12,147 common stock shares. Contingencies Based on the current outbreak of the Coronavirus SARS-CoV-2, the pathogen responsible for COVID-19, which has already had an impact on financial markets, there could be additional repercussions to the Company’s operating business, including but not limited to, the sourcing of materials for product candidates, manufacture of supplies for preclinical and/or clinical studies, delays in clinical operations, which may include the availability or the continued availability of patients for trials due to such things as quarantines, conduct of patient monitoring and clinical trial data retrieval at investigational study sites. The future impact of the outbreak is highly uncertain and cannot be predicted, and the Company cannot provide any assurance that the outbreak will not have a material adverse impact on the Company’s operations or future results or filings with regulatory health authorities. The extent of the impact to the Company, if any, will depend on future developments, including actions taken to contain the coronavirus. |
9. NOTES PAYABLE
9. NOTES PAYABLE | 12 Months Ended |
Dec. 31, 2020 | |
Notes Payable [Abstract] | |
9. NOTES PAYABLE | Notes Payable in Default At December 31, 2020 and 2019, the Company maintained notes payable to both related and non-related parties totaling approximately $329,000 and $776,000, respectively. These notes are short term, straight-line amortizing notes. The notes carry annual interest rates between 0% and 10% and have default rates as high as 20%. The Company is accruing interest at the default rate of 18.0% on two of the loans. As described in Note 4: STOCKHOLDERS’ DEFICIT, As described previously, the Company entered into an exchange agreement with Dr. Imhoff. Based on this agreement the Company exchanged $199,417 of short-term debt outstanding. As described previously, the Company entered into an exchange agreement with Ms. Rosenstock. Based on this agreement the Company exchanged $50,000 of short-term debt outstanding and Mr. Rosenstock forgave $28,986. On February 8, 2019, a note payable in default to Aquarius as reported in the Company’s Form 10-K report - Footnote 9: Notes payable – Note payable in default On July 1, 2019, the Company entered into a loan agreement with Accilent Capital Management Inc / Rev Royalty Income and Growth Trust (“Accilent”), providing for the purchase by Accilent of an unsecured promissory note in the principal amount of $49,389 (CAD$ 65,500). The note was fully funded on July 9, 2019 (net of an 8% original issue discount and other expenses). The note bears an interest rate of 16% and was due and payable on September 11, 2019. Following maturity, demand, default, or judgment and until actual payment in full, interest rate shall be paid at the rate of 19% per annum. The Company issued 315,000 warrants at an exercise price of $0.25 per warrant and exercisable within 3 years from issuance (the “Initial Warrants”). As of December 31, 2020, the loan had been paid off. As of December 31, 2019, $57,946 remained outstanding, which included a fee of $4,951 and interest of $4,606. As described previously, the Company entered into an exchange agreement with Mr. Blumberg. Based on this agreement the Company exchanged $82,320 of short-term debt outstanding. As described previously, the Company entered into an exchange agreement with Mr. James. Based on this agreement the Company exchanged $2,286 of short-term debt outstanding. The following table summarizes the Notes payable in default, including related parties December 31, 2020 December 31, 2019 Dr. Imhoff $ $ 199 Dr. Cartwright 1 2 Ms. Rosenstock 50 Mr. Fowler 26 26 Mr. Mermelstein 285 244 GHS GPB 17 17 Aquarius 108 Accilent 58 Mr. Blumberg 70 Mr. James 2 Notes payable in default $ 329 $ 776 The notes payable to related parties was $1,000 of the $329,000 balance at December 31, 2020 and $349,000 of the $776,000 balance at December 31, 2019. Short Term Notes Payable At December 31, 2020 and 2019, the Company maintained short term notes payable to both related and non-related parties totaling $96,000 and $1,026,000, respectively. These notes are short term, straight-line amortizing notes. The notes carry annual interest rates between 5% and 19%. As described previously, the Company entered into an exchange agreement with Dr. Imhoff. Based on this agreement the Company exchanged $201,000 of short-term debt outstanding. The Company issued promissory notes to Mr. Cartwright and Mr. Faupel, in the amounts of approximately $48,000 and $4,000, respectively. The notes were initially issued with 0% interest, however interest increased to 6.0% interest 90 days after the Company received $1,000,000 in financing proceeds. On August 22, 2018, the Company issued a promissory note to Mr. Case for $150,000 in aggregate principal amount of a 6% promissory note for an aggregate purchase price of $157,500 (representing a $7,500 original issue discount). As of December 31, 2020, the Company had exchanged $179,291 of debt outstanding for: 896,456 common stock shares; and 896,455 warrants issued to purchase common stock shares at a strike price of $0.20. As of December 31, 2019, the Company had not repaid the note and original issue discount of $157,500 ($7,500 is recorded in accrued expenses). As described previously, the Company entered into an exchange agreement with Mr. Mamula. Based on this agreement the Company exchanged $15,577 of short-term debt outstanding. On September 19, 2018, and February 15, 2019, the Company issued promissory notes to Mr. Gould for $50,000 each in aggregate principal amount of a 6% promissory note for an aggregate purchase price of $52,500 each (representing a $2,500 original issue discount). As of December 31, 2020, the Company had entered into an exchange agreement with Mr. Gould. Based on this agreement the Company exchanged $111,227 of debt outstanding for: 556,136 common stock shares; and 556,136 warrants issued to purchase common stock shares at a strike price of $0.20. As of December 31, 2019, the Company had not repaid the note and original issue discount of $52,500 ($2,500 is recorded in accrued expenses) and therefore the accrued interest rate increased to 12%. As described previously, the Company entered into an exchange agreement with K2 Medical. Based on this agreement the Company exchanged $203,000 of short-term debt outstanding. On February 14, 2019, the Company entered into a Purchase and Sale Agreement with Everest Business Funding for the sale of its accounts receivable. The transaction provided the Company with $48,735 after $1,265 in debt issuance costs (bank costs) for a total purchase amount of $50,000, in which the Company would have to repay $68,500. At a minimum the Company would need to pay $535.16 per day or 20.0% of the future collected accounts receivable or “receipts.” The effective interest rate as calculated for this transaction is approximately 132.5%. As of December 31, 2019, $60,105 had been paid, leaving a balance of $8,016. As of December 31, 2020, the balance of $68,121 had been paid in full. In July 2019, the Company entered into a premium finance agreement to finance its insurance policies totaling $142,000. The note requires monthly payments of $14,459, including interest at 4.91% and matures in April 2020. As of December 31, 2020, the balance was paid in full. The balance due on insurance policies totaled $57,483 at December 31, 2019. On July 4, 2020, the Company entered into a premium finance agreement to finance its insurance policies totaling $109,000. The note requires monthly payments of $11,299, including interest at 4.968% and matures in April 2021. As of December 31, 2020, the balance was $44,916. As described previously, the Company entered into an exchange agreement with Mr. Blumberg. Based on this agreement the Company exchanged $223,000 of short-term debt outstanding. As described previously, the Company entered into an exchange agreement with Mr. Grimm. Based on this agreement the Company exchanged $51,050 of short-term debt outstanding. On June 30, 2020, the Company exchanged $125,000 in debt (during June 2020, $125,000 in payables had been converted into short-term debt) from Mr. James Clavijo, for 500,000 common stock shares and 250,000 warrants to purchase common stock shares. The fair value of the common stock shares was $250,000 (based on a $0.50 fair value for the Company’s stock) and of the warrants to purchase common stock shares was $99,963 (based on a $0.40 black scholes fair valuation). This resulted in a net loss on extinguishment of debt of $224,963 ($349,963 fair value less the $125,000 of exchanged debt). After the exchange transaction a balance was due Mr. Clavijo of $10,213 which was paid. The following table summarizes the Short-term notes payable, including related parties December 31, 2020 December 31, Dr. Imhoff $ $ 167 Dr. Cartwright 46 48 Dr. Faupel 5 5 Ms. Mamula 15 Mr. Case 150 Mr. Gould 100 K2 (Shenghuo) 203 Premium Finance (insurance) 45 58 Everest 8 Mr. Grimm 49 Mr. Blumberg 223 Short-term notes payable, including related parties $ 96 $ 1,026 The short-term notes payable past due to related parties was $51,000 of the $96,000 balance at December 31, 2020 and $645,000 of the $1,026,000 balance at December 31, 2019. Troubled Debt Restructuring The debt extinguished for Notes Payable was $1,808,712 in debt for common stock shares and warrants as described above that were determined to have a total fair value of $2,235,811, resulting in a loss on extinguishment of debt of $427,099 which is recorded in other income (expense) on the accompanying consolidated statements of operations. Included in that total was an amount that an investor forgave of approximately $29,000 of debt, which was recorded as a gain for extinguishment of debt. This debt extinguished met the criteria for troubled debt. The basic criteria are that the borrower is troubled, ie., they are having financial difficulties, and a concession is granted by the creditor. Due to the Company being in default on several of its loans the debt is considered troubled debt. The troubled debt restructuring for Note Payable, would have increased the loss per share calculation from .04 to .08. |
10. SHORT-TERM CONVERTIBLE DEBT
10. SHORT-TERM CONVERTIBLE DEBT | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
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, 2019, the Company had a note due of $512,719. As of December 31, 2020, the note had been exchanged for common stock shares and warrants. This was part of the exchange made on January 8, 2020, for $790,544 of debt outstanding for: 1,905,270 common stock shares issued on March 23, 2020; 496,602 warrants issued to purchase common stock shares at a strike price of $0.20; 692,446 warrants issued to purchase common stock shares at a strike price of $0.25; and 692,446 warrants issued to purchase common stock shares at a strike price of $0.75. Troubled Debt Restructuring The debt extinguished for Related Party Convertible Note Payable – Short-Term, which closed on January 8, 2020, the Company exchanged in part $600,653 in debt for several common stock shares and warrants as described above. The exchange resulted in a gain of $249,938. This debt extinguished met the criteria for troubled debt. The basic criteria are that the borrower is troubled, i.e., they are having financial difficulties, and a concession is granted by the creditor. Due to the Company being in default on several of its loans the debt is considered troubled debt. The troubled debt restructuring for Related Party Convertible Note Payable – Short-Term, would have reduced the loss per share calculation from .04 to .01. Short-term Convertible Notes Payable Auctus On December 17, 2019, the Company entered into a securities purchase agreement and convertible note with Auctus. The convertible note issued to Auctus will be for a total of $2.4 million. The first tranche of $700,000 was received in December 2019 and matures December 17, 2021 and accrues interest at a rate of ten percent (10%). The note may not be prepaid in whole or in part except as otherwise explicitly allowed. Any amount of principal or interest on the note which is not paid when due shall bear interest at the rate of the lessor of 24% or the maximum permitted by law (the “default interest”). The variable conversion prices shall equal the lesser of: (i) the lowest trading price on the issue date, and (ii) the variable conversion price. The variable conversion price shall mean 95% multiplied by the market price (the market price means the average of the five lowest trading prices during the period beginning on the issue date and ending on the maturity date), minus $0.04 per share, provided however that in no event shall the variable conversion price be less than $0.15. If an event of default under this note occurs and/or the note is not extinguished in its entirety prior to December 17, 2020 the $0.15 price shall no longer apply. In connection with the first tranche of $700,000, the Company issued to 7,500,000 warrants to purchase common stock at an exercise price of $0.20. The fair value of the warrants at the date of issuance was $745,972 and was $635,000 allocated to the warrant liability and a loss of $110,972 was recorded at the date of issuance for the amount of the fair value in excess of the net proceeds received of $635,000. The $700,000 proceeds were received net of debt issuance costs of $65,000 (net proceeds of $635,000, after administrative and legal expenses Company received $570,000). The Company used $65,000 of the proceeds to make a partial payment of the $89,250 convertible promissory note issued on July 3, 2018 to Auctus. On May 27, 2020, the second tranche of $400,000 was received. The last tranche of $1.3 million will be received within 60 days of the S-1 registration statement becoming effective. The conversion price of the notes will be at market value with a minimum conversion amount of $0.15. The last two tranches will have warrants attached. As of December 31, 2020, and 2019, $700,000 remained outstanding and accrued interest of $73,889 and $2,722, respectively. Further, as December 31, 2020 and 2019, the Company had unamortized debt issuance costs of $33,854 and $64,000, respectively and an unamortized debt discount on warrants of $330,729, and $621,271, respectively and providing a net balance of $501,989 and $12,007, respectively. The Company also recorded a liability for the fair value of derivative liability in the amount of $25,000 as of December 31, 2020. On May 27, 2020, the Company received the second tranche in the amount of $400,000, from the December 17, 2019, securities purchase agreement and convertible note with Auctus. The net amount paid to the Company was $313,000 This second tranche is part of the convertible note issued to Auctus for a total of $2.4 million of which $700,000 has already been provided by Auctus. The notes maturity date is December 17, 2021 and an interest rate of ten percent (10%). The note may not be prepaid in whole or in part except as otherwise explicitly allowed. Any amount of principal or interest on the note which is not paid when due shall bear interest at the rate of the lessor of 24% or the maximum permitted by law (the “default interest”). The variable conversion prices shall equal the lesser of: (i) the lowest trading price on the issue date, and (ii) the variable conversion price. The variable conversion price shall mean 95% multiplied by the market price (the market price means the average of the five lowest trading prices during the period beginning on the issue date and ending on the maturity date), minus $0.04 per share, provided however that in no event shall the variable conversion price be less than $0.15. If an event of default under this note occurs and/or the note is not extinguished in its entirety prior to December 17, 2020 the $0.15 price shall no longer apply. The last tranche of $1.3 million will be received within 60 days of the S-1 registration statement becoming effective. The conversion price of the notes will be at market value with a minimum conversion amount of $0.15. In addition, as part of this transaction the Company was required to pay a 2.0% fee to a registered broker-dealer. As of December 31, 2020, $400,000 remained outstanding and accrued interest of $24,222. Further, as of December 31, 2020, the Company had unamortized debt issuance costs of $47,086, providing a net balance of $352,914. The total outstanding balance for the first two tranches outstanding as of December 31, 2020, was approximately $1,100,000. In addition, the Company determined that the conversion option needed to be bifurcated from the debt arrangement and will be valued at fair value each reporting period. The initial value at the date of issuance deemed to be $0 due to the presence of the $0.15 floor price. As of December 31, 2020, the Company calculated an intrinsic value of the bifurcation to be $8,425. On March 31, 2020, we entered into a securities purchase agreement with Auctus Fund, LLC for the issuance and sale to Auctus of $112,750 in aggregate principal amount of a 12% convertible promissory note. On March 31, 2020, we issued the note to Auctus and issued 250,000 five-year common stock warrants at an exercise price of $0.16. On April 3, 2020, we received net proceeds of $100,000. The note matures on January 26, 2021 and accrues interest at a rate of 12% per year. We may not prepay the note, in whole or in part. After the 90th calendar day after the issuance date, and ending on the later of maturity date and the date of payment of the default amount, Auctus may convert the note, at any time, in whole or in part, provided such conversion does not provide Auctus with more than 4.99% of the outstanding common share stock. The conversion may be made converted into shares of the our common stock, at a conversion price equal to the lesser of: (i) the lowest Trading Price during the twenty-five (25) trading day period on the last trading prior to the issue date and (ii) the variable conversion price (55% multiplied by the market price, market price means the lowest trading price for the common stock during the twenty-five (25) trading day period ending on the latest complete trading day prior to the conversion date. Trading price is the lowest trade price on the trading market as reported. The note includes customary events of default provisions and a default interest rate of 24% per year. As of December 31, 2020, the note outstanding was $112,750, which consisted of unamortized balance of $8,424 of a beneficial conversion feature, unamortized original issue discount of $5,100, unamortized debt issuance costs of $5,517 and interest of $10,260 included in accrued expenses on the accompanying consolidated balance sheet. Other Short-Term Convertible Notes Payable On May 15, 2019, the Company entered into a securities purchase agreement with Eagle Equities, LLC, providing for the purchase by Eagle of a convertible redeemable note in the principal amount of $57,750. The note was fully funded on May 21, 2019, upon which the Company received $45,000 of net proceeds (net of a 10% original issue discount and other expenses). The note bears an interest rate of 8% is due and payable on May 15, 2020. The note may be converted by Eagle at any time after five months from issuance into shares of the Company common stock (as determined in the notes) calculated at the time of conversion. The conversion price of the notes will be equal to 60% of the average of the two lowest closing bid prices of the Company’s common stock shares as reported on OTC Markets exchange, for the 20 prior trading days including the day upon which the Company receives 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. During 2020, Eagle provided a forbearance to the Company on the default after a payment was made. On May 15, 2019, the Company had recorded a $38,500 beneficial conversion feature, $5,250 original issue discount and $7,500 of debt issuance costs. As of December 31, 2019, the outstanding note was for $25,651, which consisted of unamortized balance of $14,438 of a beneficial conversion feature, unamortized original issue discount of $1,942, unamortized debt issuance costs of $2,774 and interest of $1,166 included in accrued expenses on the accompanying consolidated balance sheet. On May 14, 2020, the outstanding note was paid off. On May 15, 2019, the Company entered into a securities purchase agreement with Adar Bays, LLC, providing for the purchase by Adar of a convertible redeemable note in the principal amount of $57,750. The note was fully funded on May 21, 2019, upon which the Company received $45,000 of net proceeds (net of a 10% original issue discount and other expenses). The note bears an interest rate of 8% and are due and payable on May 15, 2020. The note may be converted by Adar at any time after five months from issuance into shares of the Company common stock (as determined in the notes) calculated at the time of conversion. The conversion price of the notes will be equal to 60% of the average of the two lowest closing bid prices of the Company’s common stock shares as reported on OTC Markets exchange, for the 20 prior trading days including the day upon which the Company receives 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. During 2020, Adar provided a forbearance to the Company on the default after a payment was made. On May 15, 2019, the Company had recorded a $38,500 beneficial conversion feature, $5,250 original issue discount and $7,500 of debt issuance costs. As of December 31, 2019, the note outstanding increased to $84,780 as a default penalty of $27,030 was added to the outstanding balance of the note, which consisted of unamortized balance of $14,438 of a beneficial conversion feature, unamortized original issue discount of $1,942, unamortized debt issuance costs of $2,774 and interest of $3,190 included in accrued expenses on the accompanying consolidated balance sheet. On May 22, 2020, the outstanding note was paid off. The following table summarizes the Convertible notes payable – short-term December 31, 2020 December 31, Shenghuo $ $ 513 Auctus 1,213 Eagle 26 Adar 85 Debt discount and issuance costs to be amortized (262 ) (9 ) Debt discount related to beneficial conversion (29 ) Convertible notes payable short-term, including related parties $ 951 $ 586 |
11. CONVERTIBLE DEBT
11. CONVERTIBLE DEBT | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
11. CONVERTIBLE DEBT | Senior Secured Promissory Note Effective February 12, 2016, the Company entered into a securities purchase agreement with GPB Debt Holdings II LLC (“GPB”) for the issuance of a $1,437,500 senior secured convertible note for an aggregate purchase price of $1,029,000 (representing an original issue discount of $287,500 and debt issuance costs of $121,000). On May 28, 2016, the balance of the note was increased by $87,500 for a total principal balance of $1,525,000. On December 7, 2016, the Company entered into an exchange agreement with GPB and as a result the principal balance increased by a transfer $312,500 (see – “Senior Secured Promissory Note”) for a total principal balance of $1,837,500. In addition, GPB received warrants for 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 and recorded an additional discount on the debt. 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. At December 31, 2019, the common stock purchase warrant exercise price had been adjusted to $0.04 and the number of common stock shares exchangeable for was 35,937,500. As of December 31, 2020, and as a result of the January 15, 2020 exchange agreement, the common stock purchase warrant exercise price had been adjusted to $0.20 and the number of common stock shares exchangeable for was 7,185,000. This exchange is subject to the Company meeting repayment conditions. Those conditions involved in part the repayment of $450,000, $100,000 and $950,000 for the completion of each Auctus financing tranche. The Company has executed Tranche 1 and 2 and has paid GPB $550,000. On September 2, 2020, the Company made a payment of $50,000, which provided the Company an additional four-month forbearance as well as paying and additional $150,000 to reduce the balance outstanding. On January 8, 2021, the Company made the final payment of $750,000 as required by this exchange agreement with GPB. The convertible note required monthly interest payments at a rate of 17% per year and was due on February 12, 2018. Subject to resale restrictions and the availability of sufficient authorized but unissued shares of the Company’s common stock, the note is convertible at a conversion price equal to 70% of the average closing price per share for the five trading days prior to issuance. In an event of default, the note will accrue interest at a rate of 22%. 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, 2020 and 2019, had not done so. The note is secured by a lien on substantially all of the Company’s assets. 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 3.85% of the Company’s revenues from the sale of products. As of December 31, 2020, and 2019, GPB had earned approximately $35,000 and $31,000 in royalties that are unpaid, respectively. Based on the exchange agreement GPB will no longer earn royalties. As of December 31, 2020, the balance due on the convertible debt was $1,709,414, consisting of principal of $1,362,384 and a prepayment penalty of $347,030 and compared to December 31, 2019, where the balance due on the convertible debt was $2,177,030 consisting of principal of $1,830,000 and a prepayment penalty of $347,030. Interest accrued on the note total $1,233,637 and $1,175,925 at December 31, 2020 and 2019, respectively, and is included in accrued expenses on the accompanying consolidated balance sheet. 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. Secured Promissory Note Effective September 10, 2014, the Company sold a secured promissory note to an accredited investor, GHS Investments, LLC (“GHS”), with an initial principal amount of $1,275,000, for a purchase price of $570,000 (less an original issue discount of $560,000 and debt issuance costs of $145,000). The note is secured by the Company’s current and future accounts receivable and inventory and accrued interest at a rate of 18% per year. The note has subsequently been assigned to different credited investors and the terms of the note were amended extend the maturity until August 31, 2016. The balance of this note was reduced by a transfer of $306,863 as part of a debt restructuring that occurred on December 7, 2016 (see – “Senior Secured Promissory Note”). The holder may convert the outstanding balance into shares of common stock at a conversion price per share equal to 75% of the lowest daily volume average price of common stock during the five days prior to conversion. During 2020, GHS converted $50,454 of principal and interest for 175,000 common stock shares. In addition, during 2020, as part of the conversion of the outstanding note, the Company paid $134,133 in cash for principal and interest that remained outstanding. As of December 31, 2020, the note was paid in full. The balance due on the note was $148,223 at December 31, 2019. Other Convertible Debt GHS Effective May 19, 2017, the Company entered into a securities purchase agreement with GHS for the purchase of a $66,000 convertible promissory note for the purchase of $60,000 in net proceeds (representing a 10% original issue discount of $6,000). The accrued interest rate of 8% per year until it matured in December 31, 2017. Beginning February 2018, the note is convertible, in whole or in part, at the holder’s option, into shares of the Company’s stock at a conversion price equal to 60% of the lowest trading price during the 25 trading days prior to conversion. Upon the occurrence of an event of default, the note will bear interest at a rate of 20% per year and the holder of the note may require the Company to redeem or convert the note at 150% of the outstanding principal balance. GHS converted $12,700 of principal and accrued interest during the year ended December 31, 2019. On December 16, 2020, the Company paid $25,000 on the note balance. At December 31, 2020 and 2019, the balance due on this note was $63,520 and $83,094, respectively including a default penalty of $37,926. Interest accrued on the note totals $17,816, and $16,641 at December 31, 2020 and 2019, and is included in accrued expenses on the accompanying consolidated balance sheet, respectively. Effective May 17, 2018, the Company entered into a securities purchase agreement with GHS for the purchase of a convertible promissory note with a principal of $9,250 for a purchase price of $7,500 (representing an original issue discount of $750 and debt issuance costs of $1,000). The note accrued interest at a rate of 8% per year until its matured June 17, 2019. Beginning February 2018, the note is convertible, in whole or in part, at the holder's option, into shares of the Company's stock at a conversion price equal to 70% of the lowest trading price during the 25 trading days prior to conversion (if the note cannot be converted due to Depository Trust Company freeze then rate decreases to 60%). Upon the occurrence of an event of default, the note will bear interest at a rate of 20% per year and the holder of the note may require the Company to redeem or convert the note at 150% of the outstanding principal balance. At December 31, 2020 and 2019, the balance due on this note was $14,187, including a default penalty of $4,937. Interest accrued on the note totals $5,006 and $3,972 at December 31, 2020 and 2019, respectively, and is included in accrued expenses on the accompanying consolidated balance sheet. Effective June 22, 2018, the Company entered into a securities purchase agreement with GHS for the purchase of a $68,000 convertible promissory note for a purchase price of $60,000 (representing an original issue discount of $6,000 and debt issuance costs of $2,000). At issuance, the Company recorded a $29,143 beneficial conversion feature, which was fully amortized at December 31, 2019. The accrued interest at a rate of 10% per year until it matured on June 22, 2019. Beginning May 2019, the note is convertible, in whole or in part, at the holder's option, into shares of the Company's stock at a conversion price equal to 70% of the lowest trading price during the 25 trading days prior to conversion (if the note cannot be converted due to Depository Trust Company freeze then rate decreases to 60%). Upon the occurrence of an event of default, the note will bear interest at a rate of 20% per year and the holder of the note may require the Company to redeem or convert the note at 150% of the outstanding principal balance. At December 31, 2020 and 2019, the balance due on this note was $103,285, including a default penalty of $35,285. Interest accrued on the note totals $39,644 and $29,287 at December 31, 2020 and 2019, respectively, and is included in accrued expenses on the accompanying consolidated balance sheet. Auctus On May 22, 2020, the Company entered into an exchange agreement with Auctus. Based on this agreement the Company exchanged three outstanding notes, in the amounts of $150,000, $89,250, and $65,000 for a total amount $328,422 of debt outstanding, as well as any accrued interest and default penalty, for: $160,000 in cash payments (payable in monthly payments of $20,000), converted a portion of the notes pursuant to original terms of the notes into 500,000 restricted common stock shares (shares were issued on June 3, 2020); and 700,000 warrants issued to purchase common stock shares at a strike price of $0.15. The fair value of the common stock shares was $250,000 (based on a $0.50 fair value for the Company’s stock) and of the warrants to purchase common stock shares was $196,818 (based on a $0.281 black scholes fair valuation). During the year ended December 31, 2020, the Company paid $100,000 to reduce the outstanding balance. As of December 31, 2020, a balance of $40,000 remained to be paid for these exchanged loans. Auctus notes exchanged in the May 22, 2020 transaction Effective March 20, 2018, the Company entered into a securities purchase with Auctus Fund, LLC ("Auctus") for the issuance of a $150,000 convertible promissory note and warrants exercisable for 4,262 shares of the Company's common stock. At issuance, the Company recorded a $97,685 beneficial conversion feature, which was fully amortized at December 31, 2018. The warrants are exercisable at any time, at an exercise price equal to $0.04 per share, subject to certain customary adjustments and price-protection provisions contained in the warrant. The warrants have a five-year term. The note accrued interest at a rate of 12% per year until it matured in December 2018. Beginning December 2018, the note is convertible, in whole or in part, at the holder's option, into shares of the Company's stock at a conversion price equal to 60% of the lowest trading price during the 20 trading days prior to conversion. Upon the occurrence of an event of default, the note will bear interest at a rate of 24% per year and the holder of the note may require the Company to redeem or convert the note at 150% of the outstanding principal balance. On May 22, 2020, the default penalty and outstanding interest was exchanged as described in the preceding paragraph. At December 31, 2019, the balance due on this total was $192,267, including a default penalty of $70,931, respectively. Interest accrued on the note totals $45,629 at December 31, 2019, and is included in accrued expenses on the accompanying consolidated balance sheet. Auctus converted nil and $14,236 of principal and accrued interested during year ended December 31, 2020 and 2019, respectively. During the year ended December 31, 2020, the Company paid $100,000 to reduce the outstanding balance. As of December 31, 2020, a balance of $40,000 remained to be paid for these exchanged loans. Effective July 3, 2018, the Company entered into a securities purchase with Auctus for the issuance of a $89,250 convertible promissory note. At issuance, the Company recorded a $59,000 beneficial conversion feature, which was fully amortized at December 31, 2019. The note accrued interest at a rate of 12% per year until it matured in April 2019. Beginning April 2019, the note is convertible, in whole or in part, at the holder's option, into shares of the Company's stock at a conversion price equal to 60% of the lowest trading price during the 20 trading days prior to conversion. Upon the occurrence of an event of default, the note will bear interest at a rate of 24% per year and the holder of the note may require the Company to redeem or convert the note at 150% of the outstanding principal balance. At December 31, 2019, the balance due on this total was $90,641, including a default penalty of $56,852. Interest accrued on the note totals $16,436 at December 31, 2019, and is included in accrued expenses on the accompanying consolidated balance sheet. At December 31, 2020, the balance due on this note was nil. Effective March 29, 2019, the Company entered into a securities purchase with Auctus for the issuance of a $65,000 convertible promissory note. At issuance, the Company recorded a $65,000 beneficial conversion feature, which was fully amortized at December 31, 2019. The note accrued interest at a rate of 12% until it matured in December 2019. Beginning December 2019, the note is convertible, in whole or in part, at the holder's option, into shares of the Company's stock at a conversion price equal to 50% of the lowest trading price during the 25 trading days prior to conversion. Upon the occurrence of an event of default, the note will bear interest at a rate of 24% per year and the holder of the note may require the Company to redeem or convert the note at 150% of the outstanding principal balance. At December 31, 2019, the balance due on this total was $106,210, including a default penalty of $41,210. Interest accrued on the note totaled $142 at December 31, 2019 and is included in accrued expenses on the accompanying consolidated balance sheet. At December 31, 2020, the balance due on this note was nil. The following table summarizes the Convertible notes (including debt in default) December 31, 2020 December 31, 2019 GPB $ 1,709 $ 1,709 $ 2,177 $ 2,177 GHS 149 64 83 14 14 103 181 103 349 Auctus 40 192 91 106 40 389 Convertible notes, past due (including debt in default) $ 1,930 $ 2,915 The convertible notes payable, past due was $1,930,000 at December 31, 2020 and the convertible notes in default was the total balance of $2,915,000 at December 31, 2019. Troubled Debt Restructuring The debt restructured for Convertible Debt, which closed on January 15, 2020, the Company restructured several re-payment plans as described above and in addition cancelled warrants and issued new warrants as part of the restructure. The debt exchanged with Auctus of $328,422 for 500,000 common stock shares resulted in a $118,396 loss. This debt restructure met the criteria for troubled debt. The basic criteria are that the borrower is troubled, i.e., they are having financial difficulties, and a concession is granted by the creditor. The troubled debt restructuring for Convertible Debt, would have increased the loss per share calculation from .04 to .05. |
12. LONG TERM DEBT
12. LONG TERM DEBT | 12 Months Ended |
Dec. 31, 2020 | |
Long-term Debt, Unclassified [Abstract] | |
12. LONG-TERM DEBT | Long-term Debt – Related Parties On July 24, 2019, Dr. Faupel and Mr. Cartwright agreed to an addendum to the debt restructuring exchange agreement and to modify the terms of the original exchange agreement. Under this modification Dr. Faupel and Mr. Cartwright agreed to extend the note to be due in full on the third anniversary of that agreement. The modification also included simple interest at a 6% rate, with the principal and accrued interest due in total at the date of maturity or September 4, 2021, the terms are currently being updated and an amended modification is expected to be completed. During the quarter ended September 30, 2018, the Company entered into an exchange agreement dated July 14, 2018, Dr Faupel, agreed to exchange outstanding amounts due to him for loans, interest, bonus, salary and vacation pay in the amount of $661,000 for a $207,000 promissory note dated September 4, 2018. As a result of the exchange agreement, the Company recorded a gain for extinguishment of debt of $199,000 and a capital contribution of $235,000 during the year ended December 31, 2018. The resulting difference of $20,000 was recorded to accrued interest. In the July 20, 2018 exchange agreement, Dr, Cartwright, agreed to exchange outstanding amounts due to him for loans, interest, bonus, salary and vacation pay in the amount of $1,621,000 for a $319,000 promissory note dated September 4, 2018. As a result of the exchange agreement, the Company recorded a gain for extinguishment of debt of $840,000 and a capital contribution of $432,000 during the year ended December 31, 2018. The resulting difference of $30,000 was recorded to accrued interest and elimination of debt. Troubled Debt Restructuring The debt extinguished for Mr. Cartwright and Mr. Faupel meet the criteria for troubled debt. The basic criteria are that the borrower is troubled, i.e., they are having financial difficulties, and a concession is granted by the creditor. Due to the Company being in default on several of its loans the debt is considered troubled debt. The troubled debt restructuring for Long-term Debt – Related Parties, had an immaterial effect on the Company’s basic or diluted earnings per share calculation for December 31, 2020 and 2019 as the gain was recorded in 2018. The table below summarizes the detail of the exchange agreement: For Dr. Faupel: Salary $ 134 Bonus 20 Vacation 95 Interest on compensation 67 Loans to Company 196 Interest on loans 149 Total outstanding prior to exchange $ 661 Amount forgiven during the quarter ended September 30, 2018 (454 ) Promissory note dated September 4, 2018 $ 207 Interest accrued through December 31, 2019 17 Balance outstanding at December 31, 2019 $ 224 Interest accrued through December 31, 2020 12 Balance outstanding at December 31, 2020 $ 236 For Dr. Cartwright: Salary $ 337 Bonus 675 Interest on compensation 59 Loans to Company 528 Interest on loans 22 Total outstanding prior to exchange $ 1,621 Amount forgiven during the quarter ended September 30, 2018 (1,302 ) Promissory note dated September 4, 2018 $ 319 Interest accrued through December 31, 2019 26 Balance outstanding at December 31, 2019 $ 345 Interest accrued through December 31, 2020 19 Balance outstanding at December 31, 2020 $ 364 On February 19, 2021, the Company entered into a new promissory note replacing the original note from September 4, 2018, with Mark Faupel and Gene Cartwright. For Dr. Cartwright the principal amount on the new note was $267,085, matures on February 18, 2023, and will accrue interest at a rate of 6%. For Dr. Faupel the principal amount on the new note was $153,178, matures on February 18, 2023, and will accrue interest at a rate of 6%. On February 19, 2021, the Company exchanged $100,000 and $85,000 of long-term debt for Dr. Cartwright and Dr. Faupel in exchange for 100 and 85 shares of Series F Preferred Stock, respectively. Future debt obligations at December 31, 2020 for Long-term Debt – Related Parties are as follows (in thousands): Year Amount 2021 $ 2022 200 2023 215 Totals $ 415 Long-term debt On May 4, 2020, the Company received a loan from the Small Business Administration (SBA) pursuant to the Paycheck Protection Program (PPP) as part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) in the amount of $50,184. The loan bears interest at a rate of 1.00%, and matures in 24 months, with the principal and interest payments being deferred until the date of forgiveness with interest accruing, then converting to monthly principal and interest payments, at the interest rate provided herein, for the remaining eighteen (18) months. Lender will apply each payment first to pay interest accrued to the day Lender received the payment, then to bring principal current, and will apply any remaining balance to reduce principal. Payments must be made on the same day as the date of this Note in the months they are due. Lender shall adjust payments at least annually as needed to amortize principal over the remaining term of the Note. Under the provisions of the PPP, the loan amounts will be forgiven as long as: the loan proceeds are used to cover payroll costs, and most mortgage interest, rent, and utility costs over a 24 week period after the loan is made; and employee and compensation levels are maintained. In addition, payroll costs are capped at $100,000 on an annualized basis for each employee. Not more than 40% of the forgiven amount may be for non-payroll costs. As of December 31, 2020, the outstanding balance was $50,477 including $293 in accrued interest. The Company has applied to have the loan forgiven. |
13. INCOME (LOSS) PER COMMON SH
13. INCOME (LOSS) PER COMMON SHARE | 12 Months Ended |
Dec. 31, 2020 | |
Earnings Per Share [Abstract] | |
13. 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, Series D and Series E convertible preferred stock, convertible debt, convertible preferred dividends and warrants convertible into common stock shares. The following table sets forth pertinent data relating to the computation of basic and diluted net loss per share attributable to common shareholders. In thousands December 31, 2020 2019 Net loss $ (401 ) $ (1,921 ) Basic weighted average number of shares outstanding 10,767 3,302 Net income (loss) per share (basic) $ (0.04 ) $ (0.58 ) Diluted weighted average number of shares outstanding 80,545 3,302 Net income (loss) per share (diluted) $ (0.04 ) $ (0.58 ) Dilutive equity instruments (number of equivalent units): Stock options Preferred stock Convertible debt 62,095 39,636 Warrants 7,683 30,208 Total Dilutive instruments 69,778 73,144 For period of net loss, basic and diluted earnings per share are the same as the assumed exercise of warrants and the conversion of convertible debt are anti-dilutive. |
14. SUBSEQUENT EVENTS
14. SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2020 | |
Subsequent Events [Abstract] | |
14. SUBSEQUENT EVENTS | GPB On January 8, 2021, the Company made the final payment of $750,000 out of the total $1,500,000 as required by this exchange agreement with GPB. On March 31, 2021, the Company issued 2,236 series F preferred stock shares in accordance with the terms of the agreement (see NOTE 11: CONVERTIBLE DEBT GHS On January 29, 2021, the Company paid GHS $40,000 per the agreement to reduce the outstanding debt. Series F Convertible Preferred Stock During January and February 2021, the Company entered into a Security Agreement with the Series F Investors (the “Series F Security Agreement”) pursuant to which all obligations under the Series F Certificate of Designation are secured by all of the Company’s assets and personal properties, with certain accredited investors. In total, for $1,944,000 the Company issued 1,944 shares of Series F Preferred Stock. Each Series F Preferred Stock is convertible into 4,000 common stock shares. The Series F Preferred Stock will have cumulative dividends at the rate per share of 6% per annum. The stated value and liquidation preference on the Series F Preferred Stock is $1,944. On February 19, 2021, the Company exchanged $100,000 and $85,000 of long-term debt for Dr. Cartwright and Dr. Faupel in exchange for 100 and 85 shares of Series F Preferred Stock, respectively. Each share of Series F Preferred is convertible, at any time for a period of 5 years after issuance, into that number of shares of Common Stock, determined by dividing the Stated Value by $0.25, subject to certain adjustments set forth in the Series F Certificate of Designation (the “Series F Conversion Price”). The conversion of Series F Preferred is subject to a 4.99% beneficial ownership limitation, which may be increased to 9.99% at the election of the holder of the Series F Preferred. If the average of the VWAPs (as defined in the Series F Certificate of Designation) for any consecutive 5 trading day period (“Measurement Period”) exceeds 200% of the then Series F Conversion Price and the average daily trading volume of the Common Stock on the primary trading market exceeds 1,000 shares per trading day during the Measurement Period (subject to adjustments), the Company may redeem the then outstanding Series F Preferred, for cash in an amount equal to aggregate Stated Value then outstanding plus accrued but unpaid dividends. Powerup (Series G Callable Preferred Stock) During January 2021, the Company finalized an investment by Power Up Lending Group Ltd. Power Up invested $78,500, net to the Company is $75,000, for 91,000 shares of Series G preferred stock with additional tranches of financing up to $925,000 in the aggregate over the terms of the Series G preferred stock. Series G will be non-voting on any matters requiring shareholder vote. The Series F Preferred Stock will have cumulative dividends at the rate per share of 8% per annum. At any time during the period indicated below, after the date of the issuance of shares of Series G preferred stock, the Company will have the right, at the Company’s option, to redeem all of the shares of Series G preferred stock by paying an amount equal to: (i) the number of shares of Series G preferred stock multiplied by then stated value (including accrued dividends); (ii) multiplied by the corresponding percentage as follows: Day 1-60, 105%; Day 61-90, 110%; Day 91-120, 115%; and Day 121-180, 122%. After the expiration of the 180 days following the issuance date, except for mandatory redemption, the Company shall have no right to redeem the Series G preferred stock. Mandatory redemption occurs within 24 months. In addition, if the Company does not redeem the Series G preferred stock then Power Up will have the option to convert to common stock shares. The variable conversion price will be the value equal to a discount of 19% off of the trading price; which is calculated as the average of the three lowest closing bid prices over the last fifteen trading days. The conversion of Series G Preferred is subject to a 4.99% beneficial ownership limitation, which may be increased to 9.99% at the election of the holder of the Series G Preferred. During February 2021, the Company finalized an investment by Power Up Lending Group Ltd. Power Up invested $53,500, net to the Company is $50,000, for 62,000 shares of Series G preferred stock with additional tranches of financing up to $925,000 in the aggregate over the terms of the Series G preferred stock. Series G will be non-voting on any matters requiring shareholder vote. The Series G Preferred Stock will have cumulative dividends at the rate per share of 8% per annum. At any time during the period indicated below, after the date of the issuance of shares of Series G preferred stock, the Company will have the right, at the Company’s option, to redeem all of the shares of Series G preferred stock by paying an amount equal to: (i) the number of shares of Series G preferred stock multiplied by then stated value (including accrued dividends); (ii) multiplied by the corresponding percentage as follows: Day 1-60, 105%; Day 61-90, 110%; Day 91-120, 115%; and Day 121-180, 122%. After the expiration of the 180 days following the issuance date, except for mandatory redemption, the Company shall have no right to redeem the Series G preferred stock. Mandatory redemption occurs within 24 months. In addition, if the Company does not redeem the Series G preferred stock then Power Up will have the option to convert to common stock shares. The variable conversion price will be the value equal to a discount of 19% off of the trading price; which is calculated as the average of the three lowest closing bid prices over the last fifteen trading days. The conversion of Series G Preferred is subject to a 4.99% beneficial ownership limitation, which may be increased to 9.99% at the election of the holder of the Series G Preferred. Other matters On February 19, 2021, the Company entered into a new promissory note replacing the original note from September 4, 2018, with Mark Faupel and Gene Cartwright. For Dr. Cartwright the principal amount on the new note was $267,085, matures on February 18, 2023, and will accrue interest at a rate of 6%. For Dr. Faupel the principal amount on the new note was $153,178, matures on February 18, 2023, and will accrue interest at a rate of 6%. On February 22, 2021, the Company based on a past agreement with Mr. Blumberg, was required to issuance 1,250,000 2-year warrants with an exercise price of $0.25, when the 30-day vwap reached $0.50. On March 2, 2021, the Company agreed to pay a fee to Aspen Capital Corporation for investor relations. Aspen would receive a fee of $49,0000, payable in cash of $24,500 and 98,000 common stock shares. In addition, they would receive 196,000 three year warrants to purchase common stock shares at an exercise price of $0.25 and expiring on March 4, 2024. On March 10, 2021, the Company entered into a consulting agreement with Richard Blumberg. The consulting agreement requires Mr. Blumberg to provide $350,000 to the Company and additional consulting services in exchange for the following: (1) 900,000 3-year warrants with an exercise price of $0.30 and 400,000 common stock shares; (2) 900,000 3-year warrants with an exercise price of $0.40 and 400,000 common stock shares; (3) 900,000 3-year warrants with an exercise price of $0.50 and 400,000 common stock shares; and (4) 900,000 3-year warrants with an exercise price of $0.60 and 400,000 common stock shares. Based on this agreement the Company will record compensation expense of $3,144,400. In addition, $88,000 in accrued consulting fees for Mr. Blumberg will be converted into 88 series F preferred stock shares. On March 22, 2021, the Company entered into an exchange agreement with Richard Fowler. As of December 31, 2020, the Company owed Mr. Fowler $546,214 ($412,624 in deferred salary and $133,590 in accrued interest). The Company will exchange the amount owed of $546,214 for 20 Series F Preferred Shares (convertible into 200,000 common stock shares), a $150,000 unsecured note and Mr. Fowler will remain on our health insurance plan. The unsecured note of $150,000 will have a four year term, with monthly payments scheduled to begin on March 15, 2022, and then monthly on the 15th thereafter, in the amount of $3,600 and accruing interest at a rate of 6%. The unsecured note will be in default on the 20th of the month. The amount forgiven by Mr. Fowler was $346,214. In addition, the Company will reimburse Mr. Fowler for $4,325.42 of accrued expenses. The Company will also begin repaying two outstanding notes totaling $45,118 in principal and interest on April 15, 2021. The notes will be combined into one note with a payment of $3,850 per month and have an interest rate of 6%, if the notes go into default the interest will be 18%. |
2. SIGNIFICANT ACCOUNTING POLIC
2. SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
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 | Recently Adopted Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires that expected credit losses relating to financial assets are measured on an amortized cost basis and available-for-sale debt securities be recorded through an allowance for credit losses. ASU 2016-13 limits the amount of credit losses to be recognized for available-for-sale debt securities to the amount by which carrying value exceeds fair value and also requires the reversal of previously recognized credit losses if fair value increases. The Company adopted the standard on January 1, 2020. The adoption of ASU 2016-13 did not have a material impact on the Company. In July, 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2017-11 (“ASU 2017-11”), which addressed accounting for (I) certain financial instruments with down round features and (II) replacement of the indefinite deferral for mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily redeemable non-controlling interests with a scope exception. The main provisions of Part I of ASU 2017-11 is to “change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. For freestanding equity classified financial instruments, the amendments require entities that present earnings per share (EPS) to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS.” Under previous US GAAP, warrants with a down round feature are not being considered indexed to the entity’s own stock, which results in classification of the warrant as a derivative liability. Under ASU 2017-11, the down round feature qualifies for a scope exception from derivative treatment. ASU 2017-11 is effective for public companies as of December 15, 2018 and interim periods within that fiscal year. Early adoption is permitted, including adoption in an interim period, with adjustments reflected as of the beginning of the fiscal year. The Company has issued financial instruments with down round features. The Company opted to adopt ASU 2017-11 as of December 31, 2020. If the Company had adopted the standard on the effective date the impact would have been immaterial to the financial statements. The impact of this adoption on the quarterly reports for 2020 would require the following debits and (credits) as shown in the schedule below: March 31, 2020 June 30, 2020 September 30, 2020 Warrant liability decrease $ 870,499 $ 3,512,254 $ 2,594,111 Long-term debt increase (244,941 ) (209,096 ) (173,251 ) Interest expense decrease (35,845 ) (71,690 ) (107,535 ) Accumulated deficit increase 13,437 2,691,036 1,808,738 Additional paid in capital increase (625,558 ) (3,303,158 ) (2,420,860 ) Change in fair value of warrants during the year 22,408 2,619,347 1,701,203 In August 2018, the FASB issued Accounting Standards Update No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, or ASU 2018-13. The amendments in ASU 2018-13 eliminate, add, and modify certain disclosure requirements for fair value measurements. The amendments are effective for the Company’s interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted for either the entire ASU or only the provisions that eliminate or modify requirements. The amendments with respect to changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty are to be applied prospectively. All other amendments are to be applied retrospectively to all periods presented. The adoption of ASU 2016-13 did not have a material impact on the Company. A variety of proposed or otherwise potential accounting standards are currently under consideration by standard-setting organizations and certain regulatory agencies. Because of the tentative and preliminary nature of such proposed standards, management has not yet determined the effect, if any, that the implementation of such proposed standards would have 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. Uncollectibility, is determined based on the determination that a distributor will not be able to make payment and the time frame has exceeded one year. The Company does not accrue interest receivables 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. |
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, 2020 and 2019, our inventories were as follows (in thousands): December 31, December 31, 2020 2019 Raw materials $ 1,276 $ 781 Work in process 80 81 Finished goods 7 17 Inventory reserve (758 ) (831 ) Total $ 605 $ 48 The company periodically reviews the value of items in inventory and provides write-downs or write-offs of inventory based on its assessment of market conditions. Write-downs and write-offs are charged to cost of goods sold. Deposits made for long-term inventory parts were recorded in Other Assets. On September 4, 2020, the Company paid and additional deposit of $200,000 for the deposit of a major part in the assembly of the Company’s devices. The Company had a prior deposit of $292,000 with this vendor that was being held until the Company could pay the entire balance of the $493,000 order. The Company had reserved and recorded an expense for the entire balance of $292,000 in prior periods as it was unsure when it would have the financial resources to pay the balance. Upon the payment of the additional deposit the Company reversed the reserve of $292,000. The parts were received during the year ended December 31, 2020. |
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 are 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, 2020 and 2019 (in thousands): December 31, December 31, 2020 2019 Equipment $ 1,042 $ 1,349 Software 652 740 Furniture and fixtures 41 124 Leasehold Improvement 12 180 1,747 2,393 Less accumulated depreciation and amortization (1,746 ) (2,393 ) Total $ 1 $ During the year ended December 31, 2020, the Company disposed of approximately $647,000 of property and equipment that was fully depreciated. |
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. |
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 $17,000 and $15,000 for the year ended December 31, 2020 and 2019, respectively. |
Leases | With the implementation of ASU 2016-02, “Leases (Topic 842)”, the Company recorded a lease-right-of-use asset and a lease liability. The Company adopted the standard on January 1, 2019. The implementation required the analysis of certain criteria in determining its treatment. The Company determined that its corporate office lease met those criteria. The Company implemented the guidance using the alternative transition method. Under this alternative, the effective date would be the date of initial application. The Company analyzed the lease at its effective date and calculated an initial lease payment amount of $267,380 with a present value of $213,000 using a 20% discount. See Note 8: Commitments and Contingencies The cumulative effect of initially applying the new guidance had an immaterial impact on the opening balance of retained earnings. The Company elected the practical expedients permitted under the transition guidance within the new standards, which allowed the Company to carry forward the historical lease classification. |
Accrued Liabilities | Accrued liabilities are summarized as follows (in thousands): December 31, 2020 December 31, Compensation $ 1,094 $ 1,123 Professional fees 83 181 Interest 1,517 1,603 Warranty 2 Vacation 34 41 Preferred dividends 202 120 Other accrued expenses 65 165 Total $ 2,995 $ 3,235 |
Subscription Receivables | Cash received from investors for common stock shares that has not completed processing is recorded as a liability to subscription receivables. As of December 31, 2020, all common stock shares were issued to investors. As of December 31, 2020, the outstanding subscription receivable was nil. As of December 31, 2019, the Company had reserved 635 Series D preferred shares and 1,270,000 common stock shares in exchange for $635,000. |
Revenue Recognition | The Company follows, ASC 606 Revenue from Contracts with Customers establishes a single and comprehensive framework which sets out how much revenue is to be recognized, and when. The core principle is that a vendor should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the vendor expects to be entitled in exchange for those goods or services. Revenue will now be recognized by a vendor when control over the goods or services is transferred to the customer. In contrast, revenue based revenue recognition around an analysis of the transfer of risks and rewards; this now forms one of a number of criteria that are assessed in determining whether control has been transferred. The application of the core principle in ASC 606 is carried out in five steps: Step 1 – Identify the contract with a customer: a contract is defined as an agreement (including oral and implied), between two or more parties, that creates enforceable rights and obligations and sets out the criteria for each of those rights and obligations. The contract needs to have commercial substance and it is probable that the entity will collect the consideration to which it will be entitled. Step 2 – Identify the performance obligations in the contract: a performance obligation in a contract is a promise (including implicit) to transfer a good or service to the customer. Each performance obligation should be capable of being distinct and is separately identifiable in the contract. Step 3 – Determine the transaction price: transaction price is the amount of consideration that the entity can be entitled to, in exchange for transferring the promised goods and services to a customer, excluding amounts collected on behalf of third parties. Step 4 – Allocate the transaction price to the performance obligations in the contract: for a contract that has more than one performance obligation, the entity will allocate the transaction price to each performance obligation separately, in exchange for satisfying each performance obligation. The acceptable methods of allocating the transaction price include adjusted market assessment approach, expected cost plus a margin approach, and, the residual approach in limited circumstances. Discounts given should be allocated proportionately to all performance obligations unless certain criteria are met and reallocation of changes in standalone selling prices after inception is not permitted. Step 5 – Recognize revenue as and when the entity satisfies a performance obligation: the entity should recognize revenue at a point in time, except if it meets any of the three criteria, which will require recognition of revenue over time: the entity’s performance creates or enhances an asset controlled by the customer, the customer simultaneously receives and consumes the benefit of the entity’s performance as the entity performs, and the entity does not create an asset that has an alternative use to the entity and the entity has the right to be paid for performance to date. Revenue by product line (in thousands): December 31, 2020 2019 Devices $ 17 Disposables 2 2 Major part components 100 15 Warranty 2 Total $ 102 $ 36 Revenue by geographic location (in thousands): December 31, 2020 2019 Asia $ 102 $ 22 Europe 14 Total $ 102 $ 36 |
Significant Distributors | Accounts receivable, that netted to a balance of $24,000, and were reserved against, were from one distributor as of December 31, 2020. The Allowance on Accounts Receivable was recorded on all but one distributor. During the year ended December 31, 2020, $100,000 or 98% of the total revenue was from one distributor for the sale of parts and cerival guides. During the year ended December 31, 2019, revenues were from two distributors and for extended warranties. Sales revenues from these distributors totaled $34,000 or 94% of the total revenue for the period ended December 31, 2019. |
Deferred Revenue | The Company defers payments received as revenue until earned based on the related contracts and applying ASC 606 as required. As of December 31, 2020, and 2019, the Company had $42,000 and $101,000 in deferred revenue, 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 has filed its 2019 federal and state corporate tax returns. The current corporate tax rates in the U.S. is 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, 2020 and, 2019, there were no uncertain tax positions. The Company has entered into an agreed upon payment plan with the IRS for delinquent payroll taxes. The Company has an established payment arrangement for its delinquent state income taxes with the State of Georgia. |
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 employees and 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 stock based payments granted or modified subsequently based on fair value estimates. On July 14, 2020, the Company granted stock options to employees and consultants. The new Stock Plan (the “Plan”) allows 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. Stock options granted have a 10-year life and expire 90 days after employment or upon termination of consulting agreement. Vesting schedule varies per grantee. Generally stock options granted vest as follows: 25% vest immediately, and the remaining stock options vest over 33 months, beginning three months after grant. For the year ended December 31, 2020 and 2019, stock based compensation for options attributable to employees, non-employees, officers and Board members was approximately $310,000 and $8,000, respectively. These amounts have been included in the Company’s statements of operations under general and administrative expense. Compensation costs for stock options which vest over time are recognized over the vesting period. As of December 31, 2020, and 2019 the Company had $559,000 and nil, of unrecognized compensation costs related to granted stock options that will be recognized, respectively. |
Beneficial Conversion Features of Convertible Securities | The Company has adopted the provisions of ASU 2017-11 to account for the down round features of warrants issued with private placements effective as of January 1, 2020. In doing so, warrants with a down round feature previously treated as a derivative liabilities in the consolidated balance sheet and measured at fair value are henceforth treated as equity, with no adjustment for changes in fair value at each reporting period. Previously, the Company accounted for conversion options embedded in convertible notes in accordance with ASC 815. ASC 815 generally requires companies to bifurcate conversion options embedded in convertible notes from their host instruments and to account for them as free standing derivative financial instruments. ASC 815 provides for an exception to this rule when convertible notes, as host instruments, are deemed to be conventional, as defined by ASC 815-40. The Company accounts for convertible notes deemed conventional and conversion options embedded in non-conventional convertible notes which qualify as equity under ASC 815, in accordance with the provisions of ASC 470-20, which provides guidance on accounting for convertible securities with beneficial conversion features. Accordingly, the Company records, as a discount to convertible notes, the intrinsic value of such conversion options based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt. Conversion options that are not bifurcated as a derivative pursuant to ASC 815 and not accounted for as a separate equity component under the cash conversion guidance are evaluated to determine whether they are beneficial to the investor at inception (a beneficial conversion feature) or may become beneficial in the future due to potential adjustments. The beneficial conversion feature guidance in ASC 470-20 applies to convertible stock as well as convertible debt which are outside the scope of ASC 815. A beneficial conversion feature is defined as a nondetachable conversion feature that is in the money at the commitment date. The beneficial conversion feature guidance requires recognition of the conversion option’s in-the-money portion, the intrinsic value of the option, in equity, with an offsetting reduction to the carrying amount of the instrument. The resulting discount is amortized as a dividend over either the life of the instrument, if a stated maturity date exists, or to the earliest conversion date, if there is no stated maturity date. If the earliest conversion date is immediately upon issuance, the dividend must be recognized at inception. When there is a subsequent change to the conversion ratio based on a future occurrence, the new conversion price may trigger the recognition of an additional beneficial conversion feature on occurrence. |
Derivatives | The Company reviews the terms of convertible debt issued to determine whether there are embedded derivative instruments, including embedded conversion options, which are required to be bifurcated and accounted for separately as derivative financial instruments. In circumstances where the host instrument contains more than one embedded derivative instrument, including the conversion option, that is required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument. Bifurcated embedded derivatives are initially recorded at fair value and are then revalued at each reporting date with changes in the fair value reported as non-operating income or expense. When the equity or convertible debt instruments contain embedded derivative instruments that are to be bifurcated and accounted for as liabilities, the total proceeds received are first allocated to the fair value of all the bifurcated derivative instruments. The remaining proceeds, if any, are then allocated to the host instruments themselves, usually resulting in those instruments being recorded at a discount from their face value. The discount from the face value of the convertible debt, together with the stated interest on the instrument, is amortized over the life of the instrument through periodic charges to interest expense. |
2. SIGNIFICANT ACCOUNTING POL_2
2. SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Effect of new accounting standard | March 31, 2020 June 30, 2020 September 30, 2020 Warrant liability decrease $ 870,499 $ 3,512,254 $ 2,594,111 Long-term debt increase (244,941 ) (209,096 ) (173,251 ) Interest expense decrease (35,845 ) (71,690 ) (107,535 ) Accumulated deficit increase 13,437 2,691,036 1,808,738 Additional paid in capital increase (625,558 ) (3,303,158 ) (2,420,860 ) Change in fair value of warrants during the year 22,408 2,619,347 1,701,203 |
Inventory valuation | December 31, December 31, 2020 2019 Raw materials $ 1,276 $ 781 Work in process 80 81 Finished goods 7 17 Inventory reserve (758 ) (831 ) Total $ 605 $ 48 |
Property and equipment | December 31, December 31, 2020 2019 Equipment $ 1,042 $ 1,349 Software 652 740 Furniture and fixtures 41 124 Leasehold Improvement 12 180 1,747 2,393 Less accumulated depreciation and amortization (1,746 ) (2,393 ) Total $ 1 $ |
Accrued liabilities | December 31, 2020 December 31, Compensation $ 1,094 $ 1,123 Professional fees 83 181 Interest 1,517 1,603 Warranty 2 Vacation 34 41 Preferred dividends 202 120 Other accrued expenses 65 165 Total $ 2,995 $ 3,235 |
Disaggregation of revenue | Revenue by product line (in thousands): December 31, 2020 2019 Devices $ 17 Disposables 2 2 Major part components 100 15 Warranty 2 Total $ 102 $ 36 Revenue by geographic location (in thousands): December 31, 2020 2019 Asia $ 102 $ 22 Europe 14 Total $ 102 $ 36 |
3. FAIR VALUE OF FINANCIAL IN_2
3. FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value for liabilities measured on a recurring basis | Fair Value at December 31, 2020 Level 1 Level 2 Level 3 Total Warrants issued in connection with Senior Secured Debt — — (2,203 ) (2,203 ) Derivative liability/bifurcated conversion option in connection with Auctus $1,100,000 loan on December 17, 2019 — — (25 ) (25 ) Total long-term liabilities at fair value $ — $ — $ (2,228 ) $ (2,228 ) Fair Value at December 31, 2019 Level 1 Level 2 Level 3 Total Warrants issued in connection with Distributor Debt — — (114 ) (114 ) Warrants issued in connection with Short-term loans — — (83 ) (83 ) Warrants issued in connection with Long-term loans — — (893 ) (893 ) Warrants issued in connection with Senior Secured Debt — — (4,002 ) (4,002 ) Derivative liability/bifurcated conversion option in connection with Auctus $1,100,000 loan on December 17, 2019 — — — — Total long-term liabilities at fair value $ — $ — $ (5,092 ) $ (5,092 ) |
Summary of changes to Level 3 instruments | Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Distributor Debt Short-Term Loans Long-Term Loans Senior Secured Debt Derivative Total Balance, December 31, 2019 $ (114 ) $ (83 ) $ (893 ) $ (4,002 ) $ $ (5,092 ) Transfer to equity as a result of warrants exchanged for fixed price warrants 67 50 117 Change in fair value of derivatives during the year (25 ) (25 ) Transfer to equity as a result of adoption of ASU 2017-11 627 627 Reduction of debt discount as result of adoption of ASU 2017-11 266 266 Change in fair value of warrants during the year 47 33 1,799 1,879 Balance, December 31, 2020 $ $ $ $ (2,203 ) $ (25 ) $ (2,228 ) |
4. STOCKHOLDER'S DEFICIT (Table
4. STOCKHOLDER'S DEFICIT (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
STOCKHOLDERS' DEFICIT: | |
Common stock issued | For the year ended December 31, 2020, the Company issued 9,818,813 shares of common stock as listed below: Conversion of debt into common shares exchange agreements 7,957,013 Conversion of debt into common shares 175,000 Shares issued for manufacturing agreements 12,147 Shares issued for payment of Series D dividends 148,653 Investments 1,526,000 Issued during the year ended December 31, 2020 9,818,813 Summary table of common stock share transactions: Balance at December 31, 2019 3,319,469 Issued in 2020 9,818,813 Balance at December 31, 2020 13,138,282 |
Debt exchanges | Total Debt and Accrued Interest Total Debt Total Accrued Interest Common Stock Shares Warrants (Exercise $0.25) Warrants (Exercise $0.75) Warrants (Exercise $0.20) Warrants (Exercise $0.15) Warrants (Exercise $0.50) Aquarius $ 145,544 $ 107,500 38,044 $ 291,088 145,544 145,544 — — — K2 Medical (Shenghuo)3 803,653 771,927 31,726 1,905,270 704,334 704,334 496,602 — — Mr. Blumberg 305,320 292,290 13,030 1,167,630 119,656 119,656 928,318 — — Mr. Case 179,291 150,000 29,291 896,456 — — 896,456 — — Mr. Grimm 51,050 50,000 1,050 255,548 — — 255,548 — — Mr. Gould 111,227 100,000 11,227 556,136 — — 556,136 — — Mr. Mamula 15,577 15,000 577 77,885 — — 77,885 — — Dr. Imhoff2 400,417 363,480 36,937 1,699,255 100,944 100,944 1,497,367 — — Ms. Rosenstock1 50,000 50,000 — 100,000 50,000 50,000 — — — Mr. James2 2,286 2,000 286 7,745 1,227 1,227 5,291 — — Auctus 328,422 249,119 79,303 500,000 — — — 700,000 — Mr. Clavijo 125,000 125,000 — 500,000 — — — — 500,000 Mr. Wells4 220,000 220,000 — — — — — — — $ 2,737,787 $ 2,496,316 $ 241,471 7,957,013 1,121,705 1,121,705 4,713,603 700,000 500,000 1 Ms. Rosenstock also forgave $28,986 in debt to the Company. 2 Mr. Imhoff and Mr. James are members of the board of directors and therefore related parties. 3 The Company’s COO and director, Mark Faupel, is a shareholder of Shenghuo, and a former director, Richard Blumberg, is a managing member of Shenghuo. 4 Mr. Wells will also receive 66,000 common share stock options; the details of which are explained above. |
Outstanding warrants | Warrants (Underlying Shares) Outstanding, January 1, 2020 46,016,840 Issuances 11,270,013 Cancelled / Expired (70 ) Exchanged in debt restructuring (28,962,508 ) Exercised Outstanding, December 31, 2020 28,324,275 |
Shares reserved for warrants | Warrants (Underlying Shares) Exercise Price Expiration Date 4,262 (1) $1.824 per share March 19, 2021 7,185,000 (2) $0.20 per share February 12, 2023 1,725,000 (3) $0.04 per share February 21, 2021 325,000 (4) $0.18 per share April 4, 2022 215,000 (5) $0.25 per share July 1, 2022 100,000 (6) $0.25 per share September 1, 2022 7,500,000 (7) $0.20 per share December 17, 2024 250,000 (8) $0.16 per share March 31, 2025 2,597,705 (9) $0.25 per share December 30, 2022 2,597,705 (10) $0.75 per share December 30, 2022 4,713,603 (11) $0.20 per share December 30, 2022 60,000 (12) $0.25 per share April 23, 2023 50,000 (13) $0.25 per share December 30, 2022 50,000 (14) $0.75 per share December 30, 2022 700,000 (15) $0.15 per share May 21, 2023 250,000 (16) $0.50 per share June 23, 2023 1,000 (17) $0.50 per share August 10, 2022 28,324,275 (1) Issued to investors for a loan in March 2018. (2) Exchanged in January 2020 from amount issued as part of a February 2016 private placement with senior secured debt holder (3) Issued to a placement agent in conjunction with a February 2016 private placement with senior secured debt holder (4) Issued to investors for a loan in April 2019 (5) Issued to investors for a loan in July 2019 (6) Issued to investors for a loan in September 2019 (7) Issued to investors for a loan in December 2019 (8) Issued to investors for a loan in January 2020 (9) Issued to investors as part of Series D Preferred Stock Capital raise in December 2020 (10) Issued to investors as part of Series D Preferred Stock Capital raise in December 2020 (11) (12) (13) (14) (15) (16) Issued to investors as part of Series D Preferred Stock Capital raise in December 2020 Issued to a consultant for services in April 2020 Issued to an investor as part of Series D Preferred Stock Capital raise in April 2020 Issued to an investor as part of Series D Preferred Stock Capital raise in April 2020 Issued to an investor for a loan in May 2020 Issued to an investor in exchange of debt in June 2020 (17) Issued to a consultant for services in August 2020 |
5. INCOME TAXES (Tables)
5. INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Components of deferred taxes | 2020 2019 Deferred tax assets: Warrant liability $ 617 $ 1,087 Accrued executive compensation 519 515 Reserves and other 421 468 Net operating loss carryforwards 17,851 18,961 19,408 21,031 Valuation allowance (19,408 ) (21,031 ) Net deferred tax assets $ 0 $ 0 |
Income taxes | 2020 2019 Statutory federal tax rate 21 % 21 % State taxes, net of federal benefit 4 4 Nondeductible expenses Valuation allowance (25 ) (25 ) Effective tax rate 0 % 0 % |
Provision for income taxes | 2020 2019 Current $ $ Deferred Deferred provision (credit) 1,623 434 Change in valuation allowance (1,623 ) (434 ) Total provision for income taxes $ $ |
6. STOCK OPTIONS (Tables)
6. STOCK OPTIONS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock options granted | Grant Date Expiration Date Vesting Period Number of Stock Options Granted Exercise Price Black Scholes Valuation Cartwright, Gene 07/14/2020 07/13/2030 Vesting(1) 400,000 $ 0.49 $ 0.483 Faupel, Mark 07/14/2020 07/13/2030 Vesting(1) 400,000 $ 0.49 $ 0.483 Imhoff, John 07/14/2020 07/13/2030 Immediate 50,000 $ 0.49 $ 0.483 James, Michael 07/14/2020 07/13/2030 Immediate 50,000 $ 0.49 $ 0.483 Clavijo, James 07/14/2020 07/13/2030 Vesting(1) 300,000 $ 0.49 $ 0.483 Battle, Lisa 07/14/2020 07/13/2030 Vesting(1) 178,000 $ 0.49 $ 0.483 Sufka, Melissa 07/14/2020 07/13/2030 Vesting(1) 178,000 $ 0.49 $ 0.483 Waterstreet, Alesandra 07/14/2020 07/13/2030 Vesting(1) 178,000 $ 0.49 $ 0.483 Wells, William 07/14/2020 07/13/2030 18 months 66,000 $ 0.49 $ 0.483 1,800,000 (1) 25% immediate and 25% each year thereafter; 36 months in total |
Stock options vested, unvested and granted | Stock options vested 641,909 Stock options unvested 1,158,091 Total stock options granted at December 31, 2020 1,800,000 |
Stock option activity | December 31, 2020 Shares Weighted Average Exercise Price Outstanding at beginning of year Options granted 1,800,000 $ 0.49 Options exercised Options expired/forfeited Outstanding at end of the period 1,800,000 $ 0.49 |
8. COMMITMENTS AND CONTINGENC_2
8. COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Future minimum rental payments under non-cancellable operating leases | Year Amount 2021 $ 91 2022 108 2023 112 2024 115 2025 119 Thereafter 50 Total 595 Less: Interest 147 Present value of lease liability $ 448 |
9. NOTES PAYABLE (Tables)
9. NOTES PAYABLE (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Notes Payable [Abstract] | |
Notes payable in default, including related parties | December 31, 2020 December 31, 2019 Dr. Imhoff $ $ 199 Dr. Cartwright 1 2 Ms. Rosenstock 50 Mr. Fowler 26 26 Mr. Mermelstein 285 244 GHS GPB 17 17 Aquarius 108 Accilent 58 Mr. Blumberg 70 Mr. James 2 Notes payable in default $ 329 $ 776 |
Short-term notes payable, including related parties | December 31, 2020 December 31, Dr. Imhoff $ $ 167 Dr. Cartwright 46 48 Dr. Faupel 5 5 Ms. Mamula 15 Mr. Case 150 Mr. Gould 100 K2 (Shenghuo) 203 Premium Finance (insurance) 45 58 Everest 8 Mr. Grimm 49 Mr. Blumberg 223 Short-term notes payable, including related parties $ 96 $ 1,026 |
10. SHORT-TERM CONVERTIBLE DE_2
10. SHORT-TERM CONVERTIBLE DEBT (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Convertible notes payable | December 31, 2020 December 31, Shenghuo $ $ 513 Auctus 1,213 Eagle 26 Adar 85 Debt discount and issuance costs to be amortized (262 ) (9 ) Debt discount related to beneficial conversion (29 ) Convertible notes payable short-term, including related parties $ 951 $ 586 |
11. CONVERTIBLE DEBT (Tables)
11. CONVERTIBLE DEBT (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Convertible notes in default | December 31, 2020 December 31, 2019 GPB $ 1,709 $ 1,709 $ 2,177 $ 2,177 GHS 149 64 83 14 14 103 181 103 349 Auctus 40 192 91 106 40 389 Convertible notes, past due (including debt in default) $ 1,930 $ 2,915 |
12. LONG TERM DEBT (Tables)
12. LONG TERM DEBT (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Long-term Debt, Unclassified [Abstract] | |
Long-term debt, related parties | For Dr. Faupel: Salary $ 134 Bonus 20 Vacation 95 Interest on compensation 67 Loans to Company 196 Interest on loans 149 Total outstanding prior to exchange $ 661 Amount forgiven during the quarter ended September 30, 2018 (454 ) Promissory note dated September 4, 2018 $ 207 Interest accrued through December 31, 2019 17 Balance outstanding at December 31, 2019 $ 224 Interest accrued through December 31, 2020 12 Balance outstanding at December 31, 2020 $ 236 For Dr. Cartwright: Salary $ 337 Bonus 675 Interest on compensation 59 Loans to Company 528 Interest on loans 22 Total outstanding prior to exchange $ 1,621 Amount forgiven during the quarter ended September 30, 2018 (1,302 ) Promissory note dated September 4, 2018 $ 319 Interest accrued through December 31, 2019 26 Balance outstanding at December 31, 2019 $ 345 Interest accrued through December 31, 2020 19 Balance outstanding at December 31, 2020 $ 364 |
Long-term debt, related parties debt obligations | Year Amount 2021 $ 2022 200 2023 215 Totals $ 415 |
13. INCOME (LOSS) PER COMMON _2
13. INCOME (LOSS) PER COMMON SHARE (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Earnings Per Share [Abstract] | |
Earnings per share | In thousands December 31, 2020 2019 Net loss $ (401 ) $ (1,921 ) Basic weighted average number of shares outstanding 10,767 3,302 Net income (loss) per share (basic) $ (0.04 ) $ (0.58 ) Diluted weighted average number of shares outstanding 80,545 3,302 Net income (loss) per share (diluted) $ (0.04 ) $ (0.58 ) Dilutive equity instruments (number of equivalent units): Stock options Preferred stock Convertible debt 62,095 39,636 Warrants 7,683 30,208 Total Dilutive instruments 69,778 73,144 |
1. ORGANIZATION, BACKGROUND, _2
1. ORGANIZATION, BACKGROUND, AND BASIS OF PRESENTATION (Details Narrative) - USD ($) | 12 Months Ended | |||||
Dec. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||
Working capital | $ (8,000,000) | |||||
Accumulated deficit | (139,956,000) | $ (139,555,000) | $ 1,808,738 | $ 2,691,036 | $ 13,437 | |
Net loss | (401,000) | (1,921,000) | ||||
Stockholders deficit | $ (10,855,000) | $ (16,935,000) | $ (15,824,000) |
2. SUMMARY OF SIGNIFICANT ACC_2
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Accounting Policies [Abstract] | |||||
Warrant liability decrease | $ 2,594,111 | $ 3,512,254 | $ 870,499 | ||
Long-term debt increase | (173,251) | (209,096) | (244,941) | ||
Interest expense decrease | (107,535) | (71,690) | (35,845) | $ (1,056,000) | $ (1,412,000) |
Accumulated deficit increase | 1,808,738 | 2,691,036 | 13,437 | (139,956,000) | (139,555,000) |
Additional paid in capital increase | (2,420,860) | (3,303,158) | (625,558) | 123,109,000 | 118,552,000 |
Change in fair value of warrants during the year | $ 1,701,203 | $ 2,619,347 | $ 22,408 | $ 1,879,000 | $ 380,000 |
2. SUMMARY OF SIGNIFICANT ACC_3
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Accounting Policies [Abstract] | ||
Raw materials | $ 1,276 | $ 781 |
Work in process | 80 | 81 |
Finished goods | 7 | 17 |
Inventory reserve | (758) | (831) |
Total | $ 605 | $ 48 |
2. SUMMARY OF SIGNIFICANT ACC_4
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Property and equipment, gross | $ 1,747 | $ 2,393 |
Less: accumulated depreciation and amortization | (1,746) | (2,393) |
Property and equipment, net | 1 | 0 |
Equipment | ||
Property and equipment, gross | 1,042 | 1,349 |
Software | ||
Property and equipment, gross | 652 | 740 |
Furniture and Fixtures | ||
Property and equipment, gross | 41 | 124 |
Leasehold Improvements | ||
Property and equipment, gross | $ 12 | $ 180 |
2. SUMMARY OF SIGNIFICANT ACC_5
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Accounting Policies [Abstract] | ||
Compensation | $ 1,094 | $ 1,123 |
Professional fees | 83 | 181 |
Interest | 1,517 | 1,603 |
Warranty | 0 | 2 |
Vacation | 34 | 41 |
Preferred dividends | 202 | 120 |
Other accrued expenses | 65 | 165 |
Total | $ 2,995 | $ 3,235 |
2. SUMMARY OF SIGNIFICANT ACC_6
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 4) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Revenue | $ 102 | $ 36 |
Asia | ||
Revenue | 102 | 22 |
Europe | ||
Revenue | 0 | 14 |
Devices | ||
Revenue | 0 | 17 |
Disposables | ||
Revenue | 2 | 2 |
Major Part Components | ||
Revenue | 100 | 15 |
Warranty | ||
Revenue | $ 0 | $ 2 |
2. SUMMARY OF SIGNIFICANT ACC_7
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Accounting Policies [Abstract] | ||
Disposal of property and equipment | $ (647) | |
Patent costs | 17 | $ 15 |
Deferred revenue | 42 | 101 |
Share-based compensation | $ 310 | $ 8 |
3. FAIR VALUE OF FINANCIAL IN_3
3. FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Warrants | $ (2,228) | $ (5,092) |
Distributor Debt | ||
Warrants | (114) | |
Short-Term Loans | ||
Warrants | (83) | |
Long-Term Loans | ||
Warrants | (893) | |
Senior Secured Debt | ||
Warrants | (2,203) | (4,002) |
Auctus Loan | ||
Warrants | (25) | 0 |
Level 1 | ||
Warrants | 0 | 0 |
Level 1 | Distributor Debt | ||
Warrants | 0 | |
Level 1 | Short-Term Loans | ||
Warrants | 0 | |
Level 1 | Long-Term Loans | ||
Warrants | 0 | |
Level 1 | Senior Secured Debt | ||
Warrants | 0 | 0 |
Level 1 | Auctus Loan | ||
Warrants | 0 | 0 |
Level 2 | ||
Warrants | 0 | 0 |
Level 2 | Distributor Debt | ||
Warrants | 0 | |
Level 2 | Short-Term Loans | ||
Warrants | 0 | |
Level 2 | Long-Term Loans | ||
Warrants | 0 | |
Level 2 | Senior Secured Debt | ||
Warrants | 0 | 0 |
Level 2 | Auctus Loan | ||
Warrants | 0 | 0 |
Level 3 | ||
Warrants | (2,228) | (5,092) |
Level 3 | Distributor Debt | ||
Warrants | (114) | |
Level 3 | Short-Term Loans | ||
Warrants | (83) | |
Level 3 | Long-Term Loans | ||
Warrants | (893) | |
Level 3 | Senior Secured Debt | ||
Warrants | (2,203) | (4,002) |
Level 3 | Auctus Loan | ||
Warrants | $ (25) | $ 0 |
3. FAIR VALUE OF FINANCIAL IN_4
3. FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 1) - Level 3 $ in Thousands | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Beginning balance | $ (5,092) |
Warrants exchanged for fixed price warrants | 117 |
Change in fair value of derivatives during the year | (25) |
Transfer to equity as a result of adoption of ASU 2017-11 | 627 |
Reduction of debt discount as result of adoption of ASU 2017-11 | 266 |
Change in fair value of warrants during the year | 1,879 |
Ending balance | (2,228) |
Distributor Debt | |
Beginning balance | (114) |
Warrants exchanged for fixed price warrants | 67 |
Change in fair value of derivatives during the year | 0 |
Transfer to equity as a result of adoption of ASU 2017-11 | 0 |
Reduction of debt discount as result of adoption of ASU 2017-11 | 0 |
Change in fair value of warrants during the year | 47 |
Ending balance | 0 |
Short-Term Loans | |
Beginning balance | (83) |
Warrants exchanged for fixed price warrants | 50 |
Change in fair value of derivatives during the year | 0 |
Transfer to equity as a result of adoption of ASU 2017-11 | 0 |
Reduction of debt discount as result of adoption of ASU 2017-11 | 0 |
Change in fair value of warrants during the year | 33 |
Ending balance | 0 |
Long-Term Loans | |
Beginning balance | (893) |
Warrants exchanged for fixed price warrants | 0 |
Change in fair value of derivatives during the year | 0 |
Transfer to equity as a result of adoption of ASU 2017-11 | 627 |
Reduction of debt discount as result of adoption of ASU 2017-11 | 266 |
Change in fair value of warrants during the year | 0 |
Ending balance | 0 |
Senior Secured Debt | |
Beginning balance | (4,002) |
Warrants exchanged for fixed price warrants | 0 |
Change in fair value of derivatives during the year | 0 |
Transfer to equity as a result of adoption of ASU 2017-11 | 0 |
Reduction of debt discount as result of adoption of ASU 2017-11 | 0 |
Change in fair value of warrants during the year | 1,799 |
Ending balance | (2,203) |
Derivative | |
Beginning balance | 0 |
Warrants exchanged for fixed price warrants | 0 |
Change in fair value of derivatives during the year | (25) |
Transfer to equity as a result of adoption of ASU 2017-11 | 0 |
Reduction of debt discount as result of adoption of ASU 2017-11 | 0 |
Change in fair value of warrants during the year | 0 |
Ending balance | $ (25) |
3. FAIR VALUE OF FINANCIAL IN_5
3. FAIR VALUE OF FINANCIAL INSTRUMENTS (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Fair Value Disclosures [Abstract] | |||||
Warrants, at fair value | $ 2,203,000 | $ 5,092,000 | |||
Derivative liability | 25,000 | 0 | |||
Change in fair value of warrants | $ 1,701,203 | $ 2,619,347 | $ 22,408 | $ 1,879,000 | $ 380,000 |
4. STOCKHOLDERS' DEFICIT (Detai
4. STOCKHOLDERS' DEFICIT (Details) | 12 Months Ended |
Dec. 31, 2020shares | |
STOCKHOLDERS' DEFICIT: | |
Conversion of debt into common shares - exchange agreements | 7,957,013 |
Conversion of debt into common shares | 175,000 |
Shares issued for manufacturing agreements | 12,147 |
Shares issued for payment of Series D dividends | 148,653 |
Investments | 1,526,000 |
Issued during the year ended December 31, 2020 | 9,818,813 |
Stock issued, beginning | 3,319,469 |
Issued in 2020 | 9,818,813 |
Stock issued, ending | 13,138,282 |
4. STOCKHOLDERS' DEFICIT (Det_2
4. STOCKHOLDERS' DEFICIT (Details 1) | 12 Months Ended | |
Dec. 31, 2020USD ($)shares | ||
Total debt and accrued interest | $ | $ 2,737,787 | |
Total debt | $ | 2,496,316 | |
Total accrued interest | $ | $ 241,471 | |
Common stock shares | 7,957,013 | |
Warrants (exercise $0.25) | 1,121,705 | |
Warrants (exercise $0.75) | 1,121,705 | |
Warrants (exercise $0.20) | 4,713,603 | |
Warrants (Exercise $0.15) | 700,000 | |
Warrants (Exercise $0.50) | 500,000 | |
Aquarius | ||
Total debt and accrued interest | $ | $ 145,544 | |
Total debt | $ | 107,500 | |
Total accrued interest | $ | $ 38,044 | |
Common stock shares | 291,088 | |
Warrants (exercise $0.25) | 145,544 | |
Warrants (exercise $0.75) | 145,544 | |
Warrants (exercise $0.20) | 0 | |
Warrants (Exercise $0.15) | 0 | |
Warrants (Exercise $0.50) | 0 | |
K2 Medical (Shenghuo) | ||
Total debt and accrued interest | $ | $ 803,653 | [1] |
Total debt | $ | 771,927 | [1] |
Total accrued interest | $ | $ 31,726 | [1] |
Common stock shares | 1,905,270 | [1] |
Warrants (exercise $0.25) | 704,334 | [1] |
Warrants (exercise $0.75) | 704,334 | [1] |
Warrants (exercise $0.20) | 496,602 | [1] |
Warrants (Exercise $0.15) | 0 | [1] |
Warrants (Exercise $0.50) | 0 | [1] |
Mr. Blumberg | ||
Total debt and accrued interest | $ | $ 305,320 | |
Total debt | $ | 292,290 | |
Total accrued interest | $ | $ 13,030 | |
Common stock shares | 1,167,630 | |
Warrants (exercise $0.25) | 119,656 | |
Warrants (exercise $0.75) | 119,656 | |
Warrants (exercise $0.20) | 928,318 | |
Warrants (Exercise $0.15) | 0 | |
Warrants (Exercise $0.50) | 0 | |
Mr. Case | ||
Total debt and accrued interest | $ | $ 179,291 | |
Total debt | $ | 150,000 | |
Total accrued interest | $ | $ 29,291 | |
Common stock shares | 896,456 | |
Warrants (exercise $0.25) | 0 | |
Warrants (exercise $0.75) | 0 | |
Warrants (exercise $0.20) | 896,456 | |
Warrants (Exercise $0.15) | 0 | |
Warrants (Exercise $0.50) | 0 | |
Mr. Grimm | ||
Total debt and accrued interest | $ | $ 51,050 | |
Total debt | $ | 50,000 | |
Total accrued interest | $ | $ 1,050 | |
Common stock shares | 255,548 | |
Warrants (exercise $0.25) | 0 | |
Warrants (exercise $0.75) | 0 | |
Warrants (exercise $0.20) | 255,548 | |
Warrants (Exercise $0.15) | 0 | |
Warrants (Exercise $0.50) | 0 | |
Mr. Gould | ||
Total debt and accrued interest | $ | $ 111,227 | |
Total debt | $ | 100,000 | |
Total accrued interest | $ | $ 11,227 | |
Common stock shares | 556,136 | |
Warrants (exercise $0.25) | 0 | |
Warrants (exercise $0.75) | 0 | |
Warrants (exercise $0.20) | 556,136 | |
Warrants (Exercise $0.15) | 0 | |
Warrants (Exercise $0.50) | 0 | |
Mr. Mamula | ||
Total debt and accrued interest | $ | $ 15,577 | |
Total debt | $ | 15,000 | |
Total accrued interest | $ | $ 577 | |
Common stock shares | 77,885 | |
Warrants (exercise $0.25) | 0 | |
Warrants (exercise $0.75) | 0 | |
Warrants (exercise $0.20) | 77,885 | |
Warrants (Exercise $0.15) | 0 | |
Warrants (Exercise $0.50) | 0 | |
Dr. Imhoff | ||
Total debt and accrued interest | $ | $ 400,417 | [2] |
Total debt | $ | 363,480 | [2] |
Total accrued interest | $ | $ 36,937 | [2] |
Common stock shares | 1,699,255 | [2] |
Warrants (exercise $0.25) | 100,944 | [2] |
Warrants (exercise $0.75) | 100,944 | [2] |
Warrants (exercise $0.20) | 1,497,367 | [2] |
Warrants (Exercise $0.15) | 0 | [2] |
Warrants (Exercise $0.50) | 0 | [2] |
Ms. Rosenstock | ||
Total debt and accrued interest | $ | $ 50,000 | [3] |
Total debt | $ | 50,000 | [3] |
Total accrued interest | $ | $ 0 | [3] |
Common stock shares | 100,000 | [3] |
Warrants (exercise $0.25) | 50,000 | [3] |
Warrants (exercise $0.75) | 50,000 | [3] |
Warrants (exercise $0.20) | 0 | [3] |
Warrants (Exercise $0.15) | 0 | [3] |
Warrants (Exercise $0.50) | 0 | [3] |
Mr. James | ||
Total debt and accrued interest | $ | $ 2,286 | [2] |
Total debt | $ | 2,000 | [2] |
Total accrued interest | $ | $ 286 | [2] |
Common stock shares | 7,745 | [2] |
Warrants (exercise $0.25) | 1,227 | [2] |
Warrants (exercise $0.75) | 1,227 | [2] |
Warrants (exercise $0.20) | 5,291 | [2] |
Warrants (Exercise $0.15) | 0 | [2] |
Warrants (Exercise $0.50) | 0 | [2] |
Auctus | ||
Total debt and accrued interest | $ | $ 328,422 | |
Total debt | $ | 249,119 | |
Total accrued interest | $ | $ 79,303 | |
Common stock shares | 500,000 | |
Warrants (exercise $0.25) | 0 | |
Warrants (exercise $0.75) | 0 | |
Warrants (exercise $0.20) | 0 | |
Warrants (Exercise $0.15) | 700,000 | |
Warrants (Exercise $0.50) | 0 | |
Mr. Clavijo | ||
Total debt and accrued interest | $ | $ 125,000 | |
Total debt | $ | 125,000 | |
Total accrued interest | $ | $ 0 | |
Common stock shares | 500,000 | |
Warrants (exercise $0.25) | 0 | |
Warrants (exercise $0.75) | 0 | |
Warrants (exercise $0.20) | 0 | |
Warrants (Exercise $0.15) | 0 | |
Warrants (Exercise $0.50) | 500,000 | |
Mr. Wells | ||
Total debt and accrued interest | $ | $ 220,000 | [4] |
Total debt | $ | 220,000 | [4] |
Total accrued interest | $ | $ 0 | [4] |
Common stock shares | 0 | [4] |
Warrants (exercise $0.25) | 0 | [4] |
Warrants (exercise $0.75) | 0 | [4] |
Warrants (exercise $0.20) | 0 | [4] |
Warrants (Exercise $0.15) | 0 | [4] |
Warrants (Exercise $0.50) | 0 | [4] |
[1] | The Company's COO and director, Mark Faupel, is a shareholder of Shenghuo, and a former director, Richard Blumberg, is a managing member of Shenghuo. | |
[2] | Mr. Imhoff and Mr. James are members of the board of directors and therefore related parties. | |
[3] | Ms. Rosenstock also forgave $28,986 in debt to the Company. | |
[4] | Mr. Wells will also receive 66,000 common share stock options; the details of which are explained above. |
4. STOCKHOLDERS' DEFICIT (Det_3
4. STOCKHOLDERS' DEFICIT (Details 2) | 12 Months Ended |
Dec. 31, 2020shares | |
STOCKHOLDERS' DEFICIT: | |
Warrants outstanding, beginning | 46,016,840 |
Issuances | 11,270,013 |
Canceled/expired | (70) |
Exchanged in debt restructuring | (28,962,508) |
Exercised | 0 |
Warrants outstanding, ending | 28,324,275 |
4. STOCKHOLDER'S DEFICIT (Detai
4. STOCKHOLDER'S DEFICIT (Details 3) - $ / shares | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | ||
Warrants outstanding | 28,324,275 | 46,016,840 | |
Warrants 1 | |||
Warrants outstanding | [1] | 4,262 | |
Warrants exercise price | $ 1.824 | ||
Expiration date | March 19, 2021 | ||
Warrants 2 | |||
Warrants outstanding | [2] | 7,185,000 | |
Warrants exercise price | $ .20 | ||
Expiration date | February 12, 2023 | ||
Warrants 3 | |||
Warrants outstanding | [3] | 1,725,000 | |
Warrants exercise price | $ .04 | ||
Expiration date | February 21, 2021 | ||
Warrants 4 | |||
Warrants outstanding | [4] | 325,000 | |
Warrants exercise price | $ .18 | ||
Expiration date | April 4, 2022 | ||
Warrants 5 | |||
Warrants outstanding | [5] | 215,000 | |
Warrants exercise price | $ .25 | ||
Expiration date | July 1, 2022 | ||
Warrants 6 | |||
Warrants outstanding | [6] | 100,000 | |
Warrants exercise price | $ .25 | ||
Expiration date | September 1, 2022 | ||
Warrants 7 | |||
Warrants outstanding | [7] | 7,500,000 | |
Warrants exercise price | $ .20 | ||
Expiration date | December 17, 2024 | ||
Warrants 8 | |||
Warrants outstanding | [8] | 250,000 | |
Warrants exercise price | $ .16 | ||
Expiration date | March 31, 2025 | ||
Warrant 9 | |||
Warrants outstanding | [9] | 2,597,705 | |
Warrants exercise price | $ .25 | ||
Expiration date | December 30, 2022 | ||
Warrant 10 | |||
Warrants outstanding | [9] | 2,597,705 | |
Warrants exercise price | $ .75 | ||
Expiration date | December 30, 2022 | ||
Warrant 11 | |||
Warrants outstanding | [9] | 4,713,603 | |
Warrants exercise price | $ .20 | ||
Expiration date | December 30, 2022 | ||
Warrants 12 | |||
Warrants outstanding | [10] | 60,000 | |
Warrants exercise price | $ .25 | ||
Expiration date | April 23, 2023 | ||
Warrants 13 | |||
Warrants outstanding | [11] | 50,000 | |
Warrants exercise price | $ .25 | ||
Expiration date | December 30, 2022 | ||
Warrants 14 | |||
Warrants outstanding | [11] | 50,000 | |
Warrants exercise price | $ .75 | ||
Expiration date | December 30, 2022 | ||
Warrants 15 | |||
Warrants outstanding | [12] | 700,000 | |
Warrants exercise price | $ .15 | ||
Expiration date | May 21, 2023 | ||
Warrants 16 | |||
Warrants outstanding | [13] | 250,000 | |
Warrants exercise price | $ .50 | ||
Expiration date | June 23, 2023 | ||
Warrants 17 | |||
Warrants outstanding | [14] | 1,000 | |
Warrants exercise price | $ .50 | ||
Expiration date | August 10, 2022 | ||
[1] | Issued to investors for a loan in March 2018. | ||
[2] | Exchanged in January 2020 from amount issued as part of a February 2016 private placement with senior secured debt holder. | ||
[3] | Issued to a placement agent in conjunction with a February 2016 private placement with senior secured debt holder. | ||
[4] | Issued to investors for a loan in April 2019. | ||
[5] | Issued to investors for a loan in July 2019. | ||
[6] | Issued to investors for a loan in September 2019. | ||
[7] | Issued to investors for a loan in December 2019. | ||
[8] | Issued to investors for a loan in January 2020. | ||
[9] | Issued to investors as part of Series D Preferred Stock Capital raise in December 2020. | ||
[10] | Issued to a consultant for services in April 2020. | ||
[11] | Issued to an investor as part of Series D Preferred Stock Capital raise in April 2020. | ||
[12] | Issued to an investor for a loan in May 2020. | ||
[13] | Issued to an investor in exchange of debt in June 2020. | ||
[14] | Issued to a consultant for services in August 2020. |
4. STOCKHOLDERS' DEFICIT (Det_4
4. STOCKHOLDERS' DEFICIT (Details Narrative) - $ / shares | Dec. 31, 2020 | Dec. 31, 2019 |
STOCKHOLDERS' DEFICIT: | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, authorized (in thousands) | 3,000,000 | 3,000,000 |
Common stock, issued (in thousands) | 13,138 | 3,319 |
Common stock, outstanding (in thousands) | 13,138 | 3,319 |
5. INCOME TAXES (Details)
5. INCOME TAXES (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Deferred tax assets: | ||
Warrant liability | $ 617 | $ 1,087 |
Accrued executive compensation | 519 | 515 |
Reserves and other | 421 | 468 |
Net operating loss carryforwards | 17,851 | 18,961 |
Gross deferred tax assets | 19,408 | 21,031 |
Valuation allowance | (19,408) | (21,031) |
Net deferred tax assets | $ 0 | $ 0 |
5. INCOME TAXES (Details 1)
5. INCOME TAXES (Details 1) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Statutory federal tax rate | 21.00% | 21.00% |
State taxes, net of federal benefit | 4.00% | 4.00% |
Nondeductible expenses | 0.00% | 0.00% |
Valuation allowance | (25.00%) | (25.00%) |
Effective rate | 0.00% | 0.00% |
5. INCOME TAXES (Details 2)
5. INCOME TAXES (Details 2) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Current | $ 0 | $ 0 |
Deferred | 0 | 0 |
Deferred provision (credit) | 1,623 | 434 |
Change in valuation allowance | (1,623) | (434) |
Total provision for income taxes | $ 0 | $ 0 |
5. INCOME TAXES (Details Narrat
5. INCOME TAXES (Details Narrative) $ in Thousands | Dec. 31, 2020USD ($) |
Income Tax Disclosure [Abstract] | |
NOL carryforwards | $ 71,400 |
6. STOCK OPTIONS (Details)
6. STOCK OPTIONS (Details) | 12 Months Ended | |
Dec. 31, 2020$ / sharesshares | ||
Number of stock options granted | shares | 1,800,000 | |
Exercise price | $ 0.49 | |
Cartwright, Gene | ||
Grant date | Jul. 14, 2020 | |
Expiration date | Jul. 13, 2030 | |
Vesting period | Vesting | [1] |
Number of stock options granted | shares | 400,000 | |
Exercise price | $ 0.49 | |
Black scholes valuation | $ 0.483 | |
Faupel, Mark | ||
Grant date | Jul. 14, 2020 | |
Expiration date | Jul. 13, 2030 | |
Vesting period | Vesting | [1] |
Number of stock options granted | shares | 400,000 | |
Exercise price | $ 0.49 | |
Black scholes valuation | $ 0.483 | |
Imhoff, John | ||
Grant date | Jul. 14, 2020 | |
Expiration date | Jul. 13, 2030 | |
Vesting period | Immediate | |
Number of stock options granted | shares | 50,000 | |
Exercise price | $ 0.49 | |
Black scholes valuation | $ 0.483 | |
James, Michael | ||
Grant date | Jul. 14, 2020 | |
Expiration date | Jul. 13, 2030 | |
Vesting period | Immediate | |
Number of stock options granted | shares | 50,000 | |
Exercise price | $ 0.49 | |
Black scholes valuation | $ 0.483 | |
Clavijo, James | ||
Grant date | Jul. 14, 2020 | |
Expiration date | Jul. 13, 2030 | |
Vesting period | Vesting | [1] |
Number of stock options granted | shares | 300,000 | |
Exercise price | $ 0.49 | |
Black scholes valuation | $ 0.483 | |
Battle, Lisa | ||
Grant date | Jul. 14, 2020 | |
Expiration date | Jul. 13, 2030 | |
Vesting period | Vesting | [1] |
Number of stock options granted | shares | 178,000 | |
Exercise price | $ 0.49 | |
Black scholes valuation | $ 0.483 | |
Sufka, Melissa | ||
Grant date | Jul. 14, 2020 | |
Expiration date | Jul. 13, 2030 | |
Vesting period | Vesting | [1] |
Number of stock options granted | shares | 178,000 | |
Exercise price | $ 0.49 | |
Black scholes valuation | $ 0.483 | |
Waterstreet, Alesandra | ||
Grant date | Jul. 14, 2020 | |
Expiration date | Jul. 13, 2030 | |
Vesting period | Vesting | [1] |
Number of stock options granted | shares | 178,000 | |
Exercise price | $ 0.49 | |
Black scholes valuation | $ 0.483 | |
Wells, William | ||
Grant date | Jul. 14, 2020 | |
Expiration date | Jul. 13, 2030 | |
Vesting period | 18 months | |
Number of stock options granted | shares | 66,000 | |
Exercise price | $ 0.49 | |
Black scholes valuation | $ 0.483 | |
[1] | 25% immediate and 25% each year thereafter; 36 months in total. |
6. STOCK OPTIONS (Details 1)
6. STOCK OPTIONS (Details 1) | 12 Months Ended |
Dec. 31, 2020shares | |
Share-based Payment Arrangement [Abstract] | |
Stock options vested | 641,909 |
Stock options unvested | 1,158,091 |
Total stock options granted at December 31, 2020 | 1,800,000 |
6. STOCK OPTIONS (Details 2)
6. STOCK OPTIONS (Details 2) | 12 Months Ended |
Dec. 31, 2020$ / sharesshares | |
Share-based Payment Arrangement [Abstract] | |
Options outstanding, beginning | shares | 0 |
Options granted | shares | 1,800,000 |
Options exercised | shares | 0 |
Options expired/forfeited | shares | 0 |
Options outstanding, end | shares | 1,800,000 |
Options outstanding weighted average exercise price, beginning | $ / shares | $ 0 |
Options granted weighted average exercise price | $ / shares | 0.49 |
Options exercised weighted average exercise price | $ / shares | 0 |
Options expired/forfeited weighted average exercise price | $ / shares | 0 |
Options outstanding weighted average exercise price, end | $ / shares | $ 0.49 |
8. COMMITMENTS AND CONTINGENC_3
8. COMMITMENTS AND CONTINGENCIES (Details) $ in Thousands | Dec. 31, 2020USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2021 | $ 91 |
2022 | 108 |
2023 | 112 |
2024 | 115 |
2025 | 119 |
Thereafter | 50 |
Total | 595 |
Less: interest | 147 |
Present value of lease liability | $ 448 |
9. NOTES PAYABLE (Details)
9. NOTES PAYABLE (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Notes payable in default, including related parties | $ 329 | $ 776 |
Dr. Imhoff | ||
Notes payable in default, including related parties | 0 | 199 |
Dr. Cartwright | ||
Notes payable in default, including related parties | 1 | 2 |
Ms. Rosenstock | ||
Notes payable in default, including related parties | 0 | 50 |
Mr. Fowler | ||
Notes payable in default, including related parties | 26 | 26 |
Mr. Mermelstein | ||
Notes payable in default, including related parties | 285 | 244 |
GHS | ||
Notes payable in default, including related parties | 0 | 0 |
GPB | ||
Notes payable in default, including related parties | 17 | 17 |
Aquarius | ||
Notes payable in default, including related parties | 0 | 108 |
Accilent | ||
Notes payable in default, including related parties | 0 | 58 |
Mr. Blumberg | ||
Notes payable in default, including related parties | 0 | 70 |
Mr. James | ||
Notes payable in default, including related parties | $ 0 | $ 2 |
9. NOTES PAYABLE (Details 1)
9. NOTES PAYABLE (Details 1) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Short-term notes payable, including related parties | $ 96 | $ 1,026 |
Dr. Imhoff | ||
Short-term notes payable, including related parties | 0 | 167 |
Dr. Cartwright | ||
Short-term notes payable, including related parties | 46 | 48 |
Dr. Faupel | ||
Short-term notes payable, including related parties | 5 | 5 |
Ms. Mamula | ||
Short-term notes payable, including related parties | 0 | 15 |
Mr. Case | ||
Short-term notes payable, including related parties | 0 | 150 |
Mr. Gould | ||
Short-term notes payable, including related parties | 0 | 100 |
K2 (Shenghuo) | ||
Short-term notes payable, including related parties | 0 | 203 |
Premium Finance (Insurance) | ||
Short-term notes payable, including related parties | 45 | 58 |
Everest | ||
Short-term notes payable, including related parties | 0 | 8 |
Mr. Grimm | ||
Short-term notes payable, including related parties | 0 | 49 |
Mr. Blumberg | ||
Short-term notes payable, including related parties | $ 0 | $ 223 |
10. SHORT-TERM CONVERTIBLE DE_3
10. SHORT-TERM CONVERTIBLE DEBT (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Total Convertible Notes Payable | ||
Convertible notes payable | $ (951) | $ 586 |
Shenghuo | ||
Convertible notes payable | 0 | 513 |
Auctus | ||
Convertible notes payable | 1,213 | 0 |
Eagle | ||
Convertible notes payable | 0 | 26 |
Adar | ||
Convertible notes payable | 0 | 85 |
Debt Discount and Issuance Costs to be Amortized | ||
Convertible notes payable | (262) | (9) |
Debt Discount Related to Beneficial Conversion | ||
Convertible notes payable | $ 0 | $ (29) |
11. CONVERTIBLE DEBT (Details)
11. CONVERTIBLE DEBT (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Convertible Notes in Default | ||
Convertible notes in default | $ 1,930 | $ 2,915 |
GPB | ||
Convertible notes in default | 1,709 | 2,177 |
GHS | ||
Convertible notes in default | 181 | 349 |
GHS | Note 1 | ||
Convertible notes in default | 0 | 149 |
GHS | Note 2 | ||
Convertible notes in default | 64 | 83 |
GHS | Note 3 | ||
Convertible notes in default | 14 | 14 |
GHS | Note 4 | ||
Convertible notes in default | 103 | 103 |
Auctus | ||
Convertible notes in default | 40 | 389 |
Auctus | Note 1 | ||
Convertible notes in default | 40 | 192 |
Auctus | Note 2 | ||
Convertible notes in default | 0 | 91 |
Auctus | Note 3 | ||
Convertible notes in default | 0 | 106 |
Auctus | Note 4 | ||
Convertible notes in default | $ 0 | $ 0 |
12. LONG TERM DEBT (Details)
12. LONG TERM DEBT (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Bonus | $ 1,094 | $ 1,123 |
Vacation | 34 | 41 |
Dr. Faupel | ||
Salary | 134 | 134 |
Bonus | 20 | 20 |
Vacation | 95 | 95 |
Interest on compensation | 67 | 67 |
Loans to Company | 196 | 196 |
Interest on loans | 149 | 149 |
Total outstanding prior to exchange | 661 | 661 |
Amount forgiven | (454) | |
Promissory note issued in exchange | 224 | 207 |
Interest accrued | 12 | 17 |
Balance outstanding, end of period | 236 | 224 |
Dr. Cartwright | ||
Salary | 337 | 337 |
Bonus | 675 | 675 |
Vacation | 0 | 0 |
Interest on compensation | 59 | 59 |
Loans to Company | 528 | 528 |
Interest on loans | 22 | 22 |
Total outstanding prior to exchange | 1,621 | 1,621 |
Amount forgiven | (1,302) | |
Promissory note issued in exchange | 345 | 319 |
Interest accrued | 19 | 26 |
Balance outstanding, end of period | $ 364 | $ 345 |
12. LONG TERM DEBT (Details 1)
12. LONG TERM DEBT (Details 1) - USD ($) | Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 |
Total | $ (173,251) | $ (209,096) | $ (244,941) | |
Long-Term Debt - Related Parties | ||||
2021 | $ 0 | |||
2022 | 200,000 | |||
2023 | 215,000 | |||
Total | $ 415,000 |
13. INCOME (LOSS) PER COMMON _3
13. INCOME (LOSS) PER COMMON SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Net loss | $ (401) | $ (1,921) |
Basic weighted average number of shares outstanding (in thousands) | 10,767 | 3,302 |
Net income (loss) per share (basic) | $ (0.04) | $ (0.58) |
Diluted weighted average number of shares outstanding (in thousands) | 10,767 | 3,302 |
Net income (loss) per share (diluted) | $ (0.04) | $ (0.58) |
Dilutive equity instruments (number of equivalent units) (in thousands) | 69,778 | 73,144 |
Stock Options | ||
Dilutive equity instruments (number of equivalent units) (in thousands) | 0 | 0 |
Preferred Stock | ||
Dilutive equity instruments (number of equivalent units) (in thousands) | 0 | 0 |
Convertible Debt | ||
Dilutive equity instruments (number of equivalent units) (in thousands) | 62,095 | 39,636 |
Warrants | ||
Dilutive equity instruments (number of equivalent units) (in thousands) | 7,683 | 30,208 |