Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2021 | May 17, 2021 | |
Cover [Abstract] | ||
Entity Registrant Name | GUIDED THERAPEUTICS INC | |
Entity Central Index Key | 0000924515 | |
Document Type | 10-Q/A | |
Document Period End Date | Mar. 31, 2021 | |
Amendment Flag | true | |
Amendment Description | This Amendment No. 1 on Form 10-Q/A is filed solely to amend and restate sections in Part I of Item 1 and 2 of the Form 10-Q for the quarter ended March 31, 2021, which was filed on May 21, 2021 (the “Form 10-Q”), due to a clerical error in the authorized number of shares available for the Series F preferred shares. The Company was only authorized to issue 1,500 and not 5,000 of the Series F preferred shares due to the oversubscribed offering. The amendment is then filed in order to reclassify capitalized Series F preferred shares in the amount of $3,087,000 (3,087 Series F preferred shares) to a subscription receivable, reverse of $86,553 in gain from the elimination of debt in the exchange of debt for Series F preferred shares, and to reverse $2,573 in accrued dividends for unissued series F preferred shares. In order to account for the oversubscribed series F preferred shares, the Company was required to issue a new series of preferred shares named series F-2. The series F-2 preferred shares have the same terms as provided by the series F preferred shares. No other changes to the Form 10-Q are included in this Amendment No. 1 other than as described above. This Amendment No. 1 does not modify or update any financial or other disclosures presented in the Form 10-Q other than as noted above, and does not reflect events occurring after the filing of the Form 10-Q. Accordingly, this Amendment No. 1 should be read in conjunction with the Form 10-Q, which provides information as of the date thereof. Pursuant to Rule 12b-15 under the Securities Exchange Act of 1934, as amended, this Amendment No. 1 also contains new certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, which are attached hereto. | |
Current Fiscal Year End Date | --12-31 | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Interactive Data Current | Yes | |
Entity Incorporation, State or Country Code | DE | |
Entity File Number | 0-22179 | |
Entity Common Stock, Shares Outstanding | 13,278,417 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2021 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2020 |
CURRENT ASSETS: | |||
Cash and cash equivalents | $ 1,247 | $ 182 | |
Accounts receivable, net of allowance for doubtful accounts of $126 at March 31, 2021 and December 31, 2020 | 24 | 24 | |
Inventory, net of reserves of $758 at March 31, 2021 and December 31, 2020 | 606 | 605 | |
Other current assets | 39 | 85 | |
Total current assets | 1,916 | 896 | |
NONCURRENT ASSETS: | |||
Property and equipment, net | 2 | 1 | |
Lease right-of-use asset, net of amortization | 426 | 453 | |
Other assets | 18 | 0 | |
Total noncurrent assets | 446 | 454 | |
Total assets | 2,362 | 1,350 | |
CURRENT LIABILITIES: | |||
Current portion of long-term debt | 45 | 28 | |
Note payable in default, related parties | 0 | 1 | |
Note payable in default | 296 | 328 | |
Short-term notes payable | 11 | 45 | |
Short-term notes payable, related parties, past due | 74 | 51 | |
Convertible notes in default | 110 | 0 | |
Convertible note, past due | 90 | 1,930 | |
Short-term convertible notes payable | 915 | 951 | |
Accounts payable | 2,427 | 2,419 | |
Accounts payable, related parties | 137 | 116 | |
Accrued liabilities | 4,895 | 2,995 | |
Mandatorily redeemable Series G convertible preferred stock | 125 | 0 | |
Current portion of lease liability | 42 | 56 | |
Deferred revenue | 62 | 42 | |
Total current liabilities | 9,229 | 8,962 | |
LONG-TERM LIABILITIES: | |||
Warrants, at fair value | 0 | 2,203 | |
Lease liability | 376 | 392 | |
Derivative liability | 113 | 25 | |
Long-term debt | 6 | 23 | |
Long-term debt-related parties | 573 | 600 | |
Total long-term debt | 1,068 | 3,243 | |
Total liabilities | 10,297 | 12,205 | |
Commitments & contingencies (Note 7) | |||
STOCKHOLDERS' DEFICIT: | |||
Common stock, $.001 par value; 3,000,000 shares authorized, 13,180 and 13,138 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively | 3,403 | 3,403 | |
Additional paid-in capital | 125,489 | 123,109 | |
Treasury stock, at cost | (132) | (132) | |
Accumulated deficit | (140,611) | (139,956) | |
Total stockholders' deficit | (7,935) | (10,855) | |
Total liabilities and stockholders' deficit | 2,362 | 1,350 | |
Series C Convertible Preferred Stock | |||
STOCKHOLDERS' DEFICIT: | |||
Convertible preferred stock | 105 | 105 | |
Series C-1 Convertible Preferred Stock | |||
STOCKHOLDERS' DEFICIT: | |||
Convertible preferred stock | 170 | 170 | |
Series C-2 Convertible Preferred Stock | |||
STOCKHOLDERS' DEFICIT: | |||
Convertible preferred stock | 531 | 531 | |
Series D Convertible Preferred Stock | |||
STOCKHOLDERS' DEFICIT: | |||
Convertible preferred stock | 276 | 276 | |
Series E Convertible Preferred Stock | |||
STOCKHOLDERS' DEFICIT: | |||
Convertible preferred stock | 1,639 | $ 1,639 | |
Series F Convertible Preferred Stock | |||
STOCKHOLDERS' DEFICIT: | |||
Convertible preferred stock | 1,195 | $ 0 | |
Series G Convertible Preferred Stock | |||
STOCKHOLDERS' DEFICIT: | |||
Convertible preferred stock | $ 0 | $ 0 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2020 |
CURRENT ASSETS: | |||
Accounts receivable, net of allowance | $ 126 | $ 126 | |
Inventory, net of reserves | $ 758 | $ 758 | |
STOCKHOLDERS' DEFICIT: | |||
Common stock, par value | $ .001 | $ .001 | |
Common stock, authorized (in thousands) | 3,000,000 | 3,000,000 | |
Common stock, issued (in thousands) | 13,180 | 13,138 | |
Common stock, outstanding (in thousands) | 13,180 | 13,138 | |
Series C Convertible Preferred Stock | |||
STOCKHOLDERS' DEFICIT: | |||
Preferred stock, par value | $ .001 | $ 0.001 | |
Preferred stock, authorized (in thousands) | 9 | 9 | |
Preferred stock, issued (in thousands) | .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) | 5,000 | 5,000 | |
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 | .8 | |
Preferred stock, outstanding (in thousands) | .8 | .8 | |
Preferred stock, liquidation preference | $ 763 | $ 763 | |
Series E 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) | 1.7 | 1.7 | |
Preferred stock, outstanding (in thousands) | 1.7 | 1.7 | |
Preferred stock, liquidation preference | $ 1,736 | $ 1,736 | |
Series F Convertible Preferred Stock | |||
STOCKHOLDERS' DEFICIT: | |||
Preferred stock, par value | $ 0.001 | $ 0.001 | |
Preferred stock, authorized (in thousands) | 1.5 | 1.5 | |
Preferred stock, issued (in thousands) | 1.4 | 1.4 | |
Preferred stock, outstanding (in thousands) | 1.4 | 1.4 | |
Preferred stock, liquidation preference | $ 1,421 | $ 1,421 | |
Series G Convertible Preferred Stock | |||
STOCKHOLDERS' DEFICIT: | |||
Preferred stock, par value | $ 0.001 | $ 0.001 | |
Preferred stock, authorized (in thousands) | 1,000 | 1,000 | |
Preferred stock, issued (in thousands) | 153 | 0 | |
Preferred stock, outstanding (in thousands) | 153 | 0 | |
Preferred stock, liquidation preference | $ 153 | $ 0 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
REVENUE: | ||
Sales - devices and disposables | $ 0 | $ 0 |
Cost of goods sold | 0 | 0 |
Gross profit | 0 | 0 |
OPERATING EXPENSES: | ||
Research and development | 16 | 24 |
Sales and marketing | 36 | 34 |
General and administrative | 770 | 184 |
Total operating expenses | 822 | 242 |
Operating loss | (822) | (242) |
OTHER INCOME (EXPENSES): | ||
Other income | 0 | 1 |
Interest expense | (141) | (287) |
Change in fair value of derivative liability | (88) | 0 |
Gain from extinguishment of debt | 0 | 28 |
Change in fair value of warrants | 448 | 3,228 |
Total other expenses | 219 | 2,970 |
INCOME (LOSS) INCOME BEFORE INCOME TAXES | (603) | 2,728 |
Provision for income taxes | 0 | 0 |
NET INCOME (LOSS) | (603) | 2,728 |
Preferred stock dividends | (52) | (12) |
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ (655) | $ 2,716 |
NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS | ||
Basic | $ (.050) | $ 0.542 |
Diluted | $ (.050) | $ 0.041 |
WEIGHTED AVERAGE SHARES OUTSTANDING | ||
Basic (in thousands) | 13,172 | 5,013 |
Diluted (in thousands) | 13,172 | 65,620 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT - USD ($) $ in Thousands | Preferred Stock Series C | Preferred Stock Series C1 | Preferred Stock Series C2 | Preferred Stock Series D | Preferred Stock Series E | Preferred Stock Series F | Preferred Stock Series G | Common Stock | Additional Paid-In Capital | Treasury Stock | Accumulated Deficit | Total |
Beginning balance, shares (in thousands) at Dec. 31, 2019 | 0 | 1 | 3 | 0 | 0 | 0 | 0 | 3,319 | ||||
Beginning balance, amount at Dec. 31, 2019 | $ 105 | $ 170 | $ 531 | $ 0 | $ 0 | $ 0 | $ 0 | $ 3,394 | $ 118,552 | $ (132) | $ (139,555) | $ (16,935) |
Issuance of preferred stock in financing, shares (in thousands) | 1 | |||||||||||
Issuance of preferred stock in financing, amount | $ 268 | 286 | 554 | |||||||||
Conversion of debt into common stock, shares (in thousands) | 6,957 | |||||||||||
Conversion of debt into common stock, amount | $ 7 | 2,068 | 2,075 | |||||||||
Issuance of common stock in financing, shares (in thousands) | 1,476 | |||||||||||
Issuance of common stock in financing, amount | $ 1 | 177 | 178 | |||||||||
Issuance of warrants in financing | 67 | 67 | ||||||||||
Issuance of common stock for manufacturing agreements, shares (in thousands) | 13 | |||||||||||
Issuance of common stock for manufacturing agreements, amount | $ 0 | 0 | ||||||||||
Accrued preferred dividends | 0 | |||||||||||
Net income (loss) | (12) | (12) | ||||||||||
Net income (loss) | 2,728 | 2,728 | ||||||||||
Ending balance, shares (in thousands) at Mar. 31, 2020 | 0 | 1 | 3 | 0 | 0 | 0 | 0 | 11,765 | ||||
Ending balance, amount at Mar. 31, 2020 | $ 105 | $ 170 | $ 531 | $ 0 | $ 0 | $ 0 | $ 0 | $ 3,402 | 121,150 | (132) | (136,839) | (11,345) |
Beginning balance, shares (in thousands) at Dec. 31, 2020 | 0 | 1 | 3 | 0 | 0 | 0 | 0 | 13,138 | ||||
Beginning balance, amount at Dec. 31, 2020 | $ 105 | $ 170 | $ 531 | $ 0 | $ 0 | $ 0 | $ 0 | $ 3,403 | 123,109 | (132) | (139,956) | (10,855) |
Series F preferred offering, shares | 1 | |||||||||||
Series F preferred offering, amount | $ 1,195 | 1,195 | ||||||||||
Issuance of warrants to finders | 151 | 151 | ||||||||||
Series G preferred offering, shares | 153 | |||||||||||
Series G preferred offering, amount | $ 0 | 0 | ||||||||||
Issuance of warrants in financing | 1,754 | |||||||||||
Issuance of common stock for preferred dividends, shares (in thousands) | 42 | |||||||||||
Issuance of warrants to consultants | 398 | 398 | ||||||||||
Conversion of warrants form liability to equity | 1,755 | 1,755 | ||||||||||
Issuance of common stock for preferred dividends, amount | $ 0 | 14 | 14 | |||||||||
Accrued preferred dividends | 62 | 62 | ||||||||||
Net income (loss) | (52) | (52) | ||||||||||
Net income (loss) | (603) | (603) | ||||||||||
Ending balance, shares (in thousands) at Mar. 31, 2021 | 0 | 1 | 3 | 1 | 2 | 1 | 153 | 13,180 | ||||
Ending balance, amount at Mar. 31, 2021 | $ 105 | $ 170 | $ 531 | $ 276 | $ 1,639 | $ 1,195 | $ 0 | $ 3,403 | $ 125,489 | $ (132) | $ (140,611) | $ (7,935) |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (603) | $ 2,728 |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||
Amortization of debt issuance costs and discounts | 64 | 94 |
Amortization of beneficial conversion feature | 8 | 19 |
Stock-based compensation | 62 | 0 |
Change in fair value of warrants | (448) | (3,228) |
Warrants issued for consulting services | 398 | 0 |
Gain on extinguishment of debt | 0 | (28) |
Change in fair value of derivative | 88 | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 0 | (11) |
Inventory | (1) | (9) |
Other current assets | 46 | 34 |
Other assets | (18) | 0 |
Accounts payable | 29 | (67) |
Deferred revenue | 20 | 0 |
Accrued liabilities | 658 | (62) |
Total adjustments | 906 | (3,258) |
Net cash provided (used) in operating activities | 303 | (530) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Additions to fixed assets | (1) | 0 |
Net cash used in investing activities | (1) | 0 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from Series F offering, net of costs | 1,195 | 0 |
Proceeds from Series G offering, net of costs | 125 | 0 |
Payments made on notes payable | (557) | (451) |
Proceeds from the issuance of common stock, net of costs | 0 | 103 |
Net cash provided by financing activities | 763 | (348) |
Net change in cash and cash equivalents | 1,065 | (878) |
Cash and cash equivalents, beginning of year | 182 | 899 |
Cash and cash equivalents, end of period | 1,247 | 21 |
SUPPLEMENTAL SCHEDULE OF: | ||
Cash paid for: interest | 405 | 165 |
NONCASH INVESTING AND FINANCING ACTIVITIES: | ||
Issuance of common stock as debt repayment | 0 | 1,902 |
Issuance of warrants to finders in connection with Series F preferred stock | 151 | 0 |
Issuance of common stock for accrued interest of debt repaid | 0 | 162 |
Dividends on preferred stock | 52 | 12 |
Subscription receivable | 3,087 | 635 |
Settlement of dividends through common stock issuance | 14 | 0 |
Warrants exchanged for fixed price warrants | 1,755 | 67 |
Other receivable | $ 0 | $ 100 |
1. ORGANIZATION, BACKGROUND, AN
1. ORGANIZATION, BACKGROUND, AND BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2021 | |
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. The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. Therefore, these financial statements should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 filed with the Securities and Exchange Commission (“SEC”) pursuant to Section 13 or 15(d) under the Securities Exchange Act of 1934. In the opinion of management, all adjustments (consisting of normal recurring accruals and other items) considered necessary for a fair presentation have been included. The Company’s prospects must be considered in light of the substantial risks, expenses and difficulties encountered by entrants into the medical device industry. This industry is characterized by an increasing number of participants, intense competition and a high failure rate. The Company has experienced net losses since its inception and, as of March 31, 2021, it had an accumulated deficit of approximately $140.6 million. To date, the Company has engaged primarily in research and development efforts and the early stages of marketing its products. The Company may not be successful in growing sales for its products. Moreover, required regulatory clearances or approvals may not be obtained in a timely manner, or at all. The Company’s products may not ever gain market acceptance and the Company may not ever generate significant revenues or achieve profitability. The development and commercialization of the Company’s products requires substantial development, regulatory, sales and marketing, manufacturing and other expenditures. The Company expects operating losses to continue for the foreseeable future as it continues to expend substantial resources to complete development of its products, obtain regulatory clearances or approvals, build its marketing, sales, manufacturing and finance capabilities, and conduct further research and development. Going Concern The Company’s consolidated financial statements have been prepared and presented on a basis assuming it will continue as a going concern. The factors below raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary from the outcome of this uncertainty. At March 31, 2021, the Company had a negative working capital of approximately $7.3 million, accumulated deficit of $140.6 million, and incurred a net loss of $0.7 million for the three months then ended. Stockholders’ deficit totaled approximately $8 million at March 31, 2021, primarily due to recurring net losses from operations. During the first quarter of 2021 the Company did raise $2.3 million as part of the Series F and G preferred stock capital raise. The Company will need to continue to raise capital in order to provide funding for its operations and FDA approval process. 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 28.0 million shares of its common stock outstanding at March 31, 2021, with exercise prices ranging between $0.15 and $0.75 per share. Exercises of in the money warrants would generate a total of approximately $7.3 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. SIGNIFICANT ACCOUNTING POLIC
2. SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
2. SIGNIFICANT ACCOUNTING POLICIES | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant areas where estimates are used include the allowance for doubtful accounts, inventory valuation and input variables for Black-Scholes, Monte Carlo simulations and binomial calculations. The Company uses the Monte Carlo simulations and binomial calculations in the calculation of the fair value of the warrant liabilities and the valuation of embedded conversion options and freestanding warrants. Principles of Consolidation The accompanying consolidated financial statements include the accounts of Guided Therapeutics, Inc. and its wholly owned subsidiary. All intercompany transactions are eliminated. Accounting Standard Updates In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740)”. The amendments in this ASU simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and by clarifying and amending other areas of Topic 740. The amendments in this ASU are effective for annual and interim periods beginning after December 15, 2020. We adopted this ASU on January 1, 2021 with no material impact on our consolidated financial statements. In August 2020, the FASB issued ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (ASU 2020-06), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity. Among other changes, ASU 2020-06 removes from U.S. GAAP the liability and equity separation model for convertible instruments with a cash conversion feature, and as a result, after adoption, entities will no longer separately present in equity an embedded conversion feature for such debt. Similarly, the embedded conversion feature will no longer be amortized into income as interest expense over the life of the instrument. Instead, entities will account for a convertible debt instrument wholly as debt unless (1) a convertible instrument contains features that require bifurcation as a derivative under ASC Topic 815, Derivatives and Hedging, or (2) a convertible debt instrument was issued at a substantial premium. Among other potential impacts, this change is expected to reduce reported interest expense, increase reported net income, and result in a reclassification of certain conversion feature balance sheet amounts from stockholders’ equity to liabilities as it relates to the Company’s convertible senior notes. Additionally, ASU 2020-06 requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share (EPS), which is consistent with the Company’s accounting treatment under the current standard. ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, with early adoption permitted for fiscal years beginning after December 15, 2020, and can be adopted on either a fully retrospective or modified retrospective basis. The Company has early adopted ASU No. 2020-06 under a modified retrospective basis on January 1, 2021. The result of the early adoption would have been a change to retained earnings of $102,000 for the year ended December 31, 2020. Except as noted above, the guidance issued by the FASB during the current year is not expected to have a material effect on the Company’s consolidated financial statements. 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 March 31, 2021 and December 31, 2020, our inventories were as follows (in thousands): March 31, December 31, 2021 2020 Raw materials $ 1,277 $ 1,276 Work in process 80 80 Finished goods 7 7 Inventory reserve (758 ) (758 ) Total $ 606 $ 605 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. 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 March 31, 2021 and December 31, 2020 (in thousands): March 31, December 31, 2021 2020 Equipment $ 1,043 $ 1,042 Software 652 652 Furniture and fixtures 41 41 Leasehold improvement 12 12 1,748 1,747 Less accumulated depreciation and amortization (1,746 ) (1,746 ) Total $ 2 $ 1 During the three months ended March 31, 2021 and year ended December 31, 2020, the Company disposed of approximately nil and $647,000 of property and equipment that was fully depreciated, respectively. 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 $3,000 and $4,000 for the quarter ended March 31, 2021 and 2020, 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. See Note 7: Commitments and Contingencies Accrued Liabilities Accrued liabilities are summarized as follows (in thousands): March 31, 2021 December 31, 2020 Compensation $ 888 $ 1,094 Professional fees 41 83 Subscription receivable 3,380 - Interest 256 1,517 Vacation 43 34 Preferred dividends 240 202 Other accrued expenses 47 65 Total $ 4,895 $ 2,995 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 March 31, 2021, and December 31, 2020 the Company had an outstanding amount due of $3,380,000 and nil, respectively. The balance was primarily due to series F preferred stock that was oversubscribed by cash investment and exchanged debt in the amount of $3,087,479. The Company issued 3,087 series F-2 preferred stock during the second quarter of 2021 for the $3,087,479 subscription receivable, excluding the fair value of warrants issued in conjunction with the series F-2 preferred stock and any costs to raise capital. The subscription receivable was also reduced by $56,670 for finder’s fees. 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. The Company did not have revenues for the three months ended March 31, 2021 and 2020. Significant Distributors Accounts receivable outstanding was $24,000, the outstanding amount was netted against a $126,000 allowance, which was from one distributor as of March 31, 2021 and December 31, 2020. Deferred revenue The Company defers payments received as revenue until earned based on the related contracts and applying ASC 606 as required. As of March 31, 2021, and December 31, 2020, the Company had $62,000 and $42,000 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 2020 federal and state corporate tax returns. 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. Although the Company has been experiencing recurring losses, it is obligated to file tax returns for compliance with IRS regulations and that of applicable state jurisdictions. At December 31, 2020, the Company has approximately $61.6 million of net operating losses carryforward available to next year. This net operating loss will be eligible to be carried forward for tax purposes at federal and applicable states level. A full valuation allowance has been recorded related the deferred tax assets generated from the net operating losses. The current corporate tax rate 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 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 three months ended March 31, 2021 and 2020 share-based compensation for options attributable to employees, non-employees, officers and Board members were approximately $62,000 and $5,000, 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 March 31, 2021, and 2020 the Company had approximately $509,000 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. The Company also adopted ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (ASU 2020-06), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity. Among other changes, ASU 2020-06 removes from U.S. GAAP the liability and equity separation model for convertible instruments with a cash conversion feature, and as a result, after adoption, entities will no longer separately present in equity an embedded conversion feature for such debt. 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. |
4. STOCKHOLDERS' DEFICIT
4. STOCKHOLDERS' DEFICIT | 3 Months Ended |
Mar. 31, 2021 | |
STOCKHOLDERS' DEFICIT: | |
4. STOCKHOLDERS' DEFICIT | Common Stock The Company has authorized 3,000,000,000 shares of common stock with $0.001 par value, of which 13,180,417 were issued and outstanding as of March 31, 2021. As of December 31, 2020, there were 3,000,000,000 authorized shares of common stock, of which 13,138,282 were issued and outstanding. For the three months ended March 31, 2021, the Company issued 42,135 shares of common stock as listed below: Shares issued for payments of Series D dividends 42,135 Issued during the three months ended March 31, 2021 42,135 Summary table of common stock share transactions: Balance at December 31, 2020 13,138,282 Issued in 2021 42,135 Balance at March 31, 2021 13,180,417 Investments During 2021, the Company received equity investments in the amount of $2,099,000 and incurred fees due on these investments of $131,000. These investors received a total of 1,421 Series F preferred stock (if the Investor elects to convert their Series F preferred stock, each Series F preferred stock shares converts into 4,000 shares of the Company’s common stock shares) and $678,000 was recorded as subscription receivable for the oversubscribed amounts received for the three months ended of March 31, 2021. The investors for the oversubscribed amount received Series F-2 preferred stock shares during the second quarter of 2021. During 2021, the Company finalized an investment by Power Up Lending Group Ltd. Power Up invested $132,000, net to the Company is $125,000, for 153,000 shares of Series G preferred stock. 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. Debt Exchanges - 2021 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 recorded this exchange as a subscription receivable and it will issue 2,236 series F-2 preferred stock shares in accordance with the terms of the agreement (see NOTE 10: CONVERTIBLE DEBT On February 19, 2021, the Company exchanged $100,000 and $85,000 of long-term debt for Dr. Cartwright and Dr. Faupel, T he Company recorded this exchange as a subscription receivable and it will issue 100 and 85 series F-2 preferred stock shares, respectively in accordance with the terms of the agreement during the second quarter of 2021 . On March 10, 2021, the Company exchanged $88,000 in accrued consulting fees for Mr. Blumberg. The Company recorded this exchange as a subscription receivable and it will issue 88 series F-2 preferred stock shares in accordance with the terms of the agreement during the second quarter of 2021. 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 recorded this exchange as a subscription receivable and it will issue 50 series F-2 preferred stock shares in accordance with the terms of the agreement during the second quarter of 2021 ( convertible into 200,000 common stock shares), a $150,000 unsecured note and Mr. Fowler remains on the Company health insurance plan. The note will accrue interest at the rate of 6% (18% in the event of default) on March 22, 2022 and be payable in monthly installments of $3,600 for four years, with the first payment being due on March 15, 2022. Debt Exchanges - 2020 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 2020 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. Series C Convertible Preferred Stock The board designated 9,000 shares of preferred stock as Series C Convertible Preferred Stock, (the “Series C 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 March 31, 2021 and December 31, 2020, 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 March 31, 2021 and 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 March 31, 2021 and December 31, 2020, the exercise price per share was $512,000. Series C1 Convertible Preferred Stock The board designated 20,250 shares of preferred stock as Series C1 Preferred Stock, of which 1,050 shares were issued and outstanding at March 31, 2021 and December 31, 2020. 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 March 31, 2021 and 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. 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 March 31, 2021 and 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 March 31, 2021 and 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 The Board designated 6,000 shares of preferred stock as Series D Preferred Stock, 763 of which remain outstanding. On January 8, 2020, the Company entered into a Stock Purchase Agreement with certain accredited investors (“the Series D Investors”) pursuant to all obligations under the Series D Certificate of Designation. The Series D Investors included 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 $763. The 763 Series D Preferred Shares are convertible into debt at the option of the holder during a prescribed time period. If the Series D Preferred Shares are converted, the Series D preferences are surrendered and the debt is then secured by the Company’s assets. As of March 31, 2021, none of the 763 Series E Preferred Shares have been converted to secured debt. 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. 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 January 2021, the Company issued 42,135 common stock shares for the payment of Series D Preferred Stock dividends accrued. As of March 31, 2021, the Company had accrued dividends of $14,306. Series E Convertible Preferred Stock The Board designated 6,000 shares of preferred stock as Series E Preferred Stock, 1,736 of which remain outstanding. During year ended December 31, 2020, the Company entered into a Stock Purchase Agreement with certain accredited investors (“the Series E 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 March 31, 2021, the Company had not issued shares as payment of Series E Preferred Stock dividends. As of March 31, 2021, the Company had accrued dividends of $101,957. Series F Convertible Preferred Stock The Board designated 1,500 shares of preferred stock as Series F Preferred Stock, 1,421 of which remain outstanding. During 2021, the Company entered into a Stock Purchase Agreement with certain accredited investors (“the Series F Investors”). In total, for $1,421,000 the Company issued 1,421 shares of Series F Preferred Stock. 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 Convertible 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 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. 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. Due to the mandatory redemption feature of the Series G preferred stock, the total amount of proceeds of $125,000 was recorded as a liability. Warrants The following table summarizes transactions involving the Company’s outstanding warrants to purchase common stock for the three months ended March 31, 2021: Warrants (Underlying Shares) Outstanding, January 1, 2021 28,324,275 Issuances 1,446,000 Canceled / Expired (1,729,262 ) Exercised - Outstanding, March 31, 2021 28,041,013 The Company had the following shares reserved for the warrants as of March 31, 2021: Warrants (Underlying Shares) Exercise Price Expiration Date 7,185,000 (1 ) $0.20 per share February 12, 2023 325,000 (2 ) $0.18 per share April 4, 2022 215,000 (3 ) $0.25 per share July 1, 2022 100,000 (4 ) $0.25 per share September 1, 2022 7,500,000 (5 ) $0.20 per share December 17, 2024 250,000 (6 ) $0.16 per share March 31, 2025 2,597,705 (7 ) $0.25 per share December 30, 2022 2,597,705 (8 ) $0.75 per share December 30, 2022 4,713,603 (9 ) $0.20 per share December 30, 2022 60,000 (10 ) $0.25 per share April 23, 2023 50,000 (11 ) $0.25 per share December 30, 2022 50,000 (12 ) $0.75 per share December 30, 2022 700,000 (13 ) $0.15 per share May 21, 2023 250,000 (14 ) $0.50 per share June 23, 2023 1,000 (15 ) $0.50 per share August 10, 2022 1,250,000 (16 ) $0.25 per share February 22, 2023 196,000 (17 ) $0.25 per share March 3, 2024 28,041,013 (1) Exchanged in January 2020 from amount issued as part of a February 2016 private placement with senior secured debt holder (2) Issued to investors for a loan in April 2019 (3) Issued to investors for a loan in July 2019 (4) Issued to investors for a loan in September 2019 (5) Issued to investors for a loan in December 2019 (6) Issued to investors for a loan in January 2020 (7) Issued to investors as part of Series D Preferred Stock Capital raise in December 2020 (8) Issued to investors as part of Series D Preferred Stock Capital raise in December 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 as part of Series D Preferred Stock Capital raise in April 2020 (13) Issued to an investor for a loan in May 2020 (14) Issued to an investor in exchange of debt in June 2020 (15) Issued to a consultant for services in August 2020 (16) Issued to a consultant (director) in February 2021 (17) Issued to a consultant for Series F Preferred Stock Capital raise in March 2021 Footnote (1) - 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 related party, which is partially owned by Mr. Blumberg, to provide investor and public relations services for a period of two years. As compensation for these services, the Company will issue a total of 5,000,000 warrants, broken into four tranches of 1,250,000. The warrants have a strike price of $0.25 and are subject to vesting based upon the close of the Series D offering and a minimum share price based on the 30-day VWAP. If the minimum share price per the terms of the agreement is not achieved, the warrants will expire three years after the issuance date. The warrants were valued using the Black Scholes model on the grant date of January 22, 2020, which resulted in a total fair value of $715,000. The Company did not appropriately expense the services received in connection with this agreement in 2020. The Company booked consulting expenses of $397,222 for the quarter ended March 31, 2021, which includes twelve months of expense for the year ended December 31, 2020. If the Company had properly accounted for the straight-line expensing of these services in 2020, net loss would have increased by $318,000 for a total net loss of $719,000 for the year ended December 31, 2020 and accumulated deficit would have increased to $140.2 million as of December 31, 2020. Unrecognized consulting expense to be recognized under this agreement is $317,778 as of March 31, 2021. |
10. CONVERTIBLE DEBT
10. CONVERTIBLE DEBT | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
10. CONVERTIBLE DEBT | Senior Secured Promissory Note As of March 31, 2021, all Senior Secured debt due to GPB had been exchanged for a subscription receivable, this subscription is for 2,236 Series F-2 preferred stock shares that will be issued in the second quarter of 2021, in accordance with the terms of the January 15, 2020 exchange agreement. In addition, On 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 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 March 31, 2021 and December 31, 2020, and 2019, GPB had earned approximately $35,000 in royalties that are unpaid. 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. Interest accrued on the note total $1,233,637 at December 31, 2020, 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. The warrants issued to that placement agent had expired during the three months ended March 31, 2021. 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 March 31, 2021 the note was paid in full. On December 31, 2020, the balance due on this note was $63,520 including a default penalty of $37,926. Interest accrued on the note totaled $17,816, at December 31, 2020 and is included in accrued expenses on the accompanying consolidated balance sheet. 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. As of March 31, 2021, the note was paid in full. At December 31, 2020, the balance due on this note was $14,187, including a default penalty of $4,937. Interest accrued on the note totaled $5,006 at December 31, 2020, 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 March 31, 2021 and December 31, 2020, the balance due on this note was $90,348 and $103,285, respectively and includes a default penalty of $35,285. Interest accrued on the note totals $36,906 and $39,644 at March 31, 2021 and December 31, 2020, 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 March 31, 2021, the balance was paid in full. At 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. As of March 31, 2021, the note was paid in full. 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. 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 March 31, 2021 and December 31, 2020, the note outstanding was $112,750, which consisted of unamortized balance of $8,424 of a beneficial conversion feature. In addition, as of March 31, 2021 and December 31, 2020, unamortized debt issuance costs of $2,550 and $5,100 and interest of $13,643 and $10,260 are included in accrued expenses on the accompanying consolidated balance sheet, respectively. The following table summarizes the Convertible notes (including debt in default) March 31, 2021 December 31, 2020 GPB $ - $ - $ 1,709 $ 1,709 GHS - 64 - 14 90 90 103 181 Auctus 110 110 - 40 Convertible notes, past due (including debt in default) $ 200 $ 1,930 The convertible notes payable, past due was $200,000 and $1,930,000 at March 31, 2021 and December 31, 2020, respectively. Troubled Debt Restructuring During 2021, the Company restructured debt with GPB resulting in the exchange of $1,709,000 of convertible debt. 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. As of March 31, 2021, the troubled debt restructuring for Convertible Debt, would have decreased the net loss by $449,000 and causing the per share calculation to change from .04 to .07 net loss per share. |
11. LONG TERM DEBT
11. LONG TERM DEBT | 3 Months Ended |
Mar. 31, 2021 | |
Long-term Debt, Unclassified [Abstract] | |
11. 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. 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. T he Company recorded this exchange as a subscription receivable and it will issue 100 and 85 series F-2 preferred stock shares, respectively in accordance with the terms of the agreement during the second quarter of 2021 . 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 (454 ) Total Interest accrued through December 31, 2020 29 Balance outstanding at December 31, 2020 $ 236 Exchange for Series F Preferred Stock (85 ) Interest accrued through March 31, 2021 3 Balance outstanding at March 31, 2021 $ 154 For Dr. Cartwright: Salary $ 337 Bonus 675 Interest on compensation 528 Loans to Company 196 Interest on loans 149 Total outstanding prior to exchange $ 1,621 Amount forgiven (1,302 ) Total Interest accrued through December 31, 2020 45 Balance outstanding at December 31, 2020 $ 364 Exchange for Series F Preferred Stock (100 ) Interest accrued through March 31, 2021 5 Balance outstanding at March 31, 2021 $ 269 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 recorded this exchange as a subscription receivable and it will issue 50 series F-2 preferred stock shares in accordance with the terms of the agreement during the second quarter of 2021 ( convertible into 200,000 common stock shares), a $150,000 unsecured note and Mr. Fowler remains on the Company health insurance plan. The note will accrue interest at the rate of 6% (18% in the event of default) on March 22, 2022 and be payable in monthly installments of $3,600 for four years, with the first payment being due on March 15, 2022. Future debt obligations at March 31, 2021 for Long-term Debt – Related Parties are as follows (in thousands): Year Amount 2021 $ - 2022 - 2023 456 2024 43 2025 43 Thereafter 31 Totals $ 573 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 March 31, 2021 and December 31, 2020, the outstanding balance was $50,604 and $50,477 including $420 and $293 in accrued interest, respectively. The Company was notified that the application for loan forgiveness was approved in the amount of $23,742 in principal and $234 in interest. The Company is planning on appealing the amount forgiven. 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. As of March 31, 2021, the troubled debt restructuring for Long-term Debt – Related Parties, would have decreased the net loss by $346,000 and causing the per share calculation to change from .04 to .07 net loss per share. |
12. INCOME (LOSS) PER COMMON SH
12. INCOME (LOSS) PER COMMON SHARE | 3 Months Ended |
Mar. 31, 2021 | |
Earnings Per Share [Abstract] | |
12. INCOME (LOSS) PER COMMON SHARE | Basic net income (loss) per share attributable to common stockholders, amounts are computed by dividing the net income (loss) plus preferred stock dividends and deemed dividends on preferred stock by the weighted average number of shares outstanding during the year. Diluted net income (loss) per share attributable to common stockholders amounts are computed by dividing the net income (loss) plus preferred stock dividends, deemed dividends on preferred stock, after-tax interest on convertible debt and convertible dividends by the weighted average number of shares outstanding during the year, plus Series C, Series D, Series E and Series F convertible preferred stock, Series G 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 March 31, 2021 2020 Net (loss) income $ (655 ) $ 2,716 Basic weighted average number of shares outstanding 13,172 5,013 Net (loss) income per share (basic) $ (0.050 ) $ 0.542 Diluted weighted average number of shares outstanding 13,172 65,620 Net (loss) income per share (diluted) $ (0.050 ) $ 0.0415 Dilutive equity instruments (number of equivalent units): Stock options - - Preferred stock 9,998 - Convertible debt 315 59,282 Warrants 17,400 1,325 Total Dilutive instruments 27,713 60,607 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. Troubled Debt Restructuring As provided in the preceding footnotes, several transactions met the basic criteria for troubled debt, which 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. As of March 31, 2021, the troubled debt restructuring in total would have decreased the net loss by $972,000 and causing the per share calculation to change from .04 to .11 net loss per share. |
13. SUBSEQUENT EVENTS
13. SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2021 | |
Subsequent Events [Abstract] | |
13. SUBSEQUENT EVENTS | On April 29, 2021, the Company made a $25,000 payment to an investment banker to assist in financing efforts, which will be presented within prepaid expenses as of June 30, 2021. These costs will be charged against the gross proceeds of the offering when it occurs. During May 2021, the Company entered into several securities purchase agreements for the issuance of 10.0% senior secured convertible debentures. Each debenture unit will represent a subscription price of $1,000 per debenture unit. The debentures are convertible into shares of common stock at a price of $0.50 for a period of thirty-six months from the closing date. In addition, the investors will receive one two-year warrant to purchase one common stock share at an exercise price of $0.80 per share. As of May 17, 2021, the Company had subscription agreements for 868 debentures and received a total of $868,000. |
2. SIGNIFICANT ACCOUNTING POL_2
2. SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
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 Update | In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740)”. The amendments in this ASU simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and by clarifying and amending other areas of Topic 740. The amendments in this ASU are effective for annual and interim periods beginning after December 15, 2020. We adopted this ASU on January 1, 2021 with no material impact on our consolidated financial statements. In August 2020, the FASB issued ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (ASU 2020-06), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity. Among other changes, ASU 2020-06 removes from U.S. GAAP the liability and equity separation model for convertible instruments with a cash conversion feature, and as a result, after adoption, entities will no longer separately present in equity an embedded conversion feature for such debt. Similarly, the embedded conversion feature will no longer be amortized into income as interest expense over the life of the instrument. Instead, entities will account for a convertible debt instrument wholly as debt unless (1) a convertible instrument contains features that require bifurcation as a derivative under ASC Topic 815, Derivatives and Hedging, or (2) a convertible debt instrument was issued at a substantial premium. Among other potential impacts, this change is expected to reduce reported interest expense, increase reported net income, and result in a reclassification of certain conversion feature balance sheet amounts from stockholders’ equity to liabilities as it relates to the Company’s convertible senior notes. Additionally, ASU 2020-06 requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share (EPS), which is consistent with the Company’s accounting treatment under the current standard. ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, with early adoption permitted for fiscal years beginning after December 15, 2020, and can be adopted on either a fully retrospective or modified retrospective basis. The Company has early adopted ASU No. 2020-06 under a modified retrospective basis on January 1, 2021. The result of the early adoption would have been a change to retained earnings of $102,000 for the year ended December 31, 2020. Except as noted above, the guidance issued by the FASB during the current year is not expected to have a material effect on the Company’s consolidated financial statements. 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 March 31, 2021 and December 31, 2020, our inventories were as follows (in thousands): March 31, December 31, 2021 2020 Raw materials $ 1,277 $ 1,276 Work in process 80 80 Finished goods 7 7 Inventory reserve (758 ) (758 ) Total $ 606 $ 605 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. |
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 March 31, 2021 and December 31, 2020 (in thousands): March 31, December 31, 2021 2020 Equipment $ 1,043 $ 1,042 Software 652 652 Furniture and fixtures 41 41 Leasehold improvement 12 12 1,748 1,747 Less accumulated depreciation and amortization (1,746 ) (1,746 ) Total $ 2 $ 1 During the three months ended March 31, 2021 and year ended December 31, 2020, the Company disposed of approximately nil and $647,000 of property and equipment that was fully depreciated, respectively. |
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 $3,000 and $4,000 for the quarter ended March 31, 2021 and 2020, 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. See Note 7: Commitments and Contingencies |
Accrued Liabilities | Accrued liabilities are summarized as follows (in thousands): March 31, 2021 December 31, 2020 Compensation $ 888 $ 1,094 Professional fees 41 83 Subscription receivable 3,380 - Interest 256 1,517 Vacation 43 34 Preferred dividends 240 202 Other accrued expenses 47 65 Total $ 4,895 $ 2,995 |
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 March 31, 2021, and December 31, 2020 the Company had an outstanding amount due of $3,380,000 and nil, respectively. The balance was primarily due to series F preferred stock that was oversubscribed by cash investment and exchanged debt in the amount of $3,087,479. The Company issued 3,087 series F-2 preferred stock during the second quarter of 2021 for the $3,087,479 subscription receivable, excluding the fair value of warrants issued in conjunction with the series F-2 preferred stock and any costs to raise capital. The subscription receivable was also reduced by $56,670 for finder’s fees. |
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. The Company did not have revenues for the three months ended March 31, 2021 and 2020. |
Significant Distributors | Accounts receivable outstanding was $24,000, the outstanding amount was netted against a $126,000 allowance, which was from one distributor as of March 31, 2021 and December 31, 2020. |
Deferred Revenue | The Company defers payments received as revenue until earned based on the related contracts and applying ASC 606 as required. As of March 31, 2021, and December 31, 2020, the Company had $62,000 and $42,000 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 2020 federal and state corporate tax returns. 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. Although the Company has been experiencing recurring losses, it is obligated to file tax returns for compliance with IRS regulations and that of applicable state jurisdictions. At December 31, 2020, the Company has approximately $61.6 million of net operating losses carryforward available to next year. This net operating loss will be eligible to be carried forward for tax purposes at federal and applicable states level. A full valuation allowance has been recorded related the deferred tax assets generated from the net operating losses. The current corporate tax rate 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 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 three months ended March 31, 2021 and 2020 share-based compensation for options attributable to employees, non-employees, officers and Board members were approximately $62,000 and $5,000, 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 March 31, 2021, and 2020 the Company had approximately $509,000 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. The Company also adopted ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (ASU 2020-06), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity. Among other changes, ASU 2020-06 removes from U.S. GAAP the liability and equity separation model for convertible instruments with a cash conversion feature, and as a result, after adoption, entities will no longer separately present in equity an embedded conversion feature for such debt. |
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_3
2. SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Inventory valuation | March 31, December 31, 2021 2020 Raw materials $ 1,277 $ 1,276 Work in process 80 80 Finished goods 7 7 Inventory reserve (758 ) (758 ) Total $ 606 $ 605 |
Property and equipment | March 31, December 31, 2021 2020 Equipment $ 1,043 $ 1,042 Software 652 652 Furniture and fixtures 41 41 Leasehold improvement 12 12 1,748 1,747 Less accumulated depreciation and amortization (1,746 ) (1,746 ) Total $ 2 $ 1 |
Accrued liabilities | March 31, 2021 December 31, 2020 Compensation $ 888 $ 1,094 Professional fees 41 83 Subscription receivable 3,380 - Interest 256 1,517 Vacation 43 34 Preferred dividends 240 202 Other accrued expenses 47 65 Total $ 4,895 $ 2,995 |
4. STOCKHOLDERS' DEFICIT (Table
4. STOCKHOLDERS' DEFICIT (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
STOCKHOLDERS' DEFICIT: | |
Common stock issued | Shares issued for payments of Series D dividends 42,135 Issued during the three months ended March 31, 2021 42,135 Summary table of common stock share transactions: Balance at December 31, 2020 13,138,282 Issued in 2021 42,135 Balance at March 31, 2021 13,180,417 |
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 |
Outstanding warrants | Warrants (Underlying Shares) Outstanding, January 1, 2021 28,324,275 Issuances 1,446,000 Canceled / Expired (1,729,262 ) Exercised - Outstanding, March 31, 2021 28,041,013 |
Shares reserved for warrants | Warrants (Underlying Shares) Exercise Price Expiration Date 7,185,000 (1 ) $0.20 per share February 12, 2023 325,000 (2 ) $0.18 per share April 4, 2022 215,000 (3 ) $0.25 per share July 1, 2022 100,000 (4 ) $0.25 per share September 1, 2022 7,500,000 (5 ) $0.20 per share December 17, 2024 250,000 (6 ) $0.16 per share March 31, 2025 2,597,705 (7 ) $0.25 per share December 30, 2022 2,597,705 (8 ) $0.75 per share December 30, 2022 4,713,603 (9 ) $0.20 per share December 30, 2022 60,000 (10 ) $0.25 per share April 23, 2023 50,000 (11 ) $0.25 per share December 30, 2022 50,000 (12 ) $0.75 per share December 30, 2022 700,000 (13 ) $0.15 per share May 21, 2023 250,000 (14 ) $0.50 per share June 23, 2023 1,000 (15 ) $0.50 per share August 10, 2022 1,250,000 (16 ) $0.25 per share February 22, 2023 196,000 (17 ) $0.25 per share March 3, 2024 28,041,013 (1) Exchanged in January 2020 from amount issued as part of a February 2016 private placement with senior secured debt holder (2) Issued to investors for a loan in April 2019 (3) Issued to investors for a loan in July 2019 (4) Issued to investors for a loan in September 2019 (5) Issued to investors for a loan in December 2019 (6) Issued to investors for a loan in January 2020 (7) Issued to investors as part of Series D Preferred Stock Capital raise in December 2020 (8) Issued to investors as part of Series D Preferred Stock Capital raise in December 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 as part of Series D Preferred Stock Capital raise in April 2020 (13) Issued to an investor for a loan in May 2020 (14) Issued to an investor in exchange of debt in June 2020 (15) Issued to a consultant for services in August 2020 (16) Issued to a consultant (director) in February 2021 (17) Issued to a consultant for Series F Preferred Stock Capital raise in March 2021 |
10. CONVERTIBLE DEBT (Tables)
10. CONVERTIBLE DEBT (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Convertible notes in default | March 31, 2021 December 31, 2020 GPB $ - $ - $ 1,709 $ 1,709 GHS - 64 - 14 90 90 103 181 Auctus 110 110 - 40 Convertible notes, past due (including debt in default) $ 200 $ 1,930 |
11. LONG TERM DEBT (Tables)
11. LONG TERM DEBT (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Long-term Debt, Unclassified [Abstract] | |
Long-term debt, related parties | 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 (454 ) Total Interest accrued through December 31, 2020 29 Balance outstanding at December 31, 2020 $ 236 Exchange for Series F Preferred Stock (85 ) Interest accrued through March 31, 2021 3 Balance outstanding at March 31, 2021 $ 154 For Dr. Cartwright: Salary $ 337 Bonus 675 Interest on compensation 528 Loans to Company 196 Interest on loans 149 Total outstanding prior to exchange $ 1,621 Amount forgiven (1,302 ) Total Interest accrued through December 31, 2020 45 Balance outstanding at December 31, 2020 $ 364 Exchange for Series F Preferred Stock (100 ) Interest accrued through March 31, 2021 5 Balance outstanding at March 31, 2021 $ 269 |
Long-term debt, related parties debt obligations | Year Amount 2021 $ - 2022 - 2023 456 2024 43 2025 43 Thereafter 31 Totals $ 573 |
12. INCOME (LOSS) PER COMMON _2
12. INCOME (LOSS) PER COMMON SHARE (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Earnings Per Share [Abstract] | |
Earnings per share | In thousands March 31, 2021 2020 Net (loss) income $ (655 ) $ 2,716 Basic weighted average number of shares outstanding 13,172 5,013 Net (loss) income per share (basic) $ (0.050 ) $ 0.542 Diluted weighted average number of shares outstanding 13,172 65,620 Net (loss) income per share (diluted) $ (0.050 ) $ 0.0415 Dilutive equity instruments (number of equivalent units): Stock options - - Preferred stock 9,998 - Convertible debt 315 59,282 Warrants 17,400 1,325 Total Dilutive instruments 27,713 60,607 |
1. ORGANIZATION, BACKGROUND, _2
1. ORGANIZATION, BACKGROUND, AND BASIS OF PRESENTATION (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Common stock, issued (in thousands) | 13,180 | 13,138 | |
Common stock, outstanding (in thousands) | 13,180 | 13,138 | |
Working capital | $ (7,300) | ||
Accumulated deficit | (140,611) | (139,956) | |
Net income (loss) | (603) | $ 2,728 | |
Stockholders' deficit | $ (7,935) | $ (10,855) |
2. SIGNIFICANT ACCOUNTING POL_4
2. SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Accounting Policies [Abstract] | ||
Raw materials | $ 1,277 | $ 1,276 |
Work in process | 80 | 80 |
Finished goods | 7 | 7 |
Inventory reserve | (758) | (758) |
Total | $ 606 | $ 605 |
2. SIGNIFICANT ACCOUNTING POL_5
2. SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Property and equipment, gross | $ 1,748 | $ 1,747 |
Less accumulated depreciation and amortization | (1,746) | (1,746) |
Property and equipment, net | 2 | 1 |
Equipment | ||
Property and equipment, gross | 1,043 | 1,042 |
Software | ||
Property and equipment, gross | 652 | 652 |
Furniture and Fixtures | ||
Property and equipment, gross | 41 | 41 |
Leasehold Improvement | ||
Property and equipment, gross | $ 12 | $ 12 |
2. SIGNIFICANT ACCOUNTING POL_6
2. SIGNIFICANT ACCOUNTING POLICIES (Details 2) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Accounting Policies [Abstract] | ||
Compensation | $ 888 | $ 1,094 |
Professional fees | 41 | 83 |
Subscritpion receivable | 3,380 | 0 |
Interest | 256 | 1,517 |
Vacation | 43 | 34 |
Preferred dividends | 240 | 202 |
Other accrued expenses | 47 | 65 |
Total | $ 4,895 | $ 2,995 |
2. SIGNIFICANT ACCOUNTING POL_7
2. SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Accounting Policies [Abstract] | |||
Disposal of property and equipment | $ 647 | $ 0 | |
Patent costs | 3 | $ 4 | |
Lease asset-right | 426 | 453 | |
Lease liability | 418 | ||
Subscription receivable | 3,380 | 0 | |
Finders fee | 57 | 0 | |
Accounts receivable outstanding | 24 | 24 | |
Accounts receivable, net of allowance | 126 | 126 | |
Deferred revenue | 62 | 42 | |
Share-based compensation | 62 | $ 0 | |
Unrecognized compensation costs | $ 509 | $ 0 |
4. STOCKHOLDERS' DEFICIT (Detai
4. STOCKHOLDERS' DEFICIT (Details) | 3 Months Ended |
Mar. 31, 2021shares | |
STOCKHOLDERS' DEFICIT: | |
Shares issued for payment of Series D dividends | 42,135 |
Issued during the nine months ended September 30, 2020 | 42,135 |
Stock issued, beginning | 13,138,282 |
Issued in 2021 | 42,135 |
Stock issued, ending | 13,180,417 |
4. STOCKHOLDERS' DEFICIT (Det_2
4. STOCKHOLDERS' DEFICIT (Details 1) $ in Thousands | 3 Months Ended |
Mar. 31, 2021USD ($)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 |
Total debt | $ | 771,927 |
Total accrued interest | $ | $ 31,726 |
Common stock shares | 1,905,270 |
Warrants (exercise $0.25) | 704,334 |
Warrants (exercise $0.75) | 704,334 |
Warrants (exercise $0.20) | 496,602 |
Warrants (Exercise $0.15) | 0 |
Warrants (Exercise $0.50) | 0 |
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 |
Total debt | $ | 363,480 |
Total accrued interest | $ | $ 36,937 |
Common stock shares | 1,699,255 |
Warrants (exercise $0.25) | 100,944 |
Warrants (exercise $0.75) | 100,944 |
Warrants (exercise $0.20) | 1,497,367 |
Warrants (Exercise $0.15) | 0 |
Warrants (Exercise $0.50) | 0 |
Ms. Rosenstock | |
Total debt and accrued interest | $ | $ 50,000 |
Total debt | $ | 50,000 |
Total accrued interest | $ | $ 0 |
Common stock shares | 100,000 |
Warrants (exercise $0.25) | 50,000 |
Warrants (exercise $0.75) | 50,000 |
Warrants (exercise $0.20) | 0 |
Warrants (Exercise $0.15) | 0 |
Warrants (Exercise $0.50) | 0 |
Mr. James | |
Total debt and accrued interest | $ | $ 2,286 |
Total debt | $ | 2,000 |
Total accrued interest | $ | $ 286 |
Common stock shares | 7,745 |
Warrants (exercise $0.25) | 1,227 |
Warrants (exercise $0.75) | 1,227 |
Warrants (exercise $0.20) | 5,291 |
Warrants (Exercise $0.15) | 0 |
Warrants (Exercise $0.50) | 0 |
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 |
Total debt | $ | 220,000 |
Total accrued interest | $ | $ 0 |
Common stock shares | 0 |
Warrants (exercise $0.25) | 0 |
Warrants (exercise $0.75) | 0 |
Warrants (exercise $0.20) | 0 |
Warrants (Exercise $0.15) | 0 |
Warrants (Exercise $0.50) | 0 |
4. STOCKHOLDERS' DEFICIT (Det_3
4. STOCKHOLDERS' DEFICIT (Details 2) | 3 Months Ended |
Mar. 31, 2021shares | |
STOCKHOLDERS' DEFICIT: | |
Warrants outstanding, beginning | 28,324,275 |
Issuances | 1,446,000 |
Canceled/expired | (1,729,262) |
Exercised | 0 |
Warrants outstanding, ending | 28,041,013 |
4. STOCKHOLDERS' DEFICIT (Det_4
4. STOCKHOLDERS' DEFICIT (Details 3) - $ / shares | 3 Months Ended | ||
Mar. 31, 2021 | Dec. 31, 2020 | ||
Warrants outstanding | 28,041,013 | 28,324,275 | |
Warrants 1 | |||
Warrants outstanding | [1] | 7,185,000 | |
Warrants exercise price | $ 0.2 | ||
Expiration date | 12-Feb-23 | ||
Warrants 2 | |||
Warrants outstanding | [2] | 325,000 | |
Warrants exercise price | $ 0.18 | ||
Expiration date | 4-Apr-22 | ||
Warrants 3 | |||
Warrants outstanding | [3] | 215,000 | |
Warrants exercise price | $ 0.25 | ||
Expiration date | 1-Jul-22 | ||
Warrants 4 | |||
Warrants outstanding | [4] | 100,000 | |
Warrants exercise price | $ 0.25 | ||
Expiration date | 1-Sep-22 | ||
Warrants 5 | |||
Warrants outstanding | [5] | 7,500,000 | |
Warrants exercise price | $ 0.2 | ||
Expiration date | 17-Dec-24 | ||
Warrants 6 | |||
Warrants outstanding | [6] | 250,000 | |
Warrants exercise price | $ 0.16 | ||
Expiration date | 31-Mar-25 | ||
Warrants 7 | |||
Warrants outstanding | [7] | 2,597,705 | |
Warrants exercise price | $ 0.25 | ||
Expiration date | 30-Dec-22 | ||
Warrants 8 | |||
Warrants outstanding | [7] | 2,597,705 | |
Warrants exercise price | $ 0.75 | ||
Expiration date | 30-Dec-22 | ||
Warrant 9 | |||
Warrants outstanding | [7] | 4,713,603 | |
Warrants exercise price | $ 0.2 | ||
Expiration date | 30-Dec-22 | ||
Warrant 10 | |||
Warrants outstanding | [8] | 60,000 | |
Warrants exercise price | $ 0.25 | ||
Expiration date | 23-Apr-23 | ||
Warrant 11 | |||
Warrants outstanding | [9] | 50,000 | |
Warrants exercise price | $ 0.25 | ||
Expiration date | 30-Dec-22 | ||
Warrant 12 | |||
Warrants outstanding | [9] | 50,000 | |
Warrants exercise price | $ 0.75 | ||
Expiration date | 30-Dec-22 | ||
Warrant 13 | |||
Warrants outstanding | [10] | 700,000 | |
Warrants exercise price | $ 0.15 | ||
Expiration date | 21-May-23 | ||
Warrant 14 | |||
Warrants outstanding | [11] | 250,000 | |
Warrants exercise price | $ 0.5 | ||
Expiration date | 23-Jun-23 | ||
Warrant 15 | |||
Warrants outstanding | [12] | 1,000 | |
Warrants exercise price | $ 0.5 | ||
Expiration date | 10-Aug-22 | ||
Warrant 16 | |||
Warrants outstanding | [13] | 1,250,000 | |
Warrants exercise price | $ 0.25 | ||
Expiration date | 22-Feb-23 | ||
Warrant 17 | |||
Warrants outstanding | [14] | 196,000 | |
Warrants exercise price | $ 0.25 | ||
Expiration date | 3-Mar-24 | ||
[1] | Exchanged in January 2020 from amount issued as part of a February 2016 private placement with senior secured debt holder | ||
[2] | Issued to investors for a loan in April 2019 | ||
[3] | Issued to investors for a loan in July 2019 | ||
[4] | Issued to investors for a loan in September 2019 | ||
[5] | Issued to investors for a loan in December 2019 | ||
[6] | Issued to investors for a loan in January 2020 | ||
[7] | Issued to investors as part of Series D Preferred Stock Capital raise in December 2020 | ||
[8] | Issued to a consultant for services in April 2020 | ||
[9] | Issued to an investor as part of Series D Preferred Stock Capital raise in April 2020 | ||
[10] | Issued to an investor for a loan in May 2020 | ||
[11] | Issued to an investor in exchange of debt in June 2020 | ||
[12] | Issued to a consultant for services in August 2020 | ||
[13] | Issued to a consultant (director) in February 2021 | ||
[14] | Issued to a consultant for Series F Preferred Stock Capital raise in March 2021 |
4. STOCKHOLDERS' DEFICIT (Det_5
4. STOCKHOLDERS' DEFICIT (Details Narrative) - $ / shares | Mar. 31, 2021 | Dec. 31, 2020 |
STOCKHOLDERS' DEFICIT: | ||
Common stock, par value | $ .001 | $ .001 |
Common stock, authorized (in thousands) | 3,000,000 | 3,000,000 |
Common stock, issued (in thousands) | 13,180 | 13,138 |
Common stock, outstanding (in thousands) | 13,180 | 13,138 |
10. CONVERTIBLE DEBT IN DEFAULT
10. CONVERTIBLE DEBT IN DEFAULT (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Convertible Notes Past Due | ||
Convertible notes in default | $ 200 | $ 1,930 |
GPB | ||
Convertible notes in default | 0 | 1,709 |
GHS | ||
Convertible notes in default | 90 | 181 |
GHS | Note 1 | ||
Convertible notes in default | 0 | 64 |
GHS | Note 2 | ||
Convertible notes in default | 0 | 14 |
GHS | Note 3 | ||
Convertible notes in default | 90 | 103 |
Auctus | ||
Convertible notes in default | $ 110 | $ 40 |
11. LONG TERM DEBT (Details)
11. LONG TERM DEBT (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2021 | Dec. 31, 2020 | |
Bonus | $ 888 | $ 1,094 |
Vacation | 43 | 34 |
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 | (454) | |
Total interest accrued | 29 | |
Promissory note issued in exchange | (85) | |
Interest accrued | 3 | |
Balance outstanding, end of period | 154 | 236 |
Dr. Cartwright | ||
Salary | 337 | |
Bonus | 675 | |
Vacation | 0 | |
Interest on compensation | 528 | |
Loans to Company | 196 | |
Interest on loans | 149 | |
Total outstanding prior to exchange | 1,621 | |
Amount forgiven | (1,302) | |
Total interest accrued | 45 | |
Promissory note issued in exchange | (100) | |
Interest accrued | 5 | |
Balance outstanding, end of period | $ 269 | $ 364 |
11. LONG TERM DEBT (Details 1)
11. LONG TERM DEBT (Details 1) - Long-Term Debt - Related Parties $ in Thousands | Mar. 31, 2021USD ($) |
2021 | $ 0 |
2022 | 0 |
2023 | 456 |
2024 | 43 |
2025 | 43 |
Thereafter | 31 |
Total | $ 573 |
12. INCOME (LOSS) PER COMMON _3
12. INCOME (LOSS) PER COMMON SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Net loss | $ (655) | $ 2,716 |
Basic weighted average number of shares outstanding (in thousands) | 13,172 | 5,013 |
Net income (loss) per share (basic) | $ (.050) | $ 0.542 |
Diluted weighted average number of shares outstanding (in thousands) | 13,172 | 65,620 |
Net (loss) income per share (diluted) | $ (.050) | $ 0.041 |
Dilutive equity instruments (number of equivalent units) (in thousands) | 27,713 | 60,607 |
Stock Options | ||
Dilutive equity instruments (number of equivalent units) (in thousands) | 0 | 0 |
Preferred Stock | ||
Dilutive equity instruments (number of equivalent units) (in thousands) | 9,998 | 0 |
Convertible Debt | ||
Dilutive equity instruments (number of equivalent units) (in thousands) | 315 | 59,282 |
Warrants | ||
Dilutive equity instruments (number of equivalent units) (in thousands) | 17,400 | 1,325 |