S-1/A

As filed with the Securities and Exchange Commission on June 29, 2022

Registration No. 333-259871

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form S-1/A

Amendment No. 3

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 GUIDED THERAPEUTICS, INC.

 (Exact name of Registrant as specified in its charter)

Delaware	3845	58-2029543
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

5835 Peachtree Corners East, Suite B

Norcross, Georgia

(770) 242-8723

(Address, including zip code and telephone number, including area code, of registrant’s principal executive offices)

Mr. Gene S. Cartwright, Ph.D.

President and Chief Executive Officer

5835 Peachtree Corners East, Suite B

Norcross, Georgia

(770) 242-8723

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 Copies to:

Robert F. Charron, Esq. Sarah E. Williams, Esq. Ellenoff Grossman & Schole LLP 1345 Avenue of the Americas New York, New York 10105 Phone: (212) 370-1300 Fax: (212) 370-7889 M. Ali Panjwani, Esq. Michael T. Campoli, Esq. Pryor Cashman LLP 7 Times Square New York, New York 10036 Phone: (212) 421-4100

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended, check the following box. ☒

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated filer	☐	Accelerated filer	☐
Non-accelerated Filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Commission acting pursuant to said Section 8(a), may determine.

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The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting offers to buy these securities in any state or other jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED June 29, 2022

PRELIMINARY PROSPECTUS

Up to 890,000 Shares of Common Stock

and

Up to 178,000 Pre-Funded Warrants to Purchase Shares of Common Stock

and

890,000 Warrants to Purchase Shares of Common Stock

Guided Therapeutics, Inc.

We are offering 890,000 shares of common stock pursuant to this prospectus at a public offering price of $10.00 per share, together with warrants (“Public Warrants”) to purchase shares of common stock. Each Public Warrant is exercisable to purchase one share of common stock at an exercise price of $12.40, exercisable upon issuance and will expire five years from the date of issuance. The shares of common stock and Public Warrants will be separately issued, but the shares and warrants will be issued and sold to purchasers together. This prospectus also relates to the offering of the shares of common stock issuable upon exercise of Public Warrants.

We are also offering to certain purchasers whose purchase of common stock in this offering that would otherwise result in the purchaser, together with its affiliates and certain related parties, beneficially owning more than 4.99% (or, at the election of the purchaser, 9.99%) of the outstanding shares of our common stock immediately following the consummation of this offering, the opportunity to purchase, if any such purchaser so chooses, up to 178,000 pre-funded warrants, in lieu of shares of common stock that would otherwise result in such purchaser’s beneficial ownership exceeding 4.99% (or, at the election of the purchaser, 9.99%) of the outstanding shares of our common stock. Each pre-funded warrant will be exercisable for one share of common stock. The purchase price of each pre-funded warrant and the accompanying Public Warrant will be equal to the price at which a share of common stock and accompanying Public Warrant are sold to the public in this offering, minus $0.001, and the exercise price of each pre-funded warrant will be $0.001 per share of common stock. The pre-funded warrants will be immediately exercisable and may be exercised at any time until all of the pre-funded warrants are exercised in full. This offering also relates to the shares of common stock issuable upon exercise of any pre-funded warrants sold in this offering. Each pre-funded warrant is being sold together with one Public Warrant. For each pre-funded warrant we sell, the number of shares of common stock we are offering will be decreased on a one-for-one basis. Because we will issue one Public Warrant for each share of common stock and for each pre-funded warrant to purchase one share of common stock sold in this offering, the number of Public Warrants sold in this offering will not change as a result of a change in the mix of the shares of common stock and pre-funded warrants sold. The shares of common stock and pre-funded warrants, and the accompanying Public Warrants, can only be purchased together in this offering but will be issued separately and will be immediately separable upon issuance.

Our common stock is currently quoted under the symbol “GTHP” on the OTC Markets. We have applied to list our common stock and the Public Warrants offered pursuant to this prospectus on the Nasdaq Capital Market (“Nasdaq”) under the symbols “GTHP” and “GTHPW”, respectively. The successful listing of our common stock and Public Warrants on Nasdaq is a condition of this offering. No assurance can be given that our application will be approved. We do not intend to apply for listing of the pre-funded warrants on any national securities exchange or trading system.

Investing in our common stock involves a high degree of risk. Please read “Risk Factors” beginning on page 11 of this prospectus.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

	Per Common Share and related Public Warrant		Per Pre-Funded Warrant and related Public Warrant		Total
Public offering price	$	10.00	$	10.00	$	8,900,000
Underwriting discount(1)(2)	$	.70	$	.70	$	541,000
Proceeds, before expenses, to us	$	9.30	$	9.30	$	8,359,000

(1)	Does not include our obligation to reimburse the underwriters for their expenses in an amount not to exceed $100,000. We refer you to “Underwriting” beginning on page 94 of this prospectus for information regarding expenses reimbursable by us to the underwriter.
(2)	The public offering price and underwriting discount corresponds to (x)(i) a public offering price per share of common stock of $9.99 and (ii) a public offering price per Public Warrant of $0.01, and (y)(i) a public offering price per pre-funded warrant of $9.989 and (ii) a public offering price per Public Warrant of $0.01.
(3)	The underwriters may also exercise their option to purchase up to an additional shares of common stock and/or Public Warrants to purchase up to an aggregate of shares of common stock from us, in any combination thereof, at the public offering price, less the underwriting discounts and commissions, for 45 days after the date of this prospectus.

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Roth Capital Partners

Prospectus dated    , 2022.

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TABLE OF CONTENTS

ABOUT THIS PROSPECTUS	6
PROSPECTUS SUMMARY	7
RISK FACTORS	16
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS	31
USE OF PROCEEDS	33
DIVIDEND POLICY	34
CAPITALIZATION	36
DILUTION	39
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	40
BUSINESS	48
REGULATORY OVERVIEW	56
MANAGEMENT	58
EXECUTIVE COMPENSATION	60
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS	63
PRINCIPAL STOCKHOLDERS	64
DESCRIPTION OF SECURITIES	66
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS	76
UNDERWRITING	87
LEGAL MATTERS	90
EXPERTS	90
ADDITIONAL INFORMATION	90
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS	F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	F-2
PART II INFORMATION NOT REQUIRED IN PROSPECTUS	II-1

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ABOUT THIS PROSPECTUS

Neither we nor the underwriters have authorized anyone to provide you with information different from, or in addition to, that contained in this prospectus or any free writing prospectus prepared by or on behalf of us or to which we may have referred you in connection with this offering. We take no responsibility for and can provide no assurance as to the reliability of, any other information that others may give you. Neither we nor the underwriters are making an offer to sell or seeking offers to buy these securities in any jurisdiction where, or to any person to whom, the offer or sale is not permitted. The information in this prospectus is accurate only as of the date on the front cover of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our securities and the information in any free writing prospectus that we may provide you in connection with this offering is accurate only as of the date of that free writing prospectus. Our business, financial condition, results of operations and future growth prospects may have changed since those dates.

We obtained the industry, market and competitive position data in this prospectus from our own internal estimates and research as well as from industry and general publications and research surveys and studies conducted by third parties. This information involves many assumptions and limitations, and you are cautioned not to give undue weight to these estimates. We have not independently verified the accuracy or completeness of the data contained in these industry publications and reports. The industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors, including those described in “Risk Factors,” that could cause results to differ materially from those expressed in these.

This prospectus contains references to our trademark and to trademarks belonging to other entities. Solely for convenience, trademarks and trade names referred to in this prospectus, including logos, artwork and other visual displays, may appear without the ® or ™ symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other companies’ trade names or trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

Unless otherwise indicated, references in this prospectus to “$”, “dollars”, “USD” or “United States dollars” are to United States dollars.

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PROSPECTUS SUMMARY

This summary highlights information contained in other parts of this prospectus. Because it is only a summary, it does not contain all of the information that you should consider before investing in our securities and it is qualified in its entirety by, and should be read in conjunction with, the more detailed information appearing elsewhere in this prospectus. Investing in our securities involves a high degree of risk. You should carefully consider the risks and uncertainties described below, together with all of the other information in this prospectus, including our financial statements and related notes, before investing in our securities. If any of the following risks materialize, our business, financial condition, operating results and prospects could be materially and adversely affected. In that event, the price of our securities could decline, and you could lose part or all of your investment.

Unless the context indicates otherwise, as used in this prospectus, the terms “Guided,” “Guided Therapeutics,” “we,” “us,” “our,” “our company” and “our business” refer to Guided Therapeutics, Inc.

On December 30, 2021 our Board approved a 1-for-20 reverse stock split of all outstanding shares of our common stock, and the Company filed a Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Company with the Secretary of State of the State of Delaware (the “Certificate of Amendment”) to effect the Reverse Stock Split. An Issuer Company Related Action Notification regarding a reverse stock split (the “Reverse Stock Split”) was submitted to Financial Industry Regulatory Authority (“FINRA”) on November 18, 2021, which was approved on May 9, 2022 and will be effective on the approximate date of the Nasdaq uplisting and financing, expected to be on or near June 30, 2022. Throughout this prospectus, references to a number of our issued and outstanding shares of common gives effect to the Reverse Stock Split, unless otherwise indicated.

Our Company

Overview

We are a medical technology company focused on developing innovative medical devices that have the potential to improve healthcare. Our primary focus is the sales and marketing of our LuViva® Advanced Cervical Scan non-invasive cervical cancer detection device. The underlying technology of LuViva primarily relates to the use of biophotonics for the non-invasive detection of cancers. LuViva is designed to identify cervical cancers and precancers painlessly, non-invasively and at the point of care by scanning the cervix with light, then analyzing the reflected and fluorescent light.

LuViva is designed to provide a less invasive and painless alternative to conventional tests for cervical cancer screening and detection. Additionally, LuViva is designed to improve patient well-being not only because it eliminates pain, but also because it is convenient to use and provides rapid results at the point of care. We focus on two primary applications for LuViva: first, as a cancer screening tool in the developing world, where infrastructure to support traditional cancer-screening methods is limited or non-existent, and second, as a triage following traditional screening in the developed world, where a high number of false positive results cause a high rate of unnecessary and ultimately costly follow-up tests.

Screening for cervical cancer represents one of the most significant demands on the practice of diagnostic medicine. As cervical cancer is linked to a sexually transmitted disease -the human papillomavirus (HPV)-every woman essentially becomes “at risk” for cervical cancer simply after becoming sexually active. In the developing world, there are approximately 2.0 billion women aged 15 and older who are potentially eligible for screening with LuViva. Guidelines for screening intervals vary across the world, but U.S. guidelines call for screening every three years. Traditionally, the Pap smear screening test, or Pap test, is the primary cervical cancer screening methodology in the developed world. However, in developing countries, cancer screening using Pap tests is expensive and requires infrastructure and skill not currently existing, and not likely to be developed in the near future, in these countries.

We believe LuViva is the answer to the developing world’s cervical cancer screening needs. Screening for cervical cancer in the developing world often requires working directly with foreign governments or non-governmental agencies (NGOs). By partnering with governments or NGOs, we can provide immediate access to cervical cancer detection to large segments of a nation’s population as part of national or regional governmental healthcare programs, eliminating the need to develop expensive and resource-intensive infrastructures.

In the developed world, we believe LuViva offers a more accurate and ultimately cost-effective triage medical device, to be used once a traditional Pap test or HPV test indicates the possibility of cervical cancer. Due to the high number of false positive results from Pap tests, traditional follow-on tests entail increased medical treatment costs. We believe these costs can be minimized by utilizing LuViva as a triage to determine whether and to what degree follow-on tests are warranted.

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We believe our non-invasive cervical cancer detection technology can be applied to the early detection of other cancers as well. For example, we have developed prototypes and conducted limited clinical studies using our biophotonic technology for the detection of esophageal cancer. We believe that skin cancer detection is also a promising target for our biophotonic technology, but currently we are focused primarily on the large-scale commercialization of LuViva.

Our Potential Market

The Developing World

According to the most recent data published by the World Health Organization (WHO), cervical cancer is the fourth most frequent cancer in women worldwide, with an estimated 570,000 new cases in 2018, an increase of 40,000 cases from 2012. For women living in less developed regions, however, cervical cancer is the second most common cancer, and 9 out of 10 women who die from cervical cancer reside in low- and middle-income countries. In 2018, GLOBOCAN, the international cancer tracking agency, estimated that approximately 311,000 women died from cervical cancer, with 85% of these deaths occurring in low- and middle-income countries.

As noted by the WHO, in developed countries, programs are in place that enable women to get screened, making most pre-cancerous lesions identifiable at stages when they can easily be treated. Early treatment prevents up to 80% of cervical cancers in these countries. In developing countries, however, limited access to effective screening means that the disease is often not identified until it is further advanced and symptoms develop. In addition, prospects for treatment of such late-stage disease may be poor, resulting in a higher rate of death from cervical cancer in these countries.

We have executed formal distribution agreement covering 40 countries, some of which have since expired. Presently, we still have active contracts in place for 24 countries that cover roughly half of the world’s population, including China and certain countries in Southeast Asia (including Indonesia), and certain countries in Eastern Europe and Russia.

We believe that the greatest need and market opportunity for LuViva lies in screening for cervical cancer in developing countries where the infrastructure for traditional screening may be limited or non-existent.

In addition to private care markets, we are actively working with distributors in the following countries to implement government-sponsored screening programs: Turkey, Indonesia and several countries in Eastern Europe. The number of screening candidates in those countries is approximately 155 million.

The Developed World

The Pap test, which involves a sample of cervical tissue being placed on a slide and observed in a laboratory, is currently the most common form of cervical cancer screening. Since the introduction of screening and diagnostic methods, the number of cervical cancer deaths in the developed world has declined dramatically, due mainly to the increased use of the Pap test. However, the Pap test has a wide variation in sensitivity, which is the ability to detect the disease, and specificity, which is the ability to exclude false positives. A study by Duke University for the U.S. Agency for Health Care Policy and Research published in 1999 showed Pap test performance ranging from a 22%-95% sensitivity and 78%-90% specificity, although new technologies improving the sensitivity and specificity of the Pap test have recently been introduced and are finding acceptance in the marketplace. Currently, about 50 million Pap tests are given annually in the United States, and combined with a pelvic exam as the standard of care, has an average price of approximately $380 per exam.

After a Pap test returns a positive result for cervical cancer, accepted protocol calls for a visual examination of the cervix using a colposcope, usually followed by a biopsy, or tissue sampling, at one or more locations on the cervix. This method looks for visual changes attributable to cancer. There are about two million colposcope examinations annually in the United States and Europe. According to industry reports by MD Save and Costhelper Health, leading online medical service providers, the average cost of a colposcopy examination with biopsy in the United States is currently $943.

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Given this landscape, we believe that there is a material need and market opportunity for LuViva as a triage device in the developed world where LuViva represents a more cost- effective method of verifying a positive Pap test than the alternatives.

The LuViva Advanced Cervical Scan

LuViva is designed to identify cervical cancers and precancers painlessly, non-invasively and at the point of care by scanning the cervix with light, then analyzing the light reflected from the cervix. The information presented by the light would be used to indicate the likelihood of cervical cancer or precancers. Our product, in addition to detecting the structural changes attributed to cervical cancer, is also designed to detect the biochemical changes that precede the development of visual lesions. In this way, cervical cancer may be detected earlier in its development, which should increase the chances of effective treatment. In addition to the device itself, operation of LuViva requires employment of our single-use, disposable calibration and alignment cervical guide.

To date, thousands of women in multiple international clinical settings have been tested with LuViva. As a result, more than 25 papers and presentations have been published regarding LuViva in a clinical setting, including at the International Federation of Gynecology and Obstetrics Congress in London in 2015 and at the Indonesian National Obstetrics and Gynecology (POGI) Meeting in Solo in 2016.

Internationally, we contract with country-specific or regional distributors. We believe that the international market will be significantly larger than the U.S. market due to the international demand for cervical cancer screening. We have executed formal distribution agreements covering over 40 countries, some of which have expired. We still have active contracts in place for countries including China and Southeast Asia (including Indonesia), Eastern Europe and Russia. In 2022, we intend to focus on other large markets such as those in the European Union, India and certain Latin American countries, such as Mexico. The ongoing conflict in Ukraine may delay filing and approval to market in Russia.

We currently have regulatory approval to sell LuViva in 44 countries, including the 33 countries in Europe under our Edition 3 CE Mark. In addition, we have approval to sell LuViva in 11 additional countries under country specific approvals including India, Indonesia, Singapore and Kenya. Finally, several non-EU countries such as Saudi Arabia, Egypt and South Africa rely on the CE Mark for medical devices. LuViva has also previously obtained marketing approval from Health Canada and COFEPRIS in Mexico but these have expired. In addition, in 2018, we were approved for sales and marketing in India. We currently are seeking regulatory approval to market LuViva in the United States but have not yet received approval from the U.S. Food and Drug Administration (“FDA”). As of March 31, 2022, we have sold 144 LuViva devices and approximately 76,980 single-use disposable cervical guides to international distributors.

We believe our non-invasive cervical cancer detection technology can be applied to the early detection of other cancers as well. As we develop LuViva as a commercial product, we continue to seek new collaborative partners focused on marketing and sales of our biophotonic technology.

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Manufacturing, Sales, Marketing and Distribution

We manufacture LuViva at our Norcross, Georgia facility. Most of the components of LuViva are custom made for us by third-party manufacturers. We adhere to ISO 13485:2003 quality standards in our manufacturing processes. Our single-use cervical guides are manufactured by a vendor that specializes in injection molding of plastic medical products. On January 22, 2017, we entered into a license agreement with Shandong Yaohua Medical Instrument Corporation (“SMI”), as amended on March 28, 2017, pursuant to which we granted SMI an exclusive global license to manufacture the LuViva device and related disposables (subject to a carve-out for manufacture in Turkey). On December 18, 2018, we entered into a co-development agreement with Newmars Technologies, Inc. (“NTI”), whereby NTI will perform final assembly of the LuViva device for its contracted distribution countries in Eastern Europe and Russia at its ISO 13485 facility in Hungary. This additional carve out has been agreed to by SMI. On August 12, 2021 the Company entered into a second amendment with SMI pursuant to which the Company has continued to grant SMI exclusive distribution, sales and manufacturing rights of the LuViva for China, Taiwan, Hong Kong and Macau.

We rely on distributors to sell our products. Distributors can be country exclusive or cover multiple countries in a region. We manage these distributors, provide them marketing materials and train them to demonstrate and operate LuViva. We seek distributors that have experience in gynecology and in introducing new technology into their assigned territories. Currently, we rely on SMI in distributing our products in the People's Republic of China, Macau, Hong Kong and Taiwan; we rely on NTI in distributing our products in Eastern Europe and Russia.

We have only limited experience in the production planning, quality system management, facility development, and production scaling that will be needed to bring production to increased sustained commercial levels. We will likely need to develop additional expertise in order to successfully manufacture, market, and distribute any future products.

Our Team

Our management team is comprised of highly experienced pharmaceutical and biotechnology executives with successful track records in researching, developing, gaining approval for and commercializing novel medicines to treat serious diseases. Each member of our management team has over 20 to 30 years of industry experience, including our CEO and COO. These individuals have held leadership positions with industry leaders such as Abbott Laboratories, and GE Health among others, and also with early stage biotechnology and emerging technology companies such as Biofield Corp and SpectRx, Inc. Additionally, the team has significant experience in company formation, capital raises, mergers/acquisitions, business development, and sales and marketing in the pharmaceutical industry. Our board of directors (the “Board”) is constituted by individuals with significant experience in the pharmaceutical and biotechnology industries.

Our Strengths

Currently, we are the only commercial stage company with a biophotonic technology that potentially addresses a large primary screening market and a potential R&D pipeline that could improve the early detection of numerous cancers that afflict men and women. Key strengths include:

· The engineering and production risks have been largely addressed as we have sold over 100 working systems worldwide.

· Regulatory approvals have been granted covering over 40 countries.

· We have legitimate pathways for securing marketing approvals in the two largest medical markets - the US and China, within a 2-3 year period.

· The clinical results of our technology have been published in leading peer-reviewed journals by world-famous, thought-leading physicians.

Our Business Strategy

Our near term goals are to accomplish the following over the next two years by pursuing the following strategies:

· Seek US FDA approval by completing a clinical trial.

· Contingent upon FDA approval, discuss opportunities to partner with a larger U.S. based company for distribution in the U.S. At the same time, we intend to build a small dedicated sales force based near major metropolitan centers and focused on generating sales at large centralized Ob-Gyn practices.

· Seek Chinese FDA approval working with our existing partner in China, Shandong Medical Instrumentation Co. Ltd.

· Pursue regulatory approval in Russia and work with our partner in Eastern Europe, Newmars Technology, Inc. to generate sales in Europe.

· Continue to selectively support sales through our distributors in large countries such as Indonesia.

While we plan to pursue regulatory approval in Russia, the ongoing conflict in Ukraine may delay filing and approval to market.

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Risk Factor Summary

Our ability to implement our business strategy is subject to numerous risks that you should be aware of before making an investment decision. These risks are described more fully in the section entitled “Risk Factors” in this prospectus. These risks include, among others:

· Although we will be required to raise additional funds in 2022, there is no assurance that such funds can be raised on terms that we would find acceptable, on a timely basis, or at all.

· If we cannot obtain additional funds when needed, we will not be able to implement our business plan.

· We have a history of losses, and we expect losses to continue.

· Our ability to sell our products is controlled by government regulations, and we may not be able to obtain any necessary clearances or approvals.

· In foreign countries, including European countries, we are subject to government regulation, which could delay or prevent our ability to sell our products in those jurisdictions.

· In the United States, where we are subject to regulation by the U.S. FDA, our product has not yet been approved which could prevent us from selling our products domestically.

· Even if we obtain clearance or approval to sell our products, we are subject to ongoing requirements and inspections that could lead to the restriction, suspension or revocation of our clearance.

· We are currently delinquent on our federal payroll and unemployment taxes.

Listing on the Nasdaq Capital Market

Our common stock is currently quoted on the OTC Markets under the symbol “GTHP”. In connection with this offering, we have applied to list our common stock and Public Warrants offered in the offering on the Nasdaq under the symbols “GTHP” and “GTHPW”, respectively. If our listing application is approved, we expect to list our common stock and the Public Warrants offered in the offering on Nasdaq upon consummation of the offering, at which point our common stock will cease to be traded on the OTC Markets. No assurance can be given that our listing application will be approved. Nasdaq listing requirements include, among other things, a stock price threshold. As a result, in order to meet such requirement, on December 20, 2021 we approved a 1-for-20 reverse stock split of our common stock. There can be no assurance that our common stock and Public Warrants will be listed on the Nasdaq. However, we will not complete this offering if we are not so listed. We do not intend to apply for listing of the pre-funded warrants on any national securities exchange or trading system.

Corporate Information

We were incorporated in the state of Delaware in 1992, under the Delaware General Corporation Law, or “DGCL”, under the name “SpectRx, Inc.” and subsequently changed our name to Guided Therapeutics, Inc. on February 22, 2008. At the same time, we renamed our wholly owned subsidiary, InterScan, Inc. which originally had been incorporated as “Guided Therapeutics, Inc.” Our telephone number is (770) 242-8723. Our website address is https://www.guidedinc.com/. The information contained in or accessible from our website is not incorporated into this prospectus, and you should not consider it part of this prospectus. We have included our website address in this prospectus solely as an inactive textual reference.

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The Offering

Common stock offered by us	890,000 shares, based on a public offering price of $10.00 per share of common stock and related Public Warrant.
Pre-funded warrants offered by us	We are also offering to certain purchasers whose purchase of common stock in this offering would otherwise result in the purchaser, together with its affiliates and certain related parties, beneficially owning more than 4.99% (or, at the election of the purchaser, 9.99%) of the outstanding shares of our common stock immediately following the consummation of this offering, the opportunity to purchase, if such purchasers so choose, up to 178,000 pre-funded warrants, in lieu of shares of common stock that would otherwise result in any such purchaser’s beneficial ownership exceeding 4.99% (or, at the election of the purchaser, 9.99%) of the outstanding shares of our common stock. Each pre-funded warrant will be exercisable for one share of common stock. The purchase price of each pre-funded warrant and the accompanying Public Warrant will equal the price at which the shares of common stock and the accompanying Public Warrant are being sold to the public in this offering, and the exercise price of each pre-funded warrant will be $0.001 per share. The pre-funded warrants will be exercisable immediately and may be exercised at any time until all of the pre-funded warrants are exercised in full. This offering also relates to the shares of common stock issuable upon exercise of any pre-funded warrants sold in this offering. For each pre-funded warrant we sell, the number of shares of common stock we are offering will be decreased on a one-for-one basis. Because we will issue one Public Warrant for each share of common stock and for each pre-funded warrant to purchase one share of common stock sold in this offering, the number of Public Warrants sold in this offering will not change as a result of a change in the mix of the shares of common stock and pre- funded warrants sold. For additional information, see “Description of Securities—Pre-Funded Warrants to be Issued as Part of this Offering” on page 73 of this prospectus.
Description of Public Warrants	We are offering Public Warrants to purchase an aggregate of 890,000 shares of common stock. Each share of common stock and each pre-funded warrant to purchase one share of common stock is being sold together with one Public Warrant to purchase one share of common stock. Each Public Warrant will have an exercise price of $12.40 per share, will be upon issuance exercisable and will expire on the fifth anniversary of the original issuance date. The shares of common stock and pre-funded warrants, and the accompanying Public Warrants, as the case may be, can only be purchased together in this offering but will be issued separately and will be immediately separable upon issuance. This prospectus also relates to the offering of the shares of common stock issuable upon exercise of the Public Warrants. For additional information, see “Description of Securities—Public Warrants to be Issued as Part of this Offering” on page 70 of this prospectus.
Shares of common stock to be outstanding after this offering	2,269,174 shares (or 2,402,674 shares if the underwriters exercise their option to purchase additional shares in full).
Underwriters’ option to purchase additional securities	We have granted the underwriters a 45-day option to purchase up to 133,500 additional shares of common stock and/or Public Warrants at the public offering price, less underwriting discounts and commissions on the same terms as set forth in this prospectus.

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Use of proceeds	We estimate that the proceeds to us from the sale of shares of our common stock in this offering will be approximately $8,900,000, or $10,235,000 if the underwriters exercise their option to purchase additional shares in full, assuming an initial public offering price of $10 per share and related Public Warrants as set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. We intend to use the net proceeds of this offering to fund completion of the US FDA clinical trial and application for FDA approval for LuViva, sales and marketing, debt repayment, and general corporate purposes. See “Use of Proceeds.”
Proposed Nasdaq Capital Market symbols	We have applied to list our common stock and Public Warrants offered pursuant to this prospectus on the Nasdaq under the symbols “GTHP” and “GTHPW”, respectively. The successful listing of our common stock and Public Warrants on Nasdaq is a condition of this offering. However, there can be no assurance that Nasdaq will approve our listing application.
No Listing of Pre-funded Warrants	We do not intend to apply for listing of the pre-funded warrants on any national securities exchange or trading system. Without an active trading market, the liquidity of the pre-funded warrants will be limited.
Risk Factors	Investment in our securities involves substantial risks. You should read this prospectus carefully, including the section entitled “Risk Factors” and the financial statements and the related notes to those statements included in this prospectus, before investing in our common stock.

The number of shares of common stock to be outstanding after this offering is based on an aggregate of 1,379,174 shares outstanding as of June 5, 2022. The disclosure above does not include:

· 75,000 shares of common stock issuable upon exercise of outstanding options as of March 31, 2022, at a weighted average exercise price of $9.80 per share, of which 52,261 shares were vested as of such date;

· 250,470 shares of common stock reserved for future issuance under our stock option plan as of March 31, 2022, plus any future increases in the number of shares of common stock reserved for issuance under our stock option plan pursuant to evergreen provisions;

· shares of common stock that may be issued upon the exercise of pre-funded warrants and Public Warrants issued in this offering; and

· 1,552,227 shares of common stock underlying warrants and convertible debt at a weighted average exercise price of $6.24 per share.

Except as otherwise indicated herein, all information in this prospectus, including the number of shares that will be outstanding after this offering, assumes no exercise by the underwriters of their option to purchase additional securities.

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GUIDED THERAPEUTICS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands)

	Three Months Ended
	March 31,
	2022			2021
Sales - devices and disposables	$	5		$	-
Cost of goods sold		1			-
Gross profit		4			-
Operating expenses:
Research and development		21			16
Sales and marketing		40			36
General and administrative		386			771
Total operating expenses		447			823
Loss from operations		(443	)		(823	)
Other income (expenses):
Interest expense		(101	)		(141	)
Change in fair value of derivative liability		(6	)		(88	)
Gain from extinguishment of debt		41			87
Change in fair value of warrants		-			448
Other expenses		2			-
Total other income (expense)		(64	)		306
Loss before income taxes		(507	)		(517	)
Provision for income taxes		-			-
Net loss		(507	)		(517	)
Preferred stock dividends		(548	)		(55	)
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	(1,055	)	$	(572	)

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SUMMARY FINANCIAL DATA 

GUIDED THERAPEUTICS, INC. AND SUBSIDIARY 

CONSOLIDATED STATEMENTS OF OPERATIONS  

(in thousands) 

	Years Ended
	December 31,
	2021			2020
Sales - devices and disposables	$	81		$	102
Cost of goods sold (recovered)		61			(41	)
Gross profit		20			143
Operating expenses:
Research and development		69			143
Sales and marketing		141			139
General and administrative		2,172			913
Total operating expenses		2,382			1,195
Loss from operations		(2,362	)		(1,052	)
Other income (expenses):
Interest expense		(1,150	)		(1,056	)
Change in fair value of derivative liability		(91	)		(25	)
Gain (loss) from extinguishment of debt		578			(296	)
Change in fair value of warrants		448			1,879
Other income		507			271
Total other income		292			773
Loss before income taxes		(2,070	)		(279	)
Provision for income taxes		-			-
Net loss		(2,070	)		(279	)
Preferred stock dividends		(361	)		(122	)
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	(2,431	)	$	(401	)

	Year ended December 31,
	2021			2020
Balance Sheet Data:
Total current assets	$	1,637		$	896
Total noncurrent assets		403			454
Working capital		(4,057	)		(8,066	)
Total assets		2,040			1,350
Current liabilities		5,694			8,962
Non current liabilities		1,791			3,243
Total liabilities		7,485			12,205
Accumulated deficit		(142,387	)		(139,956	)
Total stockholders deficit	$	(5,445	)	$	(10,855	)

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RISK FACTORS

Investing in our common stock involves a high degree of risk. You should carefully consider each of the following risks, together with all other information set forth in this prospectus, including the consolidated financial statements and the related notes, before making a decision to buy our securities. If any of the following risks actually occurs, our business could be harmed. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment.

Risks Related to Our Business and Industry

Although we may be required to raise additional funds in 2022, if the proceeds of this offering is not sufficient to carry out our business, there is no assurance that such funds can be raised on terms that we would find acceptable, on a timely basis, or at all.

Additional debt or equity financing may be required for us to continue as a going concern. We may seek to obtain additional funds for the financing of our cervical cancer detection business through additional debt or equity financings and/or new collaborative arrangements. Management believes that additional financing, if obtainable, will be sufficient to support planned operations only for a limited period. Management has implemented operating actions to reduce cash requirements. Any required additional funding may not be available on terms attractive to us, on a timely basis, or at all. If we cannot obtain additional funds or achieve profitability, we may not be able to continue as a going concern.

Because we must obtain additional funds through financing transactions or through new collaborative arrangements in order to grow the revenues of our cervical cancer detection product line, there exists substantial doubt about our ability to continue as a going concern. Therefore, it will be necessary to raise additional funds.  There can be no assurance that we will be able to raise these additional funds. If we do not secure additional funding when needed, we will be unable to conduct all of our product development efforts as planned, which may cause us to alter our business plan in relation to the development of our products. Even if we obtain additional funding, we will need to achieve profitability thereafter.

Our independent registered public accountants’ report on our consolidated financial statements as of and for the year ended December 31, 2021, indicated that there was substantial doubt about our ability to continue as a going concern because we had suffered recurring losses from operations and had an accumulated deficit of $142.4 million at December 31, 2021. The accumulated deficit from December 31, 2018 through March 31, 2022 is summarized as follows:

Accumulated deficit, from inception to 12/31/2018	$	137.7 million
Net loss for fiscal year 2019, ended 12/31/2019	$	1.9 million
Accumulated deficit, from inception to 12/31/2019	$	139.6 million
Preferred dividends for fiscal year 2020	$	0.1 million
Net loss for the year ended 12/31/2020	$	0.3 million
Accumulated deficit, from inception to 12/31/2020	$	140.0 million
Preferred dividends for fiscal year 2021	$	0.4million
Net loss for the year ended 12/31/2021	$	2.0 million
Accumulated deficit, from inception to 12/31/2021	$	142.4 million
Preferred dividends for the quarter ended 3/31/2022	$	0.5 million
Net loss for the quarter ended 3/31/2022	$	0.5 million
Accumulated deficit, from inception to 3/31/2022	$	143.4 million

Our management has implemented reductions in operating expenditures and reductions in some development activities. We have determined to make cervical cancer detection the focus of our business. We are managing the development of our other programs only when funds are made available to us via grants or contracts with government entities or strategic partners. However, there can be no assurance that we will be able to successfully implement or continue these plans.

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If we cannot obtain additional funds when needed, we will not be able to implement our business plan.

We require substantial additional capital to develop our products, including completing product testing and clinical trials, obtaining all required regulatory approvals and clearances, beginning and scaling up manufacturing, and marketing our products. We have historically financed our operations though the public and private sale of debt and equity, funding from collaborative arrangements, and grants. Any failure to achieve adequate funding in a timely fashion would delay our development programs and could lead to abandonment of our business plan. To the extent we cannot obtain additional funding, our ability to continue to manufacture and sell our current products, or develop and introduce new products to market, will be limited. Further, financing our operations through the public or private sale of debt or equity may involve restrictive covenants or other provisions that could limit how we conduct our business or finance our operations. Financing our operations through collaborative arrangements generally means that the obligations of the collaborative partner to fund our expenditures are largely discretionary and depend on a number of factors, including our ability to meet specified milestones in the development and testing of the relevant product. We may not be able to obtain an acceptable collaboration partner, and even if we do, we may not be able to meet these milestones, or the collaborative partner may not continue to fund our expenditures.

We have a history of losses, and we expect losses to continue.

We have never been profitable and we have had operating losses since our inception. We expect our operating losses to continue as we continue to expend substantial resources to complete commercialization of our products, obtain regulatory clearances or approvals; build our marketing, sales, manufacturing and finance capabilities, and conduct further research and development. The further development and commercialization of our products will require substantial development, regulatory, sales and marketing, manufacturing and other expenditures. We have only generated limited revenues from product sales. As of March 31, 2022 and December 31, 2021, our accumulated deficit was approximately $143.4 million and $142.4 million, respectively.

We are currently delinquent with our federal and state payroll and unemployment taxes.

Although we have been experiencing recurring losses, we are obligated to file tax returns for compliance with IRS regulations and that of applicable state jurisdictions. We have established payment plans for the outstanding federal and state payroll and unemployment taxes with IRS, the Department of Revenue for the State of Georgia and Department of Labor for the State of Georgia. As of the date of this prospectus, we are delinquent on federal payroll taxes for first quarter of 2017, and federal unemployment taxes for the year 2016. Per the terms of our payment plan we are required to make monthly payments in the amount of $1,009 until the balances are paid in full. We are delinquent on state payroll taxes for first quarter of 2017 and fourth quarter of 2016. Per the terms of our payment plan we are required to make monthly payments in the amount of $210 until the balances are paid in full. We are delinquent on our state unemployment taxes and per the terms of our payment plan we are required to make a minimum monthly payment in the amount of $2,629 until the balance is paid in full.

Our ability to sell our products is controlled by government regulations, and we may not be able to obtain any necessary clearances or approvals.

The design, manufacturing, labeling, distribution and marketing of medical device products are subject to extensive and rigorous government regulation in most of the markets in which we sell, or plan to sell, our products, which can be expensive and uncertain and can cause lengthy delays before we can begin selling our products in those markets.

In foreign countries, including European countries, we are subject to government regulation, which could delay or prevent our ability to sell our products in those jurisdictions.

In order for us to market our products in Europe and some other international jurisdictions, we and our distributors and agents must obtain required regulatory registrations or approvals. We must also comply with extensive regulations regarding safety, efficacy and quality in those jurisdictions. We may not be able to obtain the required regulatory registrations or approvals, or we may be required to incur significant costs in obtaining or maintaining any regulatory registrations or approvals we receive. Delays in obtaining any registrations or approvals required for marketing our products, failure to receive these registrations or approvals, or future loss of previously obtained registrations or approvals would limit our ability to sell our products internationally. For example, international regulatory bodies have adopted various regulations governing product standards, packaging requirements, labeling requirements, import restrictions, tariff regulations, duties and tax requirements. These regulations vary from country to country. In order to sell our products in Europe, in 2018 we had to undergo an inspection and re-file for ISO 13485:2016 and the CE Mark, which is an international symbol of quality and compliance with applicable European medical device directives. Failure to maintain ISO 13485:2016 certification or CE mark certification or other international regulatory approvals would prevent us from selling in some countries in the European Union.

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As of March 31, 2022, our products have achieved and maintained both ISO 13485:2016 certification and the CE Mark through our contract manufacturer, Newmars Technologies.

For our products to be marketed and sold in the People’s Republic of China, they must gain approval from the Chinese National Medical Products Administration (NMPA), formerly known as the Chinese Food and Drug Administration (Chinese FDA). We are working with our Chinese partner, Shandong Yaohua Medical Instrument Corporation, to achieve NMPA approval and as of December 31, 2021 had passed compliance testing for device safety and has enrolled approximately 150 people in their clinical trial, which is expected to be completed in 2022, although there can be no assurances that this schedule will be met.

Our business is subject to the risks of international operations.

Our business and financial results could be adversely affected due to a variety of factors, including:

· changes in a specific country or region’s political and cultural climate or economic condition, including change in governmental regime;

· unexpected or unfavorable changes in foreign laws, regulatory requirements and related interpretations;

· difficulty of effective enforcement of contractual provisions in local jurisdictions;

· inadequate intellectual property protection in foreign countries;

· trade protection measures, import or export licensing requirements such as Export Administration Regulations promulgated by the U.S. Department of Commerce and fines, penalties or suspension or revocation of export privileges;

· trade sanctions imposed by the United States or other governments with jurisdictional authority over our business operations;

· the effects of applicable and potentially adverse foreign tax law changes;

· significant adverse changes in foreign currency exchange rates;

· longer accounts receivable cycles;

· managing a geographically dispersed workforce; and

· compliance with the U.S. Foreign Corrupt Practices Act, or FCPA, and the Office of Foreign Assets Control regulations, particularly in emerging markets.

In foreign countries, particularly in those with developing economies, certain business practices may exist that are prohibited by laws and regulations applicable to us, such as the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act and other anti-corruption laws. Although our policies and procedures require compliance with these laws and are designed to facilitate compliance with these laws, our employees, contractors and agents may take actions in violation of applicable laws or our policies. Any such violation, even if prohibited by our policies, could have a material adverse effect on our business and reputation.

Our international businesses must comply with applicable laws such as the U.S. Foreign Corrupt Practices Act. Failure to maintain compliance with or adapt to changes in any of the aforementioned requirements could result in fines, penalties or regulatory actions that could have an adverse impact on our business, results of operations and financial condition.

While we plan to pursue regulatory approval in Russia, the ongoing conflict in Ukraine may delay filing and approval to market in Russia.  It is unclear how long any delays may last due to the uncertainty of the situation both in Ukraine and Russia..

The conflict in Ukraine, which has already had an impact on financial markets, could result in additional repercussions in our operating business, including delays in obtaining regulatory approval to market our products in Russia. The future impact of the conflict is highly uncertain and cannot be predicted, and we cannot provide any assurance that the conflict will not have a material adverse impact on our operations or future results or filings with regulatory health authorities.

Russia’s invasion of Ukraine, and sanctions brought by the United States and other countries against Russia, have caused disruptions in many business sectors outside of the medical sector and have resulted in significant market disruptions and increased volatility in the price of certain commodities, including oil and natural gas.

On February 24, 2022, Russia launched a large-scale invasion of Ukraine. The extent and duration of the military action, resulting sanctions and future market disruptions in the region are impossible to predict, but could be significant and may have a severe adverse effect on the region. Among other things, the conflict has resulted in increased volatility in the markets for certain securities and commodities, including oil and natural gas, and other sectors.

The United States and other countries and certain international organizations have imposed broad-ranging economic sanctions on Russia and certain Russian individuals, banking entities and corporations as a response to Russia’s invasion of Ukraine.  On March 8, 2022, the United States announced that it would ban imports of oil, natural gas and coal from Russia. The impact of this announcement on commodities and futures prices is difficult to predict and depends on a number of factors, including whether other countries act in the same manner, but such impact could be significant.

Actual and threatened responses to Russia’s invasion, as well as a rapid peaceful resolution to the conflict, may also impact the markets for certain commodities, such as oil and natural gas, and may have collateral impacts, including increased volatility, and cause disruptions to availability of certain commodities, commodity and futures prices and the supply chain globally. At this time, the situation is rapidly evolving and may evolve in a way that could have a negative impact on the fund in the future.

In the United States, our products would be subject to regulation by the U.S. FDA, which could prevent us from selling our products domestically.

In order for us to market our products in the United States, we must obtain clearance or approval from the U.S. Food and Drug Administration, or U.S. FDA. We cannot be sure that:

· we, or any collaborative partner, will make timely filings with the U.S. FDA;

· the U.S. FDA will act favorably or quickly on these submissions;

· we will not be required to submit additional information or perform additional clinical studies; or

· we will not face other significant difficulties and costs necessary to obtain U.S. FDA clearance or approval.

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It can take several years from initial filing of a PMA application and require the submission of extensive supporting data and clinical information. The U.S. FDA may impose strict labeling or other requirements as a condition of its clearance or approval, any of which could limit our ability to market our products domestically. Further, if we wish to modify a product after U.S. FDA approval of a PMA application, including changes in indications or other modifications that could affect safety and efficacy, additional clearances or approvals will be required from the U.S. FDA. Any request by the U.S. FDA for additional data, or any requirement by the U.S. FDA that we conduct additional clinical studies, could result in a significant delay in bringing our products to market domestically and require substantial additional research and other expenditures. Similarly, any labeling or other conditions or restrictions imposed by the U.S. FDA could hinder our ability to effectively market our products domestically. Further, there may be new U.S. FDA policies or changes in U.S. FDA policies that could be adverse to us.

Currently, we have not obtained clearance or approval from the U.S. FDA, however we have agreed with the U.S. FDA on the clinical trial protocol and are preparing to start the study of approximately 400 women in the third quarter of 2022 at up to three clinical sites where the protocol is now under review for approval to allow the start of the study.

Even if we obtain clearance or approval to sell our products, we are subject to ongoing requirements and inspections that could lead to the restriction, suspension or revocation of our clearance.

We, as well as any potential collaborative partners, will be required to adhere to applicable regulations in the markets in which we operate and sell our products, regarding good manufacturing practice, which include testing, control, and documentation requirements. Ongoing compliance with good manufacturing practice and other applicable regulatory requirements will be strictly enforced applicable regulatory agencies. Failure to comply with these regulatory requirements could result in, among other things, warning letters, fines, injunctions, civil penalties, recall or seizure of products, total or partial suspension of production, failure to obtain premarket clearance or premarket approval for devices, withdrawal of approvals previously obtained, and criminal prosecution. The restriction, suspension or revocation of regulatory approvals or any other failure to comply with regulatory requirements would limit our ability to operate and could increase our costs.

We depend on a limited number of distributors and any reduction, delay or cancellation of an order from these distributors or the loss of any of these distributors could cause our revenue to decline.

Each year we have had one or a few distributors that have accounted for substantially all of our limited revenues. As a result, the termination of a purchase order with any one of these distributors may result in the loss of substantially all of our revenues. We are constantly working to develop new relationships with existing or new distributors, but despite these efforts we may not be successful at generating new orders to maintain similar revenues as current purchase orders are filled. In addition, since a significant portion of our revenues is derived from a relatively few distributors, any financial difficulties experienced by any one of these distributors, or any delay in receiving payments from any one of these distributors, could have a material adverse effect on our business, results of operations, financial condition and cash flows.

To successfully market and sell our products internationally, we must address many issues with which we have limited experience.

All of our sales of LuViva to date have been to distributors outside of the United States. We expect that substantially all of our business will continue to come from sales in foreign markets, through increased penetration in countries where we currently sell LuViva, combined with expansion into new international markets. However, international sales are subject to a number of risks, including:

· difficulties in staffing and managing international operations;

· difficulties in penetrating markets in which our competitors’ products may be more established;

· reduced or no protection for intellectual property rights in some countries;

· export restrictions, trade regulations and foreign tax laws;

· fluctuating foreign currency exchange rates;

· foreign certification and regulatory clearance or approval requirements;

· difficulties in developing effective marketing campaigns for unfamiliar, foreign countries;

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· customs clearance and shipping delays;

· political and economic instability; and

· preference for locally produced products.

If one or more of these risks were realized, it could require us to dedicate significant resources to remedy the situation, and even if we are able to find a solution, our revenues may still decline.

To market and sell LuViva internationally, we depend on distributors and they may not be successful.

We currently depend almost exclusively on third-party distributors to sell and service LuViva internationally and to train our international distributors, and if these distributors terminate their relationships with us or under-perform, we may be unable to maintain or increase our level of international revenue. We will also need to engage additional international distributors to grow our business and expand the territories in which we sell LuViva. Distributors may not commit the necessary resources to market, sell and service LuViva to the level of our expectations. If current or future distributors do not perform adequately, or if we are unable to engage distributors in particular geographic areas, our revenue from international operations will be adversely affected.

Our success largely depends on our ability to maintain and protect the proprietary information on which we base our products.

Our success depends in large part upon our ability to maintain and protect the proprietary nature of our technology through the patent process, as well as our ability to license from others patents and patent applications necessary to develop our products. If any of our patents are successfully challenged, invalidated or circumvented, or our right or ability to manufacture our products was to be limited, our ability to continue to manufacture and market our products could be adversely affected. In addition to patents, we rely on trade secrets and proprietary know-how, which we seek to protect, in part, through confidentiality and proprietary information agreements. The other parties to these agreements may breach these provisions, and we may not have adequate remedies for any breach. Additionally, our trade secrets could otherwise become known to or be independently developed by competitors.

As of March 31, 2022, we have been issued, or have rights to, 27 U.S. patents (including those under license). In addition, we have filed for, or have rights to, one U.S. patents (including those under license) that is still pending. There are additional international patents and pending applications. One or more of the patents we hold directly or license from third parties, including those for our cervical cancer detection products, may be successfully challenged, invalidated or circumvented, or we may otherwise be unable to rely on these patents. These risks are also present for the process we use or will use for manufacturing our products. In addition, our competitors, many of whom have substantial resources and have made substantial investments in competing technologies, may apply for and obtain patents that prevent, limit or interfere with our ability to make, use and sell our products, either in the United States or in international markets.

The medical device industry has been characterized by extensive litigation regarding patents and other intellectual property rights. In addition, the U.S. Patent and Trademark Office, or USPTO, may institute interference proceedings. The defense and prosecution of intellectual property suits, USPTO proceedings and related legal and administrative proceedings are both costly and time consuming. Moreover, we may need to litigate to enforce our patents, to protect our trade secrets or know-how, or to determine the enforceability, scope and validity of the proprietary rights of others. Any litigation or interference proceedings involving us may require us to incur substantial legal and other fees and expenses and may require some of our employees to devote all or a substantial portion of their time to the proceedings. An adverse determination in the proceedings could subject us to significant liabilities to third parties, require us to seek licenses from third parties or prevent us from selling our products in some or all markets. We may not be able to reach a satisfactory settlement of any dispute by licensing necessary patents or other intellectual property. Even if we reached a settlement, the settlement process may be expensive and time consuming, and the terms of the settlement may require us to pay substantial royalties. An adverse determination in a judicial or administrative proceeding or the failure to obtain a necessary license could prevent us from manufacturing and selling our products.

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We may not be able to generate sufficient sales revenues to sustain our growth and strategy plans.

Our cervical cancer diagnostic activities have been financed to date through a combination of government grants, strategic partners and direct investment. Growing revenues for this product is the main focus of our business. In order to effectively market the cervical cancer detection product, additional capital will be needed.

Additional product lines involve the modification of the cervical cancer detection technology for use in other cancers. These product lines are only in the earliest stages of research and development and are currently not projected to reach market for several years. Our goal is to receive enough funding from government grants and contracts, as well as payments from strategic partners, to fund development of these product lines without diverting funds or other necessary resources from the cervical cancer program.

Because our products, which use different technology or apply technology in different ways than other medical devices, are or will be new to the market, we may not be successful in launching our products and our operations and growth would be adversely affected.

Our products are based on new methods of cancer detection. If our products do not achieve significant market acceptance, our sales will be limited and our financial condition may suffer. Physicians and individuals may not recommend or use our products unless they determine that these products are an attractive alternative to current tests that have a long history of safe and effective use. To date, our products have been used by only a limited number of people, and few independent studies regarding our products have been published. The lack of independent studies limits the ability of doctors or consumers to compare our products to conventional products.

If we are unable to compete effectively in the highly competitive medical device industry, our future growth and operating results will suffer.

The medical device industry in general and the markets in which we expect to offer products in particular, are intensely competitive. Many of our competitors have substantially greater financial, research, technical, manufacturing, marketing and distribution resources than we do and have greater name recognition and lengthier operating histories in the health care industry. We may not be able to effectively compete against these and other competitors. A number of competitors are currently marketing traditional laboratory-based tests for cervical cancer screening and diagnosis. These tests are widely accepted in the health care industry and have a long history of accurate and effective use. Further, if our products are not available at competitive prices, health care administrators who are subject to increasing pressures to reduce costs may not elect to purchase them. Also, a number of companies have announced that they are developing, or have introduced, products that permit non-invasive and less invasive cancer detection. Accordingly, competition in this area is expected to increase.

Furthermore, our competitors may succeed in developing, either before or after the development and commercialization of our products, devices and technologies that permit more efficient, less expensive non-invasive and less invasive cancer detection. It is also possible that one or more pharmaceutical or other health care companies will develop therapeutic drugs, treatments or other products that will substantially reduce the prevalence of cancers or otherwise render our products obsolete.

We have limited manufacturing experience, which could limit our growth.

We do not have manufacturing experience that would enable us to make products in the volumes that would be necessary for us to achieve significant commercial sales, and we rely upon our suppliers. In addition, we may not be able to establish and maintain reliable, efficient, full-scale manufacturing at commercially reasonable costs in a timely fashion. Difficulties we encounter in manufacturing scale-up, or our failure to implement and maintain our manufacturing facilities in accordance with good manufacturing practice regulations, international quality standards or other regulatory requirements, could result in a delay or termination of production. In the past, we have had substantial difficulties in establishing and maintaining manufacturing for our products and those difficulties impacted our ability to increase sales. Companies often encounter difficulties in scaling up production, including problems involving production yield, quality control and assurance, and shortages of qualified personnel.

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Since we rely on sole source suppliers for several of the components used in our products, any failure of those suppliers to perform would hurt our operations.

Several of the components used in our products or planned products, are available from only one supplier, and substitutes for these components could not be obtained easily or would require substantial modifications to our products. Any significant problem experienced by one of our sole source suppliers may result in a delay or interruption in the supply of components to us until that supplier cures the problem or an alternative source of the component is located and qualified. Any delay or interruption would likely lead to a delay or interruption in our manufacturing operations. For our products that require premarket approval, the inclusion of substitute components could require us to qualify the new supplier with the appropriate government regulatory authorities. Alternatively, for our products that qualify for premarket notification, the substitute components must meet our product specifications.

Because we operate in an industry with significant product liability risk, and we have not specifically insured against this risk, we may be subject to substantial claims against our products.

The development, manufacture and sale of medical products entail significant risks of product liability claims. We currently have no product liability insurance coverage beyond that provided by our general liability insurance. Accordingly, we may not be adequately protected from any liabilities, including any adverse judgments or settlements, we might incur in connection with the development, clinical testing, manufacture and sale of our products. A successful product liability claim or series of claims brought against us that result in an adverse judgment against or settlement by us in excess of any insurance coverage could seriously harm our financial condition or reputation. In addition, product liability insurance is expensive and may not be available to us on acceptable terms, if at all.

The availability of third party reimbursement for our products is uncertain, which may limit consumer use and the market for our products.

In the United States and elsewhere, sales of medical products are dependent, in part, on the ability of consumers of these products to obtain reimbursement for all or a portion of their cost from third-party payors, such as government and private insurance plans. Any inability of patients, hospitals, physicians and other users of our products to obtain sufficient reimbursement from third-party payors for our products, or adverse changes in relevant governmental policies or the policies of private third-party payors regarding reimbursement for these products, could limit our ability to sell our products on a competitive basis. We are unable to predict what changes will be made in the reimbursement methods used by third-party health care payors. Moreover, third-party payors are increasingly challenging the prices charged for medical products and services, and some health care providers are gradually adopting a managed care system in which the providers contract to provide comprehensive health care services for a fixed cost per person. Patients, hospitals and physicians may not be able to justify the use of our products by the attendant cost savings and clinical benefits that we believe will be derived from the use of our products, and therefore may not be able to obtain third-party reimbursement.

Reimbursement and health care payment systems in international markets vary significantly by country and include both government-sponsored health care and private insurance. We may not be able to obtain approvals for reimbursement from these international third-party payors in a timely manner, if at all. Any failure to receive international reimbursement approvals could have an adverse effect on market acceptance of our products in the international markets in which approvals are sought.

We have a substantial amount of indebtedness, which may adversely affect our cash flow and our ability to operate our business.

Our outstanding indebtedness, which includes all of the liabilities, was $7.2 million at March 31, 2022.      

The terms of our indebtedness could have negative consequences to us, such as:

· we may be unable to obtain additional financing to fund working capital, operating losses, capital expenditures or acquisitions on terms acceptable to us, or at all;

· the amount of our interest expense may increase if we are unable to make payments when due;

· our assets might be subject to foreclosure if we default on our secured debt;

· our vendors or employees may, and some have, instituted proceedings to collect on amounts owed them;

· we have to use a substantial portion of our cash flows from operations to repay our indebtedness, including ordinary course accounts payable and accrued payroll liabilities, which reduces the amount of money we have for future operations, working capital, inventory, expansion, or general corporate or other business activities; and

· we may be unable to refinance our indebtedness on terms acceptable to us, or at all.

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Our ability to meet our expenses and debt obligations will depend on our future performance, which will be affected by financial, business, economic, regulatory and other factors. We will be unable to control many of these factors, such as economic conditions. We cannot be certain that our earnings will be sufficient to allow us to pay the principal and interest on our debt and meet any other obligations. If we do not have enough money to service our debt, we may be required, but unable, to refinance all or part of our existing debt, sell assets, borrow money or raise equity on terms acceptable to us, if at all.

Our success depends on our ability to attract and retain scientific, technical, managerial and finance personnel.

Our ability to operate successfully and manage our future growth depends in significant part upon the continued service of key scientific, technical, managerial and finance personnel, as well as our ability to attract and retain additional highly qualified personnel in these fields. We may not be able to attract and retain key employees when necessary, which would limit our operations and growth. In addition, if we are able to successfully develop and commercialize our products, we will need to hire additional scientific, technical, marketing, managerial and finance personnel. We face intense competition for qualified personnel in these areas, many of whom are often subject to competing employment offers.

Certain provisions of our certificate of incorporation that authorize the issuance of additional shares of preferred stock may make it more difficult for a third party to effect a change in control.

Our certificate of incorporation authorizes our board of directors to issue up to 5.0 million shares of preferred stock of which 10,977 were outstanding as of March 31, 2022. Our undesignated shares of preferred stock may be issued in one or more series, the terms of which may be determined by the board without further stockholder action. These terms may include, among other terms, voting rights, including the right to vote as a series on particular matters, preferences as to liquidation and dividends, repurchase rights, conversion rights, redemption rights and sinking fund provisions. The issuance of any preferred stock could diminish the rights of holders of our common stock, and therefore could reduce the value of our common stock. In addition, specific rights granted to future holders of preferred stock could be used to restrict our ability to merge with or sell assets to a third party. The ability of our board to issue preferred stock could make it more difficult, delay, discourage, prevent or make it more costly to acquire or effect a change in control, which in turn could prevent our stockholders from recognizing a gain in the event that a favorable offer is extended and could materially and negatively affect the market price of our common stock.

Risks Related to Our Securities

The market prices for our common stock are volatile and will fluctuate.

The market price for our common stock may be volatile and subject to wide fluctuations in response to numerous factors, many of which are beyond our control, including the following: (i) actual or anticipated fluctuations in our quarterly financial results; (ii) recommendations by securities research analysts; (iii) changes in the economic performance or market valuations of other issuers that investors deem comparable to ours; (iv) addition or departure of our executive officers or members of our Board and other key personnel; (v) release or expiration of lock-up or other transfer restrictions on outstanding common stock; (vi) sales or perceived sales of additional common stock; (vii) liquidity of the common stock; (viii) significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving us or our competitors; and (ix) news reports relating to trends, concerns, technological or competitive developments, regulatory changes and other related issues in our industry or target markets. Financial markets often experience significant price and volume fluctuations that affect the market prices of equity securities of public entities and that are, in many cases, unrelated to the operating performance, underlying asset values or prospects of such entities. Accordingly, the market price of our common stock may decline even if our operating results, underlying asset values or prospects have not changed. Additionally, these factors, as well as other related factors, may cause decreases in asset values that are deemed to be other than temporary, which may result in impairment losses. As well, certain institutional investors may base their investment decisions on consideration of our environmental, governance and social practices and performance against such institutions’ respective investment guidelines and criteria, and failure to meet such criteria may result in limited or no investment in our common stock by those institutions, which could materially adversely affect the trading price of our common stock. There can be no assurance that continuing fluctuations in price and volume will not occur. If such increased levels of volatility and market turmoil continue for a protracted period of time, our operations could be materially adversely impacted and the trading price of our common stock may be materially adversely affected.

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There is a limited market for our securities.

Our common stock is listed on the OTC Markets. We have applied to list our common stock on Nasdaq. The successful listing of our common stock on the Nasdaq is a condition of this offering. However, there can be no assurance that Nasdaq will approve our listing application, or that an active and liquid market for the common stock will develop or be maintained on the applicable stock exchanges, and an investor may find it difficult to resell any of our securities.

Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our technologies.

We may seek additional capital through a combination of private and public equity offerings, debt financings, strategic partnerships and alliances and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, existing ownership interests will be diluted and the terms of such financings may include liquidation or other preferences that adversely affect the rights of existing stockholders. Debt financings may be coupled with an equity component, such as warrants to purchase shares, which could also result in dilution of our existing stockholders’ ownership. The incurrence of indebtedness would result in increased fixed payment obligations and could also result in certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business and may result in liens being placed on our assets and intellectual property. If we were to default on such indebtedness, we could lose such assets and intellectual property. If we raise additional funds through strategic partnerships and alliances and licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies or grant licenses on terms that are not favorable to us.

Future offerings of debt or equity securities may rank senior to common stock.

If we decide to issue debt or equity securities in the future ranking senior to our common stock or otherwise incur additional indebtedness, it is possible that these securities or indebtedness will be governed by an indenture or other instrument containing covenants restricting our operating flexibility and limiting our ability to pay dividends to stockholders. Additionally, any convertible or exchangeable securities that we issue in the future may have rights, preferences and privileges, including with respect to dividends, more favorable than those of common stock and may result in dilution to stockholders. Because our decision to issue debt or equity securities in any future offering or otherwise incur indebtedness will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings or financings, any of which could reduce the market price of our common stock and dilute their value.

Common stockholders are subordinated to our lenders.

In the event of bankruptcy, liquidation or reorganization, any holders of our debt and our trade creditors will generally be entitled to payment of their claims from our assets before any assets are made available for distribution to us or our stockholders. The common stock is effectively subordinated to our debt and other obligations. As of March 31, 2022, we have $7.2 million in total liabilities and out of it $514,415 is related to deferred revenue.

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Future sales of common stock by officers and directors may negatively impact the market price for our common stock.

Subject to compliance with applicable securities laws, our directors and officers and their affiliates may sell some or all of their common stock in the future. No prediction can be made as to the effect, if any, such future sales of common stock may have on the market price of the common stock prevailing from time to time. However, the future sale of a substantial number of common stock by our directors and officers and their affiliates, or the perception that such sales could occur, could adversely affect prevailing market prices for our common stock.

We do not currently pay dividends on our common stock and have no intention to pay dividends on our common stock for the foreseeable future.

No dividends on our common stock have been paid by us to date. We do not intend to declare or pay any cash dividends in the foreseeable future. Payment of any future dividends will be at the discretion of our Board, after taking into account a multitude of factors appropriate in the circumstances, including our operating results, financial condition and current and anticipated cash needs. In addition, the terms of any future debt or credit facility may preclude us from paying any dividends unless certain consents are obtained and certain conditions are met.

We may not be able to maintain the listing of our common stock on Nasdaq.

We must meet certain financial and liquidity criteria to maintain the listing of our common stock on Nasdaq. If we fail to meet any of Nasdaq’s continued listing standards, our common stock may be delisted. These continued listing standards include specifically enumerated criteria, such as:

· a $1.00 minimum closing bid price;

· stockholders’ equity of $2.5 million;

· 500,000 shares of publicly-held common stock with a market value of at least $1 million;

· 300 round-lot stockholders; and

· Compliance with Nasdaq’s corporate governance requirements, as well as additional or more stringent criteria that may be applied in the exercise of Nasdaq’s discretionary authority.

There can be no assurance that we will be able to maintain compliance and remain in compliance in the future. In particular, our share price may continue to decline for a number of reasons, including many that are beyond our control.

In addition, our board may determine that the cost of maintaining our listing on a national securities exchange outweighs the benefits of such listing. A delisting of our common stock from Nasdaq would materially impair our stockholders’ ability to buy and sell our common stock and could have an adverse effect on the market price of, and the efficiency of the trading market for, our common stock. A delisting of our common stock would also significantly impair our ability to raise capital.

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We have broad discretion in the use of our cash and cash equivalents, including the net proceeds we receive in this offering, and may not use them effectively.

Our management has broad discretion to use our cash and cash equivalents, including the net proceeds we receive in this offering, to fund our operations and could spend these funds in ways that do not improve our results of operations or enhance the value of our common stock, and you will not have the opportunity as part of your investment decision to assess whether the net proceeds are being used appropriately. The failure by our management to apply these funds effectively could result in financial losses that could have a material adverse effect on our business, cause the price of our common stock to decline. Pending their use to fund our operations, we may invest our cash and cash equivalents, including the net proceeds from this offering, in a manner that does not produce income or that loses value.

Holders of the warrants offered hereby will have no rights as common stockholders with respect to the shares our common stock underlying the warrants until such holders exercise their warrants and acquire our common stock, except as otherwise provided in the warrants.

Until holders of the Public Warrants and the pre-funded warrants acquire shares of our common stock upon exercise thereof, such holders will have no rights with respect to the shares of our common stock underlying such warrants, except to the extent that holders of such warrants will have certain rights to participate in distributions or dividends paid on our common stock as set forth in the warrants. Upon exercise of the Public Warrants and the pre-funded warrants, the holders will be entitled to exercise the rights of a common stockholder only as to matters for which the record date occurs after the exercise date.

If our shares of common stock become subject to the penny stock rules, it would become more difficult to trade our shares.

The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or authorized for quotation on certain automated quotation systems, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. If we are unable to maintain the listing of our common stock on Nasdaq or another national securities exchange and if the price of our common stock is less than $5.00, our common stock will be deemed a penny stock. The penny stock rules require a broker- dealer, before a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document containing specified information. In addition, the penny stock rules require that before effecting any transaction in a penny stock not otherwise exempt from those rules, a broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive (i) the purchaser’s written acknowledgment of the receipt of a risk disclosure statement; (ii) a written agreement to transactions involving penny stocks; and (iii) a signed and dated copy of a written suitability statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our common stock, and therefore stockholders may have difficulty selling their shares.

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In connection with the audit of our financial statements as of and for the year ended December 31, 2021, material weaknesses in our internal control over financial reporting was identified and we may identify additional material weaknesses in the future.

In connection with the preparation and audits of our financial statements as of and for the years ended December 31, 2021 and 2020, material weaknesses (as defined under the Exchange Act and by the auditing standards of the U.S. Public Company Accounting Oversight Board, or “PCAOB”), were identified in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual financial statements will not be prevented or detected on a timely basis. The material weaknesses identified arose from a lack of recourses to properly research and account for complex transactions and lack of oversight and approval by the Board of Directors and Audit Committee, including formally documented approval of significant transactions, including related party transactions.

In light of the identified material weaknesses, it is possible that, had we performed a formal assessment of our internal control over financial reporting or had our independent registered public accounting firm performed an audit of our internal control over financial reporting in accordance with PCAOB standards, additional control deficiencies may have been identified.

We have begun taking measures, and plan to continue to take measures, to remediate these material weaknesses. However, the implementation of these measures may not fully address these material weaknesses in our internal control over financial reporting, and, if so, we would not be able to conclude that they have been fully remedied. Our failure to correct these material weaknesses or our failure to discover and address any other control deficiencies could result in inaccuracies in our financial statements and could also impair our ability to comply with applicable financial reporting requirements and make related regulatory filings on a timely basis. As a result, our business, financial condition, results of operations and prospects, as well as the trading price of our common stock, may be materially and adversely affected.

We have incurred, and will continue to incur, increased costs as a result of operating as a public company, and our management has been required, and will continue to be required, to devote substantial time to new compliance initiatives.

As a public company, we have incurred and are continuing to incur significant legal, accounting and other expenses. We are subject to the reporting requirements of the Exchange Act and the rules adopted, and to be adopted, by the SEC. Our management and other personnel devote a substantial amount of time to these compliance initiatives.

Moreover, these rules and regulations have substantially increased our legal and financial compliance costs and made some activities more time-consuming and costly. The increased costs have increased our net loss. These rules and regulations may make it more difficult and more expensive for us to maintain sufficient director’s and officer’s liability insurance coverage. We cannot predict or estimate the amount or timing of additional costs we may continue to incur to respond to these requirements. The ongoing impact of these requirements could also make it more difficult for us to attract and retain qualified persons to serve on our Board, our Board committees or as executive officers.

Anti-takeover provisions in our Amended and Restated Certificate of Incorporation and By-laws may reduce the likelihood of a potential change of control, or make it more difficult for our stockholders to replace management.

Certain provisions of our Amended and Restated Certificate of Incorporation and By-laws could have the effect of making it more difficult for our stockholders to replace management at a time when a substantial number of stockholders might favor a change in management. These provisions include authorizing the board of directors to fill vacant directorships or increase the size of its board of directors.

Furthermore, our board of directors has the authority to issue up to 5.0 million shares of preferred stock in one or more series and to determine the rights and preferences of the shares of any such series without stockholder approval. Any series of preferred stock is likely to be senior to the common stock with respect to dividends, liquidation rights and, possibly, voting rights. The board’s ability to issue preferred stock may have the effect of discouraging unsolicited acquisition proposals, thus adversely affecting the market price of our common stock.

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If securities or industry analysts publish inaccurate or unfavorable research about our business, our share price and trading volume may decline.

The trading market for our common stock depends in part on the research and reports that securities or industry analysts publish about us or our business. If one or more of the analysts who cover us downgrade our shares or publish inaccurate or unfavorable research about our business, our shares price may decline. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, demand for our shares may decrease, which may cause our shares price and trading volume to decline.

Our Board approved a reverse stock split at a ratio of 1-for-20 on December 30, 2021 and there are risks associated with effectuating the reverse stock split.

In order to qualify for an uplisting to Nasdaq, we plan to effect a reverse stock split at a ratio of up to 1-for-20. All fractional shares created by the reverse stock split were rounded up to the nearest whole share. There are certain risks associated with the reverse stock split, including the following:

· We will have additional authorized shares of common stock that the board could issue in future without stockholder approval, and such additional shares could be issued, among other purposes, in financing transactions or to resist or frustrate a third-party transaction that is favored by a majority of the independent directors. This could have an anti-takeover effect, in that additional shares could be issued, within the limits imposed by applicable law, in one or more transactions that could make a change in control or takeover of us more difficult.

· There can be no assurance that our stockholders will approve the reverse stock split or the reverse stock split will achieve the benefits that we hope it will achieve. The total market capitalization of our common stock after the reverse stock split may be lower than the total market capitalization before the reverse stock split.

The reverse stock split may decrease the liquidity of the shares of our common stock.

The liquidity of our common stock may be affected adversely by the reverse stock split given the reduced number of shares that were outstanding immediately following the reverse stock split, especially if the market price of our common stock does not increase as a result of the reverse stock split. In addition, the reverse stock split may have increased the number of stockholders who own odd lots of our common stock, creating the potential for such stockholders to experience an increase in the cost of selling their shares and greater difficulty effecting such sales.

Following the reverse stock split, the resulting market price of our common stock may not attract new investors, including institutional investors, and may not satisfy the investing requirements of those investors. Consequently, the trading liquidity of our common stock may not improve.

Although we believe that a higher market price of our common stock may help generate greater or broader investor interest, there can be no assurance that the reverse stock split will result in a share price that will attract new investors, including institutional investors. In addition, there can be no assurance that the market price of our common stock will satisfy the investing requirements of those investors. As a result, the trading liquidity of our common stock may not necessarily improve.

The number of shares of our common stock issuable upon the conversion of our outstanding convertible debt and preferred stock or exercise of outstanding warrants and options is substantial.

As of March 31, 2022, our outstanding convertible debt was convertible into an aggregate of 311,659 shares of our common stock, and the outstanding shares of our Series C, Series C1, Series C2, Series D, Series E, Series F, Series F-2 preferred stock were convertible into an aggregate of 1,697,400 shares of common stock. Also, as of that date we had warrants outstanding that were exercisable for an aggregate of 1,269,266 shares, and outstanding options to purchase 75,000 shares. The shares of common stock issuable upon conversion or exercise of these securities would have constituted approximately 75.0% of the total number of shares of common stock then issued and outstanding.

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Further, under the terms of our convertible debt and preferred stock, as well as certain of our outstanding warrants, the conversion price or exercise price, as the case may be, could be adjusted downward, causing substantial dilution. See “-Adjustments to the conversion price for our convertible debt and preferred stock, and the exercise price for certain of our warrants, will dilute the ownership interests of our existing stockholders.”

Adjustments to the conversion price of some of our convertible debt and preferred stock, and the exercise price for certain of our warrants, will dilute the ownership interests of our existing stockholders.

Under the terms of a portion of our convertible debt, the conversion price fluctuates with the market price of our common stock. Additionally, under the terms of our Series C preferred stock, any dividends we choose to pay in shares of our common stock will be calculated based on the then-current market price of our common stock. Accordingly, if the market price of our common stock decreases, the number of shares of our common stock issuable upon conversion of the convertible debt or upon payment of dividends on our outstanding Series C preferred stock will increase, and may result in the issuance of a significant number of additional shares of our common stock.

Under the terms of some of our preferred stock and certain of our convertible notes and outstanding warrants, the conversion price or exercise price will be lowered if we issue common stock at a per share price below the then-conversion price or then-exercise price for those securities. Reductions in the conversion price or exercise price would result in the issuance of a significant number of additional shares of our common stock upon conversion or exercise, which would result in dilution in the value of the shares of our outstanding common stock and the voting power represented thereby.

Our need to raise additional capital in the near future or to use our equity securities for payments could have a dilutive effect on your investment.

In order to continue operations, we will need to raise additional capital. We may attempt to raise capital through the public or private sale of our common stock or securities convertible into or exercisable for our common stock. In addition, from time to time we have issued our common stock or warrants in lieu of cash payments. If we sell additional shares of our common stock or other equity securities, or issue such securities in respect of other claims or indebtedness, such sales or issuances will further dilute the percentage of our equity that you own. Depending upon the price per share of securities that we sell or issue in the future, if any, your interest in us could be further diluted by any adjustments to the number of shares and the applicable exercise price required pursuant to the terms of the agreements under which we previously issued convertible securities.

The perceived risk of dilution may cause our stockholders to sell their shares, which may cause a decline in the price of our common stock. Moreover, the perceived risk of dilution and the resulting downward pressure on our stock price could encourage investors to engage in short sales of our common stock. By increasing the number of shares offered for sale, material amounts of short selling could further contribute to progressive price declines in our common stock.

Risks Related to this Offering

Management will have broad discretion as to the use of the net proceeds from this offering, and we may not use these proceeds effectively.

We intend to use the net proceeds from this offering for working capital and general corporate purposes. Our management will have broad discretion in the application of the net proceeds from this offering and could spend the proceeds in ways that do not improve our results of operations or enhance the value of our common stock. Accordingly, you will be relying on the judgment of our management with regard to the use of these net proceeds, and you will not have the opportunity, as part of your investment decision, to assess whether the proceeds are being used appropriately. Our failure to apply these funds effectively could have a material adverse effect on our business, delay the development of our product candidates and cause the price of our common stock to decline.

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You will experience immediate and substantial dilution in the net tangible book value per share of the common stock you purchase.

Because the price per share of our common stock being offered is substantially higher than the net tangible book value per share of our common stock, you will suffer substantial dilution in the net tangible book value of the common stock you purchase in this offering. Based on a public offering price of $10.00 per share, if you purchase shares of common stock in this offering, you will suffer immediate and substantial dilution of approximately $7.44 per share in the net tangible book value of the common stock. See the section entitled “Dilution” in this prospectus for a more detailed discussion of the dilution you will incur if you purchase common stock in this offering.

In addition, we have a significant number of stock options, warrants and convertible preferred stock outstanding. To the extent that outstanding stock options, warrants have been or may be exercised or other shares issued, you may experience further dilution.

There is no public market for the pre-funded warrants being offered by us in this offering.

There is no established public trading market for the pre-funded warrants, and we do not expect a market to develop. In addition, we do not intend to apply to list the pre-funded warrants on any national securities exchange or other nationally recognized trading system. Without an active market, the liquidity of the pre-funded warrants will be limited.

Future sales of substantial amounts of our common stock could adversely affect the market price of our common stock.

We may choose to raise additional capital due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. If additional capital is raised through the sale of equity or convertible debt securities, or perceptions that those sales could occur, the issuance of these securities could result in further dilution to investors purchasing our common stock in this offering or result in downward pressure on the price of our common stock, and our ability to raise capital in the future.

A large number of shares issued in this offering may be sold in the market following this offering, which may depress the market price of our common stock.

A large number of shares issued in this offering may be sold in the market following this offering, which may depress the market price of our common stock. Sales of a substantial number of shares of our common stock in the public market following this offering could cause the market price of our common stock to decline. If there are more shares of our common stock offered for sale than buyers are willing to purchase, then the market price of our common stock may decline to a market price at which buyers are willing to purchase the offered shares of our common stock and sellers remain willing to sell the shares. All of the securities issued in the offering will be freely tradable without restriction or further registration under the Securities Act.

For all of the aforesaid reasons and others set forth in this registration statement, an investment in our common stock, warrants and any other securities that we may offer from time to time involves a certain degree of risk. Any person considering an investment in our common stock , warrants or any other of our securities should be aware of these and other factors set forth in this registration statement and should consult with his or her legal, tax and financial advisors prior to making an investment in our common stock, warrants or any other of our securities that may be offered from time to time. Our common stock, warrants and any other securities that we may offer from time to time should only be purchased by persons who can afford to lose all of their investment.

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FORWARD-LOOKING STATEMENTS

This prospectus contains a number of “forward-looking statements”. Specifically, all statements other than statements of historical facts included in this prospectus regarding our financial position, business strategy and plans and objectives of management for future operations are forward-looking statements. These forward-looking statements are based on the beliefs of management at the time these statements were made, as well as assumptions made by and information currently available to management. When used in this prospectus and the documents incorporated by reference herein, the words “anticipate,” “believe,” “estimate,” “expect,” “may,” “will,” “continue” and “intend,” and words or phrases of similar import, as they relate to our financial position, business strategy and plans, or objectives of management, are intended to identify forward-looking statements. These statements reflect our current view with respect to future events and are subject to risks, uncertainties and assumptions related to various factors.

A variety of factors, some of which are outside our control, may cause our operating results to fluctuate significantly. They include:

· access to sufficient debt or equity capital to meet our operating and financial needs;

· the extent of dilution of the holdings of our existing stockholders upon the issuance, conversion or exercise of securities issued as part of our capital raising efforts;

· the extent to which certain debt holders may call the notes to be paid;

· the effectiveness and ultimate market acceptance of our products and our ability to generate sufficient sales revenues to sustain our growth and strategy plans;

· whether our products in development will prove safe, feasible and effective;

· whether and when we or any potential strategic partners will obtain required regulatory approvals in the markets in which we plan to operate;

· our need to achieve manufacturing scale-up in a timely manner, and our need to provide for the efficient manufacturing of sufficient quantities of our products;

· the lack of immediate alternate sources of supply for some critical components of our products;

· our ability to establish and protect the proprietary information on which we base our products, including our patent and intellectual property position;

· the current outbreak of the Coronavirus SARS-CoV-2, the pathogen responsible for COVID-19, which has already had an impact on financial markets, could result in additional repercussions in our operating business, including but not limited to, the sourcing of materials for product candidates, manufacture of supplies for preclinical and/or clinical studies, delays in clinical operations, which may include the availability or the continued availability of patients for trials due to such things as quarantines, conduct of patient monitoring and clinical trial data retrieval at investigational study sites;

· the future impact of the outbreak is highly uncertain and cannot be predicted, and we cannot provide any assurance that the outbreak will not have a material adverse impact on our operations or future results or filings with regulatory health authorities. The extent of the impact, if any, we will depend on future developments, including actions taken to contain the coronavirus;

· the impact of the conflict between Russia and Ukraine on economic conditions in general and on our business and operations;

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

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

· other risks and uncertainties described from time to time in our reports filed with the SEC.

These forward-looking statements reflect our management’s beliefs and views with respect to future events and are based on estimates and assumptions as of the date of this prospectus and are subject to risks and uncertainties. We discuss many of these risks in greater detail under “Risk Factors.” Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. Given these uncertainties, you should not place undue reliance on these forward-looking statements.

You should read this prospectus and the documents that we reference in this prospectus and have filed as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of the forward-looking statements in this prospectus by these cautionary statements. Except as required by law, we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

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USE OF PROCEEDS

We estimate that we will receive proceeds of approximately $8.9 million (or approximately $10.8 million if the underwriters’ option to purchase additional shares and/or warrants is exercised in full) from the sale of the securities offered by us in this offering, based on an initial offering price of $10.00 per share of common stock (or pre-funded warrant) and related Public Warrants and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

The principal purposes of this offering are to obtain additional capital to support our operations. We intend to use the net proceeds from this offering for the following purposes:

· Fund completion of the US FDA clinical trial and application for FDA approval for LuViva.

· Support international sales and marketing partners for distribution of our products, especially LuViva.

· Build and train a U.S. sales force once U.S. FDA approval for LuViva is achieved.

· Pay off remaining debt, of approximately $887,000, as needed to complete current agreements for debt reduction, including forgiveness from consultants and legal firms.

· Order parts for manufacturing LuViva and it disposable accessories.

· Other expenses as deemed necessary by the Company’s Board.

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DIVIDEND POLICY

We do not anticipate declaring or paying, in the foreseeable future, any cash dividends on our common stock. We currently intend to retain all available funds and any future earnings to support our operations and finance the growth and development of our business. Any future determination related to our dividend policy will be made at the discretion of our Board and will depend upon, among other factors, our results of operations, financial condition, capital requirements, contractual restrictions, business prospects and other factors our Board may deem relevant.

The Company pays dividends on its preferred stock.

Holders of the Series C preferred stock are entitled to quarterly cumulative dividends at an annual rate of 12.0% until 42 months after the original issuance date (the “Dividend End Date”), payable in cash or, subject to certain conditions, the Company’s common stock. In addition, upon conversion of the Series C preferred stock prior to the Dividend End Date, the Company will also pay to the converting holder a “make-whole payment” equal to the number of unpaid dividends through the Dividend End Date on the converted shares. At December 31, 2021 and 2020, the “make-whole payment” for a converted share of Series C preferred stock would convert to 10 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 contained 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 was required to account for the warrants as a liability recorded at fair value each reporting period. The warrants expired at the end of 2020.

Series C1 and Series C2 preferred stock do 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.

The Series D Preferred Stock has cumulative dividends at the rate per of 10% per annum, calculated on the basis of a 360-day year, consisting of twelve 30 calendar day periods, payable quarterly on January 15, April 15, July 15 and October 15, beginning on the first such date after the original issue date and on each optional redemption date in cash, or, following the approval of Canadian Trading Market and at the Company’s option, in duly authorized, validly issued, fully paid and non-assessable shares of common stock, or a combination based on the dividend conversion rate which is equal to the average of the 20 volume weighted average prices of the Common Stock on the principal Trading Market immediately prior to the dividend payment date.

As of March 31, 2022, the Company issued an aggregate of 14,040 common stock shares for the payment of Series D Preferred Stock dividends accrued. As of March 31, 2022, the Company had accrued Series D dividends of $14,306.

The Series E Preferred Stock has cumulative dividends at the rate per share of 8% per annum, calculated on the basis of a 360-day year, consisting of twelve 30 calendar day periods, payable annually, beginning on the first such date after the original issue date and on each optional redemption date. in cash, or, following the approval of Canadian Trading Market and at the Company’s option, in duly authorized, validly issued, fully paid and non-assessable shares of common stock, or a combination based on the dividend conversion rate which is equal to the average of the 20 volume weighted average prices of the Common Stock on the principal Trading Market immediately prior to the dividend payment date. As of March 31, 2022, the Company issued an aggregate of 15,018 common stock shares for the payment of Series E Preferred Stock dividends accrued. As of March 31, 2022, the  Company had accrued Series E dividends of $71,099.

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The Series F Preferred Stock has cumulative dividends at the rate per share of 6% per annum, calculated on the basis of a 360-day year, consisting of twelve 30 calendar day periods, payable annually, beginning on the first such date after the original issue date and on each optional redemption date. in cash, or, following the approval of Canadian Trading Market and at the Company’s option, in duly authorized, validly issued, fully paid and non-assessable shares of common stock, or a combination based on the dividend conversion rate which is equal to the average of the 20 volume weighted average prices of the Common Stock on the principal Trading Market immediately prior to the dividend payment date. In addition to the 6% annual dividend, the Company was also required to pay a one-time, non-recurring, dividend equal to 15% of the aggregate stated value of preferred stock then held by the holder, in cash or common stock, as the corporation was unable to successfully uplist to the NASDAQ Stock Exchange by December 31, 2021; and was unable to file its clinical data intended for FDA approval of its primary product, LuViva, by December 31, 2021.

During the three months ended March 31, 2022, the Company issued 7,933 common stock shares for the payment of annual Series F Preferred Stock dividends. Additionally, During the three months ended March 31, 2022, the Company issued 12,770 common stock shares for the payment of the one-time, non-recurring 15% dividend to the Series F Preferred shareholders. As of March 31, 2022, the Company had accrued Series F dividends of $1,998.

The Series F-2 Preferred Stock has cumulative dividends at the rate per share of 6% per annum, calculated on the basis of a 360-day year, consisting of twelve 30 calendar day periods, payable annually, beginning on the first such date after the original issue date and on each optional redemption date. in cash, or, following the approval of Canadian Trading Market and at the Company’s option, in duly authorized, validly issued, fully paid and non-assessable shares of common stock, or a combination based on the dividend conversion rate which is equal to the average of the 20 volume weighted average prices of the Common Stock on the principal Trading Market immediately prior to the dividend payment date. In addition to the 6% annual dividend, the Company was also required to pay a one-time, non-recurring, dividend equal to 15% of the aggregate stated value of preferred stock then held by the holder, in cash or common stock, as the corporation was unable to successfully uplist to the NASDAQ Stock Exchange by December 31, 2021; and was unable to file its clinical data intended for FDA approval of its primary product, LuViva, by December 31, 2021.

During the three months ended March 31, 2022, the Company issued 4,777 common stock shares for the payment of annual Series F-2 Preferred Stock dividends. Additionally, during the three months ended March 31, 2022, the Company issued 18,425 common stock shares for the payment of the one-time, non-recurring 15% dividend to the Series F-2 Preferred shareholders. As of March 31, 2022, the Company had accrued Series F-2 dividends of $91,592.

The Series G Preferred Stock preferred stock carries 8% annual dividend, cumulative and payable solely upon redemption, liquidation or conversion. Upon the occurrence of an Event of Default (, the Dividend Rate shall automatically increase to twenty two percent (22%).

On June 4, 2021, the Company paid $2,952 and $4,992 for the Series G Preferred Stock dividends accrued, respectively. As of March 31, 2022, the Series G Preferred Stock was fully redeemed, leaving a null balance.

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CAPITALIZATION

The following table sets forth our cash and cash equivalents as well as capitalization as of March 31, 2022:

· on an actual basis; and

· on an as adjusted basis to give effect to the sale of 890,000 securities offered hereby at the combined offering price of $10 per share, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. The offering price may not be the final price of the Offering and will be adjusted based on the actual initial public offering price and other terms of our initial public offering determined at pricing.

You should read this table together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus, and our financial statements and related notes thereto.

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							Pro forma
							as adjusted
	March 31, 2022			Adjustments			March 31, 2022
CURRENT ASSETS:
Cash and cash equivalents	$	725	(a)		7,150			7,875
Accounts receivable, net of allowance for doubtful accounts of $126 at March 31, 2022		39			-			39
Inventory, net of reserves of $785 at December 31, 2021		570			-			570
Other current assets		453	(b)		(339	)		114
Total current assets		1,787			6,811			8,598
NONCURRENT ASSETS:
Property and equipment, net		28			-			28
Operating lease asset-right, net of amortization		355			-			355
Other assets		17			-			17
Total noncurrent assets		400			-			400
TOTAL ASSETS		2,187			6,811			8,998
LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES:
Accounts payable	$	2,476	(c)		(2,072	)		404
Accounts payable, related parties		80	(q)		(30	)		50
Accrued liabilities		1,228	(d)		(655	)		573
Deferred revenue		514			-			514
Current portion of lease liability		70			-			70
Current portion of long-term debt		67	(e)		(62	)		5
Current portion of long-term debt, related parties		27			-			27
Short-term notes payable		12			-			12
Short-term notes payable, related parties		31	(q)		(31	)		-
Convertible notes payable in default		161	(f)		(161	)		-
Short-term convertible notes payable		745	(f)		(745	)		-
Derivative liability		38	(g)		(38	)		-
Total current liabilities		5,449			(3,794	)		1,655
LONG-TERM LIABILITIES:
Long-term lease liabilities		307			-			307
Long-term debt		-	(h)		1,127			1,127
Long-term convertible debt		852	(i)		(852	)		-
Long-term debt-related parties		568	(j)		(147	)		421
Total long-term liabilities		1,727			128			1,855
TOTAL LIABILITIES		7,176			(3,666	)		3,510
COMMITMENTS & CONTINGENCIES (Note 7)
STOCKHOLDERS’ DEFICIT:
Series C convertible preferred stock, $.001 par value; 9.0 shares authorized, 0.3 shares issued and outstanding as of March 31, 2022. Liquidation preference of $286 at March 31, 2022.		105			-			105
Series C1 convertible preferred stock, $.001 par value; 20.3 shares authorized, 1.0 shares issued and outstanding as of March 31, 2022. Liquidation preference of $1,049 at March 31, 2022.		170			-			170
Series C2 convertible preferred stock, $.001 par value; 5,000 shares authorized, 3.3 shares issued and outstanding as of March 31, 2022. Liquidation preference of $3,263 at March 31, 2022.		531			-			531
Series D convertible preferred stock, $.001 par value; 6.0 shares authorized, 0.8 shares issued and outstanding as of March 31, 2022. Liquidation preference of $763 at March 31, 2022.		276			-			276
Series E convertible preferred stock, $.001 par value; 5.0 shares authorized, 1.0 shares issued and outstanding as of March 31, 2022. Liquidation preference of $968 at March 31, 2022.		914	(k)		(914	)		-
Series F convertible preferred stock, $.001 par value; 1.5 shares authorized, 1.4 shares issued and outstanding as of March 31, 2022. Liquidation preference of $1,411 at March 31, 2022.		1,174	(l)		(1,174	)		-
Series F-2 convertible preferred stock, $.001 par value; 5.0 shares authorized, 3.2 shares issued and outstanding as of March 31, 2022. Liquidation preference of $3,237 at March 31, 2022.		2,963	(m)		(2,963	)		-
Series G convertible preferred stock, $.001 par value; 1,000 shares authorized, nil shares issued and outstanding as of March 31, 2022. Liquidation preference of nil at March 31, 2022.		-			-			-
Common stock, $.001 par value; 500,000 shares authorized, 1,116 shares issued and outstanding as of March 31, 2022.		3,410	(n)		2			3,412
Additional paid-in capital		129,042	(o)		14,510			143,552
Treasury stock, at cost		(132	)		-			(132	)
Accumulated deficit		(143,442	)(p)		1,016			(142,426	)
TOTAL STOCKHOLDERS’ DEFICIT		(4,989	)		10,477			5,488
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT		2,187			6,811			8,998

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Pro-forma as adjusted does not give effect to the impact of Public or Pre-Funded Warrants.    

(a)	Assumes $8,900,000 in new cash from the NASDAQ uplist, less legal expenses and commissions related to closing of approximately $200,000 and $541,400, respectively, additional accounting costs of $100,000 and consulting fees of $21,897 to Donohoe Advisory Associates (b) for net funding of $8,036,703. The Company will use the proceeds to make payments of approximately $887,299 on its contractual obligations with various vendors and debt holders, including $325,000 to Jones Day (c), $65,299 per the July 8, 2020 exchange agreement (c), $147,000 to a former executive (g), and $350,000 to GPB Holdings, LLC in connection with the December 21, 2021 warrant exchange agreement. The warrants exchanged per the December 21, 2021 exchange agreement were not considered in the proforma adjustments above.
(b)	Reflects recognition of $285,261 of deferred legal fees (after forgiveness of $104,879) and $54,174 of offering-related costs related to the uplist.
(c)	Per exchange agreement dated January 6, 2020, we assume a reduction of Accounts Payable balance with a $325,000 payment to Jones Day and issuance of a long term note payable in the amount of $444,768 followed by a forgiveness of approximately $975,000 (p). Additionally, we assume a reduction of $304,924 of outstanding legal fees and payment of $21,897 to Donohoe Advisory Associates.
(d)	Per exchange agreement dated July 9, 2020, $62,052 of accrued executive compensation and $3,247 of accrued interest will be forgiven upon our payment of $62,052 on an unsecured note payable owed to a former employee. Furthermore; per exchange agreement with one of the former executives, dated March 22, 2021, the Company will make a payment of $146,775, including accrued interest of $375, on amounts owed to a former executive and will record debt forgiveness of $253,429 for amounts owed to former executive, included in the aforementioned exchange agreement; per the exchange agreement dated June 22, 2022, $29,776 of related-party payables, $31,285 of short-term related-party debt (q) and $8,939 of accrued expenses owed to executives will be converted into 7,000 shares of common stock. Additionally, we will issue common stock in lieu of Series D preferred stock dividends and will exchange the Series E, Series F and Series F-2 preferred stock dividends into common stock as part of the new financing. Total accrued dividends converted or settled with common stock will result in the decrease of approximately $178,995 in accrued liabilities. We also assume a decrease of $28,250 related to accrued interest on 10% Senior Unsecured Convertible Debenture. In accordance with the February 1, 2022 Auctus Fund, LLC exchange agreement, interest of $120,877 will be exchanged for a combination of shares of common stock, warrants and prefunded warrants, as amended.
(e)	Per exchange agreement dated July 9, 2020, we will make a payment of $62,052 on an unsecured note payable owed to a former employee.
(f)	Assumes conversion of $350,000 of prepayment penalty payable to Auctus Fund, LLC, per exchange agreement dated June 2, 2021 and subsequently amended on February 2, 2022 and June 1, 2022, into 35,000 shares of common stock. Assumes exchange of $161,184 note financed on April, 2, 2020 and $400,000 note dated May 28, 2020, less expensing of unamortized debt issuances costs of $5,211 into a $682,061 long-term note payable due thirteen (13) months after the close of the offering (h).
(g)	Reflects removal of a derivative liability valued at $39,129, related to conversion option associated with a $400,000 note that will be exchanged for a long-term note (h).
(h)	Per the exchange agreement dated January 6, 2020, we will issue a long-term note payable to Jones Day in the amount $444,768. Assumes exchange of $161,184 note financed on April, 2, 2020 and $400,000 note dated May 28, 2020, less expensing of unamortized debt issuances costs of $5,211 into a $682,061 long-term note payable due thirteen (13) months after the close of the offering.
(i)	Assumes conversion of $1,130,000 less the expensing of the debt issuance costs of $61,920 and reversal of $215,854 of unamortized debt discount associated with warrants related to 10% Senior Unsecured Convertible Debenture into 115,173 shares of common       stock. The purchasers are contractually obligated to participate in the NASDAQ uplist and convert the outstanding balance into shares of common stock.
(j)	Per exchange agreement with one of the former executives, dated March 22, 2021, the Company will make a payment of $146,775 on long term note payable.
(k)	Conversion of 968 Series E Preferred Shares, stated value $1,000 into 193,600 common shares, par value $0.001. The transaction will decrease Series E Preferred Stock balance and increase additional paid in capital by $913,806.
(l)	Conversion of 1,411 Series F Preferred Shares, stated value $1,000 into 282,200 common shares, par value $0.001. The transaction will decrease Series F Preferred Stock balance and increase additional paid in capital by $1,173,718.
(m)	Conversion of 3,237 Series F-2 Preferred Shares, stated value $1,000 into 647,400 common shares, par value $0.001. The transaction will decrease Series F-2 Preferred Stock balance and increase additional paid in capital by $2,961,353.
(n)	Assumes an issuance of 890,000 new common shares at $10.00 per share, par value $0.001 from the NASDAQ uplist investment of $8,900,000. Additional increases from conversions related to the following: payables and accrued expenses owed to executives (q), 10% Senior Unsecured Convertible Debenture (i), Series E Preferred Stock (k), Series F Preferred Stock (l), and Series F-2 Preferred Stock (m), and the settlement of accrued preferred stock dividends (d).
(o)	Assumes an issuance of 890,000 new common shares at $10.00 per share, par value $0.001, from the NASDAQ uplist investment of $8,900,000; issuances of an aggregate of 13,811 of common shares for the settlement of dividends payable on preferred stock totaling $178,995; issuance of an aggregate of 1,123,200 common shares for the conversion of Series E, Series F and Series F-2 preferred shares totaling $5.62 million; conversion of $1,130,000, plus accrued interest of $28,250, less unamortized debt discount related to warrants of $215,853, on 10% Senior Unsecured Convertible Debenture into 115,175 common shares (i), and issuance of 7,000 common shares for the conversion of $29,776 of related-party payables, $31,285 of short-term related-party debt and $8,939 of accrued expenses owed to executives (q). The warrants exchanged per the February 1, 2022 and June 1, 2022 Auctus Fund, LLC exchange agreements were not considered in the proforma adjustments above.
(p)	The decrease in the Company's accumulated deficit will be a result of income statement transactions related to the debt forgiveness from Jones Day of $975,000 (b), $62,052 from the July 9, 2020 exchange agreement (c), $253,429 from March 22, 2021 exchange agreement, and $104,879 of accounts payable forgiven based on an agreement signed with a vendor on June 6, 2022, and reversal of a $38,129 derivative liability associated with Auctus Fund, LLC debt.  This will be offset by the $350,000 payment made in accordance with the December 21, 2021 warrant exchange agreement with GPB Holdings, LLC (a), debt issuance costs of $5,211 on Auctus Fund, LLC debt (d) and debt issuance costs of $61,920 on 10% Senior Unsecured Convertible Debenture (f).
(q)	Per the exchange agreement dated June 22, 2022, $29,776 of related-party payables, $31,285 of short-term related-party debt and $8,939 of accrued expenses owed to executives will be converted into 7,000 shares of common stock.

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DILUTION

Investors purchasing shares of common stock in this offering will experience immediate and substantial dilution in the as adjusted net tangible book value of their shares of common stock. Dilution in as adjusted net tangible book value represents the difference between the public offering price per share and the as adjusted net tangible book value per share of Common Stock immediately after the offering.

The historical net tangible book value of our common stock as of March 31, 2022 was $(5,344,000) or $(4.79) per share post-split. Historical net tangible book value per share of common stock represents our total tangible assets (total assets less intangible assets) less total liabilities divided by the number of shares of common stock outstanding as of that date.

After giving effect to the sale of 890,000 shares of common stock and related Public Warrants in this offering at the offering price of $10 per share and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, our net tangible book value as of March 31, 2022 would have been $5,133,000, or $2.56 per share. The offering price may not be the final price of the Offering and will be adjusted based on the actual initial public offering price and other terms of our initial public offering determined at pricing. This amount represents an immediate increase in net tangible book value of $7.35 per share to our existing stockholders and an immediate dilution in net tangible book value of approximately $7.44 per share to new investors purchasing our common stock in this offering. We determine dilution by subtracting the net tangible book value per share after the offering from the amount of cash that a new investor paid for a share of common stock.

The following table illustrates this dilution on a per share basis:

Offering price per share of common stock and associated Public Warrant(1)	$	10.00
Historical net tangible book value per share as of March 31, 2022	$	(4.79	)
Increase in net tangible book value per share attributable to Investors	$	7.35
Net tangible book value per share after the offering	$	2.56
Dilution per share to new investors	$	7.44

(1) The offering price may not be the final price of the Offering and will be adjusted based on the actual initial public offering price and other terms of our initial public offering determined at pricing.

Each $1.00 increase or decrease in the combined public offering price of $10 per share and related Public Warrant would increase or decrease our net tangible book value after this offering by approximately $0.40 or ($0.43) per share, and increase or decrease the dilution per share to new investors by approximately $0.60 or ($0.57) per share, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. We may also increase or decrease the number of shares we are offering. An increase or decrease of 100,000 securities in the number of securities offered by us would increase or decrease our net tangible book value after this offering by approximately $0.31 or ($0.37) per share, and increase or decrease the dilution per share to new investors by approximately ($0.31) or $0.37 per share, assuming that the public offering price remains the same, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. The information discussed above is illustrative only and will be adjusted based on the actual public offering price and other terms of this offering determined at pricing.

If the underwriters exercise their option to purchase additional shares in full, the net tangible book value per share after giving effect to the offering would be $2.97 per share. This represents an immediate increase in pro forma net tangible book value of $0.41 per share to existing stockholders and an immediate dilution in net tangible book value of $(0.41) per share to new investors purchasing our common stock in this offering.

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Management’s Discussion and Analysis of financial condition and results of operations presented below does not give effect to the Reverse Stock Split.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the “Selected Financial Data” and our financial statements and related notes thereto included elsewhere in this prospectus. In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from management’s expectations. Factors that could cause such differences are discussed in the sections entitled “Forward-Looking Statements” and “Risk Factors.” We are not undertaking any obligation to update any forward-looking statements or other statements we may make in the following discussion or elsewhere in this document even though these statements may be affected by events or circumstances occurring after the forward-looking statements or other statements were made. Therefore, no reader of this document should rely on these statements being current as of any time other than the time at which this document is declared effective by the SEC.

Overview

We are a medical technology company focused on developing innovative medical devices that have the potential to improve healthcare. Our primary focus is the sales and marketing of our LuViva® Advanced Cervical Scan non-invasive cervical cancer detection device. The underlying technology of LuViva primarily relates to the use of biophotonics for the non-invasive detection of cancers. LuViva is designed to identify cervical cancers and precancers painlessly, non-invasively and at the point of care by scanning the cervix with light, then analyzing the reflected and fluorescent light.

LuViva is designed to provide a less invasive and painless alternative to conventional tests for cervical cancer screening and detection. Additionally, LuViva is designed to improve patient well-being not only because it eliminates pain, but also because it is convenient to use and provides rapid results at the point of care. We focus on two primary applications for LuViva: first, as a cancer screening tool in the developing world, where infrastructure to support traditional cancer-screening methods is limited or non-existent, and second, as a triage following traditional screening in the developed world, where a high number of false positive results cause a high rate of unnecessary and ultimately costly follow-up tests.

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We are a Delaware corporation, originally incorporated in 1992 under the name “SpectRx, Inc.,” and, on February 22, 2008, changed our name to Guided Therapeutics, Inc. At the same time, we renamed our wholly owned subsidiary, InterScan, which originally had been incorporated as “Guided Therapeutics.”

Since our inception, we have raised capital through the public and private sale of debt and equity, funding from collaborative arrangements, and grants.

Our 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. We have experienced operating losses since our inception and, as of March 31, 2022, we have an accumulated deficit of approximately $143.4 million. To date, we have engaged primarily in research and development efforts and the early stages of marketing our products. We do not have significant experience in manufacturing, marketing or selling our products. We may not be successful in growing sales for our products. Moreover, required regulatory clearances or approvals may not be obtained in a timely manner, or at all. Our products may not ever gain market acceptance and we may not ever generate significant revenues or achieve profitability. The development and commercialization of our products requires substantial development, regulatory, sales and marketing, manufacturing and other expenditures. We expect our operating losses to continue for the foreseeable future as we continue to expend substantial resources to complete commercialization of our products, obtain regulatory clearances or approvals, build our marketing, sales, manufacturing and finance capabilities, and conduct further research and development.

Our product revenues to date have been limited. In 2021, the majority of our revenues were from the sale of LuViva devices and disposables. We expect that the majority of our revenue in 2022 will be derived from revenue from the sale of LuViva devices and disposables.

Current Demand for LuViva

Based on written agreements and ongoing discussions with our distributors, we currently hold and expect to generate additional purchase orders for approximately $1.0 to $1.5 million in LuViva devices and disposables in 2022 and expect those purchase orders to result in actual sales of $0.5 to $1.0 million in 2022 representing what we view as current demand for our products. We cannot be assured that we will generate all or any of these additional purchase orders, or that existing orders will not be canceled by the distributors or that parts to build product will be available to meet demand, such that existing orders will result in actual sales. Because we have a short history of sales of our products, we cannot confidently predict future sales of our products beyond this time frame and cannot be assured of any particular amount of sales. Accordingly, we have not identified any particular trends with regard to sales of our products. In order to increase demand for LuViva, the Company in 2022 is focused on three primary markets: the United States, China and Europe. In addition, as of November 10, 2021, the Company had filed its initial application for listing on the Nasdaq stock exchange, been assigned a reviewer for its application and received an official review letter from Nasdaq. The goal is to uplist to Nasdaq during 2022, although there can be no assurance that this will happen.

In the United States, the Company is actively pursuing FDA approval by initiating a clinical trial protocol involving approximately 400 study participants. The protocol was drafted with input from FDA and three prestigious clinical centers that are expected to participate in enrolling the 400 women at multiple sites within their hospital systems. Clinical trial agreements have been drafted and agreed upon, the budget at one institution has been agreed upon and is under negotiation at the other institution. The third institution is reviewing the protocol and budget. The LuViva devices have been prepared and have passed bench testing in order to begin the study. All requested materials have been submitted for review by the respective hospital institutional review boards (IRBs). Once the IRB’s have approved the study, enrollment may begin, which is expected prior to the end of 2022 and will last approximately eight to nine months; however there can be no assurances that the study will be completed by the end of 2022.

In China, the Chinese NMPA (National Medical Products Approval) study has begun at four clinical sites. According to enrollment tracking reports sent to us by our Chinese partner SMI on March 11, 2022, testing of 150 patients has been completed in the ongoing clinical trial for Chinese National Medical Products Administration (NMPA) approval.  The trial is expected to be completed in the second quarter of this year and submitted for approval shortly thereafter, although there can be no assurance that the study will be completed within this time frame.

In Europe, the Company attended a meeting in Bucharest, Romania on November 3-4, 2021, hosted by our central Eastern and Russian distribution partner. The LuViva system was demonstrated for doctors at a local clinic and the head Ob-Gyn physician’s hospital has accepted the LuViva device into service and is expected to order additional Cervical Guides to test patients as part of her practice.

Critical Accounting Policies

Our material accounting policies, which we believe are the most critical to investors understanding of our financial results and condition, are discussed below. Because we are still early in our enterprise development, the number of these policies requiring explanation is limited. As we begin to generate increased revenue from different sources, we expect that the number of applicable policies and complexity of the judgments required will increase.

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Revenue Recognition: 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.

Valuation of Deferred Taxes: We account for income taxes in accordance with the liability method. Under the liability method, we recognize deferred assets and liabilities based upon anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases. We establish a valuation allowance to the extent that it is more likely than not that deferred tax assets will not be utilized against future taxable income.

Valuation of Equity Instruments Granted to Employee, Service Providers and Investors: On the date of issuance, the instruments are recorded at their fair value as determined using either the Black-Scholes valuation model or Monte Carlo Simulation model.

Allowance for Accounts Receivable: The Company reviews all outstanding accounts receivable for collectability on a quarterly basis. An allowance for doubtful accounts is recorded for any amounts deemed uncollectable. The allowance is adjusted based on our assessment of the ability of our distributors to make required payments and our review of the financial condition of our distributors.

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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.

Results of Operations

COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

Research and Development Expenses: Research and development expenses were $21,000 during the three months ended March 31, 2022, compared to $16,000 during the three months ended March 31, 2021, an increase of $5,000 or 31%. The increase was primarily due to higher research and development clinical costs and payroll-related expenses.

Sales and Marketing Expenses: Sales and marketing expenses were $40,000 during the three months ended March 31, 2022, compared to $36,000 during the three months ended March 31, 2021, an increase of $4,000 or 11%. The increase was primarily due to higher travel and payroll-related expenses.

General and Administrative Expense: General and administrative expenses were $386,000 for the three months ended March 31, 2022, compared to $771,000 during the three months ended March 31, 2021, a decrease of $385,000 or 50%. The decrease was primarily due to a prior-year charge of $398,000 recorded during the three months ended March 31, 2021 for warrants issued to Mr. Blumberg for consulting services. 

Interest Expense: Interest expense during the three months ended March 31, 2022 was $101,000, compared to $141,000 during the three months ended March 31, 2021, a decrease of $40,000, or 28%. The decrease was due a decrease in debt, resulting in lower interest recognized for outstanding notes payable and convertible debt during the three months ended March 31, 2022 versus the same period in the prior year.

Loss Due to Change in Fair Value of Derivative Liability: Loss due to change in fair value of the derivative liability during the three months ended March 31, 2022 was $6,000, compared to an $88,000 loss recorded during the three months ended March 31, 2021. The decrease was primarily due to changes to our stock price during each of the three-month periods, which impacted the fair value of the derivative liability.

Gain from extinguishment of debt: Gain from extinguishment of debt during the three months ended March 31, 2022 was $41,000, compared to a gain from extinguishment of debt of $87,000 during the three months ended March 31, 2021, a decrease of $46,000, or 53%. The decrease was due to a lower amount of debt forgiven.

Change in Fair Value of Warrants: Change in fair value of warrants during the three months ended March 31, 2022 was zero, compared to a $448,000 gain recorded during the three months ended March 31, 2021. The decrease was primarily due to (i) a change in the terms of the warrants during 2021, which resulted in reclassification of the warrant instruments from liabilities to equity and (ii) expiration of the warrants previously outstanding.

Preferred Stock Dividends: Expense related to preferred stock dividends during the three months ended March 31, 2022 was $548,000, compared to $55,000 of expense recorded during the three months ended March 31, 2021. The increase was primarily due to payment of a one-time, non-recurring 15% dividends to the Series F and Series F-2 Preferred shareholders, as required by the Series F and Series F-2 Certificate of Designations in the event the Company did not uplist to the NASDAQ stock exchange or file its clinical data intended for FDA approval of LuViva by December 31, 2021.

Net Loss: Net loss attributable to common stockholders was $1,055,000 for the three months ended March 31, 2022, compared to net loss of $572,000 for the three months ended March 31, 2021. The reasons for the fluctuation are outlined above.

There was no income tax benefit recorded for the three months ended March 31, 2022 and 2021, due to recurring net operating losses. A full valuation allowance has been recorded related the deferred tax assets generated from the net operating losses.

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COMPARISON OF THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Sales Revenue, Cost of Sales and Gross Profit from Devices and Disposables: Revenues from the sale of LuViva devices for the year ended December 31, 2021 were $81,000, compared to $102,000 for the year ended December 31, 2020, a decrease of $21,000 or 21%. Cost of goods sold was $61,000 during the year ended December 31, 2021, compared to cost of goods recovered of $41,000 during the year ended December 31, 2020. Cost of goods recovered in 2020 was the result of the buy-back of parts from one customer that were then sold, resulting in a revaluation of the inventory reserve. Cost of goods sold increased during the year ended December 31, 2021 due to inventory write-offs of slow-moving inventory. This resulted in gross profit of $20,000 on the sales of devices and disposals for the year ended December 31, 2021, compared to gross profit of $143,000 for the same period in 2020. 

Research and Development Expenses: Research and development expenses for the year ended December 31, 2021 decreased to $69,000 from $143,000 during the same period in 2020. The decrease of $74,000 or 52% was primarily due to a reduction in research and development clinical costs and payroll expenses.

Sales and Marketing Expenses: Sales and marketing expenses for the year ended December 31, 2021 remained consistent with the year ended December 31, 2020.

General and Administrative Expense: General and administrative expenses for the year ended December 31, 2021 increased to approximately $2,172,000 compared to $913,000 during the same period in 2020. The increase of approximately $1,259,000, or 138%, was primarily due to a charge of $556,000 for warrants issued to Mr. Blumberg for consulting services and consulting expenses of $228,000 for warrants issued to finders in the capital raises. Additionally, during the year ended December 31, 2020, the Company reversed $292,000 of a reserve taken for a deposit made for inventory parts for its devices, which lowered general and administrative expenses in the prior period. The remaining increase in current period general and administrative expenses was due to minimal increases in rent expense, payroll-related expenses, and miscellaneous other expenses.

Other Income: Other income during the year ended December 31, 2021 was $507,000, compared to $271,000 during the same period in 2020. The increase of $236,000, or 87%, was primarily due to the write-off of a $350,000 subscription receivable liability during 2021. The increase was offset by additional income recorded for recovery of employment expenses and aged payables with had exceeded their statute of limitations on collectability during 2020.

Interest Expense: Interest expense for the year ended December 31, 2021 increased to approximately $1,150,000, compared to $1,056,000 during the same period in 2020. The increase of approximately $94,000, or 9%, was primarily due to a $350,000 prepayment penalty incurred on short-term convertible notes payable, offset by lower interest incurred for outstanding notes payable and convertible debt during the year ended December 31, 2021.

Gain (Loss) from extinguishment of debt: During the year ended December 31, 2021, the Company recognized a gain on extinguishment of debt of $578,000, compared to a loss on extinguishment of debt of $296,000 during the same period in 2020. The gain from debt extinguished in 2021 was primarily due to forgiveness of debt principal and accrued interest totaling $578,000 during 2021. The loss of $296,000 recognized in the prior period was related to debt eliminated from debt exchange agreements.

Change in Fair Value of Warrants: The gain recorded due to change in fair value of warrants was $448,000 during the year ended December 31, 2021, compared to $1,879,000 during the same period in 2020. The decrease of $1,431,000, or 76%, was primarily due to an exchange agreement signed with GPB Debt Holdings II LLC (“GPB”), which resulted changes to the terms of the warrants and reclassification of the warrants from liabilities to equity.

Change in Fair Value of Derivative Liability: Loss from the change in the fair value of the derivative liability was $91,000 during the year ended December 31, 2021, compared to $25,000 during the same period in 2020. The increase in the loss of $66,000, or 264%, was due to changes in the fair value of the associated derivative liability and extinguishment due to a $700,000 payoff of the associated loan.

Net Loss: Net loss attributable to common stockholders was $2,431,000 during the year ended December 31, 2021, compared to $401,000 during the same period in the prior year. The increase in net loss of $2,030,000 or 506% was due to the reasons described above.

There was no income tax benefit recorded for the years ended December 31, 2021 or 2020, due to recurring net operating losses.

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Liquidity And Capital Resources

Since our inception, we have raised capital through the public and private sale of debt and equity, funding from collaborative arrangements, and grants. As of March 31, 2022, we had cash of approximately $725,000 and negative working capital of $3,662,000.

Our major cash flows for the three months ended March 31, 2022 consisted of cash used by operating activities of $179,000, cash used for investing activities of $14,000, and net cash provided by financing activities of $275,000, which primarily represented the proceeds received from warrant exercises.

Capital Resources For 2021

During 2021, the Company received $1,130,000 of cash from the sale of 10% debenture unit investments and incurred transactional fees of $86,400. The Company issued the finders 413,600 warrants for the Company’s common stock shares. The investors received a total of 1,130,000 warrants for common stock shares. The debentures are convertible into 2,260,000 of the Company’s common stock shares.

During 2021, the Company received $2,114,000 of cash from the sale of equity securities and incurred transactional fees of $139,000. The Company also issued the finders 98,000 of the Company’s common stock shares and 643,700 warrants for the Company’s common stock shares. The investors received a total of 1,436 and 3,237 shares of Series F and Series F-2 preferred stock, respectively. Each share of Series F or Series F-2 preferred stock is convertible into 4,000 shares of the Company’s common stock, at the election of the investor.

During 2021, the Company finalized an investment by Power Up Lending Group Ltd (“Power Up”). Power Up invested $132,000 (of which the Company received $125,000 net of costs) for 153,000 shares of Series G preferred stock. As of December 31, 2021, all Series G preferred shares were redeemed.

During 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). Mr. Fowler exchanged $50,000 of the amount owed of $546,214 for 50 shares of Series F-2 Preferred Shares (convertible into 200,000 shares of common stock) and a $150,000 unsecured note. The note accrues interest at the rate of 6.0% (18.0% in the event of default) beginning on March 1, 2022 and is payable in monthly installments of $3,600 for four years, with the first payment being due on March 15, 2022. The effective interest rate of the note is 6.18%. Mr. Fowler forgave $86,554 and may forgive up to $259,661 of debt if the Company complies with the repayment plan described above.

Capital Resources For 2020

During 2020, we received equity investments in the amount of $1,735,500. These investors received a total of 1,735.5 shares of Series E preferred stock (if the Investor elects to convert their Series E preferred stock, each share of Series E preferred stock converts into 4,000 shares of our common stock).

During January and April 2020, we received equity investments in the amount of $128,000. These investors received a total of 256,000 shares of common stock and 256,000 warrants issued to purchase shares of common stock at a strike price of $0.25, 256,000 warrants to purchase shares of common stock at a strike price of $0.75 and 128 shares of Series D preferred stock (if the Investor elects to convert their Series D preferred stock, each share of Series D preferred stock converts into 3,000 shares of our common stock shares). Of the amount invested $38,000 was from related parties.

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On January 6, 2020, we entered into an exchange agreement with Jones Day. Upon making a payment of $175,000, which had not yet occurred, we will exchange $1,744,768 of debt outstanding for: $175,000, an unsecured promissory note in the amount of $550,000; due 13 months form the date of issuance, that may be called at any time prior to maturity upon a payment of $150,000; and an unsecured promissory note in the principal amount of $444,768, bearing an annualized interest rate of 6.0% and due in four equal annual installments beginning on the second anniversary of the date of issuance.

On January 8, 2020, we 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. We also issued 6,957,013 warrants to purchase shares of common stock; with exercise prices of $0.25, $0.75 and $0.20.

On June 3, 2020, we exchanged $328,422 in debt from Auctus, (summarized in footnote 10: Convertible Notes), for 500,000 shares of common stock and 700,000 warrants to purchase shares of common stock. The fair value of the shares of common stock was $250,000 (based on a $0.50 fair value for our stock) and of the warrants to purchase shares of common stock was $196,818 (based on a $0.281 black scholes fair valuation). This resulted in a net loss on extinguishment of debt of $118,396 ($446,818 fair value less the $328,422 of exchanged debt).

On June 30, 2020, we 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 shares of common stock and 250,000 warrants to purchase shares of common stock. The fair value of the shares of common stock was $250,000 (based on a $0.50 fair value for our stock) and of the warrants to purchase shares of common stock was $99,963 (based on a $0.40 black scholes fair valuation). This resulted in a net loss on extinguishment of debt of $224,963 ($349,963 fair value less the $125,000 of exchanged debt). After the exchange transaction a balance was due Mr. Clavijo of $10,213 which was paid.

On July 9, 2020, we entered into an exchange agreement with Mr. Bill Wells (one of its former employees). In lieu of agreeing to dismiss approximately half of what is owed or

$220,000, 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 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; (iii) 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 (ii) 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.

The following table summarizes the debt exchanges:

	Total Debt and Accrued Interest		Total Debt		Total Accrued Interest		Common Stock Shares		Warrants (Exercise $0.25)		Warrants (Exercise $0.75)		Warrants (Exercise $0.20)		Warrants (Exercise $0.15)		Warrants (Exercise $0.50)
Aquarius	$	145,544	$	107,500	$	38,044		291,088		145,544		145,544		-		-		-
K2 Medical (Shenghuo) (3)		803,653		771,927		31,726		1,905,270		704,334		704,334		496,602		-		-
Mr. Blumberg		305,320		292,290		13,030		1,167,630		119,656		119,656		928,318		-		-
Mr. Case		179,291		150,000		29,291		896,456		-		-		896,456		-		-
Mr. Grimm		51,110		50,000		1,110		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. Rosenstock (1)		50,000		50,000		-		100,000		50,000		50,000		-		-		-
Mr. James (2)		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		-		-		-		-		250,000
Mr. Wells (4)		220,000		220,000		-		-		-		-		-		-		-
Total		2,737,847		2,496,316		241,531		7,957,013		1,121,705		1,121,705		4,713,603		700,000		250,000

1.	Ms. Rosenstock also forgave $28,986 in debt.
2.	Mr. Imhoff and Mr. James are members of the board of directors and therefore related parties.
3.	Our COO and director, Mark Faupel, is a shareholder of Shenghuo, and another current director, Richard Blumberg, also 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.

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On January 16, 2020, we entered into an exchange agreement with GPB. Under the terms of this exchange agreement, we will exchange $3,360,811 of debt outstanding as of December 12, 2019 for the following: (1) a cash payment of $1,500,000, (2) 7,185,000 warrants to purchase common stock, previously outstanding, would be exchanged for new warrants to purchase shares of common stock at a strike price of $0.20 and (3) a certain number of shares of preferred stock s for the remaining balance outstanding upon the final exchange date. On January 8, 2021, we made the final payment of $750,000 out of the total $1,500,000 as required by this exchange agreement with GPB. On June 30, 2021, we issued 2,236 shares of series F-2 preferred stock in accordance with the terms of the agreement.

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 matured on January 26, 2021 and accrues interest at a rate of 12% per year. As December 31, 2021, the note is in default and accrues default interest of 24% per year.

On May 4, 2020, we 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. We were notified that the application for loan forgiveness was approved in the amount of $23,742 in principal and $234 in interest. We are planning on appealing the amount forgiven.

On May 20, 2020, we received a $70,000 loan from Mr. Blumberg, which was paid off in June 2020.

On May 22, 2020, we entered into an exchange agreement with Auctus. Based on this agreement we exchanged three outstanding notes, in the amounts of $150,000, $89,250, and $65,000 for a total amount $304,250 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 shares of common stock (shares were issued on June 3, 2020); and 700,000 warrants issued to purchase shares of common stock with an exercise price of $0.15. The fair value of the shares of common stock was $250,000 (based on a $0.50 fair value for our stock) and of the warrants to purchase shares of common stock was $196,818 (based on a $0.281 black scholes fair valuation). This resulted in a net loss on extinguishment of debt of $118,396 ($446,818 fair value less the $328,422 of exchanged debt). The notes were no longer outstanding as of December 31, 2021.

On May 27, 2020, we received the second tranche in the amount of $400,000, from the December 17, 2019, securities purchase agreement and convertible note with Auctus. The net amount paid to us was $313,000 This second tranche is part of the convertible note issued to Auctus for a total of $2.4 million of which $700,000 has already been provided by Auctus. The note matures on May 27, 2022 and accrues interest at a rate of ten percent (10% per annum). This note is subject to the exchange agreement dated February 1, 2022 discussed below.

Auctus Exchange

On June 2, 2021, we entered into an initial exchange agreement Auctus. On February 1, 2022, we entered into a second exchange agreement with Auctus. Pursuant to this second agreement, Auctus agreed to exchange an aggregate of $668,290 of outstanding notes (the "Notes"), including accrued interest, and the associated warrants issued in connection with the Notes (which warrants, for the purpose of the exchange, are valued at, in the aggregate, $1,681,707) into unregistered units of our common stock, warrants and prefunded warrants otherwise in the form and ratios issued in this offering. The exchange price will be on a $1 for $1 basis such that Auctus will receive $2,349,997 of units consisting of common stock, warrants and prefunded warrants. The units being issued in the exchange with Auctus are not registered on this Registration Statement and are being issued pursuant to Section 4(a)(2) under the Securities Act of 1933, as amended. Additionally, the units and the common stock underlying the units will be subject to a lock up agreement with the underwriters until the earlier of 120 days after this offering and the date that the daily volume weighted average price of the common stock exceeds 200% of the public offering price for at least five consecutive trading days. Further, the termination date of the June 2, 2021 agreement was extended to April 15, 2022. The $350,000 related to default penalties will be exchanged into $350,000 of securities offered in the Nasdaq uplist offering. On April 14, 2022, we entered into an agreement with Auctus that extended the April 15, 2022 deadline to May 15, 2022. On June 1, 2022, we entered into a third exchange agreement with Auctus. As of the date of the agreement, Auctus was owed $692,114 of Notes and accrued interest. Pursuant to this third agreement, as long as we complete the Nasdaq Offering prior to July 15, 2022, the total amount owed to Auctus will be payable in cash 13 months subsequent to the consummation of the Offering.

GPB Warrant Exchange Agreement

On December 21, 2021, we entered into a warrant exchange agreement with GPB Holdings LLC. Pursuant to this agreement, upon an equity financing of net proceeds of at least $4.0 million, GPB will exchange 7,185,000 pre-split warrants at an exercise price of $0.20, with no anti-dilution provisions and no cashless exercise provision, for a cash payment of $350,000 and new warrants under the same terms as warrants granted in the aforementioned financing. The warrants will vest six months from the closing date of the equity financing. The investor agreed to restrict its holding of Company’s common stock to less than 4.99% of the total number of the Company’s outstanding common shares at any one point in time.

Other Warrant Exchange Agreements

During the year ended December 31, 2021, the Company entered into various agreements with holders of the Company’s $0.20 strike price warrants, pursuant to which each holder separately agreed to exchange 4,713,603 common stock warrants with a strike price of $0.20 for 4,477,923 common stock warrants with a strike price of $0.16 and a contractual term of 15 days. The Company received approximately $365,492 from the holders for the exercises of the warrants.

Contingencies

Based on the current outbreak of the Coronavirus SARS-CoV-2, the pathogen responsible for COVID-19, which has already had an impact on financial markets, there could be additional repercussions in our operating business, including but not limited to, the sourcing of materials for product candidates, manufacture of supplies for preclinical and/or clinical studies, delays in clinical operations, which may include the availability or the continued availability of patients for trials due to such things as quarantines,  conduct of  patient monitoring and clinical trial data retrieval at investigational study sites.

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The future impact of the outbreak is highly uncertain and cannot be predicted, and we cannot provide any assurance that the outbreak will not have a material adverse impact on our operations or future results or filings with regulatory health authorities. The extent of the impact, if any, we will depend on future developments, including actions taken to contain the coronavirus.

The conflict in Ukraine, which has already had an impact on financial markets, could result in additional repercussions in our operating business, including delays in obtaining regulatory approval to market our products in Russia. The future impact of the conflict is highly uncertain and cannot be predicted, and we cannot provide any assurance that the conflict will not have a material adverse impact on our operations or future results or filings with regulatory health authorities.

Off-Balance Sheet Arrangements

We have no material off-balance sheet arrangements, no special purpose entities, and no activities that include non-exchange-traded contracts accounted for at fair value.

BUSINESS

Overview

We are a medical technology company focused on developing innovative medical devices that have the potential to improve healthcare. Our primary focus is the sales and marketing of our LuViva® Advanced Cervical Scan non-invasive cervical cancer detection device. The underlying technology of LuViva primarily relates to the use of biophotonics for the non-invasive detection of cancers. LuViva is designed to identify cervical cancers and precancers painlessly, non-invasively and at the point of care by scanning the cervix with light, then analyzing the reflected and fluorescent light.

LuViva is designed to provide a less invasive and painless alternative to conventional tests for cervical cancer screening and detection. Additionally, LuViva is designed to improve patient well-being not only because it eliminates pain, but also because it is convenient to use and provides rapid results at the point of care. We focus on two primary applications for LuViva: first, as a cancer screening tool in the developing world, where infrastructure to support traditional cancer-screening methods is limited or non-existent, and second, as a triage following traditional screening in the developed world, where a high number of false positive results cause a high rate of unnecessary and ultimately costly follow-up tests.

Screening for cervical cancer represents one of the most significant demands on the practice of diagnostic medicine. As cervical cancer is linked to a sexually transmitted disease -the human papillomavirus (HPV)-every woman essentially becomes “at risk” for cervical cancer simply after becoming sexually active. In the developing world, there are approximately 2.0 billion women aged 15 and older who are potentially eligible for screening with LuViva. Guidelines for screening intervals vary across the world, but U.S. guidelines call for screening every three years. Traditionally, the Pap smear screening test, or Pap test, is the primary cervical cancer screening methodology in the developed world. However, in developing countries, cancer screening using Pap tests is expensive and requires infrastructure and skill not currently existing, and not likely to be developed in the near future, in these countries.

We believe LuViva is the answer to the developing world’s cervical cancer screening needs. Screening for cervical cancer in the developing world often requires working directly with foreign governments or non-governmental agencies (NGOs). By partnering with governments or NGOs, we can provide immediate access to cervical cancer detection to large segments of a nation’s population as part of national or regional governmental healthcare programs, eliminating the need to develop expensive and resource-intensive infrastructures.

In the developed world, we believe LuViva offers a more accurate and ultimately cost-effective triage medical device, to be used once a traditional Pap test or HPV test indicates the possibility of cervical cancer. Due to the high number of false positive results from Pap tests, traditional follow-on tests entail increased medical treatment costs. We believe these costs can be minimized by utilizing LuViva as a triage to determine whether and to what degree follow-on tests are warranted.

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We believe our non-invasive cervical cancer detection technology can be applied to the early detection of other cancers as well. For example, we have developed prototypes and conducted limited clinical studies using our biophotonic technology for the detection of esophageal cancer. The Company believes that skin cancer detection also is a promising target for our technology, but currently we are focused primarily on the large-scale commercialization of LuViva.

Cancer

Cancer is a group of many related diseases. All forms of cancer involve the out-of-control growth and spread of abnormal cells. Normal cells grow, divide, and die in an orderly fashion. Cancer cells, however, continue to grow and divide and can spread to other parts of the body. As reported in 2015, in the United States, one in every two women and one in every three men will develop cancer in their lifetimes. According to the American Cancer Society, the sooner a cancer is found and treatment begins, the better a patient’s chances are of being cured. We began investigating the applications of our biophotonic technology to cancer detection before 1997, when we initiated a preliminary market analysis. We concluded that our biophotonic technology had applications for the detection of a variety of cancers through the exposure of tissue to light. We selected detection of cervical cancer and skin cancer from a list of the ten most promising applications to pursue initially, and ultimately focused primarily on our LuViva cervical cancer detection device.

Cervical cancer is a cancer that begins in the lining of the cervix (which is located in the lower part of the uterus). Cervical cancer forms over time and may spread to other parts of the body if left untreated. There is generally a gradual change from a normal cervix to a cervix with precancerous cells to cervical cancer. For some women, precancerous changes may go away without any treatment. While the majority of precancerous changes in the cervix do not advance to cancer, if precancers are treated, the risk that they will become cancers can be greatly reduced.

The Developing World

According to the most recent data published by the WHO, cervical cancer is the fourth most frequent cancer in women worldwide, with an estimated 570,000 new cases in 2018, an increase of 40,000 cases from 2012. For women living in less developed regions, however, cervical cancer is the second most common cancer, and 9 out of 10 women who die from cervical cancer reside in low- and middle-income countries. In 2018, GLOBOCAN, the international cancer tracking agency, estimated that approximately 311,000 women died from cervical cancer, with 85% of these deaths occurring in low- and middle-income countries.

As noted by the WHO, in developed countries, programs are in place that enable women to get screened, making most pre-cancerous lesions identifiable at stages when they can easily be treated. Early treatment prevents up to 80% of cervical cancers in these countries. In developing countries, however, limited access to effective screening means that the disease is often not identified until it is further advanced and symptoms develop. In addition, prospects for treatment of such late-stage disease may be poor, resulting in a higher rate of death from cervical cancer in these countries.

We believe that the greatest need and market opportunity for LuViva lies in screening for cervical cancer in developing countries where the infrastructure for traditional screening may be limited or non-existent.

In addition to private care markets, we are actively working with distributors in the following countries to implement government-sponsored screening programs: Turkey, Indonesia and several countries in Eastern Europe. The number of screening candidates in those countries is approximately 155 million.

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The Developed World

The Pap test, which involves a sample of cervical tissue being placed on a slide and observed in a laboratory, is currently the most common form of cervical cancer screening. Since the introduction of screening and diagnostic methods, the number of cervical cancer deaths in the developed world has declined dramatically, due mainly to the increased use of the Pap test. However, the Pap test has a wide variation in sensitivity, which is the ability to detect the disease, and specificity, which is the ability to exclude false positives. A study by Duke University for the U.S. Agency for Health Care Policy and Research published in 1999 showed Pap test performance ranging from a 22%-95% sensitivity and 78%-10% specificity, although new technologies improving the sensitivity and specificity of the Pap test have recently been introduced and are finding acceptance in the marketplace. About 60 million Pap tests are given annually in the United States, and combined with a pelvic exam as the standard of care, has an average price of approximately $380 per exam.

After a Pap test returns a positive result for cervical cancer, accepted protocol calls for a visual examination of the cervix using a colposcope, usually followed by a biopsy, or tissue sampling, at one or more locations on the cervix. This method looks for visual changes attributable to cancer. There are about two million colposcope examinations annually in the United States and Europe. According to industry reports by MD Save and Costhelper Health, leading online medical service providers, the average cost of a colposcopy examination with biopsy in the United States is currently $943.

Given this landscape, we believe that there is a material need and market opportunity for LuViva as a triage device in the developed world where LuViva represents a more cost- effective method of verifying a positive Pap test than the alternatives.

The LuViva Advanced Cervical Scan

LuViva is designed to identify cervical cancers and precancers painlessly, non-invasively and at the point of care by scanning the cervix with light, then analyzing the light reflected from the cervix. The information presented by the light would be used to indicate the likelihood of cervical cancer or precancers. Our product, in addition to detecting the structural changes attributed to cervical cancer, is also designed to detect the biochemical changes that precede the development of visual lesions. In this way, cervical cancer may be detected earlier in its development, which should increase the chances of effective treatment. In addition to the device itself, operation of LuViva requires employment of our single-use, disposable calibration and alignment cervical guide.

To date, thousands of women in multiple international clinical settings have been tested with LuViva. As a result, more than 25 papers and presentations have been published regarding LuViva in a clinical setting, including at the International Federation of Gynecology and Obstetrics Congress in London in 2015 and at the Indonesian National Obstetrics and Gynecology (POGI) Meeting in Solo in 2016.

Internationally, we contract with country-specific or regional distributors. We believe that the international market will be significantly larger than the U.S. market due to the international demand for cervical cancer screening. We have executed formal distribution agreements covering over 40 countries, some of which have since expired. We still have active contracts in place for countries including China and Southeast Asia (including Indonesia), Eastern Europe and Russia. In 2022, we intend to focus on other large markets such as those in the European Union, India, and certain Latin American countries, such as Mexico.

We have previously obtained regulatory approval to sell LuViva in Europe under our Edition 3 CE Mark. Additionally, LuViva has also previously obtained marketing approval from Health Canada, COFEPRIS in Mexico, Ministry of Health in Kenya, which have all expired. Presently, we have marketing approval from India and the Singapore Health Sciences Authority. In addition, in 2018, we were approved for sales and marketing in India. We currently are seeking regulatory approval to market LuViva in the United States but have not yet received approval from the U.S. Food and Drug Administration (FDA). As of December 31, 2021, we have sold 144 LuViva devices and approximately 76,980 single-use-disposable cervical guides to international distributors.

We believe our non-invasive cervical cancer detection technology can be applied to the early detection of other cancers as well. From 2008 to early 2013, we worked with Konica Minolta to explore the feasibility of adapting our microporation and biophotonic cancer detection technology to other areas of medicine and to determine potential markets for these products in anticipation of a development agreement. In February 2013, we replaced our existing agreements with Konica Minolta with a new agreement, pursuant to which, subject to the payment of a nominal license fee due upon FDA approval, Konica Minolta has granted us a five-year, world-wide, non-transferable and non-exclusive right and license to manufacture and to develop a non-invasive esophageal cancer detection product from Konica Minolta and based on our biophotonic technology platform. The license permitted us to use certain related intellectual property of Konica Minolta. In return for the license, we agreed to pay Konica Minolta a royalty for each licensed product we sell that includes their intellectual property. To date, we have not achieved any sales of products that include the intellectual property of Konica Minolta. As we develop LuViva as a commercial product, we will continue to seek new collaborative partners focused especially on marketing and sales.

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Our Strengths

Currently, we are the only commercial stage company with a biophotonic technology that potentially addresses a large primary screening market and a potential R&D pipeline that could improve the early detection of numerous cancers that afflict men and women. Key strengths include:

· The engineering and production risks have been largely addressed as we have sold over 100 working systems worldwide.

· Regulatory approvals have been granted covering over 40 countries.

· We have legitimate pathways for securing marketing approvals in the two largest medical markets - the US and China, within a 2-3 year period.

· The clinical results of our technology have been published in leading peer-reviewed journals by world-famous, thought leading physicians.

Our Business Strategy

Our near term goals are to accomplish the following over the next two years by pursuing the following strategies:

· Seek US FDA approval by completing a clinical trial.

· Contingent upon FDA approval, discuss opportunities to partner with a larger U.S. based company for distribution in the U.S. At the same time, we intend to build a small dedicated sales force based near major metropolitan centers and focused on generating sales at large centralized Ob-Gyn practices.

· Seek Chinese FDA approval working with our existing partner in China, Shandong Medical Instrumentation Co. Ltd.

· Pursue regulatory approval in Russia and work with our partner in Eastern Europe, Newmars Technology, Inc. to generate sales in Europe.

· Continue to selectively support sales through our distributors in large countries such as Indonesia.

While we plan to pursue regulatory approval in Russia, the ongoing conflict in Ukraine may delay filing and approval to market LuViva in Russia.  It does not affect any existing contracts with our distribution partner for Eastern Europe and Russia as they are focused more on countries less affected by the conflict in Ukraine.

Manufacturing, Sales Marketing and Distribution

We manufacture LuViva at our Norcross, Georgia facility and our contract manufacturer, Newmars Technology, Inc, located near Budapest, Hungary. Most of the operational components of LuViva are custom made for us by third-party manufacturers. We adhere to ISO 13485:2003 quality standards in our manufacturing processes. Our single-use cervical guides are manufactured by a vendor that specializes in injection molding of plastic medical products. On January 22, 2017, we entered into a license agreement with SMI, as amended on March 28, 2017, pursuant to which we granted SMI an exclusive global license to manufacture the LuViva device and related disposables (subject to a carve-out for manufacture in Turkey). On December 18, 2018, we entered into a co-development agreement with NTI, whereby NTI will perform final assembly of the LuViva device for its contracted distribution countries in Eastern Europe and Russia at its ISO 13485 facility in Hungary. This additional carve out has been agreed to by SMI. On August 12, 2021 the Company entered into a second amendment with SMI pursuant to which the Company has continued to grant SMI exclusive distribution, sales and manufacturing rights of the LuViva for China, Taiwan, Hong Kong and Macau.

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We rely on distributors to sell our products. Distributors can be country exclusive or cover multiple countries in a region. We manage these distributors, provide them marketing materials and train them to demonstrate and operate LuViva. We seek distributors that have experience in gynecology and in introducing new technology into their assigned territories. Currently, we rely on SMI in distributing our products in the People's Republic of China, Macau, Hong Kong and Taiwan; we rely on NTI in distributing our products in Eastern Europe and Russia.

We have only limited experience in the production planning, quality system management, facility development, and production scaling that will be needed to bring production to increased sustained commercial levels. We will likely need to develop additional expertise in order to successfully manufacture, market, and distribute any future products.

Patents

We have pursued a course of developing and acquiring patents and patent rights and licensing technology. Our success depends in large part on our ability to establish and maintain the proprietary nature of our technology through the patent process and to license from other’s patents and patent applications necessary to develop our products. As of March 31, 2022, we have 41 granted U.S. and foreign patents, collectively, relating to our biophotonic cancer detection technology that were developed in-house and are owned by the Company. 10 patents are still currently active and 31 have since expired. Currently, we do not own third party patents nor do we make any outside payments for patents.

Patents can be extended up to an additional five (5) years. However, patent term extension under the Hatch-Waxman Act does not occur automatically and the patent owner must file an application with the USPTO requesting term extension within 60 days of obtaining FDA marketing approval.

Patent No.	Title	Country	Grant Date	Expiration Date
6,792,982	Vacuum Source For Harvesting Substances	US	9/21/2004	7/23/2023
7,174,927	Vacuum Source For Harvesting Substances	US	2/13/2007	9/3/2024
7,301,629	Apparatus and Method for Determining Tissue Characteristics	US	11/27/2007	7/3/2023
7,335,166	System And Methods For Fluid Extractions And Monitoring	US	2/26/2008	5/22/2023
8,644,912	Method and Apparatus For Determining Tissue Characteristics	US	2/4/2014	8/22/2031
8,781,560	Method and Apparatus For Rapid Detection and Diagnosis of Tissue Abnormalities	US	7/15/2014	9/09/2031
9,561,003	Method and Apparatus For Rapid Detection and Diagnosis of Tissue Abnormalities	US	2/7/2017	3/5/2034
D714453	Mobile Cart and Hand Held Unit for Diagnostics of Measurement	US	9/30/2014	9/30/2028
D724199	Medical Diagnostic Stand Off Tube	US	3/10/2015	3/10/2029
D746475	Mobile Cart and Hand Held Unit for Diagnostics or Measurement	US	12/29/2015	12/29/2029

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The Company has applied for two additional US patents, although there is no assurance that these patents will be granted. The Company’s strategy is to continue improving its products and filing new patents to protect those improvements.

In the United States, additional years of patent protection may be added (on a case-by-case basis) beyond the standard patent terms under the 1984 Drug Price Competition and Patent Term Restoration Act, also known as the Hatch-Waxman Act. The Hatch-Waxman act includes Section 156, which provides for the extension of the term of a granted patent (PTE) under certain circumstances. The intent behind Section 156 is to extend patent life to compensate patent holders for patent term lost while developing their product and awaiting FDA approval. The Company’s patents qualify under Section 156 because LuViva has not yet been commercialized in the United States and it is being regulated by FDA as a Class III Medical Device.

Research, Development and Engineering

We have been engaged primarily in the research, development and testing of our LuViva non-invasive cervical cancer detection product and our core biophotonic technology. Since 2013, we have incurred approximately $8.1 million in research and development expenses, net of about $927,000 reimbursed through collaborative arrangements and government grants. Research and development costs were approximately $0.1 million in the years ended December 31, 2021 and 2020 and were not material during the three months ended March 31, 2022.

Since 2013, we have focused our research and development and our engineering resources almost exclusively on development of our biophotonic technology, with only limited support of other programs funded through government contracts or third-party funding. Because our research and clinical development programs for other cancers are at a very early stage, substantial additional research and development and clinical trials will be necessary before we can produce commercial prototypes of other cancer detection products.

Several of the components used in LuViva currently are available from only one supplier, and substitutes for these components could not be obtained easily or would require substantial modifications to our products.

Competition

The medical device industry in general and the markets for cervical cancer detection in particular, are intensely competitive. If successful in our product development, we will compete with other providers of cervical cancer detection and prevention products.

Current cervical cancer screening and diagnostic tests, primarily the Pap test, HPV test, and colposcopy, are well established and pervasive. Improvements and new technologies for cervical cancer detection and prevention, such as Thin-Prep from Hologic and HPV testing from Qiagen, have led to other new competitors. In addition, there are other companies attempting to develop products using forms of biophotonic technologies in cervical cancer detection, such as Spectrascience, which has a very limited U.S. FDA approval to market its device for detection of cervical cancers, but has not yet entered the market. The approval limits use of the Spectrascience device only after a colposcopy, as an adjunct. In addition to the Spectrascience device, there are other technologies that are seeking to enter the market as adjuncts to colposcopy, including devices from Dysis and Zedco. While these technologies are not direct competitors to LuViva, modifications to them or other new technologies will require us to develop devices that are more accurate, easier to use or less costly to administer so that our products have a competitive advantage.

In April 2014, the U.S. FDA approved the use of the Roche cobas HPV test as a primary screener for cervical cancer. Using a sample of cervical cells, the cobas HPV test detects DNA from 14 high-risk HPV types. The test specifically identifies HPV 16 and HPV 18, while concurrently detecting 12 other types of high-risk HPVs. This could make HPV testing a competitor to the Pap test. However, due to its lower specificity, we believe that screening with HPV will increase the number of false positive results if widely adopted.

In June 2006, the U.S. FDA approved the HPV vaccine Gardasil from drug maker Merck. Gardasil is a prophylactic HPV vaccine, meaning that it is designed to prevent the initial establishment of HPV infections. For maximum efficacy, it is recommended that girls receive the vaccine prior to becoming sexually active. Since Gardasil will not block infection with all of the HPV types that can cause cervical cancer, the vaccine should not be considered a substitute for routine Pap tests. On October 16, 2009, GlaxoSmithKline PLC was granted approval in the United States for a similar preventive HPV vaccine, known as Cervarix. Due to the limited availability and lack of 100% protection against all potentially cancer-causing strains of HPV, we believe that the vaccines will have a limited impact on the cervical cancer screening and diagnostic market for many years.

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Government Regulation

The medical devices that we manufacture are subject to regulation by numerous regulatory bodies, including the Chinese FDA (recently renamed the Chinese National Medical Product Administration (NMPA), the U.S. FDA, and comparable international regulatory agencies. These agencies require manufacturers of medical devices to comply with applicable laws and regulations governing the development, testing, manufacturing, labeling, marketing and distribution of medical devices. Devices are generally subject to varying levels of regulatory control, the most comprehensive of which requires that a clinical evaluation program be conducted before a device receives approval for commercial distribution.

In the European Union, medical devices are required to comply with the Medical Devices Directive and obtain CE Mark certification in order to market medical devices. The CE Mark certification, granted following approval from an independent “Notified Body,” is an international symbol of adherence to quality assurance standards and compliance with applicable European Medical Devices Directives. From 2017 through 2019, we were unable to pay the annual registration fees to maintain our ISO 13485:2003 certification and our CE Mark. On December 21, 2018 we executed an agreement with Newmars, described above, for final assembly of LuViva at their ISO 13485:2016 accredited facility. This allowed LuViva to be granted to CE Mark through the facility at Newmars, which was achieved in 2021, and both the ISO and CE Mark accreditations for LuViva are currently active. Thus, LuViva can be marketed in the European Union and other countries that honor the CE Mark.

China has a regulatory regime similar to that of the European Union, but due to interaction with the U.S. regulatory regime, the CFDA also shares some similarities with its U.S. counterpart. Devices are classified by the CFDA’s Center for Medical Device Evaluation (CMDE) into three categories based on medical risk, with the level of regulatory oversight determined by degree of risk and invasiveness. CMDE’s device classifications and definitions are as follows:

· Class I device: The safety and effectiveness of the device can be ensured through routine administration.

· Class II device: Further control is required to ensure the safety and effectiveness of the device.

· Class III device: The device is implanted into the human body; used for life support or sustenance; or poses potential risk to the human body, and thus must be strictly controlled in respect to safety and effectiveness.

Based on the above definitions and several discussions with regulatory consultants and potential partners, we believe that LuViva is most likely to be classified as a Class II device, however, this is not certain and the CFDA may determine that LuViva requires a Class III registration. Class III registrations are granted by the national CFDA office while Class I and II registrations occur at the provincial level. Typically, registration granted at the provincial level allows a medical device to be marketed in all of China’s provinces.

While Class I devices usually do not require clinical trial data from Chinese patients and Class III devices almost always do, Class II medical devices sometimes do and sometimes do not require Chinese clinical trials, and this determination may depend on the claim for the device and quality of clinical trials conducted outside of China. If clinical trials conducted in China are required, they usually are less burdensome for Class II devices than Class III devices.

CFDA labs also conduct electrical, mechanical and electromagnetic emission safety testing for medical devices similar to those required for the CE Mark. As is the case with the

U.S. FDA, manufacturers in China undergo periodic inspections and must comply with international quality standards such as ISO 13485 for medical devices. As part of our agreement with SMI, SMI will underwrite the cost of securing approval of LuViva with the CFDA. As of the date of this Prospectus, SMI has informed us in writing that LuViva has passed electrical, mechanical and electromagnetic emission safety testing for medical devices, which allows clinical trials to commence.

In the United States, permission to distribute a new device generally can be met in one of two ways. The first process requires that a pre-market notification (510(k) Submission) be made to the U.S. FDA to demonstrate that the device is as safe and effective as, or substantially equivalent to, a legally marketed device that is not subject to premarket approval (PMA). A legally marketed device is a device that (1) was legally marketed prior to May 28, 1976, (2) has been reclassified from Class III to Class II or I, or (3) has been found to be substantially equivalent to another legally marketed device following a 510(k) Submission. The legally marketed device to which equivalence is drawn is known as the “predicate” device. Applicants must submit descriptive data and, when necessary, performance data to establish that the device is substantially equivalent to a predicate device. In some instances, data from human clinical studies must also be submitted in support of a 510(k) Submission. If so, these data must be collected in a manner that conforms with specific requirements in accordance with federal regulations. The U.S. FDA must issue an order finding substantial equivalence before commercial distribution can occur. Changes to existing devices covered by a 510(k) Submission which do not significantly affect safety or effectiveness can generally be made by us without additional 510(k) Submissions.

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The second process requires that an application for premarket approval (PMA) be made to the U.S. FDA to demonstrate that the device is safe and effective for its intended use as manufactured. This approval process applies to most Class III devices, including LuViva. In this case, two steps of U.S. FDA approval are generally required before marketing in the United States can begin. First, investigational device exemption (IDE) regulations must be complied with in connection with any human clinical investigation of the device in the United States. Second, the U.S. FDA must review the PMA application, which contains, among other things, clinical information acquired under the IDE. The U.S. FDA will approve the PMA application if it finds that there is a reasonable assurance that the device is safe and effective for its intended purpose.

We completed enrollment in our U.S. FDA pivotal trial of LuViva in 2008 and, after the U.S. FDA requested two-years of follow-up data for patients enrolled in the study, the

U.S. FDA accepted our completed PMA application on November 18, 2010, effective September 23, 2010, for substantive review. On March 7, 2011, we announced that the U.S. FDA had inspected two clinical trial sites and audited our clinical trial data base systems as part of its review process and raised no formal compliance issues. On January 20, 2012, we announced our intent to seek an independent panel review of our PMA application after receiving a “not-approvable” letter from the U.S. FDA. On November 14, 2012 we filed an amended PMA with the U.S. FDA. On September 6, 2013, we received a letter from the U.S. FDA with additional questions and met with the U.S. FDA on May 8, 2014 to discuss our response. On July 25, 2014, we announced that we had responded to the U.S. FDA’s most recent questions.

We received a “not-approvable” letter from the U.S. FDA on May 15, 2015. We had a follow up meeting with the U.S. FDA to discuss a path forward on November 30, 2015, at which we agreed to submit a detailed clinical protocol for U.S. FDA review so that additional studies can be completed. We held a follow up teleconference with FDA on January 28, 2020 and filed a pre-submission document to the Agency on February 17, 2020 that summarized the clinical protocol to be submitted for FDA review. We agreed with the FDA on the study protocol during the second quarter of 2021 and are recruiting clinical sites for the study. These studies may not be completed in 2022, although we intend to pursue FDA approval and start studies in 2022 once funds are available. We remain committed to obtaining U.S. FDA approval, but at the same time we are focused on international sales growth, where we believe the commercial opportunities are larger and the clinical need is more significant.

The process of obtaining clearance to market products is costly and time-consuming in virtually all of the major markets in which we sell, or expect to sell, our products and may delay the marketing and sale of our products. Countries around the world have recently adopted more stringent regulatory requirements, which are expected to add to the delays and uncertainties associated with new product releases, as well as the clinical and regulatory costs of supporting those releases. No assurance can be given that our products will be approved on a timely basis in any particular jurisdiction, if at all. In addition, regulations regarding the development, manufacture and sale of medical devices are subject to future change. We cannot predict what impact, if any, those changes might have on our business. Failure to comply with regulatory requirements could have a material adverse effect on our business, financial condition and results of operations.

Noncompliance with applicable requirements can result in import detentions, fines, civil penalties, injunctions, suspensions or losses of regulatory approvals or clearances, recall or seizure of products, operating restrictions, denial of export applications, governmental prohibitions on entering into supply contracts, and criminal prosecution. Failure to obtain regulatory approvals or the restriction, suspension or revocation of regulatory approvals or clearances, as well as any other failure to comply with regulatory requirements, would have a material adverse effect on our business, financial condition and results of operations.

Regulatory approvals and clearances, if granted, may include significant labeling limitations and limitations on the indicated uses for which the product may be marketed. In addition, to obtain regulatory approvals and clearances, the U.S. FDA and some foreign regulatory authorities impose numerous other requirements with which medical device manufacturers must comply. U.S. FDA enforcement policy strictly prohibits the marketing of approved medical devices for unapproved uses. Any products we manufacture or distribute under U.S. FDA clearances or approvals are subject to pervasive and continuing regulation by the U.S. FDA. The U.S. FDA also requires us to provide it with information on death and serious injuries alleged to have been associated with the use of our products, as well as any malfunctions that would likely cause or contribute to death or serious injury.

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The U.S. FDA requires us to register as a medical device manufacturer and list our products. We are also subject to inspections by the U.S. FDA and state agencies acting under contract with the U.S. FDA to confirm compliance with good manufacturing practice. These regulations require that we manufacture our products and maintain documents in a prescribed manner with respect to manufacturing, testing, quality assurance and quality control activities. The U.S. FDA also has promulgated final regulatory changes to these regulations that require, among other things, design controls and maintenance of service records. These changes will increase the cost of complying with good manufacturing practice requirements.

Distributors of medical devices may also be required to comply with other foreign regulatory agencies, and we or our distributors currently have marketing approval for LuViva from Health Canada, COFEPRIS in Mexico, the Ministry of Health in Kenya, and the Singapore Health Sciences Authority. The time required to obtain these foreign approvals to market our products may be longer or shorter than that required in China or the United States, and requirements for those approvals may differ from those required by the CFDA or the U.S. FDA.

We are also subject to a variety of other controls that affect our business. Labeling and promotional activities are subject to scrutiny by the U.S. FDA and, in some instances, by the U.S. Federal Trade Commission. The U.S. FDA actively enforces regulations prohibiting marketing of products for unapproved users. We are also subject, as are our products, to a variety of state and local laws and regulations in those states and localities where our products are or will be marketed. Any applicable state or local regulations may hinder our ability to market our products in those regions. Manufacturers are also subject to numerous federal, state and local laws relating to matters such as safe working conditions, manufacturing practices, environmental protection, fire hazard control and disposal of hazardous or potentially hazardous substances. We may be required to incur significant costs to comply with these laws and regulations now or in the future. These laws or regulations may have a material adverse effect on our ability to do business.

Although our marketing and distribution partners around the world assist in the regulatory approval process, ultimately, we are be responsible for obtaining and maintaining regulatory approvals for our products. The inability or failure to comply with the varying regulations or the imposition of new regulations would materially adversely affect our business, financial condition and results of operations.

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REGULATORY OVERVIEW

The development of innovative new drugs and medical devices is a time-consuming, expensive, and risky process. Despite these challenges, the pharmaceutical and medical device industries have been remarkably successful in developing a broad range of important new medicines and devices. It is also a heavily regulated industry. Drugs and medical devices are evaluated for safety, efficacy, and manufacturing quality as a condition of market access, and promotional messages must adhere to approved product characteristics. Drug and medical device prices also are regulated in most countries with national health insurance systems. Regulation of market access and promotion derives from uncertainty about drug and medical device safety and efficacy. These product characteristics can only be determined from accumulated experience over large numbers of patients in carefully designed trials or observational studies. The 1962 and 1976 (for medical device) Amendments to the United States Food and Drug Agency Act extended the powers of the FDA to review safety, efficacy, manufacturing quality and promotion. Subsequent studies concluded that the safety and efficacy requirements added to the intrinsically high cost of research and development, led to launch delay of new drugs and favored large over small firms.

However, more recently the biotechnology revolution has transformed the nature of drug discovery and the structure of the industry. Increasingly, new drugs originate in small firms, which often license out their products to more experienced firms for later stage drug development, regulatory review, and commercialization. In any given year, the biotechnology industry may comprise a couple of thousand firms, but the identities of these firms change as new start-ups are formed and established firms grow, merge, or are acquired by other established companies.

Government Regulation and Product Approval

United States Government Regulation

Government authorities in the United States, at the federal, state and local level, and in other countries extensively regulate, among other things, the research, development, testing, manufacture, packaging, storage, recordkeeping, labeling, advertising, promotion, distribution, marketing, import and export of the medical devices such as those we are developing. The processes for obtaining regulatory approvals in the United States and in foreign countries, along with subsequent compliance with applicable statutes and regulations, require the expenditure of substantial time and financial resources.

In the United States, the FDA regulates drugs and medical devices under the Federal Food, Drug, and Cosmetic Act, or FDCA, and its implementing regulations. The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations requires the expenditure of substantial time and financial resources. Failure to comply with the applicable United States requirements at any time during the product development process, approval process or after approval, may subject an applicant to a variety of administrative or judicial sanctions, such as the FDA’s refusal to approve pending new drug applications, or NDAs, withdrawal of an approval, imposition of a clinical hold, issuance of warning or untitled letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement or civil or criminal penalties.

European Union Regulation

In the European Union, medical devices are required to comply with the Medical Devices Directive and obtain CE Mark certification in order to market medical devices. The CE Mark certification, granted following approval from an independent “Notified Body,” is an international symbol of adherence to quality assurance standards and compliance with applicable European Medical Devices Directives. From 2017 through 2019, we were unable to pay the annual registration fees to maintain our ISO 13485:2003 certification and our CE Mark. Once our financing is completed, we will make the required payments and reobtain both certifications. In addition, our December 21, 2018 agreement with NTI, described above, will allow final assembly at their ISO 13485:2016 accredited facility. Once all inspections have been passed for LuViva, this will allow an alternative path for obtaining the CE Mark.

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MANAGEMENT

The following table provides information regarding our executive officers and directors as of the date hereof:

Gene S. Cartwright, Ph.D.	67	Chief Executive Officer, President, Acting Chief Financial Officer and Director
Mark Faupel, Ph.D.	66	Chief Operating Officer and Director
Richard P. Blumberg	65	Director
Michael C. James	63	Chairman and Director
John E. Imhoff, M.D.	72	Director

Except as set forth below, all of the executive officers have been associated with us in their present or other capacities for more than the past five years. Officers are elected annually by the board of directors and serve at the discretion of the board. There are no family relationships among any of our executive officers and directors.

The following is a biographical summary of the experience of our executive officers, other senior management and directors. There are no family relationships among any of our executive officers, other senior management or directors.

Gene S. Cartwright, Ph.D - President, Chief Executive Officer, President, Acting Chief Financial Officer and Director

Gene S. Cartwright, Ph.D. joined us in January 2014 as the President, Chief Executive Officer and Acting Chief Financial Officer. He was elected as a director on January 11, 2014. His most recent position was with Omnyx, LLC, a Joint Venture between GE Healthcare and the University of Pittsburgh Medical Center, where, as CEO for over four years he founded and managed the successful development of products for the field of Digital Pathology. Prior to his work with Omnyx, LLC, he was President of Molecular Diagnostics for GE Healthcare. Prior to GE, Dr. Cartwright was Divisional Vice President/General Manager for Abbott Diagnostics’ Molecular Diagnostics business. In his 24-year career at Abbott, he also served as Divisional Vice President for U.S. Marketing for five years. He received a Master of Management degree from Northwestern’s Kellogg School of Management and also holds a Ph.D. in chemistry from Stanford University and an AB from Dartmouth College.

Dr. Cartwright brings over 30 years of experience working in the IVD diagnostics industry. He has great experience in the diagnostics market both in the development and introduction of new diagnostics technologies, as well as extensive successful commercial experience with global businesses. With his background and experience, Dr. Cartwright, as President and Chief Executive Officer, as well as Acting Chief Financial Officer, works with and advises the board as to how we can successfully market and build LuViva international sales.

Mark Faupel, Ph.D., - Chief Operating Officer and Director

Mark Faupel, Ph.D., rejoined us as Chief Operating Officer and director on December 8, 2016. He previously served on our board of directors through 2013 and has more than 30 years of experience in developing non-invasive alternatives to surgical biopsies and blood tests, especially in the area of cancer screening and diagnostics. Dr. Faupel was one of our co- founders and also served as our Chief Executive Officer from May 2007 through 2013. Prior thereto was our Chief Technical Officer from April 2001 to May 2007. Dr. Faupel has served as a National Institutes of Health reviewer, is the inventor on 32 U.S. patents and has authored numerous scientific publications and presentations, appearing in such peer-reviewed journals as The Lancet. Dr. Faupel earned his Ph.D. in neuroanatomy and physiology from the University of Georgia. Dr. Faupel is also a stockholder of Shenghuo Medical, LLC. See Item 13, Certain Relationships and Related Transactions and Director Independence.

Richard P. Blumberg - Director

Richard P. Blumberg was appointed to the Board of Directors on November 10, 2016 and resigned on March 27, 2019, but was reappointed on September 1, 2020. Mr. Blumberg has been a long-time investor in the Company. Since 1978, Mr. Blumberg has been a Principal at Webster, Mrak & Blumberg, a medical-legal and class action labor litigation firm. He is also currently a Managing Member of K2 Medical, LLC formerly known as Shenghuo Medical, LLC (“Shenghuo”), a company with licensing rights in several Asian countries for the Company’s LuViva Advanced Cervical Scan, and is a Managing Member of Elysian Medical, LLC, a company with world-wide rights for certain breast cancer detection technology. He served from 2004 to 2007 as Chief Executive Officer of Energy Logics, a wind power company that developed projects in Alberta, Canada and Montana. Mr. Blumberg holds a B.S. in Electrical Engineering and Computer Science from the University of Illinois and received a J. D. from Stanford University. He also brings extensive experience as a venture capitalist specializing in high-tech and life science companies.

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Michael C. James - Chairman and Director

Michael C. James has served as a member of our Board of Directors since March 2007 and as Chairman of the Board since October 2013. Mr. James is also the Managing Partner of Kuekenhof Capital Management, LLC, a private investment management company, Chief Executive Officer and the Chief Financial Officer of Inergetics, Inc., a nutraceutical supplements company and formerly was the Chief Financial Officer of Terra Tech Corporation, which is a hydroponic and agricultural company. He also holds the position of Managing Director of Kuekenhof Equity Fund, L.P. and Kuekenhof Partners, L.P. Mr. James currently sits on the Board of Directors of Inergetics; Inc. Mr. James was Chief Executive Officer of Nestor, Inc. from January 2009 to September 2009 and served on their Board of Directors from July 2006 to June 2009. He was employed by Moore Capital Management, Inc., a private investment management company from 1995 to 1999 and held position of Partner. He was employed by Buffalo Partners, L.P., a private investment management company from 1991 to 1994 and held the position of Chief Financial and Administrative Officer. He began his career in 1980 as a staff accountant with Eisner LLP. Mr. James received a B.S. degree in Accounting from Farleigh Dickinson University in 1980.

Mr. James has experience both in the areas of company finance and accounting, which is invaluable to us during financial audits and offerings. Mr. James has extensive experience in the management of both small and large companies and his entrepreneurial background is relevant as we develop as a company.

John E. Imhoff, M.D. - Director

John E. Imhoff, M.D. has served as a member of our Board of Directors since April 2006. Dr. Imhoff is an ophthalmic surgeon who specializes in cataract and refractive surgery. He is one of our principal stockholders and invests in many other private and public companies. He has a B.S. in Industrial Engineering from Oklahoma State University, an M.D. from the University of Oklahoma and completed his ophthalmic residency at the Dean A. McGee Eye Institute. He has worked as an ophthalmic surgeon and owner of Southeast Eye Center since 1983.

Dr. Imhoff has experience in clinical trials and in other technical aspects of a medical device company. His background in industrial engineering is especially helpful to us, especially as Dr. Imhoff can combine this knowledge with clinical applications. His experience in the investment community is invaluable to a public company often undertaking capital raising efforts.

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EXECUTIVE COMPENSATION

Summary Compensation Table

The following table lists specified compensation we paid or accrued during each of the fiscal years ended December 31, 2021 and 2020 to the Chief Executive Officer and our two other most highly compensated executive officers, collectively referred to as the “named executive officers,” in 2021:

Name and Principal Position	Year	Salary ($) (3)		Bonus ($)		Option Awards ($) (1)		Other ($) (4)		Total ($)
Gene S. Cartwright, Ph.D. - President,	2021		12,000		-		-		-		12,000
CEO, Acting CFO and Director (2)	2020		12,000		-		193,200		-		205,200
Mark Faupel, Ph.D. - COO	2021		12,000		-		-		29,370		41,370
and Director (2)	2020		12,000		-		193,200		14,000		219,200
Richard Fowler - Senior Vice President of Engineering (2) (6)	2021		-		-		-		7,497		7,497
	2020		-		-		-		21,000		21,000

___________

(1) Option awards figure includes the value of Common Stock option awards at grant date as calculated under FASB ASC 718.    

(2) All amounts reported as accrued. Dr. Cartwright, Dr. Faupel, and Mr. Fowler have elected not to get paid a salary, due to our cash position.   

(3) Dr. Cartwright and Dr. Faupel accrued $1,000 per month as compensation; the amounts have not been paid.  

(4) Other expenses are related to the Company health insurance plan 

(6) During 2021, Mr. Fowler was no longer an executive of the Company. Mr. Fowler provided consulting services to the Company during 2021. 

Outstanding Equity Awards to Officers at December 31, 2021

	Number of Securities Underlying Vested Options		Number of Securities Underlying Unvested Options		Weighted-Average Exercise Price ($)		Weighted-Average Expiration Date
Name and Principal Position
Gene S. Cartwright, Ph.D. - President, CEO, Acting CFO and Director		236,364		163,636		0.49	07/12/30
Mark Faupel, Ph.D. - COO and Director		236,364		163,636		0.49	07/12/30

Outstanding Equity Awards to Directors at December 31, 2021

	Number of Securities Underlying Vested Options		Number of Securities Underlying Unvested Options		Weighted-Average Exercise Price ($)		Weighted-Average Expiration Date
Name and Principal Position
Michael C. James, Chairman and Director		50,000		-		0.49	07/12/30
John E. Imhoff, M.D., Director		50,000		-		0.49	07/12/30

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Stock Options

Our 1995 Stock Plan (the “Plan”) has expired pursuant to its terms, so zero shares remained available for issuance at December 31, 2019 and 2018. The Plan allowed for the issuance of incentive stock options, nonqualified stock options, and stock purchase rights. The exercise price of options was determined by the our board of directors, but incentive stock options were granted at an exercise price equal to the fair market value of our common stock as of the grant date. Options historically granted have generally become exercisable over four years and expire ten years from the date of grant. As of December 31, 2021, and 2020, there were no stock options outstanding and exercisable.

The 1:800 reverse stock split of all of our issued and outstanding common stock was implemented on March 29, 2019. As a result of the reverse stock split, every 800 shares of issued and outstanding common stock were converted into 1 share of common stock. This resulted in the number of stock options outstanding to be zero.

2018 Stock Option Plan

Overview: Our stockholders approved and adopted the Guided Therapeutics, Inc. 2018 Stock Option Plan (the “Plan”) and the material terms thereunder at the annual meeting of our stockholders in 2018. A total of 325,470 shares of common stock are reserved for issuance under the Plan.

Administration: Our Board or a committee of at least two people as our Board may appoint (the “Committee”) administer the Plan. The Committee has the authority to determine the terms and conditions of any agreements evidencing any awards granted under the Plan and to adopt, alter and repeal rules, guidelines and practices relating to the Plan. The Committee has full discretion to administer and interpret the Plan and to adopt such rules, regulations and procedures as it deems necessary or advisable and to determine, among other things, the time or times at which the awards may be exercised and whether and under what circumstances an award may be exercised.

Eligibility: Employees, directors, officers, advisors or consultants of our company or our affiliates are eligible to participate in the Plan. The Committee has the sole and complete authority to determine who will be granted an award under the Plan, however, it may delegate such authority to one or more officers of the Company under the circumstances set forth in the Plan.

Number of Shares Authorized: The Plan provides for an aggregate of 325,470 shares of common stock to be available for awards. If an award is forfeited or if any option terminates, expires or lapses without being exercised, the shares of our common stock subject to such award will again be made available for future grant. Shares that are used to pay the exercise price of an option or that are withheld to satisfy the plan participant’s tax withholding obligation will not be available for re-grant under the Plan. If there is any change in our corporate capitalization, the Committee in its sole discretion may make substitutions or adjustments to the number of shares reserved for issuance under the Plan, the number of shares covered by awards then outstanding under the Plan, the limitations on awards under the Plan, the exercise price of outstanding options and such other equitable substitution or adjustments as it may determine appropriate.

Term: The Plan has a term of ten years and no further awards may be granted under the Plan after that date.

Awards Available for Grant: The Committee may grant awards of Non-Qualified Stock Options, Incentive (qualified) Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Stock Bonus Awards or any combination of the foregoing; provided, that the Committee may not grant to any one person in any one calendar year Awards (i) for more than 500,000 shares of common stock in the aggregate or (ii) payable in cash in an amount to exceed $25,000 in the aggregate.

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The new Stock Plan (the “Plan”) allows for the issuance of incentive stock options, nonqualified stock options, and stock purchase rights. The exercise price of options was determined by the Company’s board of directors, but incentive stock options were granted at an exercise price equal to the fair market value of the Company’s common stock as of the grant date. Options historically granted have generally become exercisable over four years and expire ten years from the date of grant. The Plan provides for stock options to be granted up to 10% of the outstanding shares of common stock shares. During the years ended December 31, 2021 and 2020, the Company granted 1,250 and 90,000 stock options to employees and consultants, respectively. The fair value of options issued during the years ended December 31, 2021 and 2020 was estimated using the Black-Scholes option-pricing model and the following assumptions:

· a dividend yield of 0%;

· an expected life of 10 years;

· volatility of 153.1%; and

· risk-free interest rate of 0.98%.

The fair value of each option grant made during 2021 and 2020 was estimated on the date of each grant using the Black-Scholes option pricing model and recognized as stock-based compensation ratably over the option vesting periods, which approximates the service period. There were no additional options granted during the three months ended March 31, 2022.

Risk Oversight

Our board as a whole has responsibility for risk oversight, with reviews of certain areas being conducted by the relevant board committees that report on their deliberations to the full board, as further described below. Given the small size of the board, the board feels that this structure for risk oversight is appropriate (except for those risks that require risk oversight by independent directors only). The audit committee is specifically charged with discussing risk management (primarily financial and internal control risk), and receives regular reports from management and independent auditors on risks related to, among others, our financial controls and reporting. The compensation committee reviews risks related to compensation and makes recommendations to the board with respect to whether the Company’s compensation policies are properly aligned to discourage inappropriate risk-taking, and is regularly advised by management. In addition, the Company’s management regularly communicates with the board to discuss important risks for their review and oversight, including regulatory risk, and risks stemming from periodic litigation or other legal matters in which we are involved.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Our Board recognizes that related person transactions present a heightened risk of conflicts of interest. The audit committee has the authority to review and approve all related party transactions involving our directors or executive officers.

Under the policy, when management becomes aware of a related person transaction, management reports the transaction to the audit committee and requests approval or ratification of the transaction. Generally, the audit committee will approve only related party transactions that are on terms comparable to those that could be obtained in arm’s length dealings with an unrelated third person. The audit committee will report to the full board all related person transactions presented to it. Based on the definition of independence of Nasdaq, the board has determined that Mr. James and Dr. Imhoff are independent directors.

Long-Term Debt - Related Parties.

On July 14, 2018, the Company entered into an exchange agreement with Dr. Faupel, whereby Dr. Faupel agreed to exchange outstanding amounts due to him for loans, interest, bonus, salary and vacation pay in the amount of $660,895 for a $207,111 promissory note dated September 4, 2018. On July 20, 2018, the Company entered into an exchange agreement with Dr. Cartwright, whereby Dr. Cartwright agreed to exchange outstanding amounts due to him for loans, interest, bonus, salary and vacation pay in the amount of $1,621,499 for a $319,000 promissory note dated September 4, 2018 that incurs interest at a rate of 6% per annum.

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.

On February 19, 2021, the Company entered into new promissory notes replacing the original notes 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 6.0%. 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 6.0%. The modifications extended the maturity date on both of the notes.

On February 19, 2021, the Company exchanged $100,000 and $85,000 of long-term debt for Dr. Cartwright and Dr. Faupel in exchange for 100 and 85 shares of Series F-2 Preferred Stock, respectively.  

The table below summarizes the details of the exchange agreement (in thousands):

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 in prior years		(454	)
Amount exchanged for Series F-2 Preferred Stock		(85	)
Total interest accrued through December 31, 2021		39
Balance outstanding at December 31, 2021	$	161
Interest accrued through March 31, 2022		2
Balance outstanding at March 31, 2022	$	163

For Dr.Cartwright
Salary	$	337
Bonus		675
Loans to Company		528
Interest on loans		81
Total outstanding prior to exchange		1,621
Amount forgiven in prior years		(1,302	)
Amount exchanged for Series F-2 Preferred Stock		(100	)
Total interest accrued through December 31, 2021		62
Balance outstanding at December 31, 2021	$	281
Interest accrued through March 31, 2022		4
Balance outstanding at March 31, 2022	$	285

Consulting Agreement - Richard Blumberg

On March 10, 2021, the Company entered into a consulting agreement with Richard Blumberg. As a result of the consulting agreement Mr. Blumberg provided $350,000, which was recorded as a subscription receivable, to the Company in exchange for the following: (1) on September 26, 2021, 45,000 3-year warrants with an exercise price of $6.00 and 20,000 common stock shares; (2) on March 26, 2022, 45,000 3-year warrants with an exercise price of $8.00 and 20,000 common stock shares; (3) on September 26, 2022, 45,000 3-year warrants with an exercise price of $10.00 and 20,000 common stock shares; and (4) on March 26, 2023, 45,000 3-year warrants with an exercise price of $12.00 and 20,000 common stock shares.

During the year ended December 31, 2021, the consulting agreement was amended to clarify that $350,000 is not intended to be debt and will not be required to be repaid in cash. Additionally, issuance of the warrants is now predicated on the Company receiving funding receipts of $1,000,000, whether from a financing, series of financing, or gross sales. The amended agreement clarified that the warrants issued to Mr. Blumberg are compensation for services, which involve obtaining financing. The Company will recognize expense for the services equal to the fair value of the warrants issued to Mr. Blumberg as the services are provided, which will coincide with the successful execution of a financing agreement over $1,000,000. The Company concluded that as of September 30,2021, there was no longer a liability due to Mr. Blumberg of $350,000. The liability was written off in the third quarter of 2021 and a gain of $350,000 was recognized in non-operating income.

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PRINCIPAL STOCKHOLDERS

The following table lists information regarding the beneficial ownership of our equity securities as of June 17, 2022 by (1) each person whom we know to beneficially own more than 5% of the outstanding shares of our common stock, (2) each director, (3) each officer named in the summary compensation table below, and (4) all directors and executive officers as a group. Unless otherwise indicated, the address of each officer and director is 5835 Peachtree Corners East, Suite B, Norcross, Georgia 30092.

	Common Stock Beneficially Owned (2)					Common Stock Directly Held					Series C Preferred Stock (3)
Name and Address of Beneficial Owner (1)	Number of Shares		Percentage			Number of Shares		Percentage			Number of Shares		Percentage
Blumberg, Richard P. (10)		81,320		5.78	%		51,754		3.75	%		-		-
Cartwright, Gene (11)		67,101		4.67	%		7,601		0.55	%		-		-
Case, Flynn (12)		87,404		6.34	%		87,404		6.34	%		-		-
Faupel, Mark (13)		88,597		6.06	%		5,971		0.43	%		-		-
Fieldhouse Pro Funds (14)		121,412		8.70	%		105,971		7.69	%		-		-
Imhoff, John E. (15)		551,929		31.76	%		192,259		13.95	%		-		-
James, Michael C. (16)		3,262		0.24	%		639		0.05	%		-		-
K2 Medical (17)		96,286		6.65	%		25,852		1.88	%		-		-
Maloof, Dolores (18)		85,092		5.84	%		6,367		0.46	%		-		-
Narbut, Laurence (19)		82,903		5.84	%		42,903		3.11	%		-		-
Rosalind Master Fund (20)		142,975		9.83	%		67,975		4.92	%		-		-
Wells Plus 6ix Multi Strategy (21)		106,153		7.42	%		59,830		4.33	%		-		-
All directors and executive officers as a group (5 persons) (22)		792,208		36.50	%		258,224		18.73	%		-		-

	Series C1 Preferred Stock (4)				Series C2 Preferred Stock (5)
	Number of Shares		Percentage		Number of Shares		Percentage
Name and Address of Beneficial Owner (1)
Blumberg, Richard P. (10)		-		-		-		-
Cartwright, Gene (11)		-		-		-		-
Case, Flynn (12)		-		-		-		-
Faupel, Mark (13)		-		-		299.25		9.17	%
Fieldhouse Pro Funds (14)		-		-		-		-
Imhoff, John E. (15)		-		-		2,400.75		73.59	%
James, Michael C. (16)		-		-		-		-
K2 Medical (17)		-		-		-		-
Maloof, Dolores (18)		-		-		562.25		17.24	%
Narbut, Laurence (19)		-		-		-		-
Rosalind Master Fund (20)		-		-		-		-
Wells Plus 6ix Multi Strategy (21)		-		-		-		-
All directors and executive officers as a group (5 persons) (22)		-		-		2,700.00		82.76	%

	Series D Preferred Stock (6)					Series E Preferred Stock (7)
Name and Address of Beneficial Owner (1)	Number of Shares		Percentage			Number of Shares		Percentage
Blumberg, Richard P. (10)		-		-			-		-
Cartwright, Gene (11)		50.00		11.42	%		-		-
Case, Flynn (12)		-		-			-		-
Faupel, Mark (13)		38.00		8.68	%		-		-
Fieldhouse Pro Funds (14)		-		-			-		-
Imhoff, John E. (15)		300.00		68.49	%		-		-
James, Michael C. (16)		-		-			-		-
K2 Medical (17)		-		-			-		-
Maloof, Dolores (18)		50.00		11.42	%		-		-
Narbut, Laurence (19)		-		-			-		-
Rosalind Master Fund (20)		-		-			250.00		28.15	%
Wells Plus 6ix Multi Strategy (21)		-		-			-		-
All directors and executive officers as a group (5 persons) (22)		388.00		88.58	%		-		-

	Series F Preferred Stock (8)					Series F-2 Preferred Stock (9)
Name and Address of Beneficial Owner (1)	Number of Shares		Percentage			Number of Shares		Percentage
Blumberg, Richard P. (10)		-		-			88.00		3.18	%
Cartwright, Gene (11)		-		-			110.00		3.97	%
Case, Flynn (12)		-		-			-		-
Faupel, Mark (13)		-		-			97.00		3.50	%
Fieldhouse Pro Funds (14)		-		-			-		-
Imhoff, John E. (15)		10.00		0.93	%		-		-
James, Michael C. (16)		-		-			-		-
K2 Medical (17)		-		-			-		-
Maloof, Dolores (18)		25.00		2.33	%		-		-
Narbut, Laurence (19)		200.00		18.67	%		-		-
Rosalind Master Fund (20)		-		-			-		-
Wells Plus 6ix Multi Strategy (21)		-		-			-		-
All directors and executive officers as a group (5 persons) (22)		10.00		0.93	%		295.00		10.65	%

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(1)	Except as otherwise indicated in the footnotes to this table and pursuant to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all shares of common stock.
(2)	Percentage ownership is based on 1,379,174 shares of common stock outstanding as of June 17, 2022. Beneficial ownership is determined in accordance with the rules of the SEC, based on factors that include voting and investment power with respect to shares. Shares of common stock subject to convertible securities convertible or exercisable within 60 days after the record date, are deemed outstanding for purposes of computing the percentage ownership of the person holding those securities but are not deemed outstanding for purposes of computing the percentage ownership of any other person. Note that certain of our outstanding securities, including certain warrants and the shares of Series C1 preferred stock held by the persons listed in this table, have anti-dilution ratchet or price-protection provisions that, when triggered, will increase the number of shares of common stock underlying such securities. Subject to customary exceptions, these provisions are triggered anytime we issue shares of common stock to third parties at a price lower than the then-current conversion price or exercise price of the subject securities. As a result, the beneficial ownership reported in this table is only as of the date presented, and the beneficial ownership amounts of the persons in this table may increase on a future date, even though such persons have not actually acquired any additional shares of common stock.
(3)	As of June 17, 2022, there were 286 shares of Series C preferred stock outstanding, and each such share was convertible into approximately 100 shares of common stock.
(4)	As of June 17, 2022, there were 1,049.25 shares of Series C1 preferred stock outstanding, and each such share was convertible into approximately 100 shares of common stock.
(5)	As of June 17, 2022, there were 3,262.25 shares of Series C2 preferred stock outstanding, and each such share was convertible into approximately 100 shares of common stock.
(6)	As of June 17, 2022, there were 438 shares of Series D preferred stock outstanding, and each such share was convertible into approximately 150 shares of common stock.
(7)	As of June 17, 2022, there were 888 shares of Series E preferred stock outstanding, and each such share was convertible into approximately 100 shares of common stock.
(8)	As of June 17, 2022, there were 1,071 shares of Series F preferred stock outstanding, and each such share was convertible into approximately 200 shares of common stock.
(9)	As of June 17, 2022, there were 2,771 shares of Series F-2 preferred stock outstanding, and each such share was convertible into approximately 200 shares of common stock.
(10)	Shares of common stock consists of 51,754 shares of common stock directly held, 11,966 shares issuable upon exercise of warrants, and 17,600 shares issuable upon conversion of 88 shares of Series F-2 preferred stock.
(11)	Shares of common stock consist of 7,601 shares of common stock directly held, 10,000 shares issuable upon exercise of warrants, 22,000 shares issuable upon conversion of 110 shares of Series F-2 preferred stock, 7,500 shares issuable upon conversion of 50 shares of Series D preferred stock and 20,000 shares issuable upon exercise of stock options. Dr. Cartwright is the CEO and is on the Board of Directors.
(12)	Shares of common stock consists of 87,404 shares of common stock directly held.
(13)	Shares of common stock consist of 5,971 shares of common stock directly held, 7,600 shares issuable upon exercise of warrants, 20,000 shares issuable upon exercise of stock options, 19,400 shares issuable upon conversion of 97 shares of Series F-2 preferred stock, 5,700 shares issuable upon conversion of 38 shares of Series D preferred stock and 29,925 shares issuable upon conversion of 299.25 shares of Series C2 preferred stock. Dr. Faupel is the COO and is on the Board of Directors.
(14)	Shares of common stock consist of 105,971 shares of common stock directly held, 5,000 shares issuable upon exercise of warrants and 10,441 shares issuable upon conversion of the 10% debenture.
(15)	Shares of common stock consist of 192,259 shares of common stock directly held, 70,094 shares issuable upon exercise of warrants, 2,500 shares issuable upon exercise of stock options, 2,000 shares issuable upon conversion of 10 shares of Series F preferred stock, 45,000 shares issuable upon conversion of 300 shares of Series D preferred stock and 240,075 shares issuable upon conversion of 2,400.75 shares of Series C2 preferred stock. Dr. Imhoff is on the Board of Directors.
(16)	Shares of common stock consist of 639 shares of common stock directly held, 123 shares issuable upon exercise of warrants and 2,500 shares issuable upon exercise of stock options. Mr. James is on the Board of Directors.
(17)	Shares of common stock consists of 25,852 shares of common stock directly held and 70,433 shares issuable upon exercise of warrants.
(18)	Shares of common stock consists of 6,367 shares of common stock directly held, 10,000 shares issuable upon exercise of warrants, 56,225 shares issuable upon conversion of 562.25 shares of Series C2 preferred stock, and 7,500 shares issuable upon conversion of 50 shares of Series D preferred stock and 5,000 shares issuable upon conversion of 25 shares of Series F preferred stock.
(19)	Shares of common stock consists of 42,903 shares of common stock directly held and 40,000 shares issuable upon conversion of 200 shares of Series F preferred stock.
(20)	Shares of common stock consists of 67,975 shares of common stock directly held, 25,000 shares issuable upon exercise of warrants and 50,000 shares issuable upon conversion of 250 shares of Series F-2 preferred stock.
(21)	Shares of common stock consists of 59,830 shares of common stock directly held, 15,000 shares issuable upon exercise of warrants and 31,032 shares issuable upon conversion of the 10% debenture.
(22)	Shares of common stock consists of 258,224 shares of common stock directly held, 99,783 shares issuable upon exercise of warrants, 45,001 shares issuable upon exercise of stock options, 2,000 shares issuable upon conversion of 10 shares of Series F preferred stock, 59,000 shares issuable upon conversion of 295 shares of Series F-2 preferred stock, 58,200 shares issuable upon conversion of 388 shares of Series D preferred stock and 270,000 shares issuable upon conversion of 2,700 shares of Series C2 preferred stock.

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DESCRIPTION OF SECURITIES

General

Our Certificate of Incorporation authorizes the issuance of up to 500,000,000 shares of common stock, par value $0.001 per share, and 5,000,000 shares of preferred stock, par value $0.001 per share. As of the date of this prospectus, we had 1,379,174 shares of common stock issued and outstanding, 286 shares of Series C preferred stock issued and outstanding, 1,049.25 shares of Series C1 preferred stock issued and outstanding, 3,262.25 shares of Series C2 preferred stock issued and outstanding, 438 shares of Series D preferred stock issued and outstanding, 888 shares of Series E preferred stock issued and outstanding, 1,071 shares of Series F preferred stock issued and outstanding, and 2,771 shares of Series F-2 preferred stock issued and outstanding.

On December 30, 2021, the Board approved a 1-for-20 reverse stock split (the “Reverse Stock Split”), and we filed a Certificate of Amendment to the Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to effect the Reverse Stock Split. As a result, the total number of shares of common stock held by each stockholder was automatically changed and reclassified into a smaller number of shares such that each 20 shares of common stock were reclassified into one share of common stock. No fractional shares were issued in connection with the Reverse Stock Split. In lieu of any fractional shares, we issued one whole share of the post-Reverse Stock Split common stock to stockholders who otherwise would have received a fractional share as a result of the Reverse Stock Split. On November 18, 2021, we submitted an Issuer Company Related Action Notification regarding the Reverse Stock Split to FINRA. FINRA approved it on May 9, 2022 and the Reverse Stock Split will be effective on the approximate date of the Nasdaq uplisting and financing, expected to be on or near June 30, 2022.

Common Stock

Holders of our common stock are entitled to one vote for each share held on all matters submitted to a vote of stockholders and do not have cumulative voting rights. An election of directors by our stockholders is determined by a plurality of the votes cast by the stockholders entitled to vote on the election. Other matters are decided by the affirmative vote of our stockholders having a majority in voting power of the votes cast by the stockholders present or represented and voting on such matter. Holders of common stock are entitled to receive proportionately any dividends as may be declared by our board of directors, subject to any preferential dividend rights of outstanding preferred stock.

In the event of our liquidation or dissolution, the holders of common stock are entitled to receive proportionately all assets available for distribution to stockholders after the payment of all debts and other liabilities and subject to the prior rights of any outstanding preferred stock. Holders of common stock have no preemptive, subscription, redemption or conversion rights. The rights, preferences and privileges of holders of common stock are subject to and may be adversely affected by the rights of the holders of shares of any series of preferred stock that we may designate and issue in the future.

Preferred Stock

Our Certificate of Incorporation authorizes the issuance of 5,000,000 shares of blank check preferred stock with such designations, rights and preferences as may be determined from time to time by our board of directors. As of the date of this prospectus, there are 2,771 shares of Series F-2, 1,071 shares of Series F, 888 shares of Series E, 438 shares of Series D, 286 shares of Series C, 1,049.25 shares of Series C1 and 3,262.25 shares of Series C2 preferred stock issued and outstanding. Accordingly, our board of directors is empowered, without stockholder approval, to issue preferred stock with dividend, liquidation, redemption, voting or other rights which could adversely affect the voting power or other rights of the holders of common stock. We may issue some or all of the preferred stock to effect a business transaction. In addition, the preferred stock could be utilized as a method of discouraging, delaying or preventing a change in control of us.

Series C Convertible Preferred Stock

Pursuant to the Series C certificate of designations, shares of Series C preferred stock are convertible into common stock by their holder at any time and may be mandatorily convertible upon the achievement of specified average trading prices for our common stock, subject to customary adjustments, including for any accrued but unpaid dividends and pursuant to certain anti-dilution provisions, as set forth in the Series C certificate of designations. The conversion price will automatically adjust downward to 80% of the then-current market price of our common stock 15 trading days after any reverse stock split of our common stock, and 5 trading days after any conversions of our 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, our common stock. In addition, upon conversion of the Series C preferred stock prior to the Dividend End Date, we 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. The Series C preferred stock generally has no voting rights except as required by Delaware law. Upon our 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 our common stock.

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Series C1 Convertible Preferred Stock

The Series C1 preferred stock has terms that are substantially the same as the Series C preferred stock, except that the Series C1 preferred stock does not pay dividends (unless and to the extent declared on the common stock) or at-the-market “make-whole payments” and, while it has the same anti-dilution protections afforded the Series C preferred stock, it does not automatically reset in connection with a reverse stock split or conversion of our outstanding convertible debt.

Series C2 Convertible Preferred Stock

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

As of the date of this prospectus, 6,000 shares have been designated as Series D Convertible Preferred Stock (“Series D Preferred Stock”), of which 438 shares are issued and outstanding. The following is a summary of the rights, privileges and preferences of the Series D Preferred Stock, which such summary is qualified in its entirety by the Series D Certificate of Designation.

Each share of Series D Preferred Stock has a par value of $0.001 per share and a stated value equal to $763, subject to increase set forth in its Certificate of Designation (the "Stated Value").

Each holder of Series D Preferred Stock is entitled to receive cumulative dividends of 10% per annum, payable quarterly in cash or, following the listing of the Company’s common stock on certain Canadian trading markets and at the option of the Company, shares of common stock.

Upon any liquidation, dissolution or winding-up of the Company, the holders shall be entitled to receive an amount equal to the Stated Value, plus any accrued and unpaid dividends thereon and any other fees or liquidated damages then due and owing before any distribution or payment shall be made to the holders of common stock and any other securities junior to Series D Preferred Stock.

Each share of Series D Preferred Stock is convertible, at any time for a period of 5 years after issuance, into shares of common stock. The conversion price for the Series D Preferred Stock is $5.00, subject to adjustment set forth in the Series D Certificate of Designation (the “Series D Conversion Price”). The conversion of Series D Preferred Stock 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 Stock. If the average of the VWAPs (as defined under the Series D Certificate of Designation) for any consecutive 5 trading day period (“Series D 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 a number of shares per trading day during the Series D Measurement Period (subject to adjustments), the Company may redeem the then outstanding Series D Preferred Stock, for cash in an amount equal to aggregate Stated Value then outstanding plus accrued but unpaid dividends.

Except for certain matters affecting the rights of Series D Preferred Stock or as otherwise required by law, the holders of Series D Preferred Stock do not have voting rights.

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Series E Convertible Preferred Stock

As of the date of this prospectus, 6,000 shares have been designated as Series E Convertible Preferred Stock (“Series E Preferred Stock”), of which 888 shares are issued and outstanding. The following is a summary of the rights, privileges and preferences of the Series E Preferred Stock, which such summary is qualified in its entirety by the Series E Certificate of Designation.

Each share of Series E Preferred Stock has a par value of $0.001 per share and a Stated Value equal to $1,000, subject to increase set forth in its Certificate of Designation.

Each holder of Series E Preferred Stock is entitled to receive cumulative dividends of 8% per annum, payable annually in cash or, following the listing of the Company’s common stock on certain Canadian trading markets and at the option of the Company, shares of common stock.

Upon any liquidation, dissolution or winding-up of the Company, the holders shall be entitled to receive an amount equal to the Stated Value, plus any accrued and unpaid dividends thereon and any other fees or liquidated damages then due and owing before any distribution or payment shall be made to the holders of common stock and any other securities junior to Series D Preferred Stock.

Each share of Series E Preferred Stock is convertible, at any time for a period of 5 years after issuance, into that number of shares of common stock. The conversion price for the Series E Preferred Stock is $5.00, subject to adjustment set forth in the Series E Certificate of Designation (the “Series E Conversion Price”). The conversion of Series E Preferred Stock 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 Stock. If the average of the VWAPs (as defined under the Series E Certificate of Designation) for any consecutive 5 trading day period (“Series E 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 a number of shares per trading day during the Series E Measurement Period (subject to adjustments), the Company may redeem the then outstanding Series E Preferred Stock, for cash in an amount equal to aggregate Stated Value then outstanding plus accrued but unpaid dividends.

Except for certain matters affecting the rights of Series E Preferred Stock or as otherwise required by law, the holders of Series E Preferred Stock do not have voting rights.

Series F Convertible Preferred Stock

As of the date of this prospectus, 1,500 shares have been designated as Series F Convertible Preferred Stock (“Series F Preferred Stock”), of which 1,071 shares are issued and outstanding. The following is a summary of the rights, privileges and preferences of the Series F Preferred Stock, which such summary is qualified in its entirety by the Series F Certificate of Designation.

Each share of Series F Preferred Stock has a par value of $0.001 per share and a Stated Value equal to $1,000, subject to increase set forth in its Certificate of Designation.

Each holder of Series F Preferred Stock is entitled to receive cumulative dividends of 6% per annum, payable annually in cash or, following the listing of the Company’s common stock on certain Canadian trading markets and at the option of the Company, shares of common stock.

Upon any liquidation, dissolution or winding-up of the Company, the holders shall be entitled to receive an amount equal to the Stated Value, plus any accrued and unpaid dividends thereon and any other fees or liquidated damages then due and owing before any distribution or payment shall be made to the holders of common stock and any other securities junior to Series F Preferred Stock.

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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 $5.00, subject to certain adjustments set forth in the Series F Certificate of Designation (the “Series F-2 Conversion Price”). The conversion of Series F-2 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-2 Certificate of Designation) for any consecutive 5 trading day period (“Measurement Period”) exceeds 200% of the then Series F-2 Conversion Price and the average daily trading volume of the Common Stock on the primary trading market exceeds 50 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.

Except for certain matters affecting the rights of Series F Preferred Stock or as otherwise required by law, the holders of Series F Preferred Stock do not have voting rights.

Series F-2 Convertible Preferred Stock

As of the date of this prospectus, 3,500 shares have been designated as Series F-2 Convertible Preferred Stock (“Series F-2 Preferred Stock”), of which 2,771 shares are issued and outstanding. The following is a summary of the rights, privileges and preferences of the Series F-2 Preferred Stock, which such summary is qualified in its entirety by the Series F-2 Certificate of Designation.

Each share of Series F-2 Preferred Stock has a par value of $0.001 per share and a Stated Value equal to $1,000, subject to increase set forth in its Certificate of Designation.

Each holder of Series F-2 Preferred Stock is entitled to receive cumulative dividends of 6% per annum, payable annually in cash or, following the listing of the Company’s common stock on certain Canadian trading markets and at the option of the Company, shares of common stock.

Upon any liquidation, dissolution or winding-up of the Company, the holders shall be entitled to receive an amount equal to the Stated Value, plus any accrued and unpaid dividends thereon and any other fees or liquidated damages then due and owing before any distribution or payment shall be made to the holders of common stock and any other securities junior to Series F-2 Preferred Stock.

Each share of Series F-2 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 $5.00, subject to certain adjustments set forth in the Series F-2 Certificate of Designation (the “Series F-2 Conversion Price”). The conversion of Series F-2 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-2 Preferred. If the average of the VWAPs (as defined in the Series F-2 Certificate of Designation) for any consecutive 5 trading day period (“Measurement Period”) exceeds 200% of the then Series F-2 Conversion Price and the average daily trading volume of the Common Stock on the primary trading market exceeds 50 shares per trading day during the Measurement Period (subject to adjustments), the Company may redeem the then outstanding Series F-2 Preferred, for cash in an amount equal to aggregate Stated Value then outstanding plus accrued but unpaid dividends.

Except for certain matters affecting the rights of Series F-2 Preferred Stock or as otherwise required by law, the holders of Series F-2 Preferred Stock do not have voting rights.

Series G Callable Preferred Stock

The Series G Callable Preferred Stock (“Series G Preferred Stock”) consists of 1,000,000 shares. As of the date of this prospectus both $78,500 and $53,500, tranches of Series G Preferred Stock have been redeemed.

Each share of Series G Preferred Stock had a par value of $0.001 per share and a Stated Value equal to $1.00, as set forth in the Certificate of Designation.

Series G Preferred Stock had no right to vote on any matters requiring shareholder approval or any matters on which shareholders were permitted to vote. With respect to any voting rights of the Series G Preferred Stock set forth, the Series G Preferred Stock voted as a class, each share of Series G Preferred Stock had one vote on any such matter, and any such approval was given via a written consent in lieu of a meeting of the Series G Preferred stockholders.

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Each share of Series G Preferred Stock carried an annual dividend in the amount of eight percent (8%) of the Stated Value (the "Dividend Rate"), which was cumulative, payable solely upon redemption, liquidation or conversion. Upon the occurrence of an Event of Default (as defined herein), the Dividend Rate automatically increased to twenty two percent (22%).

At any time after the date of the issuance of shares of Series G Preferred Stock, the Company had 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 the 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 had no right to redeem the Series G Preferred Stock. Mandatory redemption occurred within 24 months. In addition, if the Company did not redeem the Series G Preferred Stock then the holder would have the option to convert into shares of common stock. The variable conversion price was the value equal to a discount of 19% of the trading price, which is calculated as the average of the three lowest closing bid prices over the previous fifteen trading days. The conversion of Series G Preferred Stock was subject to a 4.99% beneficial ownership limitation, which was able to be increased to 9.99% at the election of the holder of the Series G Preferred Stock. As of the date of this prospectus, the Series G Preferred Stock is fully redeemed.

Warrants

Pre-Funded Warrants

The following summary of certain terms and provisions of the pre-funded warrants that are being offered hereby is not complete and is subject to, and qualified in its entirety by, the provisions of the pre-funded warrant, the form of which is filed as an exhibit to the registration statement of which this prospectus forms a part. Prospective investors should carefully review the terms and provisions of the form of pre-funded warrant for a complete description of the terms and conditions of the pre-funded warrants.

Duration and Exercise Price

Each pre-funded warrant offered hereby will have an initial exercise price per share equal to $0.01. The pre-funded warrants will be immediately exercisable and will not expire prior to exercise. The exercise price and number of shares of common stock issuable upon exercise is subject to appropriate adjustment in the event of stock dividends, stock splits, reorganizations or similar events affecting our common stock.

Exercisability

The pre-funded warrants will be exercisable, at the option of each holder, in whole or in part, by delivering to us a duly executed exercise notice accompanied by payment in full for the number of shares of our common stock purchased upon such exercise (except in the case of a cashless exercise as discussed below). A holder (together with its affiliates) may not exercise any portion of the pre-funded warrant to the extent that the holder would own more than 4.99% of the outstanding common stock immediately after exercise, except that upon at least 61 days’ prior notice from the holder to us, the holder may increase the amount of beneficial ownership of outstanding stock after exercising the holder’s pre-funded warrants up to 9.99% of the number of shares of our common stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the pre-funded warrants and Delaware law. Purchasers of pre-funded warrants in this offering may also elect prior to the issuance of the pre-funded warrants to have the initial exercise limitation set at 9.99% of our outstanding common stock.

Cashless Exercise

If, at the time a holder exercises its pre-funded warrants, a registration statement registering the issuance of the shares of common stock underlying the pre-funded warrants under the Securities Act is not then effective or available for the issuance of such shares, then in lieu of making the cash payment otherwise contemplated to be made to us upon such exercise in payment of the aggregate exercise price, the holder may elect instead to receive upon such exercise (either in whole or in part) the net number of shares of common stock determined according to a formula set forth in the pre-funded warrants.

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Transferability

Subject to applicable laws, a pre-funded warrant may be transferred at the option of the holder upon surrender of the pre-funded warrant to us together with the appropriate instruments of transfer.

Fractional Shares

No fractional shares of common stock will be issued upon the exercise of the pre-funded warrants. Rather, the number of shares of common stock to be issued will be rounded to the nearest whole number.

Trading Market

There is no established public trading market for the pre-funded warrants, and we do not expect a market to develop. In addition, we do not intend to apply to list the pre-funded warrants on any national securities exchange or other nationally recognized trading system. Without an active trading market, the liquidity of the pre-funded warrants will be limited.

Right as a Stockholder

Except as otherwise provided in the pre-funded warrants or by virtue of such holder’s ownership of shares of our common stock, the holders of the pre-funded warrants do not have the rights or privileges of holders of our common stock with respect to the shares of common stock underlying the pre-funded warrants, including any voting rights, until they exercise their pre-funded warrants. The pre-funded warrants will provide that holders have the right to participate in distributions or dividends paid on our common stock.

Fundamental Transaction

In the event of a fundamental transaction, as described in the pre-funded warrants and generally including any reorganization, recapitalization or reclassification of our common stock, the sale, transfer or other disposition of all or substantially all of our properties or assets, our consolidation or merger with or into another person, the acquisition of more than 50% of our outstanding common stock, or any person or group becoming the beneficial owner of 50% of the voting power represented by our outstanding common stock, the holders of the pre-funded warrants will be entitled to receive upon exercise of the pre-funded warrants the kind and amount of securities, cash or other property that the holders would have received had they exercised the pre-funded warrants immediately prior to such fundamental transaction.

Public Warrants

The following summary of certain terms and provisions of the Public Warrants that are being offered hereby is not complete and is subject to, and qualified in its entirety by, the provisions of the Public Warrant, the form of which is filed as an exhibit to the registration statement of which this prospectus forms a part. Prospective investors should carefully review the terms and provisions of the form of Public Warrant for a complete description of the terms and conditions of the Public Warrants. The Public Warrants will be issued in book-entry form and will initially be represented only by one or more global warrants deposited with the warrant agent, as custodian on behalf of The Depository Trust Company, or DTC, and registered in the name of Cede & Co., a nominee of DTC, or as otherwise directed by DTC.

Duration and Exercise Price

The Public Warrants are exercisable from and after the date of their issuance and expire on the fifth anniversary of such date, at an exercise price per share of common stock equal to $12.40 per share. The Public Warrants will be governed by the terms of a global warrant held in book-entry form. The holder of a Public Warrant will not be deemed a holder of our underlying common stock until the Public Warrant is exercised. No fractional shares of common stock will be issued in connection with the exercise of a Public Warrant. Instead, for any such fractional share that would have otherwise been issued upon exercise of Public Warrants, we will round such fraction down to the next whole share.

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Exercisability

The Public Warrants will be exercisable, at the option of each holder, in whole or in part, by delivering to us a duly executed exercise notice accompanied by payment in full for the number of shares of our common stock purchased upon such exercise (except in the case of a cashless exercise as discussed below). A holder (together with its affiliates) may not exercise any portion of the Public Warrant to the extent that the holder would own more than 4.99% of the outstanding common stock immediately after exercise, except that upon at least 61 days’ prior notice from the holder to us, the holder may increase the amount of beneficial ownership of outstanding stock after exercising the holder’s Public Warrants up to 9.99% of the number of shares of our common stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the Public Warrants and Delaware law. Purchasers of Public Warrants in this offering may also elect prior to the issuance of the Public Warrants to have the initial exercise limitation set at 9.99% of our outstanding common stock.

Cashless Exercise

If, at the time a holder exercises its Public Warrants, a registration statement registering the issuance of the shares of common stock underlying the Public Warrants under the Securities Act is not then effective or available for the issuance of such shares, then in lieu of making the cash payment otherwise contemplated to be made to us upon such exercise in payment of the aggregate exercise price, the holder may elect instead to receive upon such exercise (either in whole or in part) the net number of shares of common stock determined according to a formula set forth in the Public Warrants.

Transferability

Subject to applicable laws, a Public Warrant may be transferred at the option of the holder upon surrender of the Public Warrant to us together with the appropriate instruments of transfer.

Fractional Shares

No fractional shares of common stock will be issued upon the exercise of the Public Warrants. Rather, the number of shares of common stock to be issued will be rounded to the nearest whole number.

Trading Market

We have applied for listing of the Public Warrants on Nasdaq. The successful listing of our Public Warrants on Nasdaq is a condition of this offering.

Right as a Stockholder

Except as otherwise provided in the Public Warrants or by virtue of such holder’s ownership of shares of our common stock, the holders of the Public Warrants do not have the rights or privileges of holders of our common stock with respect to the shares of common stock underlying the Public Warrants, including any voting rights, until they exercise their Public Warrants. The Public Warrants will provide that holders have the right to participate in distributions or dividends paid on our common stock.

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Fundamental Transaction

In the event of a fundamental transaction, as described in the Public Warrants and generally including any reorganization, recapitalization or reclassification of our common stock, the sale, transfer or other disposition of all or substantially all of our properties or assets, our consolidation or merger with or into another person, the acquisition of more than 50% of our outstanding common stock, or any person or group becoming the beneficial owner of 50% of the voting power represented by our outstanding common stock, the holders of the Public Warrants will be entitled to receive upon exercise of the Public Warrants the kind and amount of securities, cash or other property that the holders would have received had they exercised the Public Warrants immediately prior to such fundamental transaction. Additionally, as more fully described in the Public Warrants, in the event of certain fundamental transactions, the holders of the Public Warrants will be entitled to receive consideration in an amount equal to the Black Scholes value of the Public Warrants determined according to a formula set forth in the Public Warrants.

Warrant Agent

The Public Warrants will be issued pursuant to the terms of a warrant agency agreement between us and Computershare, as warrant agent. The warrant agent may resign upon 30 days’ written notice to us, our transfer agent and the holders of any warrant certificates. We have the right to remove the warrant agent upon 30 days’ prior written notice to the warrant agent, our transfer agent and the holders of any warrant certificates. If the warrant agent resigns or is removed, we will appoint a successor warrant agent. If we do not do so within 30 days, then any holder of a warrant certificate may petition a court of competent jurisdiction to appoint a successor warrant agent and we will be deemed to be the warrant agent pending such appointment. In the warrant agency agreement, we have agreed to indemnify the warrant agent against certain liabilities.

Amendments

The warrant agency agreement may be amended by the warrant agent and us without the approval of the holders of Public Warrants to cure any ambiguity, to correct or supplement any defective or inconsistent provisions or to make such other provisions as we and the warrant agent deem necessary or desirable and which do not adversely affect the interest of the holders. In addition, with the consent of the holders of a majority of the outstanding Public Warrants, we and the warrant agent may modify the warrant agency agreement and the Public Warrants for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the warrant agency agreement or modifying in any manner the rights of the holders of the Public Warrants; provided, however, that no modification of the terms (including but not limited to the adjustments provisions) upon which the Public Warrants are exercisable or reducing the percentage required for consent to modification of the warrant agency agreement may be made without the consent of each holder of the then-outstanding Public Warrants.

The description of the warrant agency agreement contained herein is not complete and is qualified in its entirety by the provisions of the warrant agency agreement, the form of which is filed as an exhibit to the registration statement of which this prospectus forms a part. Prospective investors should carefully review the terms and provisions of the warrant agency agreement for a complete description of the terms and conditions thereof.

Prior Warrants

Warrants issued in 10% Senior Unsecured Convertible Debenture

We issued warrants to purchase an aggregate of 56,500 shares of our common stock (the “10% Senior Unsecured Convertible Debenture Warrants”) with a strike price of $16.00 and a term of two years. These 10% Senior Unsecured Convertible Debenture Warrants contain a 4.99% beneficial ownership blocker which may be increased to 9.99% at the holder’s election.

Warrants issued in Series D Financing

We issued warrants to purchase an aggregate of 76,300 shares of our common stock (the “Series D Warrants”) with a strike price of $5.00 and a term of five years. Such warrants are exercisable on the date of issuance and may be exercised cashlessly if there is no effective registration statement covering the Common Stock issuable upon exercise of such warrants. These Series D Warrants contain a 4.99% beneficial ownership blocker which may be increased to 9.99% at the holder’s election. As of date of this prospectus, the Company executed exchange agreements with its Series D investors. As a result, 32,500 warrants with a strike price of $5.00 were repriced at a $4.00 strike price and subsequently exercised for 32,500 shares of common stock.

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We also issued Series D Warrants to purchase an aggregate of 76,300 shares of our common stock with a strike price of $15.00 and a term of five years. Such warrants are exercisable on the date of issuance and may be exercised cashlessly if there is no effective registration statement covering the common stock issuable upon exercise of theses Series D Warrants. These Series D Warrants contain a 4.99% beneficial ownership blocker which may be increased to 9.99% at the holder’s election.

Auctus Warrants

On December 17, 2019, we entered into a securities purchase agreement and convertible note with Auctus. In connection with the closing of the first tranche of the Auctus Note, we issued a five-year common stock purchase warrant (the “Auctus Warrant”) to Auctus. Such warrant entitles its holder to purchase 375,000 shares of the common stock at an exercise price of $4.00, subject to certain adjustments as provided therein. If, during the period from the issuance date of the Auctus Warrant to December 21, 2021 (or December 17, 2024 if an Event of Default occurs under the Auctus Note), we sell any common stock or securities entitling any person to acquire shares of common stock at an effective price per share (the “Base Share Price”) less than the then exercise price of such warrant, then the exercise price of the warrant shall be reduced at the option of the holder and only reduced to equal the Base Share Price, and the number of Warrant Shares issuable thereunder shall be increased proportionately. The Auctus Warrant may be exercised cashlessly if there is no effective registration statement covering the common stock issuable upon exercise of the Auctus Warrant. The Auctus Warrant contains a 4.99% beneficial ownership blocker.

GPB Warrants

We issued warrants to purchase an aggregate of 359,250 shares of our common stock (the “January 16, 2020 Exchange Agreement with GPB Holdings”) with the strike price of

$4.00. The warrants will expire on February 12, 2023. These warrants contain a 4.99% beneficial ownership blocker which may be increased to 9.99% at the holder’s election.

Warrants Issued Pursuant to the Exchange Agreements

On January 23, 2019, we entered into agreement related to promotional activities with B&B Consulting, LLC. Pursuant to that agreement, on February 22, 2021 we issued 62,500 warrants to purchase shares of common stock at a strike price of $5.00.

On December 31, 2019, we entered into exchange agreements with K2 Medical LLC, Mr. Blumberg, Mr. Imhoff, Mr. Case, Mr. Grimm, Mr. Mamula, Mr. Gould and Mr. James.

Pursuant to these agreements, we issued 235,680 warrants to purchase shares of common stock at a strike price of $4.00.

On December 31, 2019, we entered into exchange agreements with K2 Medical LLC, Mr. Imhoff, FGP Protective Opportunity Master Fund SPC, Ms. Rosenstock, Mr. James and Mr. Blumberg. Pursuant to these agreements, we issued 55,491 warrants to purchase shares of common stock at a strike price of $5.00.

On December 31, 2019, we entered into exchange agreements with K2 Medical LLC, Mr. Imhoff, FGP Protective Opportunity Master Fund SPC, Ms. Rosenstock, Mr. James and Mr. Blumberg. Pursuant to these agreements we issued 55,491 warrants to purchase shares of common stock at a strike price of $15.00.

The warrants issued pursuant to the December 2019 exchange agreements are exercisable on the date of issuance for five years. Such warrants may be exercised cashlessly if there is no effective registration statement covering the common stock issuable upon exercise of these warrants. These warrants contain a 4.99% beneficial ownership blocker which may be increased to 9.99% at the holder’s election.

On June 23, 2020, we entered into an exchange agreement with Mr. Clavijo. Pursuant to this agreement we issued 12,500 warrants to purchase shares of common stock at a strike price of $10.00.

During the year ended December 31, 2021, the Company entered into various agreements with holders of the Company’s $4.00 strike price warrants, pursuant to which each holder separately agreed to exchange 235,680 common stock warrants with a strike price of $4.00 for 223,896 common stock warrants with a strike price of $3.20 and a contractual term of 15 days. As of the date of this prospectus, the warrants have been exercised and are no longer outstanding.

During the year ended December 31, 2021, the Company entered into various agreements with the holders of the Company’s $5.00 strike price warrants, pursuant to which each holder separately agreed that in the event the Company executes a new financing agreement with proceeds greater than $4.00 million, the holders will exchange a total of 90,108 common stock warrants with a strike price of $5.00 for cash payments totaling $90,108 and 45,054 common stock warrants with terms identical as those offered in the financing agreement.

During the year ended December 31, 2021, the Company entered into various agreements with the holders of the Company’s $15.00 strike price warrants, pursuant to which each holder separately agreed that in the event the Company executes a new financing agreement with proceeds greater than $4.00 million, the holders will exchange a total of 90,108 common stock warrants with a strike price of $15.00 for 90,108 new warrants with terms identical as those offered in the financing agreement.

On June 2, 2021, we entered into an initial exchange agreement Auctus. On February 1, 2022, we entered into a second exchange agreement with Auctus. Pursuant to this second agreement, Auctus agreed to exchange an aggregate of $668,290 of outstanding notes (the "Notes"), including accrued interest, and the associated warrants issued in connection with the Notes (the warrants, for the purpose of the exchange, are valued at, in the aggregate, $1,681,707) into unregistered units of our common stock, warrants and prefunded warrants otherwise in the form and ratios issued in a proposed underwritten public offering on the Nasdaq Capital Markets (the “Nasdaq Offering”). The exchange price will be on a $1 for $1 basis such that Auctus will receive $2,349,997 of units consisting of common stock, warrants and prefunded warrants. The units being issued in the exchange with Auctus are unregistered and are being issued pursuant to Section 4(a)(2) under the Securities Act of 1933, as amended. Additionally, the units and the common stock underlying the units will be subject to a lock up agreement with the underwriters until the earlier of 120 days after the Nasdaq Offering and the date that the daily volume weighted average price of the common stock exceeds 200% of the Nasdaq Offering price for at least five consecutive trading days. Further, the termination date of June 2, 2021 was extended to April 15, 2022. The $350,000 related to default penalties will be exchanged into $350,000 of securities offered in the Nasdaq Offering. On April 14, 2022, we entered into an agreement with Auctus that extended the April 15, 2022 deadline to May 15, 2022.

On June 1, 2022, we entered into a third exchange agreement with Auctus. As of the date of the agreement, Auctus was owed $692,114 of Notes and accrued interest. Pursuant to this third agreement, as long as we complete the Nasdaq Offering prior to July 15, 2022, the total amount owed to Auctus will be payable in cash 13 months subsequent to the consummation of the Offering. The associated warrants issued in connection with the Notes (the warrants, for the purpose of the third exchange agreement, are valued at, in the aggregate, $2,031,710) will be exchanged into unregistered units of our common stock, warrants and prefunded warrants otherwise in the form and ratios issued in the Offering. The exchange price will be on a $1 for $1 basis such that Auctus will receive $2,031,710 of units consisting of common stock, warrants and prefunded warrants. The units being issued in the exchange with Auctus are unregistered and are being issued pursuant to Section 4(a)(2) under the Securities Act of 1933, as amended. Additionally, the units and the common stock underlying the units will be subject to a lock up agreement with the underwriters until the earlier of 120 days after the Nasdaq Offering and the date that the daily volume weighted average price of the common stock exceeds 200% of the Nasdaq Offering price for at least five consecutive trading days. In the event the Nasdaq Offering is not consummated by July 15, 2022, the third exchange agreement will be null and void.

Warrants Issued Pursuant to the Finder’s Fee and Commissions Agreements

We issued commission warrants related to Series D financing to purchase 2,980 shares of our common stock with a strike price of $5.00 and a term of three years.

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We issued commission warrants related to Series E financing to purchase 3,350 shares of our common stock with a strike price of $5.00 and a term of three years.

We issued commission warrants related to Series F and Series F-2 financing to purchase an aggregated 21,798 shares of our common stock with a strike price of $5.00 and a term of three years and 10,338 shares of our common stock with a strike price of $10.00 and a term of three years.

We issued commission warrants related to 10% Senior Unsecured Convertible Debenture to purchase 7,500 shares of our common stock with a strike price of $10.00 and a term of three years, warrants to purchase 10,000 shares of our common stock with a strike price of $10.00 and a term of two years and warrants to purchase 3,180 shares of our common stock with a strike price of $16.00 and a term of two years. Those warrants contain a 4.99% beneficial ownership blocker which may be increased to 9.99% at the holder’s election.

Delaware Anti-Takeover Law and Provisions of Certificate of Incorporation and By-Laws

Delaware Anti-Takeover Law

We are subject to Section 203 of the Delaware General Corporation Law. Section 203 generally prohibits a public Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years after the date of the transaction in which the person became an interested stockholder, unless:

· prior to the date of the transaction, the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;

· upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding specified shares; or

· at or subsequent to the date of the transaction, the business combination is approved by the board of directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock which is not owned by the interested stockholder.

Section 203 defines a “business combination” to include:

· any merger or consolidation involving the corporation and the interested stockholder;

· any sale, lease, exchange, mortgage, pledge, transfer or other disposition of 10% or more of the assets of the corporation to or with the interested stockholder;

· subject to exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder;

· subject to exceptions, any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of the corporation beneficially owned by the interested stockholder; or

· the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation.

In general, Section 203 defines an “interested stockholder” as any person that is:

· the owner of 15% or more of the outstanding voting stock of the corporation;

· an affiliate or associate of the corporation who was the owner of 15% or more of the outstanding voting stock of the corporation at any time within three years immediately prior to the relevant date; or

· the affiliates and associates of the above.

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Under specific circumstances, Section 203 makes it more difficult for an “interested stockholder” to effect various business combinations with a corporation for a three-year period, although the stockholders may, by adopting an amendment to the corporation’s Certificate of Incorporation or bylaws, elect not to be governed by this section, effective 12 months after adoption.

Our Amended and Restated Certificate of Incorporation and amended and restated bylaws do not exclude us from the restrictions of Section 203. We anticipate that the provisions of Section 203 might encourage companies interested in acquiring us to negotiate in advance with our board of directors since the stockholder approval requirement would be avoided if a majority of the directors then in office approve either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder.

Certificate of Incorporation and Amended and Restated Bylaws

On March 23, 2012, our board of directors approved and adopted our amended and restated bylaws. Provisions of our second amended and restated bylaws and our Certificate of Incorporation may delay or discourage transactions involving an actual or potential change of control or change in our management, including transactions in which stockholders might otherwise receive a premium for their shares, or transactions that our stockholders might otherwise deem to be in their best interests. Therefore, these provisions could adversely affect the price of our common stock. Among other things, our Certificate of Incorporation and amended and restated bylaws:

· permit our board of directors to issue up to 5,000,000 shares of preferred stock, with any rights, preferences and privileges as they may designate;

· provide that vacancies and newly created directorships resulting from any increase in the authorized number of directors elected by all of the stockholders having the right to vote as a single class may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director;

· provide that stockholders seeking to present proposals before a meeting of stockholders or to nominate candidates for election as directors at a meeting of stockholders must provide advance notice in writing, and also specify requirements as to the form and content of a stockholder’s notice; and

· do not provide for cumulative voting rights, thereby allowing the holders of a majority of the shares of common stock entitled to vote in any election of directors to elect all of the directors standing for election.

MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

The following is a summary of the material U.S. federal income tax considerations applicable to a U.S. Holder (as defined below) arising from and relating to the acquisition, ownership and disposition of the shares of common stock acquired pursuant to this prospectus, the exercise, disposition, and lapse of Public Warrants acquired pursuant to this prospectus, and the acquisition, ownership, and disposition of shares of common stock received upon exercise of the Public Warrants (the “warrant shares”), the ownership, exercise and disposition of pre-funded warrants acquired pursuant to this prospectus and the shares of common stock received upon the exercise of the pre-funded warrants. The shares of common stock, Public Warrants, warrant shares and pre-funded warrants may be referred to in this summary as the “securities.”

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This summary is for general information purposes only and does not purport to be a complete analysis or listing of all potential U.S. federal income tax considerations that may apply to a U.S. Holder as a result of the acquisition of the securities pursuant to this offering. In addition, this summary does not take into account the individual facts and circumstances of any particular U.S. Holder that may affect the U.S. federal income tax consequences to such U.S. Holder, including specific tax consequences to a U.S. Holder under an applicable tax treaty. Accordingly, this summary is not intended to be, and should not be construed as, legal or U.S. federal income tax advice with respect to any particular U.S. Holder. This summary does not address the U.S. federal net investment income, U.S. federal alternative minimum, U.S. federal estate and gift, U.S. state and local, and non-U.S. tax consequences to U.S. Holders of the acquisition, ownership, and disposition of the securities. In addition, except as specifically set forth below, this summary does not discuss applicable tax reporting requirements. Each U.S. Holder should consult its own tax advisor regarding the U.S. federal, U.S. federal net investment income, U.S. federal alternative minimum, U.S. federal estate and gift, U.S. state and local, and non-U.S. tax consequences relating to the acquisition, ownership and disposition of the securities.

No ruling from the Internal Revenue Service (the “IRS”) has been requested, or will be obtained, regarding the U.S. federal income tax considerations applicable to U.S. Holders as discussed in this summary. This summary is not binding on the IRS, and the IRS is not precluded from taking a position that is different from, and contrary to, the positions taken in this summary. In addition, because the authorities on which this summary is based are subject to various interpretations, the IRS and the U.S. courts could disagree with one or more of the positions taken in this summary.

Scope of this Summary

Authorities

This summary is based on the Internal Revenue Code of 1986, as amended (the “Code”), Treasury Regulations (whether final, temporary, or proposed) promulgated under the Code, published rulings of the IRS, published administrative positions of the IRS, and U.S. court decisions, that are in effect and available as of the date of this document. Any of the authorities on which this summary is based could be changed in a material and adverse manner at any time, and any such change could be applied retroactively. This summary does not discuss the potential effects, whether adverse or beneficial, of any proposed legislation that, if enacted, could be applied on a retroactive or prospective basis.

U.S. Holders

For purposes of this summary, the term “U.S. Holder” means a beneficial owner of the securities acquired pursuant to this prospectus that is for U.S. federal income tax purposes:

· a citizen or individual resident of the United States;

· a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) organized under the laws of the United States, any state thereof or the District of Columbia;

· an estate whose income is subject to U.S. federal income taxation regardless of its source; or

· a trust that (1) is subject to the primary supervision of a court within the United States and the control of one or more U.S. persons for all substantial decisions or (2) has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person.

U.S. Holders Subject to Special U.S. Federal Income Tax Rules Not Addressed

This summary does not address the U.S. federal income tax considerations applicable to U.S. Holders that are subject to special provisions under the Code, including U.S. Holders that: (a) are tax-exempt organizations, qualified retirement plans, individual retirement accounts, or other tax-deferred accounts; (b) are financial institutions, underwriters, insurance companies, real estate investment trusts, or regulated investment companies; (c) are brokers or dealers in securities or currencies or U.S. Holders that are traders in securities that elect to apply a mark-to-market accounting method; (d) have a “functional currency” other than the U.S. dollar; (e) own the securities as part of a straddle, hedging transaction, conversion transaction, constructive sale, or other integrated transaction; (f) acquired the securities in connection with the exercise of employee stock options or otherwise as compensation for services; (g) hold the securities other than as a capital asset within the meaning of Section 1221 of the Code (property held for investment purposes); (h) are partnerships and other pass-through entities (and investors in such partnerships and entities); (i) are subject to special tax accounting rules with respect to the securities; (j) own, have owned or will own (directly, indirectly, or by attribution) 10% or more of the total combined voting power or value of our outstanding shares; (k) are U.S. expatriates or former long-term residents of the U.S.; or (l) are subject to taxing jurisdictions other than, or in addition to, the United States. U.S. Holders that are subject to special provisions under the Code, including U.S. Holders described immediately above, should consult their own tax advisors regarding the U.S. federal, U.S. federal net investment income, U.S. federal alternative minimum, U.S. federal estate and gift, U.S. state and local, and non-U.S. tax consequences relating to the acquisition, ownership and disposition of the securities.

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If an entity or arrangement that is classified as a partnership (or other pass-through entity) for U.S. federal income tax purposes holds the securities, the U.S. federal income tax consequences to such entity or arrangement and the owners of such entity or arrangement will depend on the activities of such entity or arrangement and the status of such partners (or other owners). This summary does not address the tax consequences to any such entity or arrangement or partner (or other owner). Partners (or other owners) of entities or arrangements that are classified as partnerships for U.S. federal income tax purposes should consult their own tax advisor regarding the U.S. federal income tax consequences arising from and relating to the acquisition, ownership, and disposition of the securities.

U.S. Federal Income Tax Consequences of the Acquisition of a Combination of Share of Common Stock and Public Warrant

The purchase price for each combination of a share of common stock and a Public Warrant will be allocated between these two components in proportion to their relative fair market values at the time such securities are purchased by the U.S. Holder. This allocation of the purchase price for each such combination will establish a U.S. Holder’s initial tax basis for U.S. federal income tax purposes in the share of common stock and a Public Warrant that comprise each such combination. For this purpose, we will allocate $4.12 of the purchase price to the share of common stock and $0.01 of the purchase price for a Public Warrant. However, the IRS will not be bound by this allocation of the purchase price for the units, and therefore, the IRS or a U.S. court may not respect the allocation set forth above. Each U.S. Holder should consult its own tax advisor regarding the allocation of the purchase price for the units.

The purchase price for each combination of a prefunded warrant and a Public Warrant will be allocated between these two components in proportion to their relative fair market values at the time such securities are purchased by the U.S. Holder. This allocation of the purchase price for each such combination will establish a U.S. Holder’s initial tax basis for U.S. federal income tax purposes in the pre-funded warrant and a Public Warrant that comprises each such combination. For this purpose, we will allocate $4.12 of the purchase price to the pre-funded warrant and $0.01 of the purchase price for a Public Warrant. However, the IRS will not be bound by this allocation of the purchase price for the units, and therefore, the IRS or a U.S. court may not respect the allocation set forth above. Each U.S. Holder should consult its own tax advisor regarding the allocation of the purchase price for the units.

The IRS will not be bound by such allocations of the purchase price, and therefore, the IRS or a U.S. court may not respect the allocation set forth above. Each U.S. Holder should consult its own tax advisor regarding the allocation of the purchase price of the securities acquired pursuant to the prospectus.

Treatment of Pre-Funded Warrants

Although it is not entirely free from doubt, applicable authority indicates that, and we intend to take the position that, the pre-funded warrants should be treated as a separate class of our common stock for U.S. federal income tax purposes and a U.S. Holder of pre funded warrants should generally be taxed in the same manner as a holder of shares of common stock except as described below. Accordingly, no gain or loss should be recognized upon the exercise of a pre-funded warrant and, upon exercise, the holding period of the shares of common stock received upon exercise of the pre-funded warrant should include the holding period of the a pre-funded warrant. The tax basis of the pre-funded warrant should carry over to the shares of common stock received upon exercise, increased by the exercise price of $0.01 to $0.001 per share. However, such characterization is not binding on the IRS, and the IRS may treat the prefunded warrants as warrants to acquire shares of common stock. If so, the amount and character of a U.S. Holder’s gain with respect to an investment in pre-funded warrants could change, and a U.S. Holder may not be entitled to make the “QEF Election” or “Mark-to-Market Election” described below to mitigate PFIC consequences in the event that we are classified as a PFIC. Accordingly, each U.S. Holder should consult its own tax advisor regarding the risks associated with the acquisition of a pre-funded warrant pursuant to this prospectus (including potential alternative characterizations). The balance of this discussion generally assumes that the characterization described above is respected for U.S. federal income tax purposes.

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Passive Foreign Investment Company Rules

If we are considered a “passive foreign investment company” within the meaning of Section 1297 of the Code at any time during a U.S. Holder’s holding period, the following sections will provide a summary of the potentially adverse U.S. federal income tax consequences to U.S. Holders of the acquisition, ownership, and disposition of the securities.

We believe that we were classified as a PFIC for our tax year ended December 31, 2020, and based on the nature of our business and the projected composition of our gross income, we expect that we may be a PFIC for the tax year ending December 31, 2021 and may be a PFIC in future tax years. No opinion of legal counsel or ruling from the IRS concerning our status as a PFIC has been obtained or is currently planned to be requested. The determination of whether any corporation was, or will be, a PFIC for a tax year depends, in part, on the application of complex U.S. federal income tax rules, which are subject to differing interpretations. In addition, whether any corporation will be a PFIC for any tax year depends on the assets and income of such corporation over the course of each such tax year and, as a result, our PFIC status for the current year and future years cannot be predicted with certainty as of the date of this document. Accordingly, there can be no assurance that the IRS will not challenge any PFIC determination made by us. Each U.S. Holder should consult its own tax advisor regarding our status as a PFIC and the PFIC status of each of our non-U.S. subsidiaries.

In any year in which we are classified as a PFIC, a U.S. Holder will be required to file an annual report with the IRS containing such information as Treasury Regulations and/or other IRS guidance may require. In addition to penalties, a failure to satisfy such reporting requirements may result in an extension of the time period during which the IRS can assess a tax. U.S. Holders should consult their own tax advisors regarding the requirements of filing such information returns under these rules, including the requirement to file an IRS Form 8621 annually.

We will be a PFIC for any tax year in which (a) 75% or more of our gross income for such tax year is passive income (the “PFIC income test”) or (b) 50% or more of the value of our assets either produce passive income or are held for the production of passive income, based on the quarterly average of the fair market value of such assets (the “PFIC asset test”). “Gross income” includes, among other items, sales revenues less the cost of goods sold, plus income from investments and from incidental or outside operations or sources, and “passive income” includes, for example, dividends, interest, specified rents and royalties, some gains from the sale of stock and securities, and specified types of gains from commodities transactions.

For purposes of the PFIC income test and PFIC asset test described above, if we own, directly or indirectly, 25% or more of the total value of the outstanding shares of another corporation, we will be treated as if we (a) held a proportionate share of the assets of such other corporation and (b) received directly a proportionate share of the income of such other corporation. In addition, for purposes of the PFIC income test and PFIC asset test described above, “passive income” does not include any interest, dividends, rents, or royalties that are received or accrued by us from related persons (as defined for this purpose), to the extent such items are properly allocable to the income of such related person that is not passive income.

Under applicable attribution rules, if we are a PFIC, U.S. Holders will be deemed to own their proportionate share of any of our subsidiaries which is also a PFIC (a “Subsidiary PFIC”), and will be subject to U.S. federal income tax under the “Default PFIC Rules Under Section 1291 of the Code” discussed below on their proportionate share of any (i) distribution on the shares of a Subsidiary PFIC and (ii) disposition or deemed disposition of shares of a Subsidiary PFIC, both as if such U.S. Holders directly held the shares of such Subsidiary PFIC. Accordingly, U.S. Holders should be aware that they could be subject to tax under the PFIC rules even if no distributions are received and no redemptions or other dispositions of shares of common stock are made. In addition, U.S. Holders may be subject to U.S. federal income tax on any indirect gain realized on the stock of a Subsidiary PFIC on the sale or disposition of shares of common stock. Furthermore, Section 1298(b)(1) of the Code provides that stock in a foreign corporation held by a taxpayer is treated as stock in a PFIC if, at any time during the holding period of the taxpayer with respect to such stock, the corporation (or any predecessor) was a PFIC that was not a qualified electing fund (QEF) (“once a PFIC, always a PFIC” rule).

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Default PFIC Rules Under Section 1291 of the Code

If we are a PFIC, the U.S. federal income tax consequences to a U.S. Holder of the acquisition, ownership, and disposition of securities will depend on whether such U.S. Holder makes a “qualified electing fund” or “QEF” election (a “QEF Election”) under Section 1295 of the Code or makes a mark-to-market election under Section 1296 of the Code (a “Mark-to- Market Election”) with respect to the securities as discussed below. A U.S. Holder that does not make either a QEF Election or a Mark-to-Market Election with respect to any securities (a “Non-Electing U.S. Holder”) will be taxable as described below with respect to such securities.

A Non-Electing U.S. Holder will be subject to the rules of Section 1291 of the Code with respect to (a) any gain recognized on the sale or other taxable disposition of securities and (b) any excess distribution received on the shares of common stock, pre-funded warrants and warrant shares. A distribution generally will be an “excess distribution” to the extent that such distribution (together with all other distributions received in the current tax year) exceeds 125% of the average distributions received during the three preceding tax years (or during a U.S. Holder’s holding period for the shares of common stock, pre-funded warrants and warrant shares, if shorter).

Under Section 1291 of the Code, any gain recognized on the sale or other taxable disposition of securities of a PFIC (including an indirect disposition of shares of a Subsidiary PFIC), and any excess distribution received on such shares of common stock, pre-funded warrants and warrant shares (or a distribution by a Subsidiary PFIC to its stockholder that is deemed to be received by a U.S. Holder) must be rateably allocated to each day in a Non-Electing U.S. Holder’s holding period for the shares of common stock, pre-funded warrants or warrant shares. The amount of any such gain or excess distribution allocated to the tax year of disposition or distribution of the excess distribution and to years before the entity became a PFIC, if any, would be taxed as ordinary income (and not eligible for certain preferential tax rates, as discussed below). The amounts allocated to any other tax year would be subject to

U.S. federal income tax at the highest tax rate applicable to ordinary income in each such year, and an interest charge would be imposed on the tax liability for each such year, calculated as if such tax liability had been due in each such year. A Non-Electing U.S. Holder that is not a corporation must treat any such interest paid as “personal interest,” which is not deductible.

If we are a PFIC for any tax year during which a Non-Electing U.S. Holder holds securities, it will continue to be treated as a PFIC with respect to such Non-Electing U.S. Holder, regardless of whether it ceases to be a PFIC in one or more subsequent tax years. If we cease to be a PFIC, a Non-Electing U.S. Holder may terminate this deemed PFIC status with respect to shares of common stock, pre-funded warrants and warrant shares by electing to recognize gain (which will be taxed under the rules of Section 1291 of the Code as discussed above) as if such shares of common stock, pre-funded warrants and warrant shares were sold on the last day of the last tax year for which the Company was a PFIC. No such election, however, may be made with respect to the Public Warrants.

Under proposed Treasury Regulations, if a U.S. holder has an option, warrant, or other right to acquire stock of a PFIC (such as the Public Warrants), such option, warrant or right is considered to be PFIC stock subject to the default rules of Section 1291 of the Code. Under rules described below, the holding period for the warrant shares will begin on the date a U.S. Holder acquires the Public Warrants. This will impact the availability of the QEF Election and Mark-to-Market Election with respect to the warrant shares. Thus, a U.S. Holder will have to account for warrant shares under the PFIC rules and the applicable elections in a manner that is different from the way it accounts for shares of common stock and pre-funded warrants.

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QEF Election

A U.S. Holder that makes a QEF Election for the first tax year in which its holding period of its shares of common stock or pre-funded warrants begins generally will not be subject to the rules of Section 1291 of the Code discussed above with respect to its shares of common stock or pre-funded warrants. However, a U.S. Holder that makes a QEF Election will be subject to U.S. federal income tax on such U.S. Holder’s pro rata share of (a) our net capital gain, which will be taxed as long-term capital gain to such U.S. Holder, and (b) our ordinary earnings, which will be taxed as ordinary income to such U.S. Holder. Generally, “net capital gain” is the excess of (a) net long-term capital gain over (b) net short-term capital loss, and “ordinary earnings” are the excess of (a) “earnings and profits” over (b) net capital gain. A U.S. Holder that makes a QEF Election will be subject to U.S. federal income tax on such amounts for each tax year in which we are a PFIC, regardless of whether such amounts are actually distributed to such U.S. Holder by us. However, for any tax year in which we are a PFIC and has no net income or gain, U.S. Holders that have made a QEF Election would not have any income inclusions as a result of the QEF Election. If a U.S. Holder that made a QEF Election has an income inclusion, such a U.S. Holder may, subject to certain limitations, elect to defer payment of current U.S. federal income tax on such amounts, subject to an interest charge. If such U.S. Holder is not a corporation, any such interest paid will be treated as “personal interest,” which is not deductible.

A U.S. Holder that makes a timely QEF Election generally (a) may receive a tax-free distribution from us to the extent that such distribution represents “earnings and profits” that were previously included in income by the U.S. Holder because of such QEF Election and (b) will adjust such U.S. Holder’s tax basis in the shares of common stock or pre-funded warrants to reflect the amount included in income or allowed as a tax-free distribution because of such QEF Election. In addition, a U.S. Holder that makes a QEF Election generally will recognize capital gain or loss on the sale or other taxable disposition of shares of common stock or pre-funded warrants.

The procedure for making a QEF Election, and the U.S. federal income tax consequences of making a QEF Election, will depend on whether such QEF Election is timely. A QEF Election will be treated as “timely” for purposes of avoiding the default PFIC rules discussed above if such QEF Election is made for the first year in the U.S. Holder’s holding period for the shares of common stock or pre-funded warrants in which we were a PFIC. A U.S. Holder may make a timely QEF Election by filing the appropriate QEF Election documents at the time such U.S. Holder files a U.S. federal income tax return for such year.

A QEF Election will apply to the tax year for which such QEF Election is made and to all subsequent tax years, unless such QEF Election is invalidated or terminated or the IRS consents to revocation of such QEF Election. If a U.S. Holder makes a QEF Election and, in a subsequent tax year, we cease to be a PFIC, the QEF Election will remain in effect (although it will not be applicable) during those tax years in which the Company is not a PFIC. Accordingly, if we become a PFIC in another subsequent tax year, the QEF Election will be effective and the U.S. Holder will be subject to the QEF rules described above during any subsequent tax year in which we qualify as a PFIC.

As discussed above, under proposed Treasury Regulations, if a U.S. holder has an option, warrant or other right to acquire stock of a PFIC (such as the Public Warrants), such option, warrant or right is considered to be PFIC stock subject to the default rules of Section 1291 of the Code. However, a U.S. Holder of an option, warrant or other right to acquire stock of a PFIC may not make a QEF Election that will apply to the option, warrant or other right to acquire PFIC stock. In addition, under proposed Treasury Regulations, if a U.S. Holder holds an option, warrant or other right to acquire stock of a PFIC, the holding period with respect to shares of stock of the PFIC acquired upon exercise of such option, warrant or other right will include the period that the option, warrant or other right was held.

Consequently, under the proposed Treasury Regulations, if a U.S. Holder of shares of common stock or pre-funded warrants makes a QEF Election, such election generally will not be treated as a timely QEF Election with respect to warrant shares and the rules of Section 1291 of the Code discussed above will continue to apply with respect to such U.S. Holder’s warrant shares. However, a U.S. Holder of warrant shares should be eligible to make a timely QEF Election if such U.S. Holder makes a “purging” or “deemed sale” election to recognize gain (which will be taxed under the rules of Section 1291 of the Code discussed above) as if such warrant shares were sold for fair market value. As a result of the “purging” or “deemed sale” election, the U.S. Holder will have a new basis and holding period in the warrant shares acquired upon the exercise of the Public Warrants for purposes of the PFIC rules. In addition, gain recognized on the sale or other taxable disposition (other than by exercise) of the Public Warrants by a U.S. Holder will be subject to the rules of Section 1291 of the Code discussed above.

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For each tax year that we qualify as a PFIC, we: (a) intend to make available to U.S. Holders, upon their written request, a PFIC Annual Information Statement as described in Treasury Regulation Section 1.1295-1(g) (or any successor Treasury Regulation) and (b) upon written request, will use commercially reasonable efforts to provide such additional information that such U.S. Holder is reasonably required to obtain in connection with maintaining such QEF Election with regard to us. We may elect to provide such information on our website. Each U.S. Holder should consult its own tax advisor regarding the availability of, and procedure for making, a QEF Election.

A U.S. Holder makes a QEF Election by attaching a completed IRS Form 8621, including a PFIC Annual Information Statement, to a timely filed U.S. federal income tax return. However, if we do not provide the required information with regard to us or any of our Subsidiary PFICs, U.S. Holders will not be able to make a QEF Election for such entity and will continue to be subject to the rules of Section 1291 of the Code, discussed above, that apply to Non-Electing U.S. Holders with respect to the taxation of gains and excess distributions.

Mark-to-Market Election

A U.S. Holder may make a Mark-to-Market Election with respect to shares of common stock and warrant shares only if the shares of common stock and warrant shares are marketable stock. The shares of common stock and warrant shares generally will be “marketable stock” if the shares of common stock and warrant shares are regularly traded on (a) a national securities exchange that is registered with the SEC, (b) the national market system established pursuant to Section 11A of the U.S. Exchange Act or (c) a foreign securities exchange that is regulated or supervised by a governmental authority of the country in which the market is located, provided that (i) such foreign exchange has trading volume, listing, financial disclosure, and other requirements and the laws of the country in which such foreign exchange is located, together with the rules of such foreign exchange, ensure that such requirements are actually enforced and (ii) the rules of such foreign exchange ensure active trading of listed stocks. If such stock is traded on such a qualified exchange or other market, such stock generally will be considered “regularly traded” for any calendar year during which such stock is traded, other than in de minimis quantities, on at least 15 days during each calendar quarter. Provided that the shares of common stock and warrant shares are “regularly traded” as described in the preceding sentence, the shares of common stock and warrant shares, are expected to be marketable stock. U.S. Holders should consult their own tax advisors regarding the marketable stock rules. A Mark-to-Market Election will likely not be available with respect to the pre-funded warrants.

A U.S. Holder that makes a Mark-to-Market Election with respect to its shares of common stock generally will not be subject to the rules of Section 1291 of the Code discussed above with respect to such shares of common stock. However, if a U.S. Holder does not make a Mark-to-Market Election beginning in the first tax year of such U.S. Holder’s holding period for the shares of common stock and such U.S. Holder has not made a timely QEF Election, the rules of Section 1291 of the Code discussed above will apply to certain dispositions of, and distributions on, the shares of common stock.

Any Mark-to-Market Election made by a U.S. Holder for the shares of common stock will also apply to such U.S. Holder’s warrant shares and any shares of common stock acquired upon exercise of a pre funded warrant. As a result, if a Mark-to-Market Election has been made by a U.S. Holder with respect to shares of common stock, any warrant shares received and shares of common stock received upon exercise of a pre-funded warrant will automatically be marked-to-market in the year of exercise. Because, under the proposed Treasury Regulations, a U.S. Holder’s holding period for warrant shares includes the period during which such U.S. Holder held the Public Warrants, a U.S. Holder will be treated as making a Mark-to-Market Election with respect to its warrant shares after the beginning of such U.S. Holder’s holding period for the warrant shares unless the warrant shares are acquired in the same tax year as the year in which the U.S. Holder acquired its Public Warrants. Because a U.S. Holder’s holding period for shares of common stock received upon the exercise of pre-funded warrants includes the period during which such U.S. Holder held the pre-funded warrants, a U.S. Holder will be treated as making a Mark-to-Market Election with respect to such shares of common stock after the beginning of such U.S. Holder’s holding period for such shares of common stock unless such shares of common stock are acquired in the same tax year as the year in which the U.S. Holder acquired its pre-funded warrants. Consequently, the default rules under Section 1291 described above generally will apply to the mark-to-market gain realized in the tax year in which warrant shares are received or the tax year in which shares of common stock are received upon the exercise of the pre-funded warrants, as applicable. However, the general mark-to-market rules will apply to subsequent tax years.

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A U.S. Holder that makes a Mark-to-Market Election will include in ordinary income, for each tax year in which we are a PFIC, an amount equal to the excess, if any, of (a) the fair market value of the shares of common stock and any warrant shares, as of the close of such tax year over (b) such U.S. Holder’s tax basis in the shares of common stock and any warrant shares. A U.S. Holder that makes a Mark-to-Market Election will be allowed a deduction in an amount equal to the excess, if any, of (i) such U.S. Holder’s adjusted tax basis in the shares of common stock and any warrant shares, over (ii) the fair market value of such shares of common stock and any warrant shares (but only to the extent of the net amount of previously included income as a result of the Mark-to-Market Election for prior tax years).

A U.S. Holder that makes a Mark-to-Market Election generally also will adjust such U.S. Holder’s tax basis in the shares of common stock and warrant shares to reflect the amount included in gross income or allowed as a deduction because of such Mark-to-Market Election. In addition, upon a sale or other taxable disposition of shares of common stock and warrant shares, a U.S. Holder that makes a Mark-to-Market Election will recognize ordinary income or ordinary loss (not to exceed the excess, if any, of (a) the amount included in ordinary income because of such Mark-to-Market Election for prior tax years over (b) the amount allowed as a deduction because of such Mark-to-Market Election for prior tax years).

A U.S. Holder makes a Mark-to-Market Election by attaching a completed IRS Form 8621 to a timely filed U.S. federal income tax return. A timely Mark-to-Market Election applies to the tax year in which such Mark-to-Market Election is made and to each subsequent tax year, unless the shares of common stock and warrant shares cease to be “marketable stock” or the IRS consents to revocation of such election. Each U.S. Holder should consult its own tax advisor regarding the availability of, and procedure for making, a Mark-to-Market Election.

Although a U.S. Holder may be eligible to make a Mark-to-Market Election with respect to the shares of common stock and warrant shares, no such election may be made with respect to the stock of any Subsidiary PFIC that a U.S. Holder is treated as owning because such stock is not marketable. Hence, the Mark-to-Market Election will not be effective to eliminate the interest charge and other income inclusion rules described above with respect to deemed dispositions of Subsidiary PFIC stock or distributions from a Subsidiary PFIC to its stockholder.

Other PFIC Rules

Under Section 1291(f) of the Code, the IRS has issued proposed Treasury Regulations that, subject to some exceptions, would cause a U.S. Holder that has not made a timely QEF Election to recognize gain (but not loss) upon transfers of the securities that would otherwise be tax-deferred (e.g., gifts and exchanges pursuant to corporate reorganizations). However, the specific U.S. federal income tax consequences to a U.S. Holder may vary based on the manner in which the securities are transferred.

If finalized in their current form, the proposed Treasury Regulations applicable to PFICs would be effective for transactions occurring on or after April 1, 1992. Because the proposed Treasury Regulations have not yet been adopted in final form, they are not currently effective, and there is no assurance that they will be adopted in the form and with the effective date proposed. Nevertheless, the IRS has announced that, in the absence of final Treasury Regulations, taxpayers may apply reasonable interpretations of the Code provisions applicable to PFICs and that it considers the rules set forth in the proposed Treasury Regulations to be reasonable interpretations of those Code provisions. The PFIC rules are complex, and the implementation of aspects of the PFIC rules requires the issuance of Treasury Regulations which in many instances have not been promulgated and which, when promulgated, may have retroactive effect. U.S. Holders should consult their own tax advisors about the potential applicability of the proposed Treasury Regulations.

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Additional adverse rules will apply with respect to a U.S. Holder if we are a PFIC, regardless of whether such U.S. Holder makes a QEF Election. For example under Section 1298(b)(6) of the Code, a U.S. Holder that uses the securities as security for a loan will, except as may be provided in Treasury Regulations, be treated as having made a taxable disposition of such the securities.

In addition, a U.S. Holder who acquires the securities from a decedent will not receive a “step up” in tax basis of such the securities to fair market value.

Special rules also apply to the amount of foreign tax credit that a U.S. Holder may claim on a distribution from a PFIC. Subject to such special rules, foreign taxes paid with respect to any distribution in respect of stock in a PFIC are eligible for the foreign tax credit. The rules relating to distributions by a PFIC and their eligibility for the foreign tax credit are complicated, and a U.S. Holder should consult with their own tax advisor regarding the availability of the foreign tax credit with respect to distributions by a PFIC.

The PFIC rules are complex, and each U.S. Holder should consult its own tax advisor regarding the PFIC rules (including the applicability and advisability of a QEF Election and Mark-to-Market Election) and how the PFIC rules may affect the U.S. federal income tax consequences of the acquisition, ownership, and disposition of the securities.

U.S. Federal Income Tax Consequences of the Exercise and Disposition of Public Warrants

The following discussion describes the general rules applicable to the ownership and disposition of the Public Warrants but is subject in its entirety to the special rules described above under the heading “Passive Foreign Investment Company Rules.”

Exercise of Public Warrants

A U.S. Holder should not recognize gain or loss on the exercise of a Public Warrant and related receipt of a warrant share (unless cash is received in lieu of the issuance of a fractional warrant share). A U.S. Holder’s initial tax basis in the warrant share received on the exercise of a Public Warrant should be equal to the sum of (a) such U.S. Holder’s tax basis in such Public Warrant plus (b) the exercise price paid by such U.S. Holder on the exercise of such Public Warrant. If, as anticipated, we are a PFIC, a U.S. Holder’s holding period for the warrant share will begin on the date on which such U.S. Holder acquired its Public Warrants.

In certain limited circumstances, a U.S. Holder may be permitted to undertake a cashless exercise of Public Warrants into warrant shares. The U.S. federal income tax treatment of a cashless exercise of Public Warrants into warrant shares is unclear, and the tax consequences of a cashless exercise could differ from the consequences upon the exercise of a Public Warrant described in the preceding paragraph. U.S. Holders should consult their own tax advisors regarding the U.S. federal income tax consequences of a cashless exercise of Public Warrants.

Disposition of Public Warrants

A U.S. Holder will recognize gain or loss on the sale or other taxable disposition of a Public Warrant in an amount equal to the difference, if any, between (a) the amount of cash plus the fair market value of any property received and (b) such U.S. Holder’s tax basis in the Public Warrant sold or otherwise disposed of. Subject to the PFIC rules discussed above, any such gain or loss will be a capital gain or loss, which will be long-term capital gain or loss if the Public Warrant is held for more than one year. Deductions for capital losses are subject to complex limitations under the Code.

Expiration of Public Warrants Without Exercise

Upon the lapse or expiration of a Public Warrant, a U.S. Holder will recognize a loss in an amount equal to such U.S. Holder’s tax basis in the Public Warrant. Any such loss will be a capital loss and will be long-term capital loss if the Public Warrants are held for more than one year. Deductions for capital losses are subject to complex limitations under the Code.

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Certain Adjustments to the Public Warrants

Under Section 305 of the Code, an adjustment to the number of warrant shares that will be issued on the exercise of the Public Warrants, or an adjustment to the exercise price of the Public Warrants, may be treated as a constructive distribution to a U.S. Holder of the Public Warrants if, and to the extent that, such adjustment has the effect of increasing such U.S. Holder’s proportionate interest in our “earnings and profits,” or our assets, depending on the circumstances of such adjustment (for example, if such adjustment is to compensate for a distribution of cash or other property to the stockholders). Adjustments to the exercise price of Public Warrants made pursuant to a bona fide reasonable adjustment formula that has the effect of preventing dilution of the interest of the holders of the Public Warrants should not be considered to result in a constructive distribution. Any such constructive distribution would be taxable whether or not there is an actual distribution of cash or other property. (See more detailed discussion of the rules applicable to distributions made by us  at “Distributions on Shares of common stock, Pre-Funded Warrants and Warrant Shares” below).

Rules Applicable to U.S. Federal Income Tax Consequences of the Acquisition, Ownership, and Disposition of Shares of common stock, Pre-Funded Warrants and Warrant Shares

The following discussion describes the rules applicable to the ownership and disposition of the shares of common stock, pre-funded warrants and warrant shares, but is subject in its entirety to the special rules described above under the heading “Passive Foreign Investment Company Rules.”

Distributions on Shares of common stock, Pre-Funded Warrants and Warrant Shares

A U.S. Holder that receives a distribution, including a constructive distribution, with respect to a common share, pre-funded warrant or warrant share will be required to include the amount of such distribution in gross income as a dividend to the extent of our current and accumulated “earnings and profits”, as computed under U.S. federal income tax principles. A dividend will be taxed to a U.S. Holder at ordinary income tax rates if we are a PFIC for the tax year of such distribution or the preceding tax year. To the extent that a distribution exceeds our current and accumulated “earnings and profits”, such distribution will be treated first as a tax-free return of capital to the extent of a U.S. Holder’s tax basis in the shares of common stock, pre-funded warrants or warrant shares and thereafter as gain from the sale or exchange of such shares of common stock, pre-funded warrants or warrant shares (see “Sale or Other Taxable Disposition of Shares of common stock, Pre-Funded warrants or warrant shares” below). However, we may not maintain the calculations of earnings and profits in accordance with U.S. federal income tax principles, and each U.S. Holder may be required to assume that any distribution by us with respect to the shares of common stock, pre-funded warrants or warrant shares will constitute ordinary dividend income.

Dividends received on shares of common stock, pre-funded warrants or warrant shares should not be eligible for the “dividends received deduction” applicable to corporations. Subject to applicable limitations and provided we are eligible for the benefits of the Convention Between Canada and the United States of America with Respect to Taxes on Income and on Capital, signed September 26, 1980, as amended, or in the case of dividends paid on the shares of common stock or warrant shares, the shares of common stock or warrant shares are readily tradable on a United States securities market, dividends paid by us to non-corporate U.S. Holders, including individuals, should be eligible for the preferential tax rates applicable to long-term capital gains for dividends, provided applicable holding period and other conditions are satisfied, including that we are not classified as a PFIC in the tax year of distribution or in the preceding tax year. The dividend rules are complex, and each U.S. Holder should consult its own tax advisor regarding the application of such rules.

Sale or Other Taxable Disposition of Shares of common stock, Pre-Funded Warrants or Warrant Shares

Upon the sale or other taxable disposition of shares of common stock, pre-funded warrants or warrant shares, a U.S. Holder will recognize capital gain or loss in an amount equal to the difference between (a) the amount of cash plus the fair market value of any property received and (b) such U.S. Holder’s tax basis in such shares of common stock, pre-funded warrants or warrant shares sold or otherwise disposed of. Gain or loss recognized on such sale or other taxable disposition will be long-term capital gain or loss if, at the time of the sale or other taxable disposition, such shares of common stock, pre-funded warrants or warrant shares have been held for more than one year. Preferential tax rates may apply to long-term capital gain of a U.S. Holder that is an individual, estate, or trust. There are no preferential tax rates for long-term capital gain of a U.S. Holder that is a corporation. Deductions for capital losses are subject to significant limitations under the Code.

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Additional Income Tax Considerations

Receipt of Foreign Currency

The amount of any distribution paid to a U.S. Holder in foreign currency or on the sale, exchange or other taxable disposition of securities will be equal to the U.S. dollar value of such foreign currency based on the exchange rate applicable on the date of receipt (regardless of whether such foreign currency is converted into U.S. dollars at that time). If the foreign currency received is not converted into U.S. dollars on the date of receipt, a U.S. Holder will have a tax basis in the foreign currency equal to its U.S. dollar value on the date of receipt. Any U.S. Holder who receives payment in foreign currency and engages in a subsequent conversion or other disposition of the foreign currency may have a foreign currency exchange gain or loss that would be treated as ordinary income or loss, and will be U.S. source income or loss for foreign tax credit purposes. Different rules apply to U.S. Holders who use the accrual method of tax accounting. Each U.S. Holder should consult its own U.S. tax advisor regarding the U.S. federal income tax consequences of receiving, owning, and disposing of foreign currency.

Foreign Tax Credit

Subject to the PFIC rules discussed above, a U.S. Holder that pays (whether directly or through withholding) Canadian income tax with respect to dividends paid on the securities should be entitled, at the election of such U.S. Holder, to receive either a deduction or a credit for such Canadian income tax paid. A credit will reduce a U.S. Holder’s U.S. federal income tax liability on a dollar-for-dollar basis, whereas a deduction will reduce a U.S. Holder’s income subject to U.S. federal income tax. This election is made on a year-by-year basis and applies to all foreign taxes paid or accrued (whether directly or through withholding) by a U.S. Holder during a year. The foreign tax credit rules are complex and involve the application of rules that depend on a U.S. Holder’s particular circumstances. Accordingly, each U.S. Holder should consult its own tax advisor regarding the foreign tax credit rules.

Information Reporting; Backup Withholding Tax

Under U.S. federal income tax laws specified categories of U.S. Holders must file information returns with respect to their investment in, or involvement in, a foreign corporation. For example, U.S. return disclosure obligations (and related penalties) are imposed on U.S. Holders that hold specified types of foreign financial assets in excess of established threshold amounts. The definition of specified foreign financial assets includes not only financial accounts maintained in foreign financial institutions, but also, unless held in accounts maintained by a financial institution, any stock or security issued by a non-U.S. person. U.S. Holders may be subject to these reporting requirements unless their securities are held in an account at certain financial institutions. Penalties for failure to file these information returns are substantial. U.S. Holders should consult their own tax advisors regarding the requirements of filing information returns, including the requirement to file IRS Form 8938.

Payments made within the U.S., or by a U.S. payor or U.S. middleman, of dividends on, and proceeds arising from the sale or other taxable disposition of the Securities may be subject to information reporting and backup withholding tax, currently at the rate of 24%, if a U.S. Holder (a) fails to furnish its correct U.S. taxpayer identification number (generally on Form W-9), (b) furnishes an incorrect U.S. taxpayer identification number, (c) is notified by the IRS that such U.S. Holder has previously failed to properly report items subject to backup withholding tax, or (d) fails to certify, under penalty of perjury, that it has furnished its correct U.S. taxpayer identification number and that the IRS has not notified such U.S. Holder that it is subject to backup withholding tax. However, specified exempt persons, such as U.S. Holders that are corporations, are excluded from these information reporting and backup withholding tax rules. Any amounts withheld under the U.S. backup withholding tax rules will be allowed as a credit against a U.S. Holder’s U.S. federal income tax liability, if any, or will be refunded, if such U.S. Holder furnishes required information to the IRS in a timely manner.

The discussion of reporting requirements set forth above is not intended to constitute a complete description of all reporting requirements that may apply to a U.S. Holder. A failure to satisfy reporting requirements may, in some circumstances result in an extension of the time period during which the IRS can assess a tax and, under some circumstances, such an extension may apply to assessments of amounts unrelated to any unsatisfied reporting requirement. Each U.S. Holder should consult its own tax advisors regarding the information reporting and backup withholding rules.

THE ABOVE SUMMARY IS NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF ALL INCOME TAX CONSIDERATIONS APPLICABLE TO U.S. HOLDERS WITH RESPECT TO THE ACQUISITION, OWNERSHIP, AND DISPOSITION OF SHARES OF COMMON STOCK, PUBLIC WARRANTS, PRE-FUNDED WARRANTS AND WARRANT SHARES. U.S. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE INCOME TAX CONSIDERATIONS APPLICABLE TO THEM IN THEIR OWN PARTICULAR CIRCUMSTANCES.

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UNDERWRITING

We will enter into an underwriting agreement with Roth Capital Partners, LLC, acting as the representative of several underwriters named below, with respect to the shares of common stock and/or pre-funded warrants and accompanying Public Warrants to purchase shares of common stock subject to this offering. Subject to certain conditions, we have agreed to sell to the underwriters, and the underwriters have agreed to purchase, the following number of securities.

Underwriter	Number of Common Shares		Number of Pre-Funded Warrants	Number of Public Warrants
Roth Capital Partners, LLC		890,000			890,000
Total		890,000			890,000

The underwriters are offering the securities subject to their acceptance of the securities from us and subject to prior sale. The underwriting agreement provides that the obligations of the underwriters to pay for and accept delivery of the securities offered by this prospectus is subject to the approval of certain legal matters by their counsel and to certain other conditions. The underwriters are obligated to take and pay for all of the securities if any such securities are taken. However, the underwriters are not required to take or pay for the securities covered by the underwriters’ over-allotment option described below.

Over-Allotment Option

We have granted the underwriters an option, exercisable for 45 days from the date of this prospectus, to purchase up to an aggregate of shares of common stock and/or Public Warrants to purchase up to shares of common stock (equal to 15% of the number of shares of common stock and Public Warrants sold in this offering), including for such purpose shares of common stock underlying pre-funded warrants in any combination thereof to cover over-allotments, if any, at the public offering price per share and Public Warrant set forth on the cover page of this prospectus, less the underwriting discount. The underwriters may exercise this option solely for the purpose of covering over-allotments, if any, made in connection with the offering of the shares of common stock offered by this prospectus. If the underwriters exercise this option, the underwriters will be obligated, subject to certain conditions, to purchase a number of additional securities for which the option has been exercised.

Discount, Commissions and Expenses

The underwriters have advised us that they propose to offer the securities to the public at the public offering price set forth on the cover page of this prospectus and to certain dealers at that price less a concession not in excess of $ per share of common stock and $ per Public Warrant.

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The following table provides information regarding the amount of the discounts and commissions to be paid to the underwriters by us, before expenses.

	Per share		Per Pre- Funded Warrant		Per Public Warrant		Total Per Share/Pre-Funded Warrant and Accompanying Public Warrant		Total Per Pre- Funded Warrant and Accompanying Public Warrant
Public offering price	$	9.99	$	9.989	$	0.001	$	10.00	$	8,900,000
Underwriting discounts and commissions(1)	$		$		$		$		$
Proceeds before expenses, to us	$	9.2907	$	9.2907	$	0.00093	$	9.30	$	8,037,000

(1) We have agreed to pay the underwriters a commission of between 5.0% and 7.0% of the gross proceeds of this offering.

We have agreed to reimburse the underwriters for certain out-of-pocket expenses, including the fees and disbursements of their counsel, up to an aggregate of $100,000. We estimate that the total expenses payable by us in connection with this offering, other than the underwriting discount referred to above, will be approximately $100,000.

Upon the closing of the public offering, we shall grant to the underwriters warrants to purchase shares of our common stock in an amount equal to five percent (5%) of the number of shares of our common stock as well as the number of shares underlying the warrants issued to the investors in the public offering. The warrants shall have an exercise price equal to 120% of the public offering price, will be non- exercisable for six (6) months after the effective date of the registration statement of which this prospectus forms a part and shall expire five (5) years after such date. The warrants will not be subject to redemption by us, and will entitle the holder thereof to unlimited "piggyback" registration rights with respect to the shares of our common stock underlying such warrants at our expense, one demand registration right at our expense and an additional demand registration right at the warrant holder's expense for a period of five (5) years from the effective date of the registration statement of which this prospectus forms a part. The warrants will be subject to FINRA Rule 5110(g)(1) in that, except as otherwise permitted by FINRA rules, for a period of 180 days following the effective date of the registration statement of which this prospectus forms a part, the warrants may not be (i) sold, transferred, assigned, pledged or hypothecated or (ii) the subject of any hedging, short sale, derivative, put or call transaction that would result in the effective economic disposition of the securities by any person.

Right of First Offer

Subject to certain conditions, we granted to Roth Capital Partners, LLC, for a period beginning on the closing of the public offering and ending eighteen (18) months thereafter, a right of first refusal to act as exclusive placement agent or sole book-running manager or sole lead managing underwriter, as applicable, for any private or public offering of equity, equity-linked or debt securities, in each case under a separate agreement containing customary terms and conditions that are mutually agreed upon by us and by Roth Capital Partners LLC. In accordance with FINRA Rule 5110(g)(6), such right shall not have a duration of more than three years from the commencement of sales of this offering.

Indemnification

We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act, and liabilities arising from breaches of representations and warranties contained in the underwriting agreement, or to contribute to payments that the underwriters may be required to make in respect of those liabilities.

Lock-Up Agreements

We and our officers and directors have agreed, and any affiliates of such officers and directors subject to limited exceptions, for a period of 90 days after the date of the underwriting agreement, not to offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of, directly or indirectly any shares of common stock or any securities convertible into or exchangeable for our common stock either owned as of the date of the underwriting agreement or thereafter acquired without the prior written consent of the representative. The representative may, in its sole discretion and at any time or from time to time before the termination of the lock-up period, without notice, release all or any portion of the securities subject to lock-up agreements if, in its sole and absolute discretion the market for the shares of common stock would not be adversely impacted by sales and in cases of financial emergency. The restrictions contained in the lock-up agreements shall not apply to the shares of common stock to be sold pursuant to the underwriting agreement on behalf of the undersigned, if any. Notwithstanding the foregoing, if (i) we issue an earnings release or material news, or a material event relating to our Company occurs, during the last 17 days of the restriction period (as defined in the lock-up agreement), or (ii) prior to the expiration of the restriction period, the Company announces that it will release earnings results during the 16-day period beginning on the last day of the restriction period, the restrictions imposed by the lock-up agreement shall continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event, unless the underwriters waive such extension.

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Stock Market Listing

Our common stock is currently quoted on the OTC Markets under the symbol “GTHP”. We are in the process of applying to have our shares of common stock and Public Warrants offered under this prospectus listed on Nasdaq under the symbols “GTHP” and “GTHPW”, respectively. No assurance can be given that our application will be approved. We will not consummate this offering unless our common stock and Public Warrants are approved for listing on Nasdaq. There is no established public trading market for the Public Warrants and pre-funded warrants, and we do not expect a market to develop for the pre-funded warrants. There is no assurance that a market will develop for the Public Warrants. In addition, we do not intend to apply to list the pre-funded warrants on any national securities exchange or other nationally recognized trading system. Without an active trading market, the liquidity of the pre-funded warrants will be limited.

Price Stabilization, Short Positions and Penalty Bids

In connection with the offering the underwriters may engage in stabilizing transactions, over-allotment transactions, syndicate covering transactions and penalty bids in accordance with Regulation M under the Exchange Act:

· Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum.

· Over-allotment involves sales by the underwriters of shares in excess of the number of shares the underwriters are obligated to purchase, which creates a short position. The short position may be either a covered short position or a naked short position. In a covered short position, the number of shares over-allotted by the underwriters is not greater than the number of shares that they may purchase in the over-allotment option. In a naked short position, the number of shares involved is greater than the number of shares in the over-allotment option. The underwriters may close out any covered short position by either exercising their over-allotment option and/or purchasing shares in the open market.

· Syndicate covering transactions involve purchases of shares of common stock in the open market after the distribution has been completed in order to cover syndicate short positions. In determining the source of shares to close out the short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the over-allotment option. If the underwriters sell more shares than could be covered by the over-allotment option, a naked short position, the position can only be closed out by buying shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there could be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in the offering.

· Penalty bids permit a syndicate representative to reclaim a selling concession from a syndicate member when the shares of common stock originally sold by the syndicate member is purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions.

These stabilizing transactions, syndicate covering transactions and penalty bids, to the extent applicable, may have the effect of raising or maintaining the market price of our common stock or preventing or retarding a decline in the market price of the shares of common stock. As a result, the price of our securities may be higher than the price that might otherwise exist in the open market. Neither we nor the underwriters make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of our common stock. In addition, neither we nor the underwriters make any representations that the underwriters will engage in these stabilizing transactions or that any transaction, once commenced, will not be discontinued without notice.

Electronic Distribution

This preliminary prospectus in electronic format may be made available on websites or through other online services maintained by the underwriters, or by their affiliates. Other than this preliminary prospectus in electronic format, the information on the underwriters’ website and any information contained in any other website maintained by such underwriters is not part of this preliminary prospectus or the registration statement of which this preliminary prospectus forms a part, has not been approved and/or endorsed by us or the underwriters in their capacity as underwriters, and should not be relied upon by investors.

89

Other

From time to time, the underwriters and/or their affiliates have provided, and may in the future provide, various investment banking and other financial services for us for which services they have received and, may in the future receive, customary fees. In the course of their businesses, the underwriters and their affiliates may actively trade our securities or loans for their own account or for the accounts of customers, and, accordingly, the underwriters and their affiliates may at any time hold long or short positions in such securities or loans. Except for services provided in connection with this offering, the underwriters have not provided any investment banking or other financial services to us during the 180-day period preceding the date of this prospectus and we do not expect to retain the underwriters to perform any investment banking or other financial services for at least 90 days after the date of this prospectus.

Selling Restrictions

No action may be taken in any jurisdiction other than the United States that would permit a public offering of the securities or the possession, circulation or distribution of this prospectus in any jurisdiction where action for that purpose is required. Accordingly, the securities offered hereby may not be offered or sold, directly or indirectly, and neither the prospectus nor any other offering material or advertisements in connection with such securities may be distributed or published in or from any country or jurisdiction except under circumstances that will result in compliance with any applicable laws, rules and regulations of any such country or jurisdiction.

LEGAL MATTERS

Ellenoff Grossman & Schole LLP, New York, New York, is acting as counsel in connection with this offering, will pass on certain legal matters with respect to United States federal law in connection with the registration of our securities under the Securities Act, and as such, will pass upon the validity of the securities offered in this prospectus. Pryor Cashman LLP, New York, New York, has acted as counsel to the underwriters in connection with this offering.

EXPERTS

The consolidated financial statements of Guided Therapeutics, Inc. as of December 31, 2021 and 2020, and for each of the years in the two-year period ended December 31, 2021, have been included herein in reliance upon the report of UHY LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing. The audit report covering the December 31, 2021 consolidated financial statements contains an explanatory paragraph that states that the Company’s incurred recurring losses and negative cash flows and has an accumulated deficit that raise substantial doubt about its ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of that uncertainty.

ADDITIONAL INFORMATION

We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the securities offered by this prospectus. This prospectus, which constitutes a part of the registration statement, does not contain all the information set forth in the registration statement, some of which is contained in exhibits to the registration statement as permitted by the rules and regulations of the SEC. For further information with respect to us and our securities, we refer you to the registration statement, including the exhibits filed as a part of the registration statement. Statements contained in this prospectus concerning the contents of any contract or any other document are not necessarily complete. If a contract or document has been filed as an exhibit to the registration statement, please see the copy of the contract or document that has been filed. Each statement in this prospectus relating to a contract or document filed as an exhibit is qualified in all respects by the filed exhibit. The SEC maintains an internet website that contains reports and other information about issuers, like us, that file electronically with the SEC. The address of that website is www.sec.gov.

We are subject to the information reporting requirements of the Exchange Act, and we will file reports, proxy statements and other information with the SEC.

We also maintain a website at www.guidedinc.com. Information contained in, or accessible through, our website is not a part of this prospectus, and the inclusion of our website address in this prospectus is only as an inactive textual reference.

90

GUIDED THERAPEUTICS, INC. AND SUBSIDIARS

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021 AND 2020 (AUDITED)

Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets as of December 31, 2021 and 2020	F-4
Consolidated Statements of Operations for the years ended December 31, 2021 and 2020	F-6
Consolidated Statements of Stockholders’ Deficit for the years ended December 31, 2021 and 2020	F-7
Consolidated Statements of Cash Flows for the years ended December 31, 2021 and 2020	F-10
Notes to Consolidated Financial Statements	F-12

March 31, 2022 (UNAUDITED)

Consolidated Balance Sheets as of March 31, 2022 (Unaudited) and December 31, 2021	F-44
Consolidated Statements of Operations for the three months ended March 31, 2022 and 2021 (Unaudited)	F-45
Consolidated Statements of Stockholders’ Deficit for the three months ended March 31, 2022 and 2021 (Unaudited)	F-46
Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021 (Unaudited)	F-48
Notes to Consolidated Financial Statements	F-49

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Guided Therapeutics, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Guided Therapeutics, Inc. and Subsidiary. (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for the years then ended, and the related notes (collectively, the “consolidated financial statements”). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America (“US GAAP”).

Substantial Doubt about the Company’s Ability to Continue as a Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has recurring losses from operations, limited cash flow, and an accumulated deficit. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustment that might result from the outcome of this uncertainty. Our opinion is not modified with respect to this matter.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risk of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

F-2

To the Board of Directors and Stockholders of

Guided Therapeutics, Inc.

Page Two

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Going Concern Assessment

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As disclosed in Note 1 to the consolidated financial statements, the Company has suffered recurring losses from operations, negative operating cash flow, has a net accumulated deficit and expects to continue to incur losses for at least the next twelve months. This matter is also described in the “Emphasis of Matter - Substantial Doubt about the Company’s Ability to Continue as a Going Concern” section of our report.

We identified management’s judgments and assumptions used to assess the Company’s ability to continue as a going concern as a critical audit matter due to inherent complexities and uncertainties related to the Company’s projections of operations. Auditing these judgments and assumptions involved especially challenging auditor judgment due to the nature and extent of audit evidence and effort required to address these matters.

How the Critical Audit Matter was Addressed

The primary procedures we performed to address this critical audit matter included the following: (1) evaluating management’s assessment and assessing the reasonableness of key assumptions underlying management’s conclusion, (2) evaluating the probability that the Company will be able to reduce note payable obligations and other operating expenditures if required, (3) assessing management’s plans in the context of other audit evidence obtained during the audit to determine whether it supported or contradicted the conclusions reached by management.

/s/ UHY LLP

We have served as the Company’s auditor since 2007.

Sterling Heights, Michigan

March 29, 2022

F-3

GUIDED THERAPEUTICS, INC. AND SUBSIDIARY 

CONSOLIDATED BALANCE SHEETS

(in thousands)

	December 31,		December 31,
	2021		2020
ASSETS
Current Assets:
Cash and cash equivalents	$	643	$	182
Accounts receivable, net of allowance for doubtful accounts of $126 at December 31, 2021 and 2020		46		24
Inventory, net of reserves of $785 and $758 at December 31, 2021 and 2020, respectively		571		605
Other current assets		377		85
Total current assets		1,637		896
Non-Current Assets:
Property and equipment, net		14		1
Operating lease right-of-use asset, net of amortization		372		453
Other assets		17		-
Total non-current assets		403		454
TOTAL ASSETS	$	2,040	$	1,350
LIABILITIES AND STOCKHOLDERS DEFICIT
Current Liabilities:
Accounts payable	$	2,362	$	2,419
Accounts payable, related parties		87		116
Accrued liabilities		1,768		2,995
Deferred revenue		337		42
Current portion of lease liability		67		56
Current portion of long-term debt		88		28
Notes payable in default		-		328
Notes payable in default, related parties		-		1
Short-term notes payable		48		45
Short-term notes payable, related parties		40		51
Convertible notes payable in default		161		-
Convertible notes payable, past due		-		1,930
Short-term convertible notes payable		736		951
Total current liabilities		5,694		8,962
Long-Term Liabilities
Warrants, at fair value		-		2,203
Long-term lease liability		325		392
Derivative liability		32		25
Long-term convertible debt		820		23
Long-term debt		22		-
Long-term debt, related parties		592		600
Total long-term liabilities		1,791		3,243
Total liabilities		7,485		12,205
COMMITMENTS AND CONTINGENCIES (Note 7)

F-4

STOCKHOLDERS DEFICIT:
Series C convertible preferred stock, $0.001 par value; 9.0 shares authorized, 0.3 shares issued and outstanding as of December 31, 2021 and 2020. Liquidation preference of $286 at December 31, 2021 and 2020.		105			105
Series C1 convertible preferred stock, $0.001 par value; 20.3 shares authorized, 1.0 shares issued and outstanding as of December 31, 2021 and 2020. Liquidation preference of $1,049 at December 31, 2021 and 2020.		170			170
Series C2 convertible preferred stock, $0.001 par value; 5,000 shares authorized, 3.3 shares issued and outstanding as of December 31, 2021 and 2020. Liquidation preference of $3,263 at December 31, 2021 and 2020.		531			531
Series D convertible preferred stock, $0.001 par value; 6.0 shares authorized, 0.8 shares issued and outstanding as of December 31, 2021 and 2020. Liquidation preference of $763 at December 31, 2021 and 2020.		276			276
Series E convertible preferred stock, $0.001 par value; 5.0 shares authorized, 1.7 shares issued and outstanding as of December 31, 2021 and 2020. Liquidation preference of $1,736 at December 31, 2021 and 2020.		1,639			1,639
Series F convertible preferred stock, $0.001 par value; 1.5 shares authorized, 1.4 and nil shares issued and outstanding as of December 31, 2021 and 2020, respectively. Liquidation preference of $1,426 and nil at December 31, 2021 and 2020, respectively.		1,187			-
Series F-2 convertible preferred stock, $0.001 par value; 3.5 shares authorized, 3.2 and nil shares issued and outstanding as of December 31, 2021 and 2020, respectively. Liquidation preference of $3,237 and nil at December 31, 2021 and 2020, respectively.		2,963			-
Series G convertible preferred stock, $0.001 par value; 1,000 shares authorized, nil shares issued and outstanding as of December 31, 2021 and 2020. Liquidation preference was nil at December 31, 2021 and 2020.		-			-
Common stock, $0.001 par value; 500,000 shares authorized, 13,673 and 13,138 shares issued and outstanding as of December 31, 2021 and 2020, respectively.		3,403			3,403
Additional paid-in capital		126,800			123,109
Treasury stock at cost		(132	)		(132	)
Accumulated deficit		(142,387	)		(139,956	)
Total stockholders deficit		(5,445	)		(10,855	)
TOTAL LIABILITIES AND STOCKHOLDERS DEFICIT	$	2,040		$	1,350

The accompanying notes are an integral part of these consolidated statements.

F-5

GUIDED THERAPEUTICS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
	Years Ended
	December 31,
	2021			2020
Sales - devices and disposables	$	81		$	102
Cost of goods sold (recovered)		61			(41	)
Gross profit		20			143
Operating expenses:
Research and development		69			143
Sales and marketing		141			139
General and administrative		2,172			913
Total operating expenses		2,382			1,195
Loss from operations		(2,362	)		(1,052	)
Other income (expenses):
Interest expense		(1,150	)		(1,056	)
Change in fair value of derivative liability		(91	)		(25	)
Gain (loss) from extinguishment of debt		578			(296	)
Change in fair value of warrants		448			1,879
Other income		507			271
Total other income		292			773
Loss before income taxes		(2,070	)		(279	)
Provision for income taxes		-			-
Net loss		(2,070	)		(279	)
Preferred stock dividends		(361	)		(122	)
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	(2,431	)	$	(401	)
NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS
Basic	$	(0.18	)	$	(0.04	)
Diluted	$	(0.18	)	$	(0.04	)
Weighted average shares outstanding
Basic		13,377			10,767
Diluted		13,377			10,767

The accompanying notes are an integral part of these consolidated statements.

F-6

GUIDED THERAPEUTICS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
FOR THE YEAR ENDED DECEMBER 31, 2021
(in thousands)
	Preferred Stock				Preferred Stock				Preferred Stock				Preferred Stock
	Series C				Series C1				Series C2				Series D
	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount
Balance at December 31, 2020		-	$	105		1	$	170		3	$	531		1	$	276
Series F preferred offering		-		-		-		-		-		-		-		-
Series F-2 preferred offering		-		-		-		-		-		-		-		-
Conversion of debt and expenses for Series F-2 preferred stock		-		-		-		-		-		-		-		-
Issuance of common stock to finders		-		-		-		-		-		-		-		-
Series G preferred offering		-		-		-		-		-		-		-		-
Series G redemption		-		-		-		-		-		-		-		-
Issuance of common stock for payment of Series D preferred dividends		-		-		-		-		-		-		-		-
Issuance of common stock for payment of Series E preferred dividends		-		-		-		-		-		-		-		-
Issuance of warrants to consultants		-		-		-		-		-		-		-		-
Warrants issued with debt		-		-		-		-		-		-		-		-
Conversion of warrants from liabilities to equity		-		-		-		-		-		-		-		-
Conversion of Series F Preferred shares into common stock		-		-		-		-		-		-		-		-
Stock-based compensation		-		-		-		-		-		-		-		-
Accrued preferred dividends		-		-		-		-		-		-		-		-
Net loss		-		-		-		-		-		-		-		-
Balance at December 31, 2021		-	$	105		1	$	170		3	$	531		1	$	276

	Preferred Stock				Preferred Stock					Preferred Stock				Preferred Stock
	Series E				Series F					Series F-2				Series G
	Shares		Amount		Shares		Amount			Shares		Amount		Shares			Amount
Balance at December 31, 2020		2	$	1,639		-	$	-			-	$	-		-		$	-
Series F preferred offering		-		-		1		1,195			-		-		-			-
Series F-2 preferred offering		-		-		-		-			1		404		-			-
Conversion of debt and expenses for Series F-2 preferred stock		-		-		-		-			2		2,559		-			-
Issuance of common stock to finders		-		-		-		-			-		-		-			-
Series G preferred offering		-		-		-		-			-		-		153			-
Series G redemption		-		-		-		-			-		-		(153	)		-
Issuance of common stock for payment of Series D preferred dividends		-		-		-		-			-		-		-			-
Issuance of common stock for payment of Series E preferred dividends		-		-		-		-			-		-		-			-
Issuance of warrants to consultants		-		-		-		-			-		-		-			-
Warrants issued with debt		-		-		-		-			-		-		-			-
Conversion of warrants from liabilities to equity		-		-		-		-			-		-		-			-
Conversion of Series F Preferred shares into common stock		-		-		-		(8	)		-		-		-			-
Stock-based compensation		-		-		-		-			-		-		-			-
Accrued preferred dividends		-		-		-		-			-		-		-			-
Net loss		-		-		-		-			-		-		-			-
Balance at December 31, 2021		2	$	1,639		1	$	1,187			3	$	2,963		-		$	-

F-7

					Additional
	Common Stock				Paid-In		Treasury			Accumulated
	Shares		Amount		Capital		Stock			Deficit			Total
Balance at December 31, 2020		13,138	$	3,403	$	123,109	$	(132	)	$	(139,956	)	$	(10,855	)
Series F preferred offering		-		-		-		-			-			1,195
Series F-2 preferred offering		-		-		-		-			-			404
Conversion of debt and expenses for Series F-2 preferred stock		-		-		-		-			-			2,559
Issuance of common stock to finders		98		-		54		-			-			54
Series G preferred offering		-		-		-		-			-			-
Series G redemption		-		-		-		-			-			-
Issuance of common stock for payment of Series D preferred dividends		109		-		53		-			-			53
Issuance of common stock for payment of Series E preferred dividends		288		-		118		-			-			118
Issuance of warrants to consultants		-		-		1,172		-			-			1,172
Warrants issued with debt		-		-		304		-			-			304
Conversion of warrants from liabilities to equity		-		-		1,755		-			-			1,755
Conversion of Series F Preferred shares into common stock		40		-		8		-			-			-
Stock-based compensation		-		-		227		-			-			227
Accrued preferred dividends		-		-		-		-			(361	)		(361	)
Net loss		-		-		-		-			(2,070	)		(2,070	)
Balance at December 31, 2021		13,673	$	3,403	$	126,800	$	(132	)	$	(142,387	)	$	(5,445	)

The accompanying notes are an integral part of these consolidated financial statements.

F-8

GUIDED THERAPEUTICS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
FOR THE YEAR ENDED DECEMBER 31, 2020
( in thousands)
	Preferred Stock				Preferred Stock				Preferred Stock				Preferred Stock
	Series C				Series C1				Series C2				Series D
	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount
Balance at December 31, 2019		-	$	105		1	$	170		3	$	531		-	$	-
Issuance of preferred stock in financing		-		-		-		-		-		-		1		276
Conversion of debt into common stock		-		-		-		-		-		-		-		-
Issuance of common stock in financing		-		-		-		-		-		-		-		-
Warrants exchanged for fixed price warrants		-		-		-		-		-		-		-		-
Issuance of common stock for manufacturing agreements		-		-		-		-		-		-		-		-
Issuance of common stock for payment of Series D preferred dividends		-		-		-		-		-		-		-		-
Beneficial conversion feature of convertible debt		-		-		-		-		-		-		-		-
Adjustment to warrant liability for adoption of ASU 2017-11		-		-		-		-		-		-		-		-
Stock based compensation		-		-		-		-		-		-		-		-
Accrued series D preferred stock dividends		-		-		-		-		-		-		-		-
Net loss		-		-		-		-		-		-		-		-
Balance at December 31, 2020		-	$	105		1	$	170		3	$	531		1	$	276

	Preferred Stock								Additional
	Series E				Common Stock				Paid-In		Treasury			Accumulated
	Shares		Amount		Shares		Amount		Capital		Stock			Deficit			Total
Balance at December 31, 2019		-	$	-		3,319	$	3,394	$	118,552	$	(132	)	$	(139,555	)	$	(16,935	)
Issuance of preferred stock in financing		2		1,639		-		-		-		-			-			1,915
Conversion of debt into common stock		-		-		8,132		8		2,921		-			-			2,929
Issuance of common stock in financing		-		-		1,526		1		460		-			-			461
Issuance of warrants in financing		-		-		-		-		117		-			-			117
Issuance of common stock for manufacturing agreements		-		-		12		-		-		-			-			-
Issuance of common stock for payment of Series D preferred dividends		-		-		149		-		40		-			-			40
Beneficial conversion feature of convertible debt		-		-		-		-		82		-			-			82
Adjustment to warrant liability for adoption of ASU 2017-11		-		-		-		-		627		-			-			627
Stock based compensation		-		-		-		-		310		-			-			310
Accrued series D preferred stock dividends		-		-		-		-		-		-			(122	)		(122	)
Net loss		-		-		-		-		-		-			(279	)		(279	)
Balance at December 31, 2020		2	$	1,639		13,138	$	3,403	$	123,109	$	(132	)	$	(139,956	)	$	(10,855	)

The accompanying notes are an integral part of these consolidated financial statements.

F-9

GUIDED THERAPEUTICS, INC. AND SUBSIDIARY 

CONSOLIDATED STATEMENTS OF CASH FLOWS 

(in thousands)

	Year Ended
	December 31,
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(2,071	)	$	(279	)
Adjustments to reconcile net loss to net cash used in operating activities:
Bad debt expense		-			12
Inventory reserve		-			(73	)
Depreciation		1			-
Amortization of debt issuance costs and discounts		320			394
Amortization of beneficial conversion feature		8			102
Stock based compensation		228			310
Change in fair value of warrants		(448	)		(1,879	)
Loss on extinguishment of debt		-			296
Extinguishment of derivative liability		(84	)		-
Change in fair value of derivatives		91			25
Amortization of lease right-of-use-asset		82			-
Expense for warrants issued to consultants		664			-
Gain from forgiveness of debt		(578	)		-
Other non-cash expenses (income)		117			-
Change in operating assets and liabilities:
Accounts receivable		(22	)		(23	)
Inventory		33			(483	)
Other current assets		(292	)		(15	)
Other non-current assets		(17	)		18
Accounts payable and accrued liabilities		136			(221	)
Lease liabilities		(56	)		-
Deferred revenue		296			(59	)
NET CASH USED IN OPERATING ACTIVITIES		(1,592	)		(1,875	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(14	)		(1	)
NET CASH USED FOR INVESTING ACTIVITIES		(14	)		(1	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt financing		1,248			519
Payments made on notes payable		(1,468	)		(1,101	)
Payments of debt issuance costs		(86	)		-
Note payable default penalty		398			-
Proceeds from issuance of Series D preferred stock		-			102
Proceeds from issuance of Series E preferred stock		-			1,639
Proceeds from issuance of common stock, net of costs		-			-
Proceeds from Series F offering, net of costs		1,436			-
Proceeds from Series F-2 offering, net of costs		539			-
Proceeds from Series G offering, net of costs		125			-
Redemption of Series G preferred stock		(125	)		-
NET CASH PROVIDED BY FINANCING ACTIVITIES		2,067			1,159

F-10

NET CHANGE IN CASH		461		(717	)
Cash at beginning of period		182		899
CASH AT END OF PERIOD	$	643	$	182
SUPPLEMENTAL DISCLOSURE FOR OPERATING ACTIVITIES:
Cash paid for interest	$	557	$	295
SUPPLEMENTAL DISCLOSURE FOR NON-CASH INVESTING AND FINANCING ACTIVITIES:
Dividends on preferred stock	$	361	$	122
Debt from related parties exchanged for preferred series F-2	$	323	$	-
Issuance of series F-2 preferred stock	$	2,236	$	-
Issuance of warrants to finders in connection with Series F and Series F-2 preferred stock	$	377	$	-
Settlement of dividends through common stock issuance	$	171	$	40
Settlement of accounts payable through common stock issuance	$	62	$	-
Warrants exchanged for fixed price warrants	$	1,755	$	131
Warrants issued with debt	$	304	$	-
Settlement of accounts payable through issuance of promissory note	$	97	$	-
Issuance of common stock as debt repayment	$	-	$	2,929
Conversion of Preferred Series F to common stock	$	8	$	-
Subscription receivable	$	-	$	635

The accompanying notes are an integral part of these consolidated financial statements.

F-11

GUIDED THERAPEUTICS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

During the year ended December 31, 2021, the Board simultaneously approved a 1-for-20 reverse stock split of our common stock and decreased the total number of authorized common shares to 500,000,000. On November 18, 2021, the Company submitted an Issuer Company Related Action Notification regarding the reverse stock split to the Financial Industry Regulatory Authority (“FINRA”). FINRA has not yet declared an effective date for the reverse stock split. The Company will adjust the number of shares available for future grant under its equity incentive plan and employee stock purchase plans and will also adjust the number of outstanding awards issued to reflect the effects of its reverse split. All historical share and per share amounts reflected throughout this report will be adjusted to reflect the stock split at the time it becomes effective.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principals generally accepted in the United States of America, or U.S. GAAP. All intercompany transactions and balances have been eliminated in consolidation. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the Company as of December 31, 2021 and 2020, and the consolidated results of operations and cash flows for the years ended December 31, 2021 and 2020 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 December 31, 2021, it had an accumulated deficit of approximately $142.4 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.

The Company is not organized by multiple operating segments for the purpose of making operating decisions or assessing performance. Accordingly, the Company operates in one reportable operating segment. The Company’s principal decision makers are the Chief Executive Officer and its Chief Financial Officer. Management believes that its business operates as one reportable segment because: a) the Company measures profit and loss as a whole; b) the principal decision makers do not review information based on any operating segment; c) the Company does not maintain discrete financial information on any specific segment; d) the Company has not chosen to organize its business around different products and services, and e) the Company has not chosen to organize its business around geographic areas.

F-12

Going Concern

The Company’s consolidated financial statements have been prepared and presented on a basis assuming it will continue as a going concern. The factors below raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary from the outcome of this uncertainty.

At December 31, 2021, the Company had a negative working capital of approximately $4.1 million, accumulated deficit of $142.4 million, and incurred a net loss including preferred dividends of $2.4 million for the year then ended. Stockholders’ deficit totaled approximately $5.4 million at December 31, 2021, primarily due to recurring net losses from operations.

During the year ended December 31, 2021, the Company raised $3.2 million of funds from the sale of preferred stock and 10% convertible debentures. 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, 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 27.7 million shares of its common stock outstanding at December 31, 2021, with exercise prices ranging between $0.15 and $0.80 per share. Exercises of in-the-money warrants would generate a total of approximately $5.1 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 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 freestanding warrants.

Accounting Standard Updates

FASB ASU 2021-04, “Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options” - Issued in May 2021, ASU No. 2021-04 provides guidance to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. The amendments in this ASU No. 2021-04 are effective for all entities for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years, with early adoption permitted, including interim periods within those fiscal years. We adopted ASU 2021-04 in the third quarter of 2021. Adoption of this standard had no material impact on our consolidated financial statements.

F-13

FASB ASU NO. 2020-06, “Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” - Issued in August 2020, ASU 2020-06 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 are classification 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 early adopted ASU No. 2020-06 under a modified retrospective basis on January 1, 2021. Adoption had no material impact on our consolidated financial statements.

FASB ASU NO. 2019-12, “Simplifying the Accounting for Income Taxes” - Issued in December 2019, 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. Adoption had no material impact on our 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.

F-14

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. As of December 31, 2021 and 2020, our inventories were as follows:

	(in thousands)
	December 31,			December 31,
	2021			2020
Raw materials	$	1,255		$	1,276
Work-in-progress		69			80
Finished goods		32			7
Inventory reserve		(785	)		(758	)
Total inventory	$	571		$	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 December 31, 2021 and 2020:

	(in thousands)
	December 31,			December 31,
	2021			2020
Equipment	$	1,048		$	1,042
Software		652			652
Furniture and fixtures		41			41
Leasehold improvements		12			12
Construction in progress		8			-
Subtotal		1,761			1,747
Less accumulated depreciation		(1,747	)		(1,746	)
Property, equipment and leasehold improvements, net
	$	14		$	1

Depreciation expense related to property and equipment for the years ended December 31, 2021 and 2020 was not material.

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.

F-15

Patent Costs

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 to approximately $14,800 and $17,000 for the years ended December 31, 2021 and 2020, respectively.

Leases

A lease provides the lessee the right to control the use of an identified asset for a period of time in exchange for consideration. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. The Company determines if an arrangement is a lease at inception. Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term.

Where an operating lease contains extension options that the Company is reasonably certain to exercise, the extension period is included in the calculation of the right-of-use assets and lease liabilities.

The discount rate used to determine the commencement date present value of lease payments is the interest rate implicit in the lease, or when that is not readily determinable, the Company utilizes its secured borrowing rate. Right-of-use assets include any lease payments required to be made prior to commencement and exclude lease incentives. Both right-of-use assets and lease liabilities exclude variable payments not based on an index or rate, which are treated as period costs. The Company’s lease agreements do not contain significant residual value guarantees, restrictions or covenants. See Note 7 - Commitments and Contingencies.

Accrued Liabilities

Accrued liabilities as of December 31, 2021 and 2020 are summarized as follows:

	(in thousands)
	December 31,		December 31,
	2021		2020
Compensation	$	621	$	1,094
Professional fees		98		83
Interest		261		1,517
Vacation		39		34
Preferred dividends		349		202
Stock subscription payable		351		-
Other accrued expenses		49		65
Total	$	1,768	$	2,995

Stock Subscription Payable

Cash received from investors for common stock shares that have not yet been issued is recorded as a liability, which is presented within Accrued Liabilities on the consolidated balance sheet.

F-16

Revenue Recognition

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 recognize material revenues during the years ended December 31, 2021 or 2020. The Company’s revenues do not require significant estimates or judgments. The Company is not party to contracts that include multiple performance obligations or material variable consideration.

Contract Balances

The Company defers payments received as revenue until earned based on the related contracts and applying ASC 606 as required. As of December 31 2021 and 2020, the Company had $337,000 and $42,000 of deferred revenue, respectively.

Significant Distributors

As of December 31, 2021, accounts receivable outstanding was $172,000; the outstanding amount was netted against a $126,000 allowance, leaving a balance of $46,000 which was from two distributors. As of December 31, 2020, accounts receivable outstanding was $150,000, the outstanding amount was netted against a $126,000 allowance, leaving a balance of $24,000 which was from one distributor.

F-17

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 provision for income taxes is determined in accordance with ASC 740, “Income Taxes”. The Company provides for income taxes based on enacted tax law and statutory tax rates at which items of income and expense are expected to be settled in our income tax return. Certain items of revenue and expense are reported for Federal income tax purposes in different periods than for financial reporting purposes, thereby resulting in deferred income taxes. Deferred taxes are also recognized for operating losses that are available to offset future taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected 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, 2021, the Company had approximately $61.6 million of net operating losses carryforward available. 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 Company recognizes uncertain tax positions based on a benefit recognition model. Provided that the tax position is deemed more likely than not of being sustained, the Company recognizes the largest amount of tax benefit that is greater than 50.0% likely of being ultimately realized upon settlement. The tax position is derecognized when it is no longer more likely than not of being sustained. The Company classifies income tax related interest and penalties as interest expense and selling, general and administrative expense, respectively, on the consolidated statements of operations.

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 accounts for its stock-based awards in accordance with ASC Subtopic 718, “Compensation - Stock Compensation”, which requires fair value measurement on the grant date and recognition of compensation expense for all stock-based payment awards made to employees and directors. The Company determines the fair value of stock options using the Black-Scholes model. The fair value of restricted stock awards is based upon the quoted market price of the common shares on the date of grant. The fair value of stock-based awards is expensed over the requisite service periods of the awards. The Company accounts for forfeitures of stock-based awards as they occur.

The Black-Scholes option pricing model requires the input of certain assumptions that require the Company’s judgment, including the expected term and the expected stock price volatility of the underlying stock. The assumptions used in calculating the fair value of stock-based compensation represent management’s best estimates, but these estimates involve inherent uncertainties and the application of judgment. As a result, if factors change resulting in the use of different assumptions, stock-based compensation expense could be materially different in the future.

F-18

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 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.

During 2021, the Company adopted ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, 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, the new standard eliminates the liability and equity separation model for convertible instruments with a cash conversion feature. As a result of adoption of the standard, the Company 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.

F-19

3.   FAIR VALUE OF FINANCIAL INSTRUMENTS

The guidance for fair value measurements, ASC 820, Fair Value Measurements and Disclosures, establishes the authoritative definition of fair value, sets out a framework for measuring fair value, and outlines the required disclosures regarding fair value measurements. Fair value is the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The Company uses a three-tier fair value hierarchy based upon observable and non-observable inputs as follow:

· Level 1 – Quoted market prices in active markets for identical assets and liabilities;

· Level 2 – Inputs, other than level 1 inputs, either directly or indirectly observable; and

· Level 3 – Unobservable inputs developed using internal estimates and assumptions (there is little or no market date) which reflect those that market participants would use.

The Company records its derivative activities at fair value. As of December 31, 2021 we had one instrument that we valued for the derivative liability associated with the bifurcated conversion option of the Auctus loan for $400,000 ($700,000 of the $1,100,000 was paid in during the year ended December 31, 2021). There was no movement of instruments between fair value hierarchy tiers during the years ended December 31, 2021 or 2020.  

The following tables present the fair value of those liabilities measured on a recurring basis as of December 31, 2021 and 2020:

	Fair Value at December 31, 2021 (in thousands)
	Level 1		Level 2		Level 3			Total
Derivative liability/bifurcated conversion option in connection with Auctus $400,000 loan on December 17, 2019	$	-	$	-	$	(32	)	$	(32	)
Total long-term liabilities at fair value	$	-	$	-	$	(32	)	$	(32	)

	Fair Value at December 31, 2020 (in thousands)
	Level 1		Level 2		Level 3			Total
Warrants issued in connection with Senior Secured Debt	$		$		$	(2,203	)	$	(2,203	)
Derivative liability/bifurcated conversion option in connection with Auctus $400,000 loan on December 17, 2019		-		-		(25	)		(25	)
Total long-term liabilities at fair value	$	-	$	-	$	(2,228	)	$	(2,228	)

The following is a summary of changes to Level 3 instruments during the year ended December 31, 2021:

	(in thousands)
	Senior Secured Debt			Derivative			Total
Balance, December 31, 2020	$	(2,203	)	$	(25	)	$	(2,228	)
Change in the terms of warrants previously recorded as a liability and now reclassified to equity		1,755			-			1,755
Change in value due to warrants expiring during the year		448			-			448
Extinguishment of derivative liability due to payoff of $700,000 loan to Auctus		-			84			84
Change in fair value during the year		-			(91	)		(91	)
Balance, December 31, 2021	$	-		$	(32	)	$	(32	)

F-20

4.  STOCKHOLDERS’ DEFICIT

Common Stock

The Company has authorized 500,000,000 shares of common stock with $0.001 par value. As of December 31, 2021 and 2020, 13,673,583 and 13,138,282 shares were issued and outstanding, respectively.

During the years ended December 31, 2021 and 2020 the Company issued 535,301 and 9,818,813 shares of common stock, respectively:

	Number of Shares
Conversion of debt into common shares - exchange agreements		7,957,013
Conversion of debt into common shares		175,000
Shares issued for manufacturing agreements		12,147
Shares issued for payment of Series D dividends		148,653
Shares issued to investors		1,526,000
Issued during the year ended December 31, 2020		9,818,813
Shares issued for payment of Series D dividends		109,039
Shares issued for payment of Series E dividends		288,262
Shares issued for payment of finder fee		98,000
Conversion of Series F Preferred shares into common stock		40,000
Issued during the year ended December 31, 2021		535,301
Summary table of common stock share transactions:
Outstanding at December 31, 2019		3,319,469
Issued in 2020		9,818,813
Outstanding at December 31, 2020		13,138,282
Issued in 2021		535,301
Outstanding at December 31, 2021		13,673,583

Conversion of Debt into Common Shares - 2020 Exchange Agreements

On January 8, 2020, the Company exchanged $2,064,366 in debt for several equity instruments with an estimated 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 during the year ended December 31, 2020.

On June 3, 2020, the Company exchanged $328,422 of debt held by Auctus, (summarized in Note 10, “Convertible Notes”), for 500,000 shares of common stock and 700,000 warrants to purchase common stock shares. The fair value of the common shares was $250,000 and the fair value of the warrants was $196,818 (based on an estimated fair value of $0.281, as determined utilizing the Black-Scholes option pricing model). This resulted in a net loss on extinguishment of debt of $118,396 ($446,818 fair value less $328,422 of exchanged debt).

On June 30, 2020, the Company exchanged $125,000 of debt held by Mr. James Clavijo, for 500,000 shares of common stock and 250,000 warrants to purchase common shares. The fair value of the common shares was $250,000 and the fair value of the warrants was $99,963 (based on an estimated fair value of $0.40, as determined utilizing the Black-Scholes option pricing model). This resulted in a net loss on extinguishment of debt of $224,963 ($349,963 fair value less $125,000 of exchanged debt).

F-21

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. During the year ended December 31, 2021, the Company obtained the minimum amount of financing and issued the promissory note to Mr. Wells in accordance with the agreement described above.

The following table summarizes the debt exchanges:

	Total Debt and Accrued Interest		Total Debt		Total Accrued Interest		Common Stock Shares		Warrants (Exercise $0.15)		Warrants (Exercise $0.20)		Warrants (Exercise $0.25)		Warrants (Exercise $0.50)		Warrants (Exercise $0.75)
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		-		496,602		704,334		-		704,334
Mr. Blumberg		305,320		292,290		13,030		1,167,630		-		928,318		119,656		-		119,656
Mr. Case		179,291		150,000		29,291		896,456		-		896,456		-		-		-
Mr. Grimm		51,110		50,000		1,110		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		-		1,497,367		100,944		-		100,944
Ms. Rosenstock1		50,000		50,000		-		100,000		-		-		50,000		-		50,000
Mr. James2		2,286		2,000		286		7,745		-		5,291		1,227		-		1,227
Auctus		328,422		249,119		79,303		500,000		700,000		-		-				-
Mr. Clavijo		125,000		125,000		-		500,000		-		-		-		250,000		-
Mr. Wells4		220,000		220,000		-		-		-		-		-		-		-
	$	2,737,847	$	2,496,316	$	241,531		7,957,013		700,000		4,713,603		1,121,705		250,000		1,121,705

____________ 

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. 

Conversion of Debt into Common Shares - 2020

Effective September 10, 2014, the Company sold a secured convertible promissory note to an accredited investor, GHS Investments, LLC (“GHS”), with an initial principal amount of $1,275,000, for a purchase price of $570,000 (less an original issue discount of $560,000 and debt issuance costs of $145,000). The outstanding balance of the note was convertible into shares of common stock at a conversion price per share equal to 75% of the lowest daily volume average price of common stock during the five days prior to conversion. During 2020, GHS converted $50,454 of principal and interest owed for 175,000 shares of common stock. As of December 31, 2020, there was no remaining amount due on the note.

Shares Issued for Manufacturing Agreements - 2020

During the year ended December 31, 2020, the Company issued 12,147 shares of common stock to Shandong Yaohua Medical Instrument Corporation (“SMI”), as compensation for manufacturing and distribution services. Refer to Note 7, “Commitments and Contingencies.”

Shares Issued to Investors - 2020

During the year ended December 31, 2020, the Company issued 1,526,000 shares of common stock to certain accredited investors as part of the Series D Preferred Stock offering (see “Series D Preferred Stock” below).

F-22

Shares Issued as Payment for Finder’s Fee - 2021

During 2021, the Company issued 98,000 shares of common stock as compensation for the “finder’s fee” associated with the Series F and Series F-2 Preferred Stock offerings (see “Series F Convertible Preferred Stock” and “Series F-2 Convertible Preferred Stock” below).

Conversion of Series F Preferred Shares into Common Stock - 2021

During the year ended December 31, 2021, 10 shares of Series F Preferred were converted into 40,000 shares of the Company’s common stock (see “Series F Convertible Preferred Stock” below).

Preferred Stock

The Company has authorized 5,000,000 shares of preferred stock with a $0.001 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 December 31, 2021 and 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 of 572,000 common 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. Unpaid accrued dividends were $120,120 as of December 31, 2021. Upon conversion of the Series C preferred stock prior to the Dividend End Date, the Company will also pay to the converting holder a “make-whole payment” equal to the number of unpaid dividends through the Dividend End Date on the converted shares. At December 31, 2021 and 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. As of December 31, 2021, these warrants had expired.

Series C1 Convertible Preferred Stock

The board designated 20,250 shares of preferred stock as Series C1 Preferred Stock, of which 1,049 shares were issued and outstanding at December 31, 2021 and 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 December 31, 2021 and 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.

F-23

At December 31, 2021 and 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 of 2,098,500 common shares.

The Series C1 preferred stock has terms that are substantially the same as the Series C preferred stock, except that the Series C1 preferred stock does not pay dividends (unless and to the extent declared on the common stock) or at-the-market “make-whole payments” and, while it has the same anti-dilution protections afforded the Series C preferred stock, it does not automatically reset in connection with a reverse stock split or conversion of our outstanding convertible debt.

Series C2 Convertible Preferred Stock

On August 31, 2018, the Company entered into agreements with certain holders of the Company’s Series C1 Preferred Stock, including the chairman of the Company’s board of directors, and the Chief Operating Officer and a director of the Company pursuant to which those holders separately agreed to exchange each share of the Series C1 Preferred Stock held for one (1) share of the Company’s newly created Series C2 Preferred Stock. In total, for 3,262.25 shares of Series C1 Preferred Stock to be surrendered, the Company issued 3,262.25 shares of Series C2 Preferred Stock. At December 31, 2021 and 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 of 6,524,500 common 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 remained outstanding as of December 31, 2021. 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 at $0.75. Each Series D Preferred Stock is convertible into 3,000 common 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 December 31, 2021, none of the 763 Series D 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.

During the year ended December 31, 2021, the Company issued 109,039 shares of common stock for the payment of accrued Series D Preferred Stock dividends. As of December 31, 2021, the Company had accrued dividends of $14,306.

F-24

Series E Convertible Preferred Stock

The Board designated 5,000 shares of preferred stock as Series E Preferred Stock, 1,736 of which remain outstanding. 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.

Each share of Series E Preferred Stock has a par value of $0.001 per share and a Stated Value equal to $1,000, subject to increase set forth in its Certificate of Designation.

Each holder of Series E Preferred Stock is entitled to receive cumulative dividends of 8% per annum, payable annually on the Stated Value in cash or, following the listing of the Company’s common stock on certain Canadian trading markets and at the option of the Company, shares of common stock.

During the year ended December 31, 2021, the Company issued 288,262 shares of common for the payment of Series E Preferred Stock dividends accrued. As of December 31, 2021, the Company had accrued dividends of $54,521.

Series F Convertible Preferred Stock

The Company was oversubscribed for its Series F Convertible Preferred Stock, resulting in the requirement to file an additional Certificate of Designation for Series F-2 Convertible Preferred Stock with substantially the same terms as the Series F Convertible Preferred Stock. The Board designated 1,500 shares of preferred stock as Series F Preferred Stock, 1,426 of which are issued and outstanding. During 2021, the Company entered into a Stock Purchase Agreement with certain accredited investors (“the Series F Investors”). In total, for $1,436,000 the Company issued 1,436 shares of Series F Preferred Stock. Each Series F Preferred Stock is convertible into 4,000 common stock shares. The Series F Preferred Stock will have cumulative dividends at the rate per share of 6% per annum. The stated value and liquidation preference on the Series F Preferred Stock is $1,436.

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.

During the year ended December 31, 2021, 10 shares of Series F Preferred were converted into 40,000 shares of the Company’s common stock. As of December 31, 2021, the Company had not issued shares as payment of Series F Preferred Stock dividends. As of December 31, 2021, the Company had accrued dividends of $65,718.

F-25

Series F-2 Convertible Preferred Stock

The Board designated 3,500 shares of preferred stock as Series F-2 Preferred Stock, 3,237 of which are issued and outstanding. During 2021, the Company entered into a Stock Purchase Agreement with certain accredited investors (“the Series F-2 Investors”). In total, for $678,000 the Company issued 678 shares of Series F-2 Preferred Stock. In addition, the Company exchanged outstanding debt of $2,559,000 for 2,559 shares of Series F-2 Preferred Stock (see Note 9, “Convertible Debt”). Each Series F-2 Preferred Stock is convertible into 4,000 common stock shares. The Series F-2 Preferred Stock will have cumulative dividends at the rate per share of 6% per annum. The stated value and liquidation preference on the Series F-2 Preferred Stock is $3,237.

Each share of Series F-2 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-2 Certificate of Designation (the “Series F-2 Conversion Price”). The conversion of Series F-2 Preferred is subject to a 4.99% beneficial ownership limitation, which may be increased to 9.99% at the election of the holders of the Series F-2 Preferred. If the average of the VWAPs (as defined in the Series F-2 Certificate of Designation) for any consecutive 5 trading day period (“Measurement Period”) exceeds 200% of the then Series F-2 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-2 Preferred, for cash in an amount equal to aggregate Stated Value then outstanding plus accrued but unpaid dividends. As of December 31, 2021, the Company had not issued shares as payment of Series F-2 Preferred Stock dividends. As of December 31, 2021, the Company had accrued dividends of $94,907.

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. The Company has redeemed all of the Series G preferred stock and the balance is paid.

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. On June 4, 2021, the Company redeemed the January 2021 investment of $75,000 for $114,597, this $39,597 difference was recorded as interest expense. On July 8, 2021, the Company redeemed the February 2021 investment of $50,000 for $78,094. The difference of $28,094 was recorded as interest expense. As of December 31, 2021, the amount outstanding was nil.

F-26

Warrants

The following table summarizes transactions involving the Company’s outstanding warrants to purchase common stock for the years ended December 31, 2021 and 2020:

	Warrants (Underlying Shares)			Weighted-Average Exercise Price Per Share
Outstanding, January 1, 2020		46,016,840		$	1.71
Warrants issued		11,270,013		$	0.34
Warrants cancelled/expired		(70	)	$	1,068,423
Warrants exchanged		(28,962,508	)	$	0.04
Outstanding, December 31, 2020		28,324,275		$	0.25
Warrants issued		7,982,223		$	0.30
Warrants cancelled/expired		(1,729,662	)	$	0.04
Warrants exchanged		(4,713,603	)	$	0.20
Warrants exercised		(2,193,599	)	$	0.16
Outstanding, December 31, 2021		27,669,634		$	0.29

Warrant Exchanges - 2021

During the year ended December 31, 2021, the Company entered into various agreements with holders of the Company’s $0.20 strike price warrants, pursuant to which each holder separately agreed to exchange 4,713,603 common stock warrants with a strike price of $0.20 for 4,477,923 common stock warrants with a strike price of $0.16 and a contractual term of 15 days. During the year ended December 31, 2021, the Company received approximately $351,000 from the holders for the exercise of 2,193,599 warrants, which was included in Accrued Liabilities as of December 31, 2021, pending issuance of the common shares. The Company measured the effect of the exchange as the excess of fair value of the exchanged instruments over the fair value of the original instruments and determined the effect of the exchange was nil. Management estimated the fair value of the warrants issued utilizing the Black-Scholes Option Pricing model with the following assumptions:

	December 31,
	2021
Expected term	15 days
Volatility		143.2	%
Risk-free interest rate		0.0	%
Dividend yield		0.00	%

During the year ended December 31, 2021, the Company entered into various agreements with holders of the Company’s $0.25 strike price warrants, pursuant to which each holder separately agreed that in the event the Company obtains financing of at least $4.0 million, 1,802,161 of common stock warrants with a strike price of $0.25 will be exchanged for 901,081 warrants with terms identical to the warrants granted in the financing and cash payments totaling approximately $90,000, which are due within ten (10) business days of closing of the new financing. In the event Company is not successful in obtaining financing greater than $4.0 million, the warrant’s terms remain unchanged and the common share warrants will expire on their original date. The warrants will have a one-year lockup restriction and a 10% blocker such that the warrant holders will be restricted from owning more than 10% of the total number of the Company’s outstanding common shares at any one point in time after completion of the financing.

F-27

During the year ended December 31, 2021, the Company entered into various agreements with holders of the Company’s $0.75 strike price warrants, pursuant to which each holder separately agreed that in the event the Company obtains financing of at least $4.0 million, 1,802,161 of common stock warrants with a strike price of $0.75 will be exchanged for 1,802,161 warrants with the same price but with terms identical to the new warrants granted in the financing. In the event Company is not successful in obtaining financing greater than $4.0 million, the warrant’s terms will remain unchanged and the common share warrants will expire on their original date. The new warrants will have a one-year lockup restriction and a 10% blocker such that the warrant holders will be restricted from owning more than 10% of the total number of the Company’s outstanding common shares at any one point in time after completion of the financing.

During the year ended December 31, 2021, the Company entered into an agreement with GPB Debt Holdings II LLC (“GPB”), pursuant to which GPB agreed that in the event the Company obtains financing of at least $4.0 million, 7,185,000 of common stock warrants with a strike price of $0.20 will be exchanged for 3,592,500 warrants with terms identical to the warrants granted in the financing and a cash payment of $350,000. In the event Company is not successful in obtaining financing greater than $4.0 million, the warrant’s terms remain unchanged and the common share warrants will expire on their original date. The new warrants, which will vest six months after the closing of a financing greater than $4.0 million, will have a 4.99% blocker such that the warrant holders will be restricted from owning more than 4.99% of the total number of the Company’s outstanding common shares at any one point in time after completion of the financing.

Other Warrant Transactions

During 2021, the Company issued 10% debenture unit investments in the amount of $1,130,000 and incurred fees due on these debentures of $86,400. The Company issued the finders 263,000 warrants for the Company’s common stock shares which expire on May 31, 2023 and an additional 150,000 warrants to purchase the Company’s common stock shares which expire on May 31, 2024. The investors received a total of 1,130,000 warrants for common stock shares, which expire on May 17, 2023.

During 2021, the Company issued equity investments in the amount of $2,114,000 and incurred fees due on these investments of $139,000. The Company also issued the finders 98,000 of the Company’s common stock shares and 643,700 warrants, which expire in the first half of 2024.

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 shares 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 made a payment of $750,000, as required by the exchange agreement with GPB, which canceled the previously issued warrants.

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 were 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 common stock warrants at a $0.25 strike price and expiring in three years, if the following conditions occur: 1,250,000 common stock warrants, 6 months after the close of the Series D Preferred Stock units, if the minimum common stock share price is a at least $0.50 based on a 30-day VWAP, with a two year term; 1,250,000 common stock warrants, 12 months after the close of the Series D Preferred Stock units, if the minimum common stock share price is at least $0.75 based on a 30-day VWAP, with a one and half year term; 1,250,000 common stock warrants, 18 months after the close of the Series D Preferred Stock units, if the minimum common stock share price is a minimum of $1.00 based on a 30-day VWAP, with a one year term; and 1,250,000 common stock warrants, 24 months after the close of the Series D Preferred Stock units, if the minimum common stock share price is a minimum of $1.25 based on a 30-day VWAP, with a one year term. The consultant agrees to a 10.0% blocker at any single point in time it cannot own 10.0% of the total common stock shares outstanding. The Company issued 1,250,000 common stock warrants during the year ended December 31, 2021, in accordance with the agreement. Refer to Note 7, “Commitments and Contingencies” for additional information. 

F-28

5.   STOCK OPTIONS

The new Stock Plan (the “Plan”) allows for the issuance of incentive stock options, nonqualified stock options, and stock purchase rights. The exercise price of options was determined by the Company’s board of directors, but incentive stock options were granted at an exercise price equal to the fair market value of the Company’s common stock as of the grant date. Options historically granted have generally become exercisable over four years and expire ten years from the date of grant. The plan provides for stock options to be granted up to 10% of the outstanding common stock shares.

During the years ended December 31, 2021 and 2020, the Company recognized stock-based compensation expense of $226,717 and $309,905, respectively. The following table summarizes the Company’s stock option activity and related information for the year ended December 31, 2021:

	Number of Shares			Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Life	Aggregate Intrinsic Value of In-the-Money Options (in thousands)
Options outstanding as of January 1, 2021		1,800,000		$	0.49
Options granted		25,000		$	0.48
Options forfeited		(167,614	)	$	0.49
Options expired		(157,386	)	$	0.49
Options outstanding as of December 31, 2021		1,500,000		$	0.49	8.5 years	$	135
Options exercisable as of December 31, 2021		954,273		$	0.49	8.5 years	$	86

The aggregate intrinsic value is calculated as the difference between the Company’s closing stock price as of December 31, 2021 and the exercise price, multiplied by the number of options. As of December 31, 2021, there was $263,470 total unrecognized stock-based compensation expense. Such costs are expected to be recognized over a weighted average period of approximately 1.5 years. The weighted-average fair value of awards granted was $0.47 and $0.48 during the years December 31, 2021 and 2020, respectively.

The Company recognizes compensation expense for stock option awards on a straight-line basis over the applicable service period of the award. The service period is generally the vesting period. The following weighted-average assumptions were used to calculate stock-based compensation expense:

	December 31,			December 31,
	2021			2020
Expected term (years)	10 years			10 years
Volatility		153.12	%		153.12	%
Risk-free interest rate		0.98	%		0.98	%
Dividend yield		0.00	%		0.00	%

6.   LITIGATION AND CLAIMS

From time to time, the Company may be involved in various legal proceedings and claims arising in the ordinary course of business. Management believes that the dispositions of these matters, individually or in the aggregate, are not expected to have a material adverse effect on the Company’s financial condition. However, depending on the amount and timing of such disposition, an unfavorable resolution of some or all of these matters could materially affect the future results of operations or cash flows in a particular year.

As of December 31, 2021 and 2020, there was no accrual recorded for any potential losses related to pending litigation.

F-29

7.   COMMITMENTS AND CONTINGENCIES

Operating Leases

Our corporate offices, which also comprise our administrative, research and development, marketing and production facilities, are located on a 12,835 square foot leased property. Total operating lease cost recognized for this lease was $110,701 and $114,591 for the years ended December 31, 2021 and 2020, respectively. The below table presents total operating lease right-of-use assets and lease liabilities as of December 31, 2021:

	(in thousands)
	Year Ended December 31,
	2021
Operating lease right-of-use assets	$	372
Operating lease liabilities	$	392

The table below presents the maturities of operating lease liabilities as of December 31, 2021:

	(in thousands)
	Operating
	Leases
2022	$	108
2023		112
2024		115
2025		118
2026		50
Total future lease payments		503
Less: discount		(111	)
Total lease liabilities	$	392

The table below presents the weighted-average remaining lease term and discount rate used in the calculation of operating lease right-of-use assets and lease liabilities:

	Year Ended December 31,
	2021
Weighted average remaining lease term (years)		4.4
Weighted average discount rate		11.4	%

F-30

Related Party Contracts

On June 5, 2016, the Company entered into a license agreement with Shenghuo Medical, LLC pursuant to which the Company granted Shenghuo an exclusive license to manufacture, sell and distribute LuViva in Taiwan, Brunei Darussalam, Cambodia, Laos, Myanmar, Philippines, Singapore, Thailand, and Vietnam. Shenghuo was already the Company’s exclusive distributor in China, Macau and Hong Kong, and the license extended to manufacturing in those countries as well. Under the terms of the license agreement, once Shenghuo was capable of manufacturing LuViva in accordance with ISO 13485 for medical devices, Shenghuo would pay the Company a royalty equal to $2.00 or 20% of the distributor price (subject to a discount under certain circumstances), whichever is higher, per disposable distributed within Shenghuo’s exclusive territories. In connection with the license grant, Shenghuo was to underwrite the cost of securing approval of LuViva with Chinese Food and Drug Administration. At its option, Shenghuo also would provide up to $1.0 million in furtherance of the Company’s efforts to secure regulatory approval for LuViva from the U.S. Food and Drug Administration, in exchange for the right to receive payments equal to 2% of the Company’s future sales in the United States, up to an aggregate of $4.0 million. Pursuant to the license agreement, Shenghuo had the option to have a designee appointed to the Company’s board of directors (current director Richard Blumberg is the designee).

On September 6, 2016, the Company entered into a royalty agreement with one of its directors, John Imhoff, and another stockholder, Dolores Maloof, pursuant to which the Company sold to them a royalty of future sales of single-use cervical guides for LuViva. Under the terms of the royalty agreement, and for consideration of $50,000, the Company will pay them an aggregate perpetual royalty initially equal to $0.10, and from and after October 2, 2016, equal to $0.20, for each disposable that the Company sells (or that is sold by a third party pursuant to a licensing arrangement with the Company).

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. During the years December 31 2021, the Company recognized $556,111 of consulting expenses as a result of this agreement, 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 $79,444 as of December 31, 2021. 

On March 10, 2021, the Company entered into a consulting agreement with Richard Blumberg. As a result of the consulting agreement Mr. Blumberg provided cash of $350,000, which was recorded as a stock subscription payable, to the Company in exchange for the following: (1) on September 26, 2021, 900,000 3-year warrants with an exercise price of $0.30 and 400,000 common stock shares; (2) on March 26, 2022, 900,000 3-year warrants with an exercise price of $0.40 and 400,000 common stock shares; (3) on September 26, 2022, 900,000 3-year warrants with an exercise price of $0.50 and 400,000 common stock shares; and (4) on March 26, 2023, 900,000 3-year warrants with an exercise price of $0.60 and 400,000 common stock shares.

During the year ended December 31, 2021, the consulting agreement was amended to clarify that $350,000 is not intended to be debt and will not be required to be repaid in cash. Additionally, issuance of the warrants is now predicated on the Company receiving funding receipts of $1,000,000, whether from a financing, series of financing, or gross sales. The amended agreement clarified that the warrants issued to Mr. Blumberg are compensation for services, which involve obtaining financing. The Company will recognize expense for the services equal to the fair value of the warrants issued to Mr. Blumberg as the services are provided, which will coincide with the successful execution of a financing agreement over $1,000,000. The Company concluded that as of September 30,2021, there was no longer a liability due to Mr. Blumberg of $350,000. The liability was written off in the third quarter of 2021 and a gain of $350,000 was recognized in non-operating income.

F-31

Other Commitments

On July 24, 2019, Shandong Yaohua Medical Instrument Corporation (“SMI”), agreed to modify its existing agreement. Under the terms of this modification, the Company agreed to grant (1) exclusive manufacturing rights, excepting the disposable cervical guides for the Republic of Turkey, and the final assembly rights for Hungary, and (2) exclusive distribution and sales for LuViva in jurisdictions, subject to the following terms and conditions. First, SMI shall complete the payment for parts, per the purchase order, for five additional LuViva devices. Second, in consideration for the $885,144 that the Company received, SMI will receive 12,147 common stock shares. Third, SMI shall honor all existing purchase orders it has executed to date with the Company, in order to maintain jurisdiction sales and distribution rights. If SMI needs to purchase cervical guides then it will do so at a cost including labor, plus ten percent markup. The Company will provide 200 cervical guides at no cost for the clinical trials. Fourth, the Company and SMI will make best efforts to sell devices after CFDA approval. With an initial estimate of year one sales of 200 LuViva devices; year two sales of 500 LuViva devices; year three sales of 1,000 LuViva devices; and year four sales of 1,250 LuViva devices. Fifth, SMI shall pay for entire costs of securing approval of LuViva with the Chinese FDA. Sixth, SMI shall arrange, at its sole cost, for a manufacturer in China to build tooling to support manufacturing. In addition, SMI retains the right to manufacture for China, Hong Kong, Macau and Taiwan, where SMI has distribution and sales rights. For each single-use cervical guide sold by SMI in the jurisdictions, SMI shall transfer funds to escrow agent at a rate of $1.90 per device chip. If within 18 months of the license’s effective date, SMI fails to achieve commercialization of LuViva in China, SMI shall no longer have any rights to manufacture, distribute or sell LuViva. Commercialization is defined as: filing an application with the Chinese FDA for the approval of LuViva; any assembly or manufacture of the devices or disposables that begins in China; and purchase of at least 10 devices and disposables for clinical evaluations and regulatory use and or sales in the jurisdictions.

On August 12, 2021, the Company executed an amendment to its agreement with SMI, which established a payment schedule for the balance owed by SMI to the Company for outstanding purchase orders. During the year ended December 31, 2021, the Company received $353,635 from SMI on the aforementioned purchase order. The remaining balance owed for outstanding purchase orders was $177,000 as of December 31, 2021. Under the terms of the amended agreement, the parties agreed that if by October 30, 2022, SMI fails to achieve commercialization of LuViva in China, SMI shall no longer have any rights to manufacture, distribute or sell LuViva.

Contingencies

Based on the current outbreak of the Coronavirus SARS-CoV-2, the pathogen responsible for COVID-19, which has already had an impact on financial markets, there could be additional repercussions to the Company’s operating business, including but not limited to, the sourcing of materials for product candidates, manufacture of supplies for preclinical and/or clinical studies, delays in clinical operations, which may include the availability or the continued availability of patients for trials due to such things as quarantines, conduct of patient monitoring and clinical trial data retrieval at investigational study sites.

The future impact of the outbreak is highly uncertain and cannot be predicted, and the Company cannot provide any assurance that the outbreak will not have a material adverse impact on the Company’s operations or future results or filings with regulatory health authorities. The extent of the impact to the Company, if any, will depend on future developments, including actions taken to contain the coronavirus.

The conflict in Ukraine, which has already had an impact on financial markets, could result in additional repercussions in our operating business, including delays in obtaining regulatory approval to market our products in Russia. The future impact of the conflict is highly uncertain and cannot be predicted, and we cannot provide any assurance that the conflict will not have a material adverse impact on our operations or future results or filings with regulatory health authorities.

8.   NOTES PAYABLE

Notes Payable in Default

At December 31, 2021 and 2020, the Company maintained notes payable to both related and non-related parties totaling approximately nil and $329,000, respectively. These notes are short term, straight-line amortizing notes. The notes carried annual interest rates between 0% and 10% and have default rates as high as 20%. As described in Note 4: “Stockholders’ Deficit,” certain notes payable in default outstanding had been exchanged for equity and cash as described in the note.

F-32

During the year ended December 31, 2021, the Company obtained a legal opinion as to how the applicable statute of limitations effects the status of the note payable due to Mr. Mermelstein and determined that the Company can no longer be required to repay the note as of December 31, 2021. As a result of the opinion, the note payable of $285,244 and accrued interest of $32,945 was written off during the third quarter of 2021.

During 2021, notes payable of $1,000 due to Dr. Cartwright were paid off and notes payable of $26,000 due to Mr. Fowler were brought current and not in default. The note payable to GPB was exchanged as described in Note 9, “Convertible Debt”.

The following table summarizes notes payable in default, including related parties (in thousands):

	Notes payable in default, including related parties
	December 31, 2021		December 31, 2020
Mr. Mermelstein	$	-	$	285
Dr. Cartwright		-		1
Mr. Fowler		-		26
GPB		-		17
Notes payable in default	$	-	$	329

The notes payable in default to related parties was $27,000 of the $329,000 balance as of December 31, 2020.

Short Term Notes Payable

At December 31, 2021 and 2020, the Company maintained short term notes payable to both related and non-related parties totaling $165,000 and $96,000, respectively. These notes are short term, straight-line amortizing notes. The notes carry annual interest rates between 4.3% and 6% (16% to 18% in the event of default).  

On July 4, 2021, the Company entered into a premium finance agreement to finance its insurance policies totaling $117,560. The note requires monthly payments of $11,968, including interest at 4.3% and matured in April 2022. As of December 31, 2021, the balance owed was $47,615.

On July 4, 2020, the Company entered into a premium finance agreement to finance its insurance policies totaling $109,000. The note requires monthly payments of $11,299, including interest at 4.968% and matured in April 2021. As of December 31, 2021, the balance was paid.

During 2019, the Company issued promissory notes to Dr. Cartwright and Dr. Faupel, in the amounts of approximately $41,000 and $5,000, respectively. The notes were initially issued with 0% interest, however interest increased to 6.0% interest 90 days after the Company received $1,000,000 in financing proceeds.

On December 21, 2016 and January 19, 2017, the Company issued promissory notes to Mr. Fowler, in the amounts of approximately $12,500 and $13,900. The notes were initially issued with 0% interest and then went into default with an interest rate of 18%. During the year ended December 31, 2021, the Company entered into an exchange agreement with Mr. Fowler, which combined the notes into one short term note payable of $26,400 and $18,718 in principal and interest of the two previous notes, respectively, for the total balance of $45,118. The agreement brought the note current and will accrue interest at a rate of 6.0%. The note carries a monthly payment of $3,850. As of December 31, 2021, the outstanding principal balance on the note was $5,759. At December 31, 2020 this note was recorded in the Notes payable in default section of the consolidated Balance Sheet.

F-33

The following table summarizes short-term notes payable, including related parties:

	Short-term notes payable, including related parties
	December 31, 2021		December 31, 2020
Dr. Cartwright	$	34	$	46
Dr. Faupel		-		5
Mr. Fowler		6		-
Premium Finance (insurance)		48		45
Short-term notes payable	$	88	$	96

The short-term notes payable due to related parties was $40,000 of the $88,000 balance at December 31, 2021 and $51,000 of the $96,000 balance at December 31, 2020.

9.  CONVERTIBLE DEBT

Short-term Convertible Notes Payable

Auctus

On December 17, 2019, the Company entered into a securities purchase agreement and convertible note with Auctus. The convertible note issued to Auctus will be for a total of $2.4 million. The first tranche of $700,000 was received in December 2019 and matures December 17, 2021 and accrues interest at a rate of ten percent (10%). The note may not be prepaid in whole or in part except as otherwise explicitly allowed. Any amount of principal or interest on the note which is not paid when due shall bear interest at the rate of the lessor of 24% or the maximum permitted by law (the “default interest”). The variable conversion prices shall equal the lesser of: (i) the lowest trading price on the issue date, and (ii) the variable conversion price. The variable conversion price shall mean 95% multiplied by the market price (the market price means the average of the five lowest trading prices during the period beginning on the issue date and ending on the maturity date), minus $0.04 per share, provided however that in no event shall the variable conversion price be less than $0.15. If an event of default under this note occurs and/or the note is not extinguished in its entirety prior to December 17, 2020 the $0.15 price shall no longer apply.

In connection with the first tranche of $700,000, the Company issued 7,500,000 warrants to purchase common stock at an exercise price of $0.20. The fair value of the warrants at the date of issuance was $745,972 and was $635,000 allocated to the warrant liability and a loss of $110,972 was recorded at the date of issuance for the amount of the fair value in excess of the net proceeds received of $635,000. The $700,000 proceeds were received net of debt issuance costs of $65,000 (net proceeds of $635,000, after administrative and legal expenses Company received $570,000). The Company used $65,000 of the proceeds to make a partial payment of the $89,250 convertible promissory note issued on July 3, 2018 to Auctus. The Company made a $700,000 payment on June 1, 2021, which resulted in a prepayment penalty of $350,000 being assessed to the Company, which was outstanding as of December 31, 2021. The Company recorded this prepayment penalty as interest expense. Interest will not be assessed on the prepayment penalty. As of December 31, 2021 and 2020, nil and $700,000, respectively, remained outstanding. As of December 31, 2021, accrued interest was paid in full and at December 31, 2020, $73,889 remained outstanding. Further, as December 31, 2021 and 2020, the Company had unamortized debt issuance costs of nil and $31,146, respectively and an unamortized debt discount on warrants of nil and $179,623, respectively and providing a net balance of $350,000 and $489,231, respectively.

F-34

On May 27, 2020, the Company received the second tranche in the amount of $400,000, from the December 17, 2019 securities purchase agreement and convertible note with Auctus. The net amount paid to the Company was $313,000 This second tranche is part of the convertible note issued to Auctus for a total of $2.4 million of which $700,000 has already been provided by Auctus. The note matures on May 27, 2022 and incurs interest at a rate of ten percent (10%). The note may not be prepaid in whole or in part except as otherwise explicitly allowed. Any amount of principal or interest on the note which is not paid when due shall bear interest at the rate of the lessor of 24% or the maximum permitted by law (the “default interest”). The variable conversion price is equal to 75% of the average of the five (5) day volume weighted average price of the common stock immediately prior to the issue date of the note (provid\ded, however, that if the common stock is trading on a public market at a price greater than 0.50 per share on the issuance date, than 75% shall be replaced with 80%). If an event of default under this note occurs and/or the note is not extinguished in its entirety prior to December 17, 2020 the $0.15 price shall no longer apply. The last tranche of $1.3 million will be received within 60 days of the S-1 registration statement becoming effective. The conversion price of the notes will be at market value with a minimum conversion amount of $0.15. In addition, as part of this transaction the Company was required to pay a 2.0% fee to a registered broker-dealer. As of December 31, 2021 and 2020, $400,000 remained outstanding and accrued interest was $64,778 and $24,222, respectively. Further, as of December 31, 2021 and 2020, the Company had unamortized debt issuance costs of $13,586 and $47,086, providing a net balance of $451,192 and $377,136. As of December 31, 2021 the bifurcated derivative liability was $31,889.

Convertible Notes in Default

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. During the year ended December 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 matured on January 26, 2021 and accrues interest at the default rate of 24% per year. We may not prepay the note, in whole or in part. After the 90^th 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 converted into shares of the our common stock, at a conversion price equal to the lesser of: (i) the lowest Trading Price during the twenty-five (25) trading day period on the last trading prior to the issue date and (ii) the variable conversion price (55% multiplied by the market price, market price means the lowest trading price for the common stock during the twenty-five (25) trading day period ending on the latest complete trading day prior to the conversion date. Trading price is the lowest trade price on the trading market as reported. The note includes customary events of default provisions and a default interest rate of 24% per year. As of December 31, 2021 and 2020, $161,184 (which includes a default penalty of $48,434) and $112,750 remained outstanding. In addition, as of December 31, 2021 and 2020, unamortized debt issuance costs of nil and $5,100 and accrued interest was $36,428 and $10,260, respectively.

The following table summarizes the Short-term Convertible Notes Payable, including debt in default (in thousands):

	Short-term convertible notes payable , including debt in default
	December 31, 2021			December 31, 2020
Auctus Tranche 1		-			700
Auctus Tranche 2	$	400		$	400
Auctus prepayment penalty		350			-
Auctus (March 31, 2020 Note)		161			113
Debt discount and issuance costs to be amortized		(14	)		(262	)
Convertible notes payable - short-term	$	897		$	951

F-35

Troubled Debt Restructuring

During 2021, the prepayment penalty to Auctus was recorded as debt extinguished for Short-term Convertible Notes Payable. This prepayment penalty resulted in a loss of $350,000. In addition, the gain recognized for the extinguishment of the derivative liability due to the payoff of the $700,000 loan to Auctus of $84,000 was recorded. This debt extinguished met the criteria for troubled debt. The basic criteria are that the borrower is troubled, i.e., they are having financial difficulties, and a concession is granted by the creditor.

Senior Secured Promissory Note

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 $312,500 for a total principal balance of $1,837,500. In addition, GPB received warrants for 2,246 shares of the Company’s common stock. The Company allocated proceeds totaling $359,555 to the fair value of the warrants at issuance and recorded an additional discount on the debt. The warrants expired during the year ended December 31, 2021.

On January 16, 2020, we entered into an exchange agreement with GPB. Under the terms of this exchange agreement, we exchanged $3,360,811 of debt outstanding for the following: (1) cash payments of $1,500,000, (2) 7,185,000 warrants to purchase common stock, previously outstanding, would be exchanged for new warrants to purchase common stock shares at a strike price of $0.20 and (3) a certain amount of preferred stock shares for the remaining balance outstanding upon the final exchange date. During 2021, we made the final payments totaling $800,000 out of the total $1,500,000 and issued 2,236 shares of Series F-2 preferred stock in accordance with the terms of the agreement. In addition, 7,185,000 of common stock purchase warrants outstanding were exchanged for new warrants with a strike price of $0.20.

As of December 31, 2020, the balance due on the convertible debt was $1,709,414 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.

Other Convertible Debt

GHS

On 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 bore interest at a rate of 20% per year and the holder of the note may have required the Company to redeem or convert the note at 150% of the outstanding principal balance. As of 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. As of December 31, 2021, the note was paid in full.

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 bore interest at a rate of 20% per year and the holder of the note may have required the Company to redeem or convert the note at 150% of the outstanding principal balance. As of 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. As of December 31, 2021, the note was paid in full.

F-36

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). The note accrued interest at a rate of 10% per year until it matured on June 22, 2019. Beginning May 2019, the note was 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 bore interest at a rate of 20% per year and the holder of the note may have required the Company to redeem or convert the note at 150% of the outstanding principal balance. As of December 31, 2020, the balance due on this note was $103,285, including a default penalty of $35,285. Interest accrued on the note totaled $39,644 at December 31, 2020, respectively, and is included in accrued expenses on the accompanying consolidated balance sheet. As of December 31, 2021, the note was paid in full.

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), 500,000 shares of restricted common stock and 700,000 warrants to purchase common shares at a strike price of $0.15. The fair value of the common stock shares was $250,000 and the fair value of the warrants to purchase common shares was $196,818 (based on an estimated fair value of $0.281 as determined utilizing the Black-Scholes option pricing model). At December 31, 2020, a balance of $40,000 remained to be paid for these exchanged loans. As of December 31, 2021, the loans were paid in full.

The following table summarizes the convertible notes, including convertible debt in default (in thousands):

	Convertible notes payable, including debt in default
	December 31, 2021		December 31, 2020
GBP	$	-	$	1,709
GHS		-		181
Auctus		-		40
Convertible notes payable	$	-	$	1,930

Troubled Debt Restructuring

During 2021, the Company restructured debt with GPB resulting in the exchange of $1,709,414 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.

10.  LONG-TERM DEBT

Long-term Debt - Related Parties 

On July 14, 2018, the Company entered into an exchange agreement with Dr. Faupel, whereby Dr. Faupel agreed to exchange outstanding amounts due to him for loans, interest, bonus, salary and vacation pay in the amount of $660,895 for a $207,111 promissory note dated September 4, 2018. On July 20, 2018, the Company entered into an exchange agreement with Dr. Cartwright, whereby Dr. Cartwright agreed to exchange outstanding amounts due to him for loans, interest, bonus, salary and vacation pay in the amount of $1,621,499 for a $319,000 promissory note dated September 4, 2018 that incurs interest at a rate of 6% per annum.

F-37

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.

On February 19, 2021, the Company entered into new promissory notes replacing the original notes 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 6.0%. 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 6.0%. The modifications extended the maturity date on both of the notes.

On February 19, 2021, the Company exchanged $100,000 and $85,000 of long-term debt for Dr. Cartwright and Dr. Faupel in exchange for 100 and 85 shares of Series F-2 Preferred Stock, respectively.  

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-2 Preferred Stock		(85	)
Interest and salaries accrued through December 31, 2021		10
Balance outstanding at December 31, 2021	$	161

For Dr.Cartwright
Salary	$	337
Bonus		675
Loans to Company		528
Interest on loans		81
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-2 Preferred Stock		(100	)
Interest and salaries accrued through December 31, 2021		17
Balance outstanding at December 31, 2021	$	281

F-38

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). Mr. Fowler exchanged $50,000 of the amount owed of $546,214 for 50 shares of Series F-2 Preferred Shares (convertible into 200,000 shares of common stock) and a $150,000 unsecured note. The note accrues interest at the rate of 6.0% (18.0% in the event of default) beginning on March 1, 2022 and is payable in monthly installments of $3,600 for four years, with the first payment being due on March 15, 2022. The effective interest rate of the note is 6.18%. Mr. Fowler forgave $86,554 and may forgive up to $259,661 of debt if the Company complies with the repayment plan described above.

At the time of the exchange agreement with Mr. Fowler, the Company was in default to the creditor on two notes in the amounts of $12,500 and $13,900 dated December 21, 2016 and January 19, 2017, respectively. The March 22, 2021 exchange agreement modified the notes to current status, payable in full within one year from the date of the agreement, in monthly payments of at least $3,850. The notes accrue at an interest rate of 6% (18% in the event of default).

Future debt obligations as shown below include: $281,000, $161,000 and $150,000 for a total of $592,000 for Dr. Cartwright, Dr. Faupel, and Mr. Fowler, respectively. Future debt obligations at December 31, 2021 for debt owed to related parties is as follows:

Year	Amount
2022	$	30
2023		479
2024		39
2025		41
2026		3
Thereafter		-
Total	$	592

Troubled Debt Restructuring

The debt extinguished for Dr. Cartwright, Mr. Fowler and Dr. 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. During the year ended December 31, 2021, the Company recorded a gain of $86,554 for Mr. Fowler’s debt exchange.

Small Business Administration Loan

On May 4, 2020, the Company received a loan from the Small Business Administration (SBA) pursuant to the Paycheck Protection Program (PPP) as part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) in the amount of $50,184. The loan bears interest at a rate of 1.00%, and matures in 24 months, with the principal and interest payments being deferred until the date of forgiveness with interest accruing, then converting to monthly principal and interest payments, at the interest rate provided herein, for the remaining eighteen (18) months. Lender will apply each payment first to pay interest accrued to the day Lender received the payment, then to bring principal current, and will apply any remaining balance to reduce principal. Payments must be made on the same day as the date of this Note in the months they are due. Lender shall adjust payments at least annually as needed to amortize principal over the remaining term of the Note. Under the provisions of the PPP, the loan amounts will be forgiven as long as: the loan proceeds are used to cover payroll costs, and most mortgage interest, rent, and utility costs over a 24 week period after the loan is made; and employee and compensation levels are maintained. In addition, payroll costs are capped at $100,000 on an annualized basis for each employee. Not more than 40% of the forgiven amount may be for non-payroll costs. As of December 31, 2021 and 2020, the outstanding balance was $11,000 (this amount is recorded in current portion of long-term debt) and $50,477, including $385 and $293 in accrued interest, respectively. During the year ended December 31, 2021, the Company was notified that the application for loan forgiveness was approved in the amount of $23,742 in principal and $234 in interest.

F-39

10% Senior Unsecured Convertible Debenture

On May 17, 2021, the Company issued 10% Senior Unsecured convertible debentures to investors, which mature on May 17, 2024 (the “Maturity Date”). The Company subscribed $1,130,000 of the $1,000 convertible debentures. The terms of the debentures are as follows: 1) the principal amount of some or all of the convertible debentures and accrued interest are convertible into common stock shares at the holder’s option, at a price of $0.50 per common share (the “conversion price”), subject to adjustment in certain events, at any time prior to maturity date; 2) prior to successful uplist to a U.S. National Exchange, the Company may, at its election, convert the note at the conversion price, or in the event the Company undertakes a capital raise in connection with the uplisting, the holder may, at their election, exchange some or all of the debentures for securities issued in such capital raise on a $1.00 for $1.00 basis; 3) each debenture unit will have a right to 1,000 warrants for common stock shares, warrants have an exercise price of $0.80 and an expiration date of May 17, 2023; 4) if a Change of Control (as defined in the Convertible Debenture Certificate) occurs prior to the Maturity Date, unless the holder elects in writing to convert the Convertible Debentures into common shares, the Company will repay in cash upon the closing of such Change of Control all outstanding principal and accrued interest under each Convertible Debenture plus a Change of Control premium equal to an additional 3% of the outstanding principal sum under such Convertible Debenture. Prior to the closing of an Change of Control, in lieu of repayment as set forth in the preceding sentence, the holder has the right to elect in writing to convert, effective immediately prior to the effective date of such Change of Control, all outstanding principal and accrued Interest under the Convertible Debentures into common shares at the Conversion Price; 5) Subject to a holder's option of electing conversion prior to the Redemption Date (as such term is defined below), on or after the date that is 24 months from the Closing Date if the daily volume weighted average trading price of the common shares is $1.50 per common share or more for each trading day over a 30 consecutive trading day period, the Company may, at any time (the "Redemption Date"), at its option, redeem all, or any portion of the Convertible Debentures for either: (i) a cash payment (in the form of a certified cheque or bank draft) that is equal to all outstanding principal and accrued interest under each Convertible Debenture up to the Redemption Date; or (ii) by issuing and delivering common shares to the holders of Convertible Debentures at a deemed price of $0.50 per common share that is equal to all outstanding principal and accrued interest under each Convertible Debenture up to the Redemption Date, or any combination of (i) or (ii), upon not less than 30 days and not more than 60 days prior written notice in the manner provided in the Debenture Certificate, to the holder of Convertible Debentures.

At December 31, 2021, the balance due on the 10% Senior Secured Convertible Debenture was $1,130,000 and total interest accrued was $73,326. At December 31, 2021, the Company had also recorded a bond payable discount of $240,856 and unamortized debt issuance costs of $69,120, for a net balance of $819,024. Interest is payable at the rate of 10% compounded quarterly, payable semi-annually on July 1 and January 1, beginning on January 1, 2022, each conversion date and on the maturity date.

6% Unsecured Promissory Note

On July 9, 2020, we entered into an exchange agreement with Mr. Bill Wells (a former employee). In lieu of agreeing to dismiss approximately half of what was owed to him, or $220,000, Mr. Wells received the following: (i) cash payments of $20,000; (ii) an unsecured promissory note in the amount of $90,000 to be executed within 30 days of completing new financing(s) totaling at least $3.0 million, (iii) 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 (ii) 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, 2021, the Company closed a financing round that exceeded the $3.0 million threshold and issued an unsecured promissory note in the amount of $97,052 to Mr. Wells. The note, for which monthly installment payments of $5,000 are due, matures 18 months after the issuance date and incurs interest at a rate of 6.0% per annum. As of December 31, 2021, the total amount owed to Mr. Wells (principal and accrued interest), was $99,158, of which $77,087 was classified as short-term and is included in “Current portion of long-term debt” on the consolidated balance sheet. The remaining balance is classified as long-term and is included in “Long-term debt” on the consolidated balance sheet.

F-40

11.  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 C-1, Series C-2, Series D, Series E, Series F and Series F-2 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, except for per-share data):

	December 31,
	2021			2020
Net loss		(2,431	)		(401	)
Basic weighted average number of shares outstanding		13,377			10,767
Net loss per share (basic)		(0.18	)		(0.04	)
Diluted weighted average number of shares outstanding		13,377			10,767
Net loss per share (diluted)		(0.18	)		(0.04	)
Dilutive equity instruments (number of equivalent units):
Stock options		1,867			-
Preferred stock		18,253			-
Convertible debt		964			62,095
Warrants		15,655			7,683
Total Dilutive instruments		36,739			69,778

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 and preferred stock 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 past due or in default on several of its loans, the debt is considered troubled debt. As of December 31, 2021, the troubled debt restructuring in total would have decreased the net loss by $85,000, causing the per share calculation to change from .18 to .19 net loss per share. This includes $94,392 of accounts payables forgiven during the year ended December 31, 2021 in accordance with an agreement executed on September 30, 2021.  

12.  INCOME TAXES

The Company has incurred net operating losses ("NOLs") since inception. As of December 31, 2021, the company had NOL carryforwards available through 2038 of approximately $58.0 million to offset its future income tax liability. The company has recorded deferred tax assets but reserved against, due to uncertainties related to utilization of NOLs as well as calculation of effective tax rate. Utilization of existing NOL carryforwards may be limited in future years based on significant ownership changes. The company is in the process of analyzing their NOL and has not determined if the company has had any change of control issues that could limit the future use of NOL. NOL carryforwards that were generated after 2017 of approximately $9.9 million may only be used to offset 80% of taxable income and are carried forward indefinitely.

F-41

Components of deferred taxes are as follow at December 31 (in thousands):

The following is a summary of the items that caused recorded income taxes to differ from taxes computed using the statutory federal income tax rate for the years ended December 31:

	2021			2020
Statutory federal tax rate		21	%		21	%
State taxes, net of federal benefit		4	%		4	%
Nondeductible expenses		-			-
Valuation allowance		25	%		25	%
Effective tax rate		0	%		0	%

The Company applies the applicable authoritative guidance which prescribes a comprehensive model for the manner in which a company should recognize, measure, present and disclose in its financial statements all material uncertain tax positions that the Company has taken or expects to take on a tax return. As of December 31, 2021, the Company has no uncertain tax positions. There are no uncertain tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase or decrease within twelve months from December 31, 2021.

The Company files federal income tax returns and income tax returns in various state tax jurisdictions with varying statutes of limitations. The Company has filed its 2020 federal and state corporate tax returns. The last three tax years are subject to examination.

The provision for income taxes as of the dates indicated consisted of the following (in thousands) December 31:

	2021			2020
Current	$	-		$	-
Deferred		-			-
Deferred provision (credit)		(1,728	)		1,623
Change in valuation allowance		1,728			(1,623	)
Total provision for income taxes	$	-		$	-

In 2021 and 2020, our effective tax rate differed from the U.S. federal statutory rate due to the valuation allowance over our deferred tax assets.

	2021			2020
Deferred tax assets:
Warrant liability	$	-		$	617
Accrued executive compensation		288			519
Reserves and other		273			289
Stock options		134			132
Net operating loss carryforwards		16,985			17,851
		17,680			19,408
Valuation allowance		(17,680	)		(19,408	)
Net deferred tax assets	$	-		$	-

F-42

13.  SUBSEQUENT EVENTS

Auctus Exchange Agreement

On June 2, 2021, we entered into an initial exchange agreement Auctus. On February 1, 2022, we entered into a second exchange agreement with Auctus. Pursuant to this second agreement, Auctus agreed to exchange an aggregate of $668,290 of outstanding notes (the "Notes"), including accrued interest, and the associated warrants issued in connection with the Notes (the warrants, for the purpose of the exchange, are valued at, in the aggregate, $1,681,707) into unregistered units of our common stock, warrants and prefunded warrants otherwise in the form and ratios issued in a proposed underwritten public offering on the Nasdaq Capital Markets (the “Nasdaq Offering”).

The exchange price will be on a $1 for $1 basis such that Auctus will receive $2,349,997 of units consisting of common stock, warrants and prefunded warrants.  The units being issued in the exchange with Auctus are unregistered and are being issued pursuant to Section 4(a)(2) under the Securities Act of 1933, as amended.  Additionally, the units and the common stock underlying the units will be subject to a lock up agreement with the underwriters until the earlier of 120 days after the Nasdaq Offering and the date that the daily volume weighted average price of the common stock exceeds 200% of the Nasdaq Offering price for at least five consecutive trading days. Further, the termination date of the June 2, 2021 was extended to April 15, 2022. The $350,000 related to default penalties will be exchanged into $350,000 of securities offered in the Nasdaq Offering.

Common Stock Issuances

Subsequent to December 31, 2021, we issued 4,477,923 shares of common stock for warrant exercises (see Note 4, “Warrant Exchanges - 2021”).

Subsequent to December 31, 2021, we issued 307,000 shares of common stock for the conversion of Series E Preferred shares.

Subsequent to December 31, 2021, we issued 625,686 shares of common stock for payment of a one-time 15% dividend to holders of our Series F and Series F-2 Preferred shares.

Subsequent to December 31, 2021, we issued 121,262 shares of common stock for payment of interest accrued on the 10% Senior Unsecured Convertible Debenture.

Subsequent to December 31, 2021, we issued 60,000 shares of common stock for the conversion of Series F Preferred shares.

Subsequent to December 31, 2021, we issued 23,109 shares of common stock for payment of Series D Preferred share dividends.

Subsequent to December 31, 2021, we issued 12,432 shares of common stock for payment of Series E Preferred share dividends.

F-43

GUIDED THERAPEUTICS, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(in thousands)

	March 31,			December 31,
	2022			2021
	(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	725		$	643
Accounts receivable, net of allowance for doubtful accounts of $126 at March 31, 2022 and December 31, 2021		39			46
Inventory, net of reserves of $785 at March 31, 2022 and December 31, 2021		570			571
Other current assets		453			377
Total current assets		1,787			1,637
Non-Current Assets:
Property and equipment, net		28			14
Operating lease right-of-use assets, net of amortization		355			372
Other assets		17			17
Total non-current assets		400			403
TOTAL ASSETS	$	2,187		$	2,040
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities:
Accounts payable	$	2,476		$	2,362
Accounts payable, related parties		80			87
Accrued liabilities		1,228			1,768
Deferred revenue		514			337
Current portion of lease liability		70			67
Current portion of long-term debt		67			88
Current portion of long-term debt, related parties		27			-
Short-term notes payable		12			48
Short-term notes payable, related parties		31			40
Convertible notes payable in default		161			161
Short-term convertible notes payable		745			736
Derivative liability		38			-
Total current liabilities		5,449			5,694
Long-Term Liabilities
Long-term lease liabilities		307			325
Derivative liability		-			32
Long-term convertible debt		852			820
Long-term debt		-			22
Long-term debt, related parties		568			592
Total long-term liabilities		1,727			1,791
Total liabilities		7,176			7,485
COMMITMENTS AND CONTINGENCIES (Note 7)
STOCKHOLDERS’ DEFICIT:
Series C convertible preferred stock, $0.001 par value; 9.0 shares authorized, 0.3 shares issued and outstanding as of March 31, 2022 and December 31, 2021. Liquidation preference of $286 at March 31, 2022 and December 31, 2021.		105			105
Series C1 convertible preferred stock, $0.001 par value; 20.3 shares authorized, 1.0 shares issued and outstanding as of March 31, 2022 and December 31, 2021. Liquidation preference of $1,049 at March 31, 2022 and December 31, 2021.		170			170
Series C2 convertible preferred stock, $0.001 par value; 5,000 shares authorized, 3.3 shares issued and outstanding as of March 31, 2022 and December 31, 2021. Liquidation preference of $3,263 at March 31, 2022 and December 31, 2021.		531			531
Series D convertible preferred stock, $0.001 par value; 6.0 shares authorized, 0.8 shares issued and outstanding as of March 31, 2022 and December 31, 2021. Liquidation preference of $763 at March 31, 2022 and December 31, 2021, respectively.		276			276
Series E convertible preferred stock, $0.001 par value; 5.0 shares authorized, 1.0 and 1.7 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively. Liquidation preference of $968 and $1,736 at March 31, 2022 and December 31, 2021, respectively.		914			1,639
Series F convertible preferred stock, $0.001 par value; 1.5 shares authorized, 1.4 shares issued and outstanding as of March 31, 2022 and December 31, 2021. Liquidation preference of $1,411 and $1,426 at March 31, 2022 and December 31, 2021, respectively.		1,174			1,187
Series F-2 convertible preferred stock, $0.001 par value; 5.0 shares authorized, 3.2 shares issued and outstanding as of March 31, 2022 and December 31, 2021. Liquidation preference of $3,237 at March 31, 2022 and December 31, 2021.		2,963			2,963
Series G convertible preferred stock, $0.001 par value; 1,000 shares authorized, nil shares issued and outstanding as of March 31, 2022 and December 31, 2021. Liquidation preference was nil at March 31, 2022 and December 31, 2021.		-			-
Common stock, $0.001 par value; 500,000 shares authorized, 22,316 and 13,673 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively		3,410			3,403
Additional paid-in capital		129,042			126,800
Treasury stock at cost		(132	)		(132	)
Accumulated deficit		(143,442	)		(142,387	)
Total stockholders’ deficit		(4,989	)		(5,445	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	2,187		$	2,040

The accompanying notes are an integral part of these consolidated statements.

F-44

GUIDED THERAPEUTICS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except per share data)

	Three Months Ended
	March 31,
	2022			2021
Sales - devices and disposables	$	5		$	-
Cost of goods sold		1			-
Gross profit		4			-
Operating expenses:
Research and development		21			16
Sales and marketing		40			36
General and administrative		386			771
Total operating expenses		447			823
Loss from operations		(443	)		(823	)
Other income (expenses):
Interest expense		(101	)		(141	)
Change in fair value of derivative liability		(6	)		(88	)
Gain from extinguishment of debt		41			87
Change in fair value of warrants		-			448
Other expenses		2			-
Total other income (expense)		(64	)		306
Loss before income taxes		(507	)		(517	)
Provision for income taxes		-			-
Net loss		(507	)		(517	)
Preferred stock dividends		(548	)		(55	)
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	(1,055	)	$	(572	)
NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS
Basic	$	(0.05	)	$	(0.04	)
Diluted	$	(0.05	)	$	(0.04	)
Weighted average shares outstanding
Basic		20,683			13,172
Diluted		20,683			13,172

The accompanying notes are an integral part of these consolidated financial statements.

F-45

GUIDED THERAPEUTICS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

FOR THE THREE MONTHS ENDED MARCH 31, 2022

(unaudited, in thousands)

	Preferred Stock				Preferred Stock				Preferred Stock				Preferred Stock
	Series C				Series C1				Series C2				Series D
	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount
Balance at December 31, 2021		-	$	105		1	$	170		3	$	531		1	$	276
Common stock warrants exercised		-		-		-		-		-		-		-		-
Issuance of common stock for payment of Series D preferred dividends		-		-		-		-		-		-		-		-
Issuance of common stock for payment of Series E preferred dividends		-		-		-		-		-		-		-		-
Issuance of common stock for payment of Series F preferred dividends		-		-		-		-		-		-		-		-
Issuance of common stock for payment of Series F-2 preferred dividends		-		-		-		-		-		-		-		-
Issuance of common stock for payment of interest		-		-		-		-		-		-		-		-
Issuance of common stock for Series F and Series F-2 one-time 15% dividends		-		-		-		-		-		-		-		-
Conversion of Series E preferred stock to common stock		-		-		-		-		-		-		-		-
Conversion of Series F preferred stock to common stock		-		-		-		-		-		-		-		-
Stock-based compensation		-		-		-		-		-		-		-		-
Expense for warrants issued to consultants		-		-		-		-		-		-		-		-
Accrued preferred dividends		-		-		-		-		-		-		-		-
Net loss		-		-		-		-		-		-		-		-
Balance at March 31, 2022		-	$	105		1	$	170		3	$	531		1	$	276

	Preferred Stock						Preferred Stock					Preferred Stock
	Series E						Series F					Series F2
	Shares			Amount			Shares		Amount			Shares		Amount
Balance at December 31, 2021		2		$	1,639			1	$	1,187			3	$	2,963
Common stock warrants exercised		-			-			-		-			-		-
Issuance of common stock for payment of Series D preferred dividends		-			-			-		-			-		-
Issuance of common stock for payment of Series E preferred dividends		-			-			-		-			-		-
Issuance of common stock for payment of Series F preferred dividends		-			-			-		-			-		-
Issuance of common stock for payment of Series F-2 preferred dividends		-			-			-		-			-		-
Issuance of common stock for payment of interest		-			-			-		-			-		-
Issuance of common stock for Series F and Series F-2 one-time 15% dividends		-			-			-		-			-		-
Conversion of Series E preferred stock to common stock		(1	)		(725	)		-		-			-		-
Conversion of Series F preferred stock to common stock		-			-			-		(13	)		-		-
Stock-based compensation		-			-			-		-			-		-
Expense for warrants issued to consultants		-			-			-		-			-		-
Accrued preferred dividends		-			-			-		-			-		-
Net loss		-			-			-		-			-		-
Balance at March 31, 2022		1		$	914			1	$	1,174			3	$	2,963

					Additional
	Common Stock				Paid-In		Treasury			Accumulated
	Shares		Amount		Capital		Stock			Deficit			Total
Balance at December 31, 2021		13,673	$	3,403	$	126,800	$	(132	)	$	(142,387	)	$	(5,445	)
Common stock warrants exercised		4,478		4		712		-			-			716
Issuance of common stock for payment of Series D preferred dividends		23		-		15		-			-			15
Issuance of common stock for payment of Series E preferred dividends		13		-		8		-			-			8
Issuance of common stock for payment of Series F preferred dividends		158		-		105		-			-			105
Issuance of common stock for payment of Series F-2 preferred dividends		96		-		64		-			-			64
Issuance of common stock for payment of interest		121		-		81		-			-			81
Issuance of common stock for Series F and Series F-2 one-time 15% dividends		624		-		399		-			-			399
Conversion of Series E preferred stock to common stock		3,070		3		722		-			-			-
Conversion of Series F preferred stock to common stock		60		-		13		-			-			-
Stock-based compensation		-		-		44		-			-			44
Expense for warrants issued to consultants		-		-		79		-			-			79
Accrued preferred dividends		-		-		-		-			(548	)		(548	)
Net loss		-		-		-		-			(507	)		(507	)
Balance at March 31, 2022		22,316	$	3,410	$	129,042	$	(132	)	$	(143,442	)	$	(4,989	)

The accompanying notes are an integral part of these consolidated statements.

F-46

GUIDED THERAPEUTICS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

FOR THE THREE MONTHS ENDED MARCH 31, 2021

(unaudited, in thousands)

	Preferred Stock				Preferred Stock				Preferred Stock				Preferred Stock
	Series C				Series C1				Series C2				Series D
	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount
Balance at December 31, 2020		-	$	105		1	$	170		3	$	531		1	$	276
Series F preferred offering		-		-		-		-		-		-		-		-
Conversion of debt and expenses for Series F preferred stock		-		-		-		-		-		-		-		-
Issuance of warrants to finders		-		-		-		-		-		-		-		-
Series G preferred offering		-		-		-		-		-		-		-		-
Issuance of common stock for payment of Series D preferred dividends		-		-		-		-		-		-		-		-
Issuance of warrants to consultants		-		-		-		-		-		-		-		-
Conversions of warrants from liability to equity		-		-		-		-		-		-		-		-
Stock-based compensation		-		-		-		-		-		-		-		-
Accrued preferred dividends		-		-		-		-		-		-		-		-
Net loss		-		-		-		-		-		-		-		-
Balance at March 31, 2021		-	$	105		1	$	170		3	$	531		1	$	276

	Preferred Stock				Preferred Stock				Preferred Stock
	Series E				Series F				Series G
	Shares		Amount		Shares		Amount		Shares		Amount
Balance at December 31, 2020		2	$	1,639		-	$	-		-	$	-
Series F preferred offering		-		-		2		1,667		-		-
Conversion of debt and expenses for Series F preferred stock		-		-		2		2,559		-		-
Issuance of warrants to finders		-		-		-		-		-		-
Series G preferred offering		-		-		-		-		153		-
Issuance of common stock for payment of Series D preferred dividends		-		-		-		-		-		-
Issuance of warrants to consultants		-		-		-		-		-		-
Conversions of warrants from liability to equity		-		-		-		-		-		-
Stock-based compensation		-		-		-		-		-		-
Accrued preferred dividends		-		-		-		-		-		-
Net loss		-		-		-		-		-		-
Balance at March 31, 2021		2	$	1,639		4	$	4,226		153	$	-

					Additional
	Common Stock				Paid-In		Treasury			Accumulated
	Shares		Amount		Capital		Stock			Deficit			Total
Balance at December 31, 2020		13,138	$	3,403	$	123,109	$	(132	)	$	(139,956	)	$	(10,855	)
Series F preferred offering		-		-		-		-			-			1,667
Conversion of debt and expenses for Series F preferred stock		-		-		-		-						2,559
Issuance of warrants to finders		-		-		151		-			-			151
Series G preferred offering		-		-		-		-			-			-
Issuance of common stock for payment of Series D preferred dividends		42		-		14		-			-			14
Issuance of warrants to consultants		-		-		398		-			-			398
Conversions of warrants from liability to equity		-		-		1,755		-			-			1,755
Stock-based compensation		-		-		62		-			-			62
Accrued preferred dividends		-		-		-		-			(55	)		(55	)
Net loss				-		-		-			(517	)		(517	)
Balance at March 31, 2021		13,180	$	3,403	$	125,489	$	(132	)	$	(140,528	)	$	(4,821	)

The accompanying notes are an integral part of these consolidated financial statements.

F-47

GUIDED THERAPEUTICS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

	Three Months Ended
	March 31,
	2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(507	)	$	(517	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of debt issuance costs and discounts		41			64
Amortization of beneficial conversion feature		-			8
Stock based compensation		44			62
Change in fair value of warrants		-			(448	)
Change in fair value of derivatives		6			88
Amortization of lease right-of-use-asset		16			-
Expense for warrants issued to consultants		79			398
Gain from forgiveness of debt		(41	)		(87	)
Other non-cash expenses (income)		6			-
Change in operating assets and liabilities:
Accounts receivable		6			-
Inventory		1			(1	)
Other current assets		(76	)		46
Other non-current assets		-			(18	)
Accounts payable and accrued liabilities		84			65
Lease liabilities		(15	)		-
Deferred revenue		177			20
NET CASH USED IN OPERATING ACTIVITIES		(179	)		(320	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(14	)		(1	)
NET CASH USED FOR INVESTING ACTIVITIES		(14	)		(1	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from warrant exercises		365			-
Payments made on notes payable		(90	)		(557	)
Proceeds from Series F offering, net of costs		-			1,818
Proceeds from Series G offering, net of costs		-			125
NET CASH PROVIDED BY FINANCING ACTIVITIES		275			1,386
NET CHANGE IN CASH		82			1,065
Cash at beginning of period		643			182
CASH AT END OF PERIOD	$	725		$	1,247
SUPPLEMENTAL DISCLOSURE FOR OPERATING ACTIVITIES:
Cash paid for interest	$	6		$	405
SUPPLEMENTAL DISCLOSURE FOR NON-CASH INVESTING AND FINANCING ACTIVITIES:
Dividends on preferred stock	$	548		$	55
Common stock issued for payment of interest	$	81		$	-
Issuance of series F-2 preferred stock	$	-		$	2,559
Issuance of warrants to finders in connection with Series F and Series F-2 preferred stock	$	-		$	151
Common stock issued for payment of dividends	$	592		$	14
Conversion of Series E Preferred Shares into Common Stock	$	725		$	1,755
Conversion of Series F Preferred Shares into Common Stock	$	13		$	-

The accompanying notes are an integral part of these consolidated financial statements.

F-48

GUIDED THERAPEUTICS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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.

During the year ended December 31, 2021, the Board simultaneously approved a 1-for-20 reverse stock split of our common stock and decreased the total number of authorized common shares to 500,000,000. On November 18, 2021, the Company submitted an Issuer Company Related Action Notification regarding the reverse stock split to the Financial Industry Regulatory Authority (“FINRA”). FINRA has not yet declared an effective date for the reverse stock split. The Company will adjust the number of shares available for future grant under its equity incentive plan and employee stock purchase plans and will also adjust the number of outstanding awards issued to reflect the effects of its reverse split. All historical share and per share amounts reflected throughout this report will be adjusted to reflect stock split at the time it becomes effective.

Basis of Presentation

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, 2021 filed with the Securities and Exchange Commission (“SEC”) pursuant to Section 13 or 15(d) under the Securities Exchange Act of 1934. The December 31, 2021 balances reported herein are derived from the audited consolidated financial statements for the year ended December 31, 2021. The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year.

All intercompany transactions and balances have been eliminated in consolidation. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the Company as of March 31, 2022 and December 31, 2021, and the consolidated results of operations and cash flows for the three-month periods ended March 31, 2022 and 2021 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, 2022, it had an accumulated deficit of approximately $143.4 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.

F-49

The Company is not organized by multiple operating segments for the purpose of making operating decisions or assessing performance. Accordingly, the Company operates in one reportable operating segment. The Company’s principal decision makers are the Chief Executive Officer and its Chief Financial Officer. Management believes that its business operates as one reportable segment because: a) the Company measures profit and loss as a whole; b) the principal decision makers do not review information based on any operating segment; c) the Company does not maintain discrete financial information on any specific segment; d) the Company has not chosen to organize its business around different products and services, and e) the Company has not chosen to organize its business around geographic areas.

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, 2022, the Company had a negative working capital of approximately $3.7 million, accumulated deficit of $143.4 million, and incurred a net loss including preferred dividends of $1.1 million for the three months then ended. Stockholders’ deficit totaled approximately $5.0 million at March 31, 2022, primarily due to recurring net losses from operations.

During the three-month period ended March 31, 2022, the Company raised $0.4 million of proceeds from warrant exercises. 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, 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 25.4 million shares of its common stock outstanding at March 31, 2022, with exercise prices ranging between $0.15 and $0.80 per share. Exercises of in-the-money warrants would generate a total of approximately $4.7 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 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.

Accounting Standard Updates

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.

F-50

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. As of March 31, 2022 and December 31, 2021, our inventories were as follows:

	(in thousands)
	March 31, 2022			December 31, 2021
Raw materials	$	1,254		$	1,255
Work-in-progress		69			69
Finished goods		32			32
Inventory reserve		(785	)		(785	)
Total inventory	$	570		$	571

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.

F-51

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, 2022 and December 31, 2021:

	(in thousands)
	March 31, 2022			December 31, 2021
Equipment	$	1,049		$	1,048
Software		652			652
Furniture and fixtures		41			41
Leasehold improvements		12			12
Construction in progress		21			8
Subtotal		1,775			1,761
Less accumulated depreciation		(1,747	)		(1,747	)
Property, equipment and leasehold improvements, net	$	28		$	14

Depreciation expense related to property and equipment for the three months ended March 31, 2022 and 2021 was not material.

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 were not material for the three months ended March 31, 2022 and 2021.

Leases

A lease provides the lessee the right to control the use of an identified asset for a period of time in exchange for consideration. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. The Company determines if an arrangement is a lease at inception. Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term.

Where an operating lease contains extension options that the Company is reasonably certain to exercise, the extension period is included in the calculation of the right-of-use assets and lease liabilities.

The discount rate used to determine the commencement date present value of lease payments is the interest rate implicit in the lease, or when that is not readily determinable, the Company utilizes its secured borrowing rate. Right-of-use assets include any lease payments required to be made prior to commencement and exclude lease incentives. Both right-of-use assets and lease liabilities exclude variable payments not based on an index or rate, which are treated as period costs. The Company’s lease agreements do not contain significant residual value guarantees, restrictions or covenants. See Note 7 - Commitments and Contingencies.

F-52

Accrued Liabilities

Accrued liabilities as of March 31, 2022 and December 31, 2021 are summarized as follows:

	(in thousands)
	March 31, 2022		December 31, 2021
Compensation	$	573	$	621
Professional fees		41		98
Stock Subscription Payable		-		351
Interest		232		261
Vacation		42		39
Preferred dividends		299		349
Other accrued expenses		41		49
Total	$	1,228	$	1,768

Stock Subscription Payable

Cash received from investors for common stock shares that have not yet been issued is recorded as a liability, which is presented within Accrued Liabilities on the consolidated balance sheet.

Revenue Recognition

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 recognize material revenues during the three-month periods ended March 31, 2022 or 2021. The Company’s revenues do not require significant estimates or judgments. The Company is not party to contracts that include multiple performance obligations or material variable consideration.

F-53

Contract Balances

The Company defers payments received as revenue until earned based on the related contracts and applying ASC 606 as required. As of March 31, 2022 and December 31, 2021, the Company had $514,000 and $337,000 in deferred revenue, respectively.

Significant Distributors

As of March 31, 2022, accounts receivable outstanding was $165,000, the outstanding amount was netted against a $126,000 allowance, leaving a balance of $39,000 which was from two distributors. As of December 31, 2021, accounts receivable outstanding was $172,000; the outstanding amount was netted against a $126,000 allowance, leaving a balance of $46,000, which was from two distributors.

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 provision for income taxes is determined in accordance with ASC 740, “Income Taxes”. The Company provides for income taxes based on enacted tax law and statutory tax rates at which items of income and expense are expected to be settled in our income tax return. Certain items of revenue and expense are reported for Federal income tax purposes in different periods than for financial reporting purposes, thereby resulting in deferred income taxes. Deferred taxes are also recognized for operating losses that are available to offset future taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

The Company has filed its 2021 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 March 31, 2022, the Company had approximately $61.6 million of net operating losses carryforward available. 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 Company recognizes uncertain tax positions based on a benefit recognition model. Provided that the tax position is deemed more likely than not of being sustained, the Company recognizes the largest amount of tax benefit that is greater than 50.0% likely of being ultimately realized upon settlement. The tax position is derecognized when it is no longer more likely than not of being sustained. The Company classifies income tax related interest and penalties as interest expense and selling, general and administrative expense, respectively, on the consolidated statements of operations.

F-54

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 accounts for its stock-based awards in accordance with ASC Subtopic 718, “Compensation - Stock Compensation”, which requires fair value measurement on the grant date and recognition of compensation expense for all stock-based payment awards made to employees and directors. The Company determines the fair value of stock options using the Black-Scholes model. The fair value of restricted stock awards is based upon the quoted market price of the common shares on the date of grant. The fair value of stock-based awards is expensed over the requisite service periods of the awards. The Company accounts for forfeitures of stock-based awards as they occur.

The Black-Scholes option pricing model requires the input of certain assumptions that require the Company’s judgment, including the expected term and the expected stock price volatility of the underlying stock. The assumptions used in calculating the fair value of stock-based compensation represent management’s best estimates, but these estimates involve inherent uncertainties and the application of judgment. As a result, if factors change resulting in the use of different assumptions, stock-based compensation expense could be materially different in the future.

Derivatives

The Company reviews the terms of convertible debt issued to determine whether there are embedded derivative instruments, including embedded conversion options, which are required to be bifurcated and accounted for separately as derivative financial instruments. In circumstances where the host instrument contains more than one embedded derivative instrument, including the conversion option, that is required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument.

Bifurcated embedded derivatives are initially recorded at fair value and are then revalued at each reporting date with changes in the fair value reported as non-operating income or expense. When the equity or convertible debt instruments contain embedded derivative instruments that are to be bifurcated and accounted for as liabilities, the total proceeds received are first allocated to the fair value of all the bifurcated derivative instruments. The remaining proceeds, if any, are then allocated to the host instruments themselves, usually resulting in those instruments being recorded at a discount from their face value. The discount from the face value of the convertible debt, together with the stated interest on the instrument, is amortized over the life of the instrument through periodic charges to interest expense.

3. FAIR VALUE OF FINANCIAL INSTRUMENTS

The guidance for fair value measurements, ASC 820, Fair Value Measurements and Disclosures, establishes the authoritative definition of fair value, sets out a framework for measuring fair value, and outlines the required disclosures regarding fair value measurements. Fair value is the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The Company uses a three-tier fair value hierarchy based upon observable and non-observable inputs as follow:

· Level 1-Quoted market prices in active markets for identical assets and liabilities;

· Level 2-Inputs, other than level 1 inputs, either directly or indirectly observable; and

· Level 3-Unobservable inputs developed using internal estimates and assumptions (there is little or no market date) which reflect those that market participants would use.

F-55

The Company records its derivative activities at fair value. As of March 31, 2022 we had one instrument that we valued for the derivative liability associated with the bifurcated conversion option of the Auctus loan for $400,000. There was no movement of instruments between fair value hierarchy tiers during the three months ended March 31, 2022.

The following tables present the fair value of those liabilities measured on a recurring basis as of March 31, 2022 and December 31, 2021:

	Fair Value at March 31, 2022 (in thousands)
	Level 1		Level 2		Level 3			Total
Derivative liability/bifurcated conversion option in connection with Auctus $400,000 loan on December 17, 2019	$	-	$	-	$	(38	)	$	(38	)
Total short-term liabilities at fair value	$	-	$	-	$	(38	)	$	(38	)

	Fair Value at December 31, 2021 (in thousands)
	Level 1		Level 2		Level 3			Total
Derivative liability/bifurcated conversion option in connection with Auctus $400,000 loan on December 17, 2019		-		-		(32	)		(32	)
Total long-term liabilities at fair value	$	-	$	-	$	(32	)	$	(32	)

The following is a summary of changes to Level 3 instruments during the three months ended March 31, 2022:

	(in thousands)
	Senior Secured Debt		Derivative			Total
Balance, December 31, 2021	$	-	$	(32	)	$	(32	)
Change in fair value during the period		-		(6	)		(6	)
Balance, March 31, 2022	$	-	$	(38	)	$	(38	)

4. STOCKHOLDERS’ DEFICIT

Common Stock

The Company has authorized 500,000,000 shares of common stock with $0.001 par value. As of March 31, 2022 and December 31, 2021, 22,316,412 and 13,673,583 shares were issued and outstanding, respectively.

F-56

During the three months ended March 31, 2022, the Company issued 8,642,829 shares of common stock:

	Number of Shares
Common stock warrants exercised		4,477,923
Issuance of common stock for payment of Series D preferred dividends		23,109
Issuance of common stock for payment of Series E preferred dividends		12,432
Issuance of common stock for payment of Series F preferred dividends		158,662
Issuance of common stock for payment of Series F-2 preferred dividends		95,535
Issuance of common stock for payment of interest		121,262
Issuance of common stock for Series F one-time 15% dividend		255,401
Issuance of common stock for Series F-2 one-time 15% dividend		368,505
Conversion of Series E preferred stock to common stock		3,070,000
Conversion of Series F preferred stock to common stock		60,000
Issued during the three months ended March 31, 2022		8,642,829
Summary table of common stock share transactions:
Balance at December 31, 2021		13,673,583
Issued in 2022		8,642,829
Balance at March 31, 2022		22,316,412

Preferred Stock

The Company has authorized 5,000,000 shares of preferred stock with a $0.001 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, 2022 and December 31, 2021, 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. Unpaid accrued dividends were $120,120 as of March 31, 2022. 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, 2022 and December 31, 2021, the “make-whole payment” for a converted share of Series C preferred stock would convert to 200 shares of the Company’s common stock.

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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. As of March 31, 2022, these warrants had expired.

Series C1 Convertible Preferred Stock

The board designated 20,250 shares of preferred stock as Series C1 Preferred Stock, of which 1,049 shares were issued and outstanding at March 31, 2022 and December 31, 2021. 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, 2022 and December 31, 2021, 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.

At March 31, 2022 and December 31, 2021, 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, 2022 and December 31, 2021, 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 remained outstanding as of March 31, 2022 and December 31, 2021. On January 8, 2021, 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 at $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, 2022, none of the 763 Series D Preferred Shares have been converted to secured debt.

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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.

During the three months ended March 31, 2022, the Company issued 23,109 common stock shares for the payment of accrued Series D Preferred Stock dividends. As of March 31, 2022, the Company had accrued dividends of $14,306.

Series E Convertible Preferred Stock

The Board designated 5,000 shares of preferred stock as Series E Preferred Stock, 968 and 1,736 of which remained outstanding as of March 31, 2022 and December 31, 2021, respectively. 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.

Each share of Series E Preferred Stock has a par value of 0.001 per share and a Stated Value equal to $1,000, subject to increase set forth in its Certificate of Designation.

Each holder of Series E Preferred Stock is entitled to receive cumulative dividends of 8% per annum, payable

annually in cash or, following the listing of the Company’s common stock on certain Canadian trading markets and at the option of the Company, shares of common stock.

During the three months ended March 31, 2022, the Company issued 3,070,000 common stock shares for the conversion of 768 shares of Series E Convertible Preferred Stock.

During the three months ended March 31, 2022, the Company issued 12,432 common stock shares for the payment of Series E Preferred Stock dividends accrued. As of March 31, 2022, the Company had accrued dividends of $71,099.

Series F Convertible Preferred Stock

The Board designated 1,500 shares of preferred stock as Series F Preferred Stock, 1,411 and 1,426 of which were issued and outstanding as of March 31, 2022 and December 31, 2021, respectively. During 2021, the Company entered into a Stock Purchase Agreement with certain accredited investors (“the Series F Investors”). In total, for $1,436,000 the Company issued 1,436 shares of Series F Preferred Stock. Each Series F Preferred Stock is convertible into 4,000 common stock shares. The Series F Preferred Stock is entitled to cumulative dividends at the rate per share of 6% per annum. The stated value on the Series F Preferred Stock is $1,411.

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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.

During the three months ended March 31, 2022, the Company issued 60,000 common stock shares for the conversion of 15 shares of Series F Convertible Preferred Stock.

During the three months ended March 31, 2022, the Company issued 158,662 common stock shares for the payment of annual Series F Preferred Stock dividends. Additionally, During the three months ended March 31, 2022, the Company issued 255,401 common stock shares for the payment of a one-time, non-recurring 15% dividend to the Series F Preferred shareholders (as required by the Series F Certificate of Designation in the event the Company did not uplist to the NASDAQ stock exchange or file its clinical data intended for FDA approval of LuViva by December 31, 2021). As of March 31, 2022, accrued dividends totaled $1,998.

Series F-2 Convertible Preferred Stock

The Company was oversubscribed for its Series F Convertible Preferred Stock, resulting in the requirement to file an additional Certificate of Designation for Series F-2 Convertible Preferred Stock with substantially the same terms as the Series F Convertible Preferred Stock. The Board designated 3,500 shares of preferred stock as Series F-2 Preferred Stock, 3,237 of which were issued and outstanding as of March 31, 2022 and December 31, 2021. During 2021, the Company entered into a Stock Purchase Agreement with certain accredited investors (“the Series F-2 Investors”). In total, for $678,000 the Company issued 678 shares of Series F-2 Preferred Stock. In addition, the Company exchanged outstanding debt of $2,559,000 for 2,559 shares of Series F-2 Preferred Stock. Each Series F-2 Preferred Stock is convertible into 4,000 common stock shares. The Series F-2 Preferred Stock will have cumulative dividends at the rate per share of 6% per annum. The stated value on the Series F-2 Preferred Stock is 3,237.

Each share of Series F-2 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-2 Certificate of Designation (the “Series F-2 Conversion Price”). The conversion of Series F-2 Preferred is subject to a 4.99% beneficial ownership limitation, which may be increased to 9.99% at the election of the holders of the Series F-2 Preferred. If the average of the VWAPs (as defined in the Series F-2 Certificate of Designation) for any consecutive 5 trading day period (“Measurement Period”) exceeds 200% of the then Series F-2 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-2 Preferred, for cash in an amount equal to aggregate Stated Value then outstanding plus accrued but unpaid dividends.

During the three months ended March 31, 2022, the Company issued 95,535 common stock shares for the payment of annual Series F-2 Preferred Stock dividends. Additionally, During the three months ended March 31, 2022, the Company issued 368,505 common stock shares for the payment of a one-time, non-recurring 15% dividend to the Series F-2 Preferred shareholders (as required by the Series F-2 Certificate of Designation in the event the Company did not uplist to the NASDAQ stock exchange or file its clinical data intended for FDA approval of LuViva by December 31, 2021). As of March 31, 2022, accrued dividends totaled $91,592.

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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. The Company has redeemed all of the Series G preferred stock and the balance is paid.

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 125,000 was recorded as a liability. On June 4, 2021, the Company redeemed the January 2021 investment of $75,000 for $114,597, this $39,597 difference was recorded as interest expense. On July 8, 2021, the Company redeemed the February 2021 investment of $50,000 for $78,094. The difference of 28,094 was recorded as interest expense. As of March 31, 2022 and December 31, 2021, the amount outstanding was nil.

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Warrants

The following table summarizes transactions involving the Company’s outstanding warrants to purchase common stock for the three months ended March 31, 2022:

	Warrants (Underlying Shares)			Weighted-Average Exercise Price Per Share
Outstanding, December 31, 2021		27,669,634		$	0.29
Warrants exercised		(2,284,324	)	$	0.16
Outstanding, March 31, 2022		25,385,310		$	0.30

5. STOCK OPTIONS

The new Stock Plan (the “Plan”) allows for the issuance of incentive stock options, nonqualified stock options, and stock purchase rights. The exercise price of options was determined by the Company’s board of directors, but incentive stock options were granted at an exercise price equal to the fair market value of the Company’s common stock as of the grant date. Options historically granted have generally become exercisable over four years and expire ten years from the date of grant. The plan provides for stock options to be granted up to 10% of the outstanding common stock shares.

There was no stock option activity during the three months ended March 31, 2022. The following table summarizes the Company’s outstanding and exercisable stock options as of March 31, 2022:

	Number of Shares		Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Life	Aggregate Intrinsic Value of In-the-Money Options  (in thousands)
Options outstanding as of March 31, 2022		1,500,000	$	0.49	8.3 years	$	240
Options exercisable as of March 31, 2022		1,045,227	$	0.49	8.3 years	$	167

The aggregate intrinsic value is calculated as the difference between the Company’s closing stock price as of March 31, 2022 and the exercise price, multiplied by the number of options. As of March 31, 2022, there was $219,558 of unrecognized stock-based compensation expense. Such costs are expected to be recognized over a weighted average period of approximately 1.25 years. The weighted-average fair value of awards granted was nil and $0.47 during the three months ended March 31, 2022 and 2021, respectively.

The Company recognizes compensation expense for stock option awards on a straight-line basis over the applicable service period of the award. The service period is generally the vesting period. The Black-Scholes option pricing model and the following weighted-average assumptions were used to estimate the fair value of awards granted during the three months ended March 31, 2021:

	March 31,
	2021
Expected term (years)		10 years
Volatility		153.12	%
Risk-free interest rate		0.98	%
Dividend yield		0.00	%

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6. LITIGATION AND CLAIMS

From time to time, the Company may be involved in various legal proceedings and claims arising in the ordinary course of business. Management believes that the dispositions of these matters, individually or in the aggregate, are not expected to have a material adverse effect on the Company’s financial condition. However, depending on the amount and timing of such disposition, an unfavorable resolution of some or all of these matters could materially affect the future results of operations or cash flows in a particular year.

As of March 31, 2022, and December 31, 2021, there was no accrual recorded for any potential losses related to pending litigation.

7. COMMITMENTS AND CONTINGENCIES

Operating Leases

The below table presents total operating lease right-of-use assets and lease liabilities as of March 31, 2022:

	(in thousands)
	Three Months Ended March 31,
	2022
Operating lease right-of-use assets	$	355
Operating lease liabilities	$	377

The table below presents the maturities of operating lease liabilities as of March 31, 2022:

	(in thousands)
	Operating
	Leases
2022 (remaining)	$	82
2023		112
2024		115
2025		118
2026		50
Total future lease payments		477
Less: discount		(100	)
Total lease liabilities	$	377

The table below presents the weighted-average remaining lease term and discount rate used in the calculation of operating lease right-of-use assets and lease liabilities:

	Three Months Ended March 31,
	2022
Weighted average remaining lease term (years)		4.2
Weighted average discount rate		11.4	%

Related Party Contracts

On June 5, 2016, the Company entered into a license agreement with Shenghuo Medical, LLC pursuant to which the Company granted Shenghuo an exclusive license to manufacture, sell and distribute LuViva in Taiwan, Brunei Darussalam, Cambodia, Laos, Myanmar, Philippines, Singapore, Thailand, and Vietnam. Shenghuo was already the Company’s exclusive distributor in China, Macau and Hong Kong, and the license extended to manufacturing in those countries as well. Under the terms of the license agreement, once Shenghuo was capable of manufacturing LuViva in accordance with ISO 13485 for medical devices, Shenghuo would pay the Company a royalty equal to $2.00 or 20% of the distributor price (subject to a discount under certain circumstances), whichever is higher, per disposable distributed within Shenghuo’s exclusive territories. In connection with the license grant, Shenghuo was to underwrite the cost of securing approval of LuViva with Chinese Food and Drug Administration. At its option, Shenghuo also would provide up to $1.0 million in furtherance of the Company’s efforts to secure regulatory approval for LuViva from the U.S. Food and Drug Administration, in exchange for the right to receive payments equal to 2% of the Company’s future sales in the United States, up to an aggregate of $4.0 million. Pursuant to the license agreement, Shenghuo had the option to have a designee appointed to the Company’s board of directors (current director Richard Blumberg is the designee).

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On September 6, 2016, the Company entered into a royalty agreement with one of its directors, John Imhoff, and another stockholder, Dolores Maloof, pursuant to which the Company sold to them a royalty of future sales of single-use cervical guides for LuViva. Under the terms of the royalty agreement, and for consideration of $50,000, the Company will pay them an aggregate perpetual royalty initially equal to $0.10, and from and after October 2, 2016, equal to $0.20, for each disposable that the Company sells (or that is sold by a third party pursuant to a licensing arrangement with the Company).

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. During the three months ended March 31, 2022, the Company recognized $79,444 of consulting expenses as a result of this agreement. Unrecognized consulting expense to be recognized under this agreement is nil as of March 31, 2022.

On March 10, 2021, the Company entered into a consulting agreement with Richard Blumberg. As a result of the consulting agreement Mr. Blumberg provided $350,000, which was recorded to subscription receivable, to the Company in exchange for the following: (1) on September 26, 2021, 900,000 3-year warrants with an exercise price of $0.30 and 400,000 common stock shares; (2) on March 26, 2022, 900,000 3-year warrants with an exercise price of $0.40 and 400,000 common stock shares; (3) on September 26, 2022, 900,000 3-year warrants with an exercise price of $0.50 and 400,000 common stock shares; and (4) on March 26, 2023, 900,000 3-year warrants with an exercise price of $0.60 and 400,000 common stock shares.

During the year ended December 31, 2021, the consulting agreement was amended to clarify that $350,000 is not intended to be debt and will not be required to be repaid in cash. Additionally, issuance of the warrants is now predicated on the Company receiving funding receipts of $1,000,000, whether from a financing, series of financing, or gross sales. The amended agreement clarified that the warrants issued to Mr. Blumberg are compensation for services, which involve obtaining financing. The Company will recognize expense for the services equal to the fair value of the warrants issued to Mr. Blumberg as the services are provided, which will coincide with the successful execution of a financing agreement over $1,000,000.

Other Commitments

On July 24, 2019, Shandong Yaohua Medical Instrument Corporation (“SMI”), agreed to modify its existing agreement. Under the terms of this modification, the Company agreed to grant (1) exclusive manufacturing rights, excepting the disposable cervical guides for the Republic of Turkey, and the final assembly rights for Hungary, and (2) exclusive distribution and sales for LuViva in jurisdictions, subject to the following terms and conditions. First, SMI shall complete the payment for parts, per the purchase order, for five additional LuViva devices. Second, in consideration for the $885,144 that the Company received, SMI will receive 12,147 common stock shares. Third, SMI shall honor all existing purchase orders it has executed to date with the Company, in order to maintain jurisdiction sales and distribution rights. If SMI needs to purchase cervical guides, then it will do so at a cost including labor, plus ten percent markup. The Company will provide 200 cervical guides at no cost for the clinical trials. Fourth, the Company and SMI will make best efforts to sell devices after CFDA approval. With an initial estimate of year one sales of 200 LuViva devices; year two sales of 500 LuViva devices; year three sales of 1,000 LuViva devices; and year four sales of 1,250 LuViva devices. Fifth, SMI shall pay for entire costs of securing approval of LuViva with the Chinese FDA. Sixth, SMI shall arrange, at its sole cost, for a manufacturer in China to build tooling to support manufacturing. In addition, SMI retains the right to manufacture for China, Hong Kong, Macau and Taiwan, where SMI has distribution and sales rights. For each single-use cervical guide sold by SMI in the jurisdictions, SMI shall transfer funds to escrow agent at a rate of $1.90 per device chip. If within 18 months of the license’s effective date, SMI fails to achieve commercialization of LuViva in China, SMI shall no longer have any rights to manufacture, distribute or sell LuViva. Commercialization is defined as: filing an application with the Chinese FDA for the approval of LuViva; any assembly or manufacture of the devices or disposables that begins in China; and purchase of at least 10 devices and disposables for clinical evaluations and regulatory use and or sales in the jurisdictions.

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On August 12, 2021, the Company executed an amendment to its agreement with SMI, which established a payment schedule for the balance owed by SMI to the Company for outstanding purchase orders. The remaining balance owed for outstanding purchase orders was $23,445 as of March 31, 2022. Under the terms of the amended agreement, the parties agreed that if by October 30, 2022, SMI fails to achieve commercialization of LuViva in China, SMI shall no longer have any rights to manufacture, distribute or sell LuViva.

Contingencies

The current outbreak of the Coronavirus SARS-CoV-2, the pathogen responsible for COVID-19, which has already had an impact on financial markets, could result in additional repercussions to the Company’s operating business, including but not limited to, the sourcing of materials for product candidates, manufacture of supplies for preclinical and/or clinical studies, delays in clinical operations, which may include the availability or the continued availability of patients for trials due to such things as quarantines, conduct of patient monitoring and clinical trial data retrieval at investigational study sites.

The future impact of the outbreak is highly uncertain and cannot be predicted, and the Company cannot provide any assurance that the outbreak will not have a material adverse impact on the Company’s operations or future results or filings with regulatory health authorities. The extent of the impact to the Company, if any, will depend on future developments, including actions taken to contain the coronavirus.

The Russia-Ukraine conflict and the sanctions imposed in response to this crisis could result in repercussions to our operating business, including delays in obtaining regulatory approval to market our products in Russia. The future impact of the conflict is highly uncertain and cannot be predicted, and we cannot provide any assurance that the conflict will not have a material adverse impact on our operations or future results or filings with regulatory health authorities.

8. NOTES PAYABLE

Short Term Notes Payable

At March 31, 2022 and December 31, 2021, the Company maintained short term notes payable to related and non-related parties totaling approximately $43,253 and $87,615, respectively. These notes are short term, straight-line amortizing notes. The notes carry annual interest rates between 4.3% and 16%, or 18% in the event of default.

On July 4, 2021, the Company entered into a premium finance agreement to finance its insurance policies totaling $117,560. The note requires monthly payments of $11,968, including interest at 4.3% and matured in April 2022. As of March 31, 2022, the balance on that note was $11,968.

During 2019, the Company issued promissory notes to Mr. Cartwright totaling $45,829. The note was initially issued with 0% interest, however interest increased to 6.0% interest 90 days after the Company received $1,000,000 in financing proceeds. As of March 31, 2022, the balance on the notes was $31,285.

On December 21, 2016 and January 19, 2017, the Company issued promissory notes to Mr. Fowler, in the amounts of approximately $12,500 and $13,900. The notes were initially issued with 0% interest and then went into default with an interest rate of 18%. As part of the March 22, 2021 exchange agreement these notes were combined into one short term note payable of $26,400 and $18,718 in principal and interest of the two previous notes, respectively, for the total balance of $45,118. The aforementioned agreement brought the note current and will accrue interest at a rate of 6.0%. The note carries a monthly payment of $3,850. As of March 31, 2022, the note was paid in full.

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The following table summarizes short-term notes payable, including related parties:

	Short-term notes payable, including related parties
	March 31, 2022		December 31, 2021
Dr. Cartwright	$	31	$	34
Mr. Fowler		-		6
Premium Finance (insurance)		12		48
Short-term notes payable	$	43	$	88

The short-term notes payable due to related parties was $31,285 at March 31, 2022 and $40,000 of the $88,000 balance at December 31, 2021.

9. SHORT-TERM CONVERTIBLE DEBT

Short-term Convertible Notes Payable

Auctus

On December 17, 2019, the Company entered into a securities purchase agreement and convertible note with Auctus. The convertible note issued to Auctus will be for a total of $2.4 million. The first tranche of $700,000 was received in December 2019 and matured December 17, 2021 and accrued interest at a rate of ten percent (10%). The note may not have been prepaid in whole or in part except as otherwise explicitly allowed. Any amount of principal or interest on the note which was not paid when due shall bore interest at the rate of the lessor of 24% or the maximum permitted by law (the “default interest”). The variable conversion prices equaled the lesser of: (i) the lowest trading price on the issue date, and (ii) the variable conversion price. The variable conversion price was 95% multiplied by the market price (the market price means the average of the five lowest trading prices during the period beginning on the issue date and ending on the maturity date), minus $0.04 per share, provided however that in no event could the variable conversion price be less than $0.15. If an event of default under this note occurred and/or the note was not extinguished in its entirety prior to December 17, 2020 the $0.15 price floor no longer applied.

In connection with the first tranche of $700,000, the Company issued 7,500,000 warrants to purchase common stock at an exercise price of $0.20. The fair value of the warrants at the date of issuance was $745,972; $635,000 was allocated to the warrant liability and a loss of $110,972 was recorded at the date of issuance for the amount of the fair value in excess of the net proceeds received of $635,000. The $700,000 proceeds were received net of debt issuance costs of $65,000 (net proceeds of $635,000, after administrative and legal expenses Company received $570,000). The Company used $65,000 of the proceeds to make a partial payment of the $89,250 convertible promissory note issued on July 3, 2018 to Auctus. The Company made a $700,000 payment on June 1, 2021, which resulted in a prepayment penalty of $350,000 being assessed to the Company, which remained outstanding as of March 31, 2022. The Company recorded this prepayment penalty as interest expense. Interest will not be assessed on the prepayment penalty. As of March 31, 2022 and December 31, 2021, the outstanding amount of the note was nil.

F-66

On May 27, 2020, the Company received the second tranche in the amount of $400,000, from the December 17, 2019 securities purchase agreement and convertible note with Auctus. The net amount paid to the Company was $313,000 This second tranche is part of the convertible note issued to Auctus for a total of $2.4 million of which $700,000 has already been provided by Auctus. The note maturity date is May 27, 2022 and the note accrues interest at a rate of ten percent (10%). The note may not be prepaid in whole or in part except as otherwise explicitly allowed. Any amount of principal or interest on the note which is not paid when due shall bear interest at the rate of the lessor of 24% or the maximum permitted by law (the “default interest”). The variable conversion prices shall equal the lesser of: (i) the lowest trading price on the issue date, and (ii) the variable conversion price. The variable conversion price shall mean 95% multiplied by the market price (the market price means the average of the five lowest trading prices during the period beginning on the issue date and ending on the maturity date), minus $0.04 per share, provided however that in no event shall the variable conversion price be less than $0.15. If an event of default under this note occurs and/or the note is not extinguished in its entirety prior to December 17, 2020 the $0.15 price shall no longer apply. The last tranche of $1.3 million will be received within 60 days of the S-1 registration statement becoming effective. The conversion price of the notes will be at market value with a minimum conversion amount of $0.15. In addition, as part of this transaction the Company was required to pay a 2.0% fee to a registered broker-dealer. As of March 31, 2022 and December 31, 2021, $400,000 of principal remained outstanding and accrued interest totaled $74,778 and $64,778, respectively. Further, as of March 31, 2022 and December 31, 2020, the Company had unamortized debt issuance costs of $5,211 and $13,586. As of March 31, 2022 and December 31, 2021, the estimated fair value of the derivative liability for the bifurcated conversion option was $38,129 and $31,889, respectively.

Convertible Notes in Default

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 June 30, 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 matured 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 90^th 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 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, 2022 and December 31, 2021, the outstanding balance on the note was $161,184 (which includes a default penalty of $48,434. As of March 31, 2022 and December 31, 2021, accrued interest of $46,099 and $36,428 are included in accrued expenses on the accompanying consolidated balance sheet, respectively.

The following table summarizes the Short-term Convertible Notes Payable, including debt in default (in thousands):

	March 31, 2022			December 31, 2021
Auctus Tranche 2	$	400		$	400
Auctus prepayment penalty		350			350
Auctus (March 31, 2020 Note)		161			161
Debt discount and issuance costs to be amortizaed		(5	)		(14	)
Convertible notes payable - short-term	$	906		$	897

On June 2, 2021, we entered into an exchange agreement with Auctus, which was amended on February 1, 2022. Pursuant to this agreement, Auctus agreed to exchange an aggregate of $668,290 of outstanding notes (the “Notes”), including accrued interest, and the associated warrants issued in connection with the Notes (the warrants, for the purpose of the exchange, are valued at, in the aggregate, $1,681,707) into unregistered units of our common stock, warrants and prefunded warrants otherwise in the form and ratios issued in a proposed underwritten public offering on the Nasdaq Capital Markets (the “Nasdaq Offering”).

F-67

The exchange price will be on a $1 for $1 basis such that Auctus will receive $2,349,997 of units consisting of common stock, warrants and prefunded warrants. The units being issued in the exchange with Auctus are unregistered and are being issued pursuant to Section 4(a)(2) under the Securities Act of 1933, as amended. Additionally, the units and the common stock underlying the units will be subject to a lock up agreement with the underwriters until the earlier of 120 days after the Nasdaq Offering and the date that the daily volume weighted average price of the common stock exceeds 200% of the Nasdaq Offering price for at least five consecutive trading days. Further, the termination date of the June 2, 2021 agreement was extended to April 15, 2022. The $350,000 related to default penalties will be exchanged into $350,000 of securities offered in the Nasdaq Offering.

10. LONG-TERM DEBT

Long-term Debt - Related Parties 

On July 14, 2018, the Company entered into an exchange agreement with Dr. Faupel, whereby Dr. Faupel agreed to exchange outstanding amounts due to him for loans, interest, bonus, salary and vacation pay in the amount of $660,895 for a $207,111 promissory note dated September 4, 2018. On July 20, 2018, the Company entered into an exchange agreement with Dr. Cartwright, whereby Dr. Cartwright agreed to exchange outstanding amounts due to him for loans, interest, bonus, salary and vacation pay in the amount of $1,621,499 for a $319,000 promissory note dated September 4, 2018 that incurs interest at a rate of 6% per annum.

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.

On February 19, 2021, the Company entered into new promissory notes replacing the original notes 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 6.0%. 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 6.0%. The modifications extended the maturity date on both of the notes.

On February 19, 2021, the Company exchanged $100,000 and $85,000 of long-term debt for Dr. Cartwright and Dr. Faupel in exchange for 100 and 85 shares of Series F2 Preferred Stock, respectively.

F-68

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 in prior years		(454	)
Amount exchanged for Series F-2 Preferred Stock		(85	)
Total interest accrued through December 31, 2021		39
Balance outstanding at December 31, 2021	$	161
Interest accrued through March 31, 2022		2
Balance outstanding at March 31, 2022	$	163

For Dr.Cartwright
Salary	$	337
Bonus		675
Loans to Company		528
Interest on loans		81
Total outstanding prior to exchange		1,621
Amount forgiven in prior years		(1,302	)
Amount exchanged for Series F-2 Preferred Stock		(100	)
Total interest accrued through December 31, 2021		62
Balance outstanding at December 31, 2021	$	281
Interest accrued through March 31, 2022		4
Balance outstanding at March 31, 2022	$	285

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 exchanged $50,000 of the amount owed of $546,214 for 50 share of Series F-2 Preferred Shares (convertible into 200,000 common stock shares), and a $150,000 unsecured note. The note accrues interest at the rate of 6% (18% in the event of default) beginning on March 22, 2022 and is payable in monthly installments of $3,580 for four years, with the first payment due on March 15, 2022. The effective interest rate of the note is 6.18%. During the three months ended March 31, 2022, Mr. Fowler forgave $6,232 of the outstanding balance and may forgive up to $253,429 of the remaining principal and accrued interest if the Company complies with the repayment plan described above. The reduction in the outstanding balance met the criteria for troubled debt. The basic criteria are that the borrower is troubled, i.e., they are having financial difficulties, and a concession is granted by the creditor. The outstanding principal amount owed on the note was $146,400 as of March 31, 2022, of which $26,586 is included in “Current portion of long-term debt, related parties” and the remainder of which is included in “Long-term debt, related parties” on the consolidated balance sheets.

F-69

Future debt obligations as shown below include: $284,867, $163,376, and $146,400 for a total of $594,643 for Dr. Cartwright, Dr. Faupel, and Mr. Fowler, respectively. Future debt obligations as of March 31, 2022 for debt owed to related parties is as follows (in thousands):

Year	Amount
2022	$	27
2023		485
2024		39
2025		41
2026		3
Thereafter		-
Total	$	595

Small Business Administration Loan

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, 2022 and December 31, 2021, the outstanding balance was $4,491 (this amount is presented in current portion of long-term debt) and $11,181, including $407 and $385 in accrued interest, respectively.

10% Senior Unsecured Convertible Debenture

On May 17, 2021, the Company issued 10% Senior Unsecured convertible debentures to investors, which mature on May 17, 2024 (the “Maturity Date”). The Company subscribed $1,130,000 of the $1,000 convertible debentures. The terms of the debentures are as follows: 1) the principal amount of some or all of the convertible debentures and accrued interest are convertible into common stock shares at the holder’s option, at a price of $0.50 per common stock share (the “conversion price”), subject to adjustment in certain events, at any time prior to maturity date; 2) upon successful uplist to a U.S. National Exchange, the note will automatically convert into the uplisting financing; 3) each debenture unit will have a right to 1,000 warrants for common stock shares, warrants have an exercise price of $0.80 and an expiration date of May 17, 2023; 4) if a Change of Control (as defined in the Convertible Debenture Certificate) occurs prior to the Maturity Date, unless the holder elects in writing to convert the Convertible Debentures into common shares, the Company will repay in cash upon the closing of such Change of Control all outstanding principal and accrued interest under each Convertible Debenture plus a Change of Control premium equal to an additional 3% of the outstanding principal sum under such Convertible Debenture. Prior to the closing of an Change of Control, in lieu of repayment as set forth in the preceding sentence, the holder has the right to elect in writing to convert, effective immediately prior to the effective date of such Change of Control, all outstanding principal and accrued Interest under the Convertible Debentures into common shares at the Conversion Price; 5) Subject to a holder’s option of electing conversion prior to the Redemption Date (as such term is defined below), on or after the date that is 24 months from the Closing Date if the daily volume weighted average trading price of the common shares is $1.50 per common share or more for each trading day over a 30 consecutive trading day period, the Company may, at any time (the “Redemption Date”), at its option, redeem all, or any portion of the Convertible Debentures for either: (i) a cash payment (in the form of a certified cheque or bank draft) that is equal to all outstanding principal and accrued interest under each Convertible Debenture up to the Redemption Date; or (ii) by issuing and delivering common shares to the holders of Convertible Debentures at a deemed price of US$0.50 per common share that is equal to all outstanding principal and accrued interest under each Convertible Debenture up to the Redemption Date, or any combination of (i) or (ii), upon not less than 30 days and not more than 60 days prior written notice in the manner provided in the Debenture Certificate, to the holder of Convertible Debentures.

F-70

At March 31, 2022 and December 31, 2021, the balance due on the 10% Senior Secured Convertible Debenture was $1,130,000 and total accrued interest was $28,250 and $73,326, respectively. The bond payable discount and unamortized debt issuance costs as of March 31, 2022 and December 31, 2021 are presented below (in thousands):

	March 31, 2022			December 31, 2021
10% Senior Unsecured Convertible Debentures	$	1,130		$	1,130
Debt Issuance costs to be amortized		(62	)		(69	)
Debt Discount		(216	)		(241	)
Long-term convertible debt	$	852		$	820

6% Unsecured Promissory Note

On July 9, 2020, we entered into an exchange agreement with Mr. Bill Wells (a former employee). In lieu of agreeing to dismiss approximately half of what was owed to him, or $220,000, Mr. Wells received the following: (i) cash payments of $ 20,000; (ii) an unsecured promissory note in the amount of $90,000 to be executed within 30 days of completing new financing(s) totaling at least $3.0 million, (iii) 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 (ii) 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, 2021, the Company closed a financing round that exceeded the $3.0 million threshold and issued an unsecured promissory note in the amount of $97,052 to Mr. Wells. The note, for which monthly installment payments of $5,000 are due, matures 18 months after the issuance date and incurs interest at a rate of 6.0% per annum. During the three months ended March 31, 2022, the Company made payments of $35,000 to Mr. Wells, which resulted in forgiveness of $35,000 of the remaining balance of accrued compensation. The reduction in the outstanding balance 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, 2022, the total amount owed to Mr. Wells (principal and accrued interest), was $65,299, which is included in “Current portion of long-term debt” on the consolidated balance sheet.

11. 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, Series F and Series F-2 convertible preferred stock, Series G preferred stock, convertible debt, convertible preferred dividends and warrants convertible into common stock shares.

F-71

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, except for per-share data):

	March 31,
	2022			2021
Net loss		(1,055	)		(572	)
Basic weighted average number of shares outstanding		20,683			13,172
Net loss per share (basic)		(0.05	)		(0.04	)
Diluted weighted average number of shares outstanding		20,683			13,172
Net loss per share (diluted)		(0.05	)		(0.04	)
Dilutive equity instruments (number of equivalent units):
Stock options		917			-
Preferred stock		15,572			17,994
Convertible debt		2,018			315
Warrants		13,609			17,400
Total Dilutive instruments		32,116			35,709

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 Restructurings - 2022

During the three months ended March 31, 2022, two of the Company’s creditors forgave $41,232 of debt. The reductions in the outstanding balances 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, 2022, the troubled debt restructurings in total would have decreased the net loss by $41,232, with no impact to net loss per share.

Troubled Debt Restructurings - 2021

During the three months ended March 31, 2021, the Company restructured several debt agreements that 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, 2022, the troubled debt restructurings in total would have decreased the net loss by $972,000, causing the per share calculation to change from .04 to .11 net loss per share.

12. SUBSEQUENT EVENTS

Auctus Exchange Agreement

On April 14, 2022, we entered into an agreement with Auctus that extended the April 15, 2022 deadline to May 15, 2022. See Footnote 9 – “Short-Term Convertible Debt” for information on the exchange agreement.

On June 1, 2022, we entered into a third exchange agreement with Auctus. As of the date of the agreement, Auctus was owed $692,114 of Notes and accrued interest. Pursuant to this third agreement, as long as we complete the Nasdaq Offering prior to July 15, 2022, the total amount owed to Auctus will be payable in cash 13 months subsequent to the consummation of the Offering. The $350,000 prepayment penalty and warrants issued in connection with the Notes (for the purpose of the third exchange agreement, are valued at, in the aggregate, $2,031,710) will be exchanged into unregistered units of our common stock, warrants and prefunded warrants otherwise in the form and ratios issued in the Offering. The exchange price will be on a $1 for $1 basis such that Auctus will receive $2,031,710 of units consisting of common stock, warrants and prefunded warrants. The units being issued in the exchange with Auctus are unregistered and are being issued pursuant to Section 4(a)(2) under the Securities Act of 1933, as amended. Additionally, the units and the common stock underlying the units will be subject to a lock up agreement with the underwriters until the earlier of 120 days after the Nasdaq Offering and the date that the daily volume weighted average price of the common stock exceeds 200% of the Nasdaq Offering price for at least five consecutive trading days. In the event the Nasdaq Offering is not consummated by July 15, 2022, the third exchange agreement will be null and void.

Ellenoff Grossman & Schole LLP (“EGS”) Exchange Agreement

On June 6, 2022, we entered into an exchange agreement with EGS. Currently, we owe $304,879 to EGS, for legal services performed. Pursuant to the agreement, EGS will forgive $104,879 of the balance owed after we successfully complete a financing of at least $3,000,000 (the “Financing”), make a cash payment of $200,000 from the proceeds of the financing and (upon closing of the Financing), we will negotiate a one-year agreement for EGS to provide legal representation under a retained agreement with a monthly rate to be agreed upon by both parties. In the event the Financing does not occur by August 31, 2022, the Company agreed to make a partial payment of 50,000 to EGS in exchange for forgiveness, upon which $50,000 of the outstanding debt will be forgiven. Any remaining amounts will be due to EGS.

Executive Exchange Agreements

On June 22, 2022, we entered into exchange agreements with two of our executives. Pursuant to the agreements, $29,776 of related-party payables, $31,285 of short-term related-party debt and $8,939 of accrued expenses owed to executives will be converted into shares of common stock and/or warrants valued at $70,000, upon successful completion of a financing of at least $4,000,000.

Series D Exchange Agreements

Subsequent to March 31, 2022, the Company entered into various agreements with Series D Preferred shareholders, pursuant to which each holder separately agreed to exchange their Series D Preferred shares into the Company’s common shares (in accordance with their existing Series D Preferred Share Agreements). In addition, the holders agreed to exchange 650,000 common stock warrants with a strike price of $0.25 for 650,000 warrants with a strike price of $0.20, which were required to be immediately exercised. The Company received $130,000 from the holders for exercises of the aforementioned warrants.  

Common Stock Issuances

Subsequent to March 31, 2022, we issued 1,864,000 shares of common stock for the conversion of Series F-2 Preferred shares.

Subsequent to March 31, 2022, we issued 1,360,000 shares of common stock for the conversion of Series F Preferred shares.

F-72

Subsequent to March 31, 2022, we issued 320,000 shares of common stock for the conversion of Series E Preferred shares.

Subsequent to March 31, 2022, we issued 650,000 shares of common stock for warrant exercises.

Subsequent to March 31, 2022, we issued 975,000 shares of common stock for the conversion of Series D Preferred shares.

Subsequent to March 31, 2022, we issued 25,288 shares of common stock for Series D Preferred dividends.

Subsequent to March 31, 2022, we issued 50,230 shares of common stock for Series E Preferred dividends.

Subsequent to March 31, 2022, we issued 19,330 shares of common stock for Series F Preferred dividends.

Subsequent to March 31, 2022, we issued 3,213 shares of common stock for Series F-2 Preferred dividends.

F-73

Up to 890,000 Shares of Common Stock

or

Up to 178,000 Pre-Funded Warrants to Purchase Shares of Common Stock

890,000 Warrants to Purchase Shares of Common Stock

Guided Therapeutics, Inc.

 PROSPECTUS

Roth Capital Partners

The date of this prospectus is               , 2021.

91

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution.

The following table sets forth the costs and expenses, other than underwriter fees to be paid by us in connection with the sale of the shares of our securities being registered hereby. All amounts are estimates except for the SEC registration fee, the FINRA filing fee and the NASDAQ listing fee. All such expenses will be borne by the Company.

SEC registration fee	$	1,112.40
FINRA filing fee	$	699.00
Nasdaq listing fee	$	45,000.00
Printing and engraving expenses	$	1,000.00
Legal fees and expenses	$	222,000.00
Accounting fees and expenses	$	100,000.00
Transfer agent and registrar fees and expenses	$	1,000.00
Miscellaneous	$	1,000.00
Total	$	371,811.40

Item 14. Indemnification of Directors and Officers.

Section 145 of the Delaware General Corporation Law provides that a corporation may indemnify directors and officers as well as other employees and individuals against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with any threatened, pending or completed actions, suits or proceedings in which such person is made a party by reason of such person being or having been a director, officer, employee or agent of the corporation. Section 145 of the Delaware General Corporation Law also provides that expenses (including attorneys’ fees) incurred by a director or officer in defending an action may be paid by a corporation in advance of the final disposition of an action if the director or officer undertakes to repay the advanced amounts if it is determined such person is not entitled to be indemnified by the corporation. The Delaware General Corporation Law provides that Section 145 is not exclusive of other rights to which those seeking indemnification may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise. Our amended and restated bylaws provide that, we shall indemnify and hold harmless any person who was or is made or is threatened to be made a party or is otherwise involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative by reason of the fact that such person, or the person for whom he is the legally representative, is or was a director or officer of ours, against all liabilities, losses, expenses (including attorney’s fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such proceeding.

Section 102(b)(7) of the Delaware General Corporation Law permits a corporation to provide in its Certificate of Incorporation that a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for unlawful payments of dividends or unlawful stock repurchases, redemptions or other distributions, or (iv) for any transaction from which the director derived an improper personal benefit.

Our Certificate of Incorporation provides that we shall, indemnify to the fullest extent permitted by law any person made or threatened to be made a party to an action or proceeding, whether criminal, civil, administrative or investigative, by reason of the fact that such person or his or her testator or intestate is or was a director, officer or employee of ours, or any predecessor of us, or serves or served at any other enterprise as a director, officer or employee at the request of us or any predecessor to us.

II-1

Our amended and restated bylaws provide we shall, indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of us, or is or was serving at the request of us as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees) and amounts paid in settlement (if such settlement is approved in advance by us, which approval shall not be unreasonably withheld) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in manner he reasonably believed to be in or not opposed to the best interests of us, except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to us unless and only to the extent that the Delaware Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Delaware Court of Chancery or such other court shall deem proper. Notwithstanding any other provision of this Article VI, no person shall be indemnified hereunder for any expenses or amounts paid in settlement with respect to any action to recover short-swing profits under Section 16(b) of the Securities Exchange Act of 1934, as amended.

Expenses incurred by such a person in defending a civil or criminal action, suit or proceeding by reason of the fact that such person he is or was a director, officer, employee or agent of us, or is or was serving at the request of us, or by or in the right of us to procure a judgment in our favor by reason of the fact that he is a director, officer, employee or agent of another corporation, partnership, joint venture trust or other enterprise, shall be paid by us in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such person to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by us as authorized by relevant sections of the Delaware General Corporation Law.

The indemnification rights provided in our amended and restated bylaws shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any by-law, agreement or vote of stockholders or disinterested directors or otherwise, both as to action in their official capacities and as to action in another capacity while holding such office, continue as to such person who has ceased to be a director or officer, and inure to the benefit of the heirs, executors and administrators of such a person.

If the Delaware General Corporation Law is amended to expand further the indemnification permitted to indemnitees, then we shall indemnify such persons to the fullest extent permitted by the Delaware General Corporation Law, as so amended.

Our amended and restated bylaws shall be deemed to be a contract between us and each person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that person is or was, or has agreed to become, a director or officer of ours, or is or was serving, or has agreed to serve, at our request, as a director, officer or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise, including any employee benefit plan, or by reason of any action alleged to have been taken or omitted in such capacity, at any time while this by-law is in effect, and any repeal or modification thereof shall not affect any rights or obligations then existing with respect to any state of facts then or theretofore existing or any action, suit or proceeding theretofore or thereafter brought based in whole or in part upon any such state of facts.

The indemnification provision of our amended and restated bylaws does not affect directors’ responsibilities under any other laws, such as the federal securities laws or state or federal environmental laws.

We may purchase and maintain insurance on behalf of any person who is or was a director, officer or employee of ours, or is or was serving at our request as a director, officer, employee or agent of another company, partnership, joint venture, trust or other enterprise against liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not we would have the power to indemnify him against liability under the provisions of this section. We currently maintain such insurance.

The right of any person to be indemnified is subject to our right, in lieu of such indemnity, to settle any such claim, action, suit or proceeding at our expense of by the payment of the amount of such settlement and the costs and expenses incurred in connection therewith.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling our company pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

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In the event that a claim for indemnification against such liabilities (other than the payment of expenses incurred or paid by a director, officer or controlling person in a successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered herewith, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to the court of appropriate jurisdiction the question whether such indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

Item 15. Recent Sales of Unregistered Securities

In the three years preceding the filing of this registration statement, we have issued the following securities that were not registered under the Securities Act:

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 2020, the Company paid $100,000 to reduce the outstanding balance. As of December 31, 2021, the balance was paid in full.

On March 20, 2018, we entered into a securities purchase agreement with Auctus Fund, LLC for the issuance and sale to Auctus of $150,000 in aggregate principal amount of a 12% convertible promissory note. On March 20, 2018, we issued the note to Auctus. Pursuant to the purchase agreement, we also issued to Auctus a warrant exercisable to purchase an aggregate of 4,262 shares of the Company’s common stock. The warrant was exercisable at any time, at an exercise price per share equal to $1.82 (110% of the closing price of the common stock on the day prior to issuance), subject to certain customary adjustments and price-protection provisions contained in the warrant. The warrant had a five-year term. The note matured nine months from the date of issuance and accrued interest at a rate of 12% per year. We could have prepaid the note, in whole or in part, for 115% of outstanding principal and interest until 30 days from issuance, for 125% of outstanding principal and interest at any time from 31 to 60 days from issuance, and for 130% of outstanding principal and interest at any time from 61 days from issuance to 180 days from issuance. After nine months from the date of issuance, Auctus could have converted the note, at any time, in whole or in part, into shares of our common stock, at a conversion price equal to the lower of the price offered in the our next public offering or a 40% discount to the average of the two lowest trading prices of the common stock during the 20 trading days prior to the conversion, subject to certain customary adjustments and price-protection provisions contained in the note. The note included customary events of default provisions and a default interest rate of 24% per year. Upon the occurrence of an event of default, Auctus may have require us to redeem the note (or convert it into shares of common stock) at 150% of the outstanding principal balance plus accrued and unpaid interest. On May 22, 2020, the default penalty and outstanding interest was exchanged as described in the preceding paragraph. As of June 30, 2021, the note was paid in full.

On August 22, 2018, we issued a promissory note to an investor for $150,000 in aggregate principal amount of a 6% promissory note for an aggregate purchase price of $157,500 (representing a $7,500 original issue discount). Pursuant to the promissory note the entire unpaid principal balance on the promissory note together with all accrued and unpaid interest and loan origination fees, if any, at the choice of the investor, was due and payable in full from the funds received by us from a financing of at least $2,000,000, or at the option of the investor, to be included in our financing under the same terms as the new investors with the most favorable terms making a cash investment. In addition, the investor was granted 1,500,000 warrants under this promissory note. The warrants were issued upon the financing of at least $2,000,000 and expired on the third anniversary of said financing. The warrant exercise price was equal to the same price as the warrants granted to the investors with the most favorable terms as part of any $2,000,000 or more financing or $0.25, whichever was lower. The warrants had standard anti-dilution features to protect the holder from dilution due to down rounds of financing. During, 2020, the Company exchanged $179,291 of debt outstanding for: 896,456 common stock shares; and 896,455 warrants issued to purchase common stock shares at a strike price of $0.20.

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On August 31, 2018, we entered into agreements with certain holders of the our Series C1 preferred stock, par value $0.001 per share (the “Series C1 Preferred Stock”), including John Imhoff, the chairman of our board of directors, and Mark Faupel, the Chief Operating Officer and a director of our company (the “Exchange Agreements”), pursuant to which those holders separately agreed to exchange each share of the Series C1 Preferred Stock held for one (1) share of our newly created Series C2 preferred stock, par value $0.001 per share (the “Series C2 Preferred Stock”). In total, for 3,262 shares of Series C1 Preferred Stock to be surrendered, we issued 3,262 shares of Series C2 Preferred Stock.

On September 19, 2018, we issued a promissory note to an investor for $50,000 in aggregate principal amount of a 6% promissory note for an aggregate purchase price of $52,500 (representing a $2,500 original issue discount). Pursuant to the promissory note the entire unpaid principal balance on the promissory note together with all accrued and unpaid interest and loan origination fees, if any, at the choice of the investor, was due and payable in full from the funds received from a financing of at least $2,000,000, or at the option of the investor, was to be included in the our financing under the same terms as the new investors with the most favorable terms making a cash investment. In addition, the investor was granted 500,000 warrants under this promissory note. The warrants were to be issued upon the financing of at least $2,000,000 and expire on the third anniversary of said financing. The warrant exercise price was set at the same price as the warrants granted to the investors with the most favorable terms as part of any $2,000,000 or more financing or $0.25, whichever was lower. The warrants had standard anti-dilution features to protect the holder from dilution due to down rounds of financing. During 2020, the Company entered into an exchange agreement with the investor. Based on this agreement the Company exchanged $111,227 of debt outstanding for: 556,136 common stock shares; and 556,136 warrants issued to purchase common stock shares at a strike price of $0.20.

On July 1, 2019, we entered into a loan agreement with Accilent Capital Management Inc/Rev Royalty Income and Growth Trust (“Accilent”), providing for the purchase by Rev of an unsecured promissory note in the principal amount of $49,389 (CAD$ 65,500). The note was fully funded on July 9, 2019 (net of a 8% original issue discount and other expenses). The note accrued  interest at a rate of 16% and was due and payable on September 11, 2019. Following maturity, demand, default, or judgment and until actual payment in full, interest rate was to be paid at the rate of 19% per annum. On December 5, 2019, we entered into an exchange agreement with Aquarius. Based on this agreement the company exchanged $145,544 of debt and accrued interest outstanding for: 291,088 common stock shares; 145,544 warrants issued to purchase common stock shares at a strike price of $0.25; and 145,544 warrants issued to purchase common stock shares at a strike price of $0.75.

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On January 16, 2020, we entered into an exchange agreement with GPB. This exchange agreement which has not been completed will call for the exchange of $3,360,811 of debt outstanding as of December 12, 2019 for: cash of $1,500,000; 1,860,811 common stock shares; 7,185,000 warrants to purchase common stock shares at a strike price of $0.20 for the 2016 warrants issued; 1,860,811 warrants to purchase common stock shares at a strike price of $0.25; 3,721,622 warrants to purchase common stock shares at a strike price of $0.75; and 2,791 series D preferred stock shares (each Series D preferred stock share converts into 3,000 shares of the Company’s common stock shares). If we are able to raise capital in excess of $4,000,000, the exchange amounts shall be adjusted. If the financing is between $4,000,000 and $4,900,000, for every $100,000 raised in excess of $4,000,000 we will pay an additional $50,000 to pay down debt. If between $5,000,000 and $6,000,000 is raised thru financings, we will pay an additional $1,000,000 to pay down debt. If the financing is in excess of $6,000,000 then we will pay the entire debt balance outstanding. In the event of alternative financings, we may elect to pay GPB a total of $1,500,000 in cash to GPB at which time GPB shall waive any security interest in our assets, and GPB shall exchange any remaining debt from the notes into the Series D unit offering. GPB shall have the right to convert the outstanding notes into equity, but not the obligation. A 9.99% blocker shall be in effect such that GPB agrees to restrict its holdings of our common stock shares to less than 9.99% of the total number of our outstanding common stock shares at any one point in time. All royalty payments owed to GPB pursuant thereto shall remain our obligations to GPB and shall remain in full force and effect. We shall have 8 months from the execution date of this exchange agreement, subject to early termination as forth below (in “forbearance agreement”). We shall be entitled to extend the forbearance agreement for four additional months for a $50,000 per month payment. If after the financing is completed and in the event of future financings or significant collaborations with a partner generating sales greater than $1,000,000, we agree to buy back $500,000 of the Series D preferred stock shares. The interest rate will revert to their original non default rates. Also, all existing warrants issued prior to exchange agreement were canceled. On January 8, 2021, we made the final payment of $750,000 out of the total $1,500,000 as required by this exchange agreement with GPB, which canceled the previously issued warrants. On March 31, 2021, we issued 2,236 series F2 preferred stock shares in accordance with the terms of the agreement.

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 latest complete trading prior to the issue date and (ii) the variable conversion price (55% multiplied by the market price, market price means the lowest trading price for the common stock during the twenty-five (25) trading day period ending on the latest complete trading day prior to the conversion date. Trading price is the lowest trade price on the trading market as reported. The note includes customary events of default provisions and a default interest rate of 24% per year. As of December 31, 2021 and 2020, $161,184 (which includes a default penalty of $48,434) and $112,750 remained outstanding. In addition, as of December 31, 2021 and 2020, unamortized debt issuance costs of nil and $5,100 and accrued interest was $36,428 and $10,260, respectively.

For the period of January through April 2021, we issued an aggregate of 1,436 shares of Series F preferred stock to certain accredited investors pursuant to certain securities purchase agreements at a price of $1,000 per share. Each Series F preferred stock share converts into 4,000 shares of our common stock shares. The Series F preferred stock will have cumulative dividends at the rate per share of 6% per annum. The Stated Value of the Series F preferred stock is $1,000. As of the date of this prospectus, 365 Series F Preferred Shares were converted to common shares.

For the period of January through April 2021, we issued an aggregate of 3,237 shares of Series F-2 preferred stock to certain accredited investors pursuant to certain securities purchase agreements at a price of $1,000 per share. Each Series F-2 preferred stock share converts into 4,000 shares of our common stock shares. The Series F preferred stock will have cumulative dividends at the rate per share of 6% per annum. The Stated Value of the Series F-2 preferred stock is $1,000. As of the date of this prospectus, 466 Series F-2 Preferred Shares were converted to common shares.

During the year ended December 31, 2021, the Company entered into various agreements with holders of the Company’s $4.00 strike price warrants, pursuant to which each holder separately agreed to exchange 235,680 common stock warrants with a strike price of $4.00 for 223,896 common stock warrants with a strike price of $3.20 and a contractual term of 15 days. As of the date of this prospectus, the warrants have been exercised and are no longer outstanding.

During the year ended December 31, 2021, the Company entered into various agreements with the holders of the Company’s $5.00 strike price warrants, pursuant to which each holder separately agreed that in the event the Company executes a new financing agreement with proceeds greater than $4.00 million, the holders will exchange a total of 90,108 common stock warrants with a strike price of $5.00 for cash payments totaling $90,108 and 45,054 common stock warrants with terms identical as those offered in the financing agreement.

During the year ended December 31, 2021, the Company entered into various agreements with the holders of the Company’s $15.00 strike price warrants, pursuant to which each holder separately agreed that in the event the Company executes a new financing agreement with proceeds greater than $4.00 million, the holders will exchange a total of 90,108 common stock warrants with a strike price of $15.00 for 90,108 new warrants with terms identical as those offered in the financing agreement.

On June 2, 2021, we entered into an initial exchange agreement Auctus. On February 1, 2022, we entered into a second exchange agreement with Auctus. Pursuant to this second agreement, Auctus agreed to exchange an aggregate of $668,290 of outstanding notes (the "Notes"), including accrued interest, and the associated warrants issued in connection with the Notes (the warrants, for the purpose of the exchange, are valued at, in the aggregate, $1,681,707) into unregistered units of our common stock, warrants and prefunded warrants otherwise in the form and ratios issued in a proposed underwritten public offering on the Nasdaq Capital Markets (the “Nasdaq Offering”). The exchange price will be on a $1 for $1 basis such that Auctus will receive $2,349,997 of units consisting of common stock, warrants and prefunded warrants. The units being issued in the exchange with Auctus are unregistered and are being issued pursuant to Section 4(a)(2) under the Securities Act of 1933, as amended. Additionally, the units and the common stock underlying the units will be subject to a lock up agreement with the underwriters until the earlier of 120 days after the Nasdaq Offering and the date that the daily volume weighted average price of the common stock exceeds 200% of the Nasdaq Offering price for at least five consecutive trading days. Further, the termination date of June 2, 2021 was extended to April 15, 2022. The $350,000 related to default penalties will be exchanged into $350,000 of securities offered in the Nasdaq Offering. On April 14, 2022, we entered into an agreement with Auctus that extended the April 15, 2022 deadline to May 15, 2022.

On June 1, 2022, we entered into a third exchange agreement with Auctus. As of the date of the agreement, Auctus was owed $692,114 of Notes and accrued interest. Pursuant to this third agreement, as long as we complete the Nasdaq Offering prior to July 15, 2022, the total amount owed to Auctus will be payable in cash 13 months subsequent to the consummation of the Offering. The $350,000 prepayment penalty and warrants issued in connection with the Notes ( for the purpose of the third exchange agreement, are valued at, in the aggregate, $2,031,710) will be exchanged into unregistered units of our common stock, warrants and prefunded warrants otherwise in the form and ratios issued in the Offering. The exchange price will be on a $1 for $1 basis such that Auctus will receive $2,031,710 of units consisting of common stock, warrants and prefunded warrants. The units being issued in the exchange with Auctus are unregistered and are being issued pursuant to Section 4(a)(2) under the Securities Act of 1933, as amended. Additionally, the units and the common stock underlying the units will be subject to a lock up agreement with the underwriters until the earlier of 120 days after the Nasdaq Offering and the date that the daily volume weighted average price of the common stock exceeds 200% of the Nasdaq Offering price for at least five consecutive trading days. In the event the Nasdaq Offering is not consummated by July 15, 2022, the third exchange agreement will be null and void.

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Item 16. Exhibits and financial statement schedules

(a) Exhibits

EXHIBIT NO.	DESCRIPTION
1.1*	Form of Underwriting Agreement
3.1	Restated Certificate of Incorporation, as amended through November 3, 2016 (incorporated by reference to Exhibit 3.1 to the annual report on Form 10-K filed March 15, 2016)
3.2	Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 to the current report on Form 8-K, filed March 23, 2012)
3.3	Amended and Restated Certificate of Incorporation, (incorporated by reference to Exhibit 3.1 to the current report on Form 8-K, filed November 15, 2018)
3.4	Certificate of Designation of Preferences, Rights and Limitations of Series D Convertible Preferred Stock (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
3.5	Certificate of Designation of Preferences, Rights and Limitations of Series E Convertible Preferred Stock (incorporated by reference to Exhibit 3.5 to the annual report on Form 10-K filed April 7, 2021)
4.1	Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the amended registration statement on Form S-1/A (No. 333-22429) filed April 24, 1997)
4.2	Secured Promissory Note, dated September 10, 2014 (incorporated by reference to Exhibit 4.1 to the current report on Form 8-K filed September 10, 2014)
4.3	Amendment #1 to Secured Promissory Note, dated March 10, 2015 (incorporated by reference to Exhibit 10.1 to the current report on Form 8-K filed March 19, 2015)
4.4	Amendment #2 to Secured Promissory Note, dated May 4, 2015 (incorporated by reference to Exhibit 10.1 to the current report on Form 8-K filed May 7, 2015)
4.5	Amendment #3 to Secured Promissory Note, dated June 1, 2015 (incorporated by reference to Exhibit 10.1 to the current report on Form 8-K filed June 5, 2015)
4.6	Amendment #4 to Secured Promissory Note, dated June 16, 2015 (incorporated by reference to Exhibit 10.4 to the current report on Form 8-K filed June 30, 2015)
4.7	Amendment #5 to Secured Promissory Note, dated June 29, 2015 (incorporated by reference to Exhibit 10.5 to the current report on Form 8-K filed June 30, 2015)
4.8	Amendment #6 to Secured Promissory Note, dated January 20, 2016 (incorporated by reference to Exhibit 10.1 to the current report on Form 8-K filed February 16, 2016)
4.9	Amendment #7 to Secured Promissory Note, dated February 11, 2016 (incorporated by reference to Exhibit 10.2 to the current report on Form 8-K filed February 16, 2016)
4.10	Amendment #8 to Secured Promissory Note, dated March 7, 2016 (incorporated by reference to Exhibit 10.1 to the current report on Form 8-K filed March 7, 2016)
4.11	Senior Secured Convertible Note, dated February 12, 2016 (incorporated by reference to Exhibit 4.1 to the current report on Form 8-K filed February 12, 2016)
4.12	Form of Exchange Note (GPB) (incorporated by reference to Exhibit 4.1 to the current report on Form 8-K filed December 7, 2016)
4.13	10% OID Convertible Promissory Note (incorporated by reference to Exhibit 4.1 to the current report on Form 8-K filed December 30, 2016)
4.14	Convertible Promissory Note (incorporated by reference to Exhibit 4.1 to the current report on Form 8-K filed February 16, 2017)
4.15	Form of Warrant (Standard Form) (incorporated by reference to Exhibit 4.1 to the current report on Form 8-K, filed September 14, 2010)
4.16	Form of Warrant (InterScan) (incorporated by reference to Exhibit 4.13 to the annual report on Form 10-K for the year ended December 31, 2013, filed March 27, 2014)

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4.17	Form of Warrant (November 2011 Private Placement) (incorporated by reference to Exhibit 4.1 to the current report on Form 8-K/A, filed November 28, 2011)
4.18	Form of Warrant (Series B-Tranche A) (incorporated by reference to Exhibit 10.2 to amendment no. 1 to the current report on Form 8-K, filed May 23, 2013)
4.19	Form of Warrant (Series B-Tranche B) (incorporated by reference to Exhibit 10.3 to amendment no. 1 to the current report on Form 8-K, filed May 23, 2013)
4.20	Form of Warrant (Regulation S) (incorporated by reference to Exhibit 4.1 to the current report on Form 8-K, filed September 8, 2014)
4.21	Form of Warrant (2014 Public Offering Placement Agent) (incorporated by reference to Exhibit 4.2 to the current report on Form 8-K filed December 4, 2014)
4.22	Form of Warrant (2014 Public Offering Warrant Exchanges) (incorporated by reference to Exhibit 4.1 to the current report on Form 8-K filed June 30, 2015)
4.23	Form of Warrant (Series C) (incorporated by reference to Exhibit 4.3 to the current report on Form 8-K filed June 30, 2015)
4.24	Form of Warrant (Senior Secured Convertible Note) (incorporated by reference to Exhibit 10.5 to the current report on Form 8-K filed February 12, 2016)
4.25	Form of Warrant (Series B-Tranche B Exchanges; GPB Exchange) (incorporated by reference to Exhibit 4.1 to the current report on Form 8-K filed June 14, 2016)
4.26	Common Stock Purchase Warrant (Convertible Promissory Note) (incorporated by reference to Exhibit 4.2 to the current report on Form 8-K filed February 16, 2017)
4.27	Senior Secured Convertible Note, dated December 17, 2019, by and between Guided Therapeutics, Inc. and Auctus Fund, LLC (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
4.28	Common Stock Warrant, dated December 17, 2019, by and between Guided Therapeutics, Inc. and Auctus Fund, LLC (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
4.29	Form of Common Stock Purchase Warrant (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
4.30	Form of Common Stock Purchase Warrant (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
4.31	Form of 12% debenture (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
4.32	Form of Warrant (Exchange Agreements) (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
4.33	Form of Common Stock Purchase Warrant (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
4.34	Form of Pre-Funded Warrant (incorporated by reference to Exhibit 4.34 to the registration statement on Form S-1/A (No. 333-259871) filed on February 17, 2022)
4.35	Form of Public Warrant (incorporated by reference to Exhibit 4.35 to the registration statement on Form S-1/A (No. 333-259871) filed on February 17, 2022)
4.36*	Form of Warrant Agency Agreement
5.1*	Opinion of Ellenoff Grossman & Schole LLP
10.1	1995 Stock Plan and form of Stock Option Agreement (incorporated by reference to Exhibit 10.2 to the registration statement on Form S-1 (No. 333-22429) filed February 27, 1997)
10.2	2005 Amendment to 1995 Stock Plan (incorporated by reference to Appendix 1 to the proxy statement on Schedule 14A, filed May 10, 2005)
10.3	2010 Amendment to 1995 Stock Plan (incorporated by reference to Exhibit 10.3 to the registration statement on Form S-8 (File No. 333-178261), filed December 1, 2011)
10.4	2012 Amendment to 1995 Stock Plan (incorporated by reference to Annex 1 to the proxy statement on Schedule 14A, filed April 30, 2012)
10.5	Securities Purchase Agreement (Series C), dated June 29, 2015 (incorporated by reference to Exhibit 10.6 to the current report on Form 8-K filed June 30, 2015)
10.6	Registration Rights Agreement (Series C), dated June 29, 2015 (incorporated by reference to Exhibit 10.7 to the current report on Form 8-K filed June 30, 2015)
10.7	Form of Joinder Agreement (Series C) (incorporated by reference to Exhibit 10.1 to the current report on Form 8-K filed July 13, 2015)
10.8	Interim Securities Purchase Agreement (Series C), dated September 3, 2015 (incorporated by reference to Exhibit 10.1 to the current report on Form 8-K filed September 3, 2015)

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10.9	Securities Purchase Agreement (Senior Secured Convertible Note), dated February 11, 2016 (incorporated by reference to Exhibit 10.3 to the current report on Form 8-K filed February 12, 2016)
10.10	Security Agreement (Senior Secured Convertible Note), dated February 11, 2016 (incorporated by reference to Exhibit 10.4 to the current report on Form 8-K filed February 12, 2016)
10.11	Royalty Agreement, dated September 6, 2016, between the Company and Imhoff and Maloof (incorporated by reference to Exhibit 10.1 to the current report on Form 8-K filed September 8, 2016)
10.12	Agreement between Shandong Yaohua Medical Instrument Corporation and Guided Therapeutics, Inc., Confidential, Final 22 January 2017 (incorporated by reference to Exhibit 10.1 to the current report on Form 8-K filed January 26, 2017)
10.13	Guided Therapeutics-Shenghuo Medical Agreement, 22 Jan 2017 (incorporated by reference to Exhibit 10.2 to the current report on Form 8-K filed January 26, 2017)
10.14	Securities Purchase Agreement, dated as of February 12, 2018, by and between Guided Therapeutics, Inc. and Adar Bays, LLC
10.15	Securities Purchase Agreement, dated as of February 22, 2018, by and between Guided Therapeutics, Inc. and Power Up (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
10.16	Lease Modification, dated as of February 23, 2018, by and between Guided Therapeutics, Inc. and TREA Infill Industrial Atlanta, LLC (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
10.17	Securities Purchase Agreement, dated as of March 12, 2018, by and between Guided Therapeutics, Inc. and Eagle Equities, LLC (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
10.18	Securities Purchase Agreement, dated as of May 17, 2018, by and between Guided Therapeutics, Inc. and GHS Investments, Inc (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
10.19	Securities Purchase Agreement, dated as of March 20, 2018, by and between Guided Therapeutics, Inc. and Auctus Fund, LLC (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
10.20	Securities Purchase Agreement, dated as of April 30, 2018, by and between Guided Therapeutics, Inc. and Power Up (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
10.21	Securities Purchase Agreement, dated as of June 7, 2018, by and between Guided Therapeutics, Inc. and Power Up (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
10.22	Securities Purchase Agreement, dated as of June 22, 2018, by and between Guided Therapeutics, Inc. and GHS Investments, Inc (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
10.23	Securities Purchase Agreement, dated as of July 3, 2018, by and between Guided Therapeutics, Inc. and Auctus Fund, LLC (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
10.24	Promissory Note, dated as of August 22, 2018, by and between Guided Therapeutics, Inc. and Mr. Case (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
10.25	Exchange Agreements, dated as of August 31, 2018, by and between Guided Therapeutics, Inc. and Series C1 Preferred Stockholders in exchange for Series C2 Preferred Stock. (incorporated by reference to Exhibit 10.1 to the current report on Form 8-K filed September 6, 2018)
10.26	Promissory Note, dated as of September 19, 2018, by and between Guided Therapeutics, Inc. and Mr. Gould (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
10.27	Exchange Agreement, dated as of September 30, 2018, by and between Guided Therapeutics, Inc. and Dr. Faupel (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)

II-8

10.28	Exchange Agreement, dated as of September 30, 2018, by and between Guided Therapeutics, Inc. and Dr. Cartwright (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
10.29	Purchase and Sale Agreement, dated as of February 14, 2019, by and between Guided Therapeutics, Inc. and Everest Business Funding (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
10.30	Equity Financing Agreement, dated as of March 1, 2018, by and between Guided Therapeutics, Inc. and GHS Investments, Inc (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
10.31	Promissory Note, dated as of February 15, 2019, by and between Guided Therapeutics, Inc. and Mr. Gould (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
10.32	Securities Purchase Agreement, dated as of March 29, 2019, by and between Guided Therapeutics, Inc. and Auctus Fund, LLC (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
10.33	Securities Purchase Agreement, dated as of May 15, 2019, by and between Guided Therapeutics, Inc. and Eagle Equities, LLC (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
10.34	Securities Purchase Agreement, dated as of May 15, 2019, by and between Guided Therapeutics, Inc. and Adar Bays, LLC (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
10.35	Loan Agreement, dated as of July 1, 2019, by and between Guided Therapeutics, Inc. and Accilent Capital Management Inc. / Rev Royalty Trust Income and Growth Trust (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
10.36	License Agreement Modification, dated as of July 24, 2019, by and between Guided Therapeutics, Inc. and Shandong Medical Instrument Corporation (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
10.37	Addendum to the Exchange Agreement, dated as of September 30, 2018, by and between Guided Therapeutics, Inc. and Dr. Faupel (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
10.38	Addendum to the Exchange Agreement, dated as of September 30, 2018, by and between Guided Therapeutics, Inc. and Dr. Cartwright (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
10.39	Exchange Agreement, dated as of December 5, 2019, by and between Guided Therapeutics, Inc. and Aquarius (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
10.40	Securities Purchase Agreement, dated as of December 17, 2019, by and between Guided Therapeutics, Inc. and Auctus Fund, LLC (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
10.41	Security Agreement, dated December 17, 2019, by and between Guided Therapeutics, Inc. and Auctus Fund, LLC (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
10.42	Registration Rights Agreement, dated December 17, 2019, by and between Guided Therapeutics, Inc. and Auctus Fund, LLC (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
10.43	Form of Securities Purchase Agreement between the Guided Therapeutics, Inc. and investors set forth therein (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
10.44	Form of Security Agreement between the Guided Therapeutics, Inc. and investors set forth therein (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
10.46	Securities Purchase Agreement (Series D), dated December 30, 2019 (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
10.47	Registration Rights Agreement (Series D), dated December 30, 2019 (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)

II-9

10.48	Form of Joinder Agreement (Series D), dated December 30, 2019 (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
10.49	Form of Exchange Agreement, dated as of December 30, 2019, by and between Guided Therapeutics, Inc. and Investors (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
10.50	Exchange Agreement, dated as of December 30, 2019, by and between Guided Therapeutics, Inc. and K2 (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
10.51	Exchange Agreement, dated as of December 30, 2019, by and between Guided Therapeutics, Inc. and Mr. Blumberg (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
10.52	Exchange Agreement, dated as of December 30, 2019, by and between Guided Therapeutics, Inc. and Dr. Imhoff (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
10.53	Exchange Agreement, dated as of January 6, 2020, by and between Guided Therapeutics, Inc. and Jones Day Law Firm (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
10.54	Finder’s Fee Agreement, dated as of January 6, 2020, by and between Guided Therapeutics, Inc. and Iron Stone Capital (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
10.55	Promissory Note, dated as of January 15, 2020, by and between Guided Therapeutics, Inc. and IRTH Communications, LLC (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
10.56	Exchange Agreement, dated as of January 16, 2020, by and between Guided Therapeutics, Inc. and GPB Debt Holdings II, LLC (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
10.57	Promotional Agreement, dated as of January 22, 2020, by and between Guided Therapeutics, Inc. and Blumberg & Bowles Consulting, LLC (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
10.58	Securities Purchase Agreement, dated as of March 31, 2020, by and between Guided Therapeutics, Inc. and Auctus Fund, LLC (incorporated by reference to Exhibit 3.4 to the annual report on Form 10-K, filed April 20, 2020)
10.59	2018 Stock Option Plan of the Registrant (incorporated by reference to Annex B of Definitive Proxy Statement filed October 11, 2018)
10.60	Form Securities Purchase Agreement for Series E Preferred Stock (incorporated by reference to Exhibit 10.68 to the annual report on Form 10-K filed April 7, 2021)
10.61*	Exchange Agreement, dated as of June 23, 2020, by and between Guided Therapeutics, Inc. and James Clavijo
21.1	Subsidiaries (incorporated by reference to Exhibit 21.1 to the registration statement on Form S-1 (No. 333-169755) filed October 5, 2010)
23.1*	Consent of UHY LLP
23.2*	Consent of Ellenoff Grossman & Schole LLP (contained in Exhibit 5.1)
24.1	Power of Attorney
107*	Filing Fees

* Filed herewith.

(b)	Financial Statement Schedules
	None

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Item 17. Undertakings

The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

II-11

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused its registration statement to be signed on its behalf by the undersigned, thereunto duly authorized on June 29, 2022.

GUIDED THERAPEUTICS, INC.
By:	/s/ Gene Cartwright
Name:	Gene Cartwright
Title:	President and Chief Executive Officer and Acting Chief Financial Office

Power of Attorney

KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned officers and directors Guided Therapeutics, Inc., a Delaware corporation, do hereby constitute and appoint Gene Cartwright and Mark Faupel, and each of them, as his or her true and lawful attorney-in-fact and agent, with full power of substitution and re-substitution, for him and in his name, place, and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments, exhibits thereto and other documents in connection therewith) to this Registration Statement and any subsequent registration statement filed by the registrant pursuant to Rule 462(b) of the Securities Act of 1933, as amended, which relates to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the SEC, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Gene S. Cartwright	President, Chief Executive Officer and Acting Chief Financial Officer	June 29, 2022
Gene S. Cartwright	(Principal Executive Officer and Principal Financial and Accounting Officer)
/s/ Mark Faupel	Chief Operating Officer and Director	June 29, 2022
Mark Faupel
/s/ Michael C. James	Chairman of the Board and Director	June 29, 2022
Michael C. James
/s/ John E. Imhoff	Director	June 29, 2022
John E. Imhoff
/s/ Richard P. Blumberg	Director	June 29, 2022
Richard P. Blumberg

II-12

EX-1.1

EXHIBIT 1.1 

__________ SHARES OF COMMON STOCK,
 
__________ PRE-FUNDED WARRANTS (EXERCISABLE FOR __________ SHARES)
 
AND
 
__________ COMMON WARRANTS (EXERCISABLE FOR __________ SHARES)
 
OF

GUIDED THERAPEUTICS, INC.

UNDERWRITING AGREEMENT

__________, 2022

Roth Capital Partners, LLC

As the Representative of the

Several underwriters, if any, named in Schedule I hereto

c/o Roth Capital Partners, LLC

888 San Clemente Drive, Suite 400

Newport Beach, CA 92660

Ladies and Gentlemen:

The undersigned, Guided Therapeutics, Inc., a company incorporated under the laws of Delaware (collectively with its subsidiaries and affiliates, including, without limitation, all entities disclosed or described in the Registration Statement as being subsidiaries or affiliates of Guided Therapeutics, Inc., the “Company”), hereby confirms its agreement (this “Agreement”) with the several underwriters (such underwriters, including the Representative (as defined below), the “Underwriters” and each an “Underwriter”) named in Schedule I hereto for which Roth Capital Partners, LLC is acting as representative to the several Underwriters (the “Representative” and if there are no Underwriters other than the Representative, references to multiple Underwriters shall be disregarded and the term Representative as used herein shall have the same meaning as Underwriter) on the terms and conditions set forth herein.

It is understood that the several Underwriters are to make a public offering of the Public Securities as soon as the Representative deems it advisable to do so. The Public Securities are to be initially offered to the public at the public offering price set forth in the Prospectus.

It is further understood that you will act as the Representative for the Underwriters in the offering and sale of the Closing Securities and, if any, the Option Securities in accordance with this Agreement.

ARTICLE I.

DEFINITIONS

1.1 Definitions. In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have the meanings set forth in this Section 1.1:

“Action” shall have the meaning ascribed to such term in Section 3.1(k).

“Affiliate” means with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with such Person as such terms are used in and construed under Rule 405 under the Securities Act.

“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York generally are open for use by customers on such day.

“Closing” means the closing of the purchase and sale of the Closing Securities pursuant to Section 2.1.

“Closing Date” means the hour and the date on the Trading Day on which all conditions precedent to (i) the Underwriters’ obligations to pay the Closing Purchase Price and (ii) the Company’s obligations to deliver the Closing Securities, in each case, have been satisfied or waived, but in no event later than 10:00 a.m. (New York City time) on the second (2^nd) Trading Day following the date hereof or at such earlier time as shall be agreed upon by the Representative and the Company.

“Closing Purchase Price” shall have the meaning ascribed to such term in Section 2.1(b), which aggregate purchase price shall be net of the underwriting discounts and commissions.

“Closing Securities” shall have the meaning ascribed to such term in Section 2.1(a)(ii).

“Closing Shares” shall have the meaning ascribed to such term in Section 2.1(a)(i).

“Closing Warrants” shall have the meaning ascribed to such term in Section 2.1(a)(ii).

“Commission” means the United States Securities and Exchange Commission.

“Common Stock” means the common stock of the Company, par value $0.001 per share, and any other class of securities into which such securities may hereafter be reclassified or changed.

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“Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

“Common Warrants” means the Common Stock purchase warrants delivered to the Underwriters in accordance with Section 2.1(a) and Section 2.2(a).

“Company Auditor” means UHY LLP, with offices located in __________.

“Company Counsel” means Ellenoff Grossman & Schole LLP, with offices located at 1345 Avenue of the Americas, New York, New York 10105.

“Effective Date” shall have the meaning ascribed to such term in Section 3.1(f).

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“Execution Date” shall mean the date on which the parties execute and enter into this Agreement.

“Exempt Issuance” means the issuance of (a) shares of Common Stock or options to employees, officers or directors of the Company pursuant to any stock or option plan duly adopted for such purpose by a majority of the non-employee members of the Board of Directors or a majority of the members of a committee of non-employee directors established for such purpose for services rendered to the Company, (b) securities upon the exercise or exchange of or conversion of any Securities issued hereunder (including any warrants issued to the underwriters hereunder) and/or other securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of this Agreement, provided that such securities have not been amended since the date of this Agreement to increase the number of such securities or to decrease the exercise price, exchange price or conversion price of such securities or to extend the term of such securities, and (c) securities issued pursuant to acquisitions or strategic transactions approved by a majority of the disinterested directors of the Company, provided that such securities are issued as “restricted securities” (as defined in Rule 144) and carry no registration rights that require or permit the filing of any registration statement in connection therewith within 90 days following the Closing Date, and provided that any such issuance shall only be to a Person (or to the equity holders of a Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the business of the Company and shall provide to the Company additional benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities.

3

“FCPA” means the Foreign Corrupt Practices Act of 1977, as amended.

“FINRA” means the Financial Industry Regulatory Authority.

“GAAP” shall have the meaning ascribed to such term in Section 3.1(i).

“Indebtedness” means (a) any liabilities for borrowed money or amounts owed in excess of $50,000 (other than trade accounts payable incurred in the ordinary course of business), (b) all guaranties, endorsements and other contingent obligations in respect of indebtedness of others, whether or not the same are or should be reflected in the Company’s consolidated balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (c) the present value of any lease payments in excess of $50,000 due under leases required to be capitalized in accordance with GAAP.

“Liens” means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

“Lock-Up Agreements” means the lock-up agreements that are delivered on the date hereof by each of the Company’s officers and directors, in the form of Exhibit F attached hereto.

“Material Adverse Effect” means (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document.

“Offering” shall have the meaning ascribed to such term in Section 2.1(c).

“Option Closing Date” shall have the meaning ascribed to such term in Section 2.2(c).

“Option Closing Purchase Price” shall have the meaning ascribed to such term in Section 2.2(b), which aggregate purchase price shall be net of the underwriting discounts and commissions.

“Option Securities” shall have the meaning ascribed to such term in Section 2.2(a)(ii).

“Option Shares” shall have the meaning ascribed to such term in Section 2.2(a)(i).

“Option Warrants” shall have the meaning ascribed to such term in Section 2.2(a).

4

“Over-Allotment Option” shall have the meaning ascribed to such term in Section 2.2.

“PC” means Pryor Cashman LLP, with offices located at 7 Times Square, New York, New York 10036.

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

“Pre-Funded Warrants” means the Pre-Funded Common Stock purchase warrants delivered to the Underwriters in accordance with Section 2.1(a).

“Preliminary Prospectus” means, if any, any preliminary prospectus relating to the Securities included in the Registration Statement or filed with the Commission pursuant to Rule 424(b).

“Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial proceeding, such as a deposition), whether commenced or threatened.

“Prospectus” means the final prospectus filed for the Registration Statement.

“Prospectus Supplement” means, if any, any supplement to the Prospectus complying with Rule 424(b) of the Securities Act that is filed with the Commission.

“Public Securities” means, collectively, the Closing Securities and, if any, the Option Securities.

“Registration Statement” means, collectively, the various parts of the registration statement prepared by the Company on Form S-1 (File No. 333-259871) with respect to the Securities, each as amended as of the date hereof, including the Prospectus and Prospectus Supplement, if any, the Preliminary Prospectus, if any, and all exhibits filed with or incorporated by reference into such registration statement, and includes any Rule 462(b) Registration Statement.

“Required Approvals” shall have the meaning ascribed to such term in Section 3.1(e).

“Rule 424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.

“Rule 462(b) Registration Statement” means any registration statement prepared by the Company registering additional Public Securities, which was filed with the Commission on or prior to the date hereof and became automatically effective pursuant to Rule 462(b) promulgated by the Commission pursuant to the Securities Act.

5

“SEC Reports” shall have the meaning ascribed to such term in Section 3.1(i).

“Securities” means the Closing Securities, the Option Securities and the Warrant Shares.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“Share Purchase Price” shall have the meaning ascribed to such term in Section 2.1(b).

“Shares” means, collectively, the shares of Common Stock delivered to the Underwriters in accordance with Section 2.1(a)(i) and Section 2.2(a).

“Subsidiary” means any subsidiary of the Company and shall, where applicable, also include any direct or indirect subsidiary of the Company formed or acquired after the date hereof.

“Trading Day” means a day on which the principal Trading Market is open for trading.

“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock Exchange (or any successors to any of the foregoing).

“Transaction Documents” means this Agreement, the Warrants, the Warrant Agency Agreement, the Lock-Up Agreements, and any other documents or agreements executed in connection with the transactions contemplated hereunder.

“Transfer Agent” means ____________________, and any successor transfer agent of the Company.

“Warrant Agency Agreement” means the warrant agency agreement dated on or about the date hereof, among the Company, Computershare, Inc. and Computershare Trust Company, N.A., in the form of Exhibit D attached hereto.

“Warrant Purchase Price” shall have the meaning ascribed to such term in Section 2.1(b).

“Warrant Shares” means the shares of Common Stock issuable upon exercise of the Warrants.

“Warrants” means, collectively, the Common Warrants and the Pre-Funded Warrants.

6

ARTICLE II.

PURCHASE AND SALE

2.1 Closing.

(a) Upon the terms and subject to the conditions set forth herein, the Company agrees to sell in the aggregate (i) __________ shares of Common Stock, (ii) Pre-Funded Warrants exercisable for an aggregate of __________ shares of Common Stock, and (iii) Common Warrants exercisable for an aggregate of __________ shares of Common Stock, and each Underwriter agrees to purchase, severally and not jointly, at the Closing, the following securities of the Company:

(i) the number of shares of Common Stock (the “Closing Shares”) set forth opposite the name of such Underwriter on Schedule I hereof;

(ii) Pre-Funded Warrants to purchase up to the number of shares of Common Stock set forth opposite the name of such Underwriter on Schedule I hereof, which shall have an exercise price equal to $____ (subject to adjustment therein), and shall be exercisable immediately following their issuance and at any time thereafter, which warrants shall be in the form of Exhibit D-2 hereto (collectively, with the Common Warrants delivered at Closing, the “Closing Warrants” and, collectively with the Closing Shares, the “Closing Securities”); and

(iii) Common Warrants to purchase up to the number of shares of Common Stock equal to the sum of the number of Closing Shares and Pre-Funded Warrants set forth opposite the name of such Underwriter on Schedule I hereof, which shall have an exercise price of $____ (subject to adjustment as provided therein), and shall be exercisable immediately following their issuance and have a term of exercise of five (5) years, which warrants shall be in the form of Exhibit D-1 hereto.

(b) The aggregate purchase price for the Closing Securities shall equal the amount set forth opposite the name of such Underwriter on Schedule I hereto (the “Closing Purchase Price”). The combined purchase price for one Share and a Common Warrant shall be $____ which shall be allocated as $____ per Share (the “Share Purchase Price”) and $____ per Common Warrant (the “Warrant Purchase Price”). The combined purchase price for one Pre-Funded Warrant and a Common Warrant shall be $____ which shall be allocated as $____ per Pre-Funded Warrant and $____ per Common Warrant.

(c) On the Closing Date, each Underwriter shall deliver or cause to be delivered to the Company, via wire transfer, immediately available funds equal to such Underwriter’s Closing Purchase Price and the Company shall deliver to, or as directed by, such Underwriter its respective Closing Securities and the Company shall deliver the other items required pursuant to Section 2.3 deliverable at the Closing. Upon satisfaction of the covenants and conditions set forth in Sections 2.3 and 2.4, the Closing shall occur at the offices of PC or such other location as the Company and Representative shall mutually agree. The Public Securities are to be offered initially to the public at the offering price set forth on the cover page of the Prospectus (the “Offering”).

7

(d) The Company acknowledges and agrees that, with respect to any Notice(s) of Exercise (as defined in the Common Warrants and the Pre-Funded Warrants, as applicable) delivered by a Holder (as defined in the Common Warrants and Pre-Funded Warrants, as applicable) on or prior to 12:00 p.m. (New York City time) on the Closing Date, which Notice(s) of Exercise may be delivered at any time after the time of execution of this Agreement, the Company shall deliver the Warrant Shares (as defined in the Common Warrants and Pre-Funded Warrants, as applicable) subject to such notice(s) to the Holder by 4:00 p.m. (New York City time) on the Closing Date. The Company acknowledges and agrees that the Holders are third-party beneficiaries of this covenant of the Company.

2.2 Over-Allotment Option.

(a) For the purposes of covering any over-allotments in connection with the distribution and sale of the Closing Securities, the Representative is hereby granted an option (the “Over-Allotment Option”) to purchase, in the aggregate, up to __________ shares of Common Stock (the “Option Shares”) and Common Warrants to purchase up to __________ shares of Common Stock (the “Option Warrants” and, collectively with the Option Shares, the “Option Securities”) which may be purchased in any combination of Option Shares and/or Option Warrants at the Share Purchase Price and/or Warrant Purchase Price, respectively.

(b) In connection with an exercise of the Over-Allotment Option, (a) the purchase price to be paid for the Option Shares is equal to the product of the Share Purchase Price multiplied by the number of Option Shares to be purchased and (b) the purchase price to be paid for the Option Warrants is equal to the product of the Warrant Purchase Price multiplied by the number of Option Warrants to be purchased (the aggregate purchase price to be paid on an Option Closing Date, the “Option Closing Purchase Price”).

(c) The Over-Allotment Option granted pursuant to this Section 2.2 may be exercised by the Representative as to all (at any time) or any part (from time to time) of the Option Securities within forty-five (45) days after the Execution Date. An Underwriter will not be under any obligation to purchase any Option Securities prior to the exercise of the Over-Allotment Option by the Representative. The Over-Allotment Option granted hereby may be exercised by the giving of oral notice to the Company from the Representative, which must be confirmed in writing by overnight mail or facsimile or other electronic transmission setting forth the number of Option Shares and/or Option Warrants to be purchased and the date and time for delivery of and payment for the Option Securities (each, an “Option Closing Date”), which will not be later than two (2) full Business Days after the date of the notice or such other time as shall be agreed upon by the Company and the Representative, at the offices of PC or at such other place (including remotely by facsimile or other electronic transmission) as shall be agreed upon by the Company and the Representative. If such delivery and payment for the Option Securities does not occur on the Closing Date, each Option Closing Date will be as set forth in the notice. Upon exercise of the Over-Allotment Option, the Company will become obligated to convey to the Underwriters, and, subject to the terms and conditions set forth herein, the Underwriters will become obligated to purchase, the number of Option Shares and/or Option Warrants specified in such notice. The Representative may cancel the Over-Allotment Option at any time prior to the expiration of the Over-Allotment Option by written notice to the Company.

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2.3 Deliveries. The Company shall deliver or cause to be delivered to each Underwriter (if applicable) the following:

(i) On the Closing Date, the Closing Shares and, as to each Option Closing Date, if any, the applicable Option Shares, which shares shall be delivered via The Depository Trust Company Deposit or Withdrawal at Custodian system for the accounts of the several Underwriters;

(ii) On the Closing Date, the Closing Warrants and, as to each Option Closing Date, if any, the Option Warrants, which Warrants shall be delivered (A) with respect to Pre-Funded Warrants, in certificated form registered in the name or names and in such authorized denominations as the applicable Underwriter may request in writing at least one Business Day prior to the Closing Date and, if any, each Option Closing Date, and (B) with respect to Common Warrants, via the Depository Trust Company Deposit or Withdrawal at Custodian system for the accounts of the several Underwriters;

(iii) On the Closing Date, and each Option Closing Date, if any, to the Representative only, a Warrant to purchase up to a number of shares of Common Stock equal to 5% of the number of Closing Shares, Closing Warrants, Option Shares and Option Warrants issued on such Closing Date and Option Closing Date, as applicable, for the account of the Representative (or its designees), which Warrant shall have an exercise price of $____, subject to adjustment therein, and registered in the name of the Representative, otherwise on the same terms as the Common Warrants;

(iv) On the Closing Date, the Warrant Agency Agreement duly executed by the parties thereto;

(v) On the Closing Date, a legal opinion of Company Counsel addressed to the Underwriters, including, without limitation, a negative assurance letter, in form and substance reasonably satisfactory to the Representative;

(vi) Contemporaneously herewith, a cold comfort letter, addressed to the Underwriters and in form and substance satisfactory in all respects to the Representative from the Company Auditor dated, respectively, as of the date of this Agreement and a bring-down letter dated as of the Closing Date and each Option Closing Date, if any;

(vii) On the Closing Date and on each Option Closing Date, the duly executed and delivered Officer’s Certificate, substantially in the form required by Exhibit B attached hereto;

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(viii) On the Closing Date and on each Option Closing Date, the duly executed and delivered Secretary’s Certificate, substantially in the form required by Exhibit C attached hereto; and

(ix) Contemporaneously herewith, the duly executed and delivered Lock-Up Agreements.

2.4 Closing Conditions. The respective obligations of each Underwriter hereunder in connection with the Closing and each Option Closing Date are subject to the following conditions being met:

(i) the accuracy in all material respects when made and on the date in question (other than representations and warranties of the Company already qualified by materiality, which shall be true and correct in all respects) of the representations and warranties of the Company contained herein (unless as of a specific date therein);

(ii) all obligations, covenants and agreements of the Company required to be performed at or prior to the date in question shall have been performed;

(iii) the delivery by the Company of the items set forth in Section 2.3 of this Agreement;

(iv) the Registration Statement shall be effective on the date of this Agreement and at each of the Closing Date and each Option Closing Date, if any, no stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceedings for that purpose shall have been instituted or shall be pending or, to the Company’s knowledge, contemplated by the Commission and any request on the part of the Commission for additional information shall have been complied with to the reasonable satisfaction of the Representative;

(v) by the Execution Date, if required by FINRA, the Underwriters shall have received clearance from FINRA as to the amount of compensation allowable or payable to the Underwriters as described in the Registration Statement;

(vi) the Closing Shares, the Option Shares, the Warrant Shares and the Common Warrants shall have been approved for listing on the Trading Market;

(vii) the 1-for-20 reverse split of the Common Stock, previously approved by the Board of Directors of the Company, shall have been approved by FINRA; and

(viii) prior to and on each of the Closing Date and each Option Closing Date, if any: (i) there shall have been no material adverse change or development involving a prospective material adverse change in the condition or prospects or the business activities, financial or otherwise, of the Company from the latest dates as of which such condition is set forth in the Registration Statement and Prospectus; (ii) no action suit or proceeding, at law or in equity, shall have been pending or threatened against the Company or any Affiliate of the Company before or by any court or federal or state commission, board or other administrative agency wherein an unfavorable decision, ruling or finding could reasonably be expected to result in a Material Adverse Effect on the business, operations, prospects or financial condition or income of the Company, except as set forth in the Registration Statement and Prospectus; (iii) no stop order shall have been issued under the Securities Act and no proceedings therefor shall have been initiated or threatened by the Commission; and (iv) the Registration Statement and the Prospectus and any amendments or supplements thereto shall contain all material statements which are required to be stated therein in accordance with the Securities Act and the rules and regulations thereunder and shall conform in all material respects to the requirements of the Securities Act and the rules and regulations thereunder, and neither the Registration Statement nor the Prospectus nor any amendment or supplement thereto shall contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

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ARTICLE III.

REPRESENTATIONS AND WARRANTIES

3.1 Representations and Warranties of the Company. The Company represents and warrants to the Underwriters as of the Execution Date, as of the Closing Date and as of each Option Closing Date, if any, as follows:

(a) Subsidiaries. All of the direct and indirect Subsidiaries of the Company are set forth in the SEC Reports. The Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens, and all of the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities. If the Company has no Subsidiaries, all other references to the Subsidiaries or any of them in the Transaction Documents shall be disregarded.

(b) Organization and Qualification. The Company and each of its Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite corporate power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any of its Subsidiaries is in violation or default of any of the provisions of its respective certificate of incorporation, bylaws or other organizational or charter documents. Each of the Company and its Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in a Material Adverse Effect and no proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

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(c) Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and each of the other Transaction Documents to which the Company is a party and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of this Agreement and each of the other Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, the Board of Directors or the Company’s stockholders in connection herewith or therewith other than in connection with the Required Approvals. This Agreement and each other Transaction Document to which the Company is a party has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

(d) No Conflicts. The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents to which it is a party, the issuance and sale of the Securities and the consummation by it of the transactions contemplated hereby and thereby do not and will not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, anti-dilution or similar adjustments, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.

(e) Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i) the filing with the Commission of the Prospectus and (ii) such filings as are required to be made under applicable state securities laws (collectively, the “Required Approvals”).

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(f) Registration Statement. The Company has filed with the Commission the Registration Statement, including any related Prospectus or Prospectuses, for the registration of the Securities under the Securities Act, which Registration Statement has been prepared by the Company in all material respects in conformity with the requirements of the Securities Act and the rules and regulations of the Commission under the Securities Act. The Registration Statement has been declared effective by the Commission on February __, 2022 (the “Effective Date”). The Company has advised the Representative of all further information (financial and other) with respect to the Company required to be set forth therein in the Registration Statement and Prospectus. Any reference in this Agreement to the Registration Statement, the Prospectus or any Prospectus Supplement shall be deemed to refer to and include the documents incorporated by reference therein; and any reference in this Agreement to the terms “amend,” “amendment” or “supplement” with respect to the Registration Statement, the Prospectus or any Prospectus Supplement shall be deemed to refer to and include the filing of any document under the Exchange Act after the date of this Agreement, or the issue date of the Prospectus or any Prospectus Supplement, as the case may be, deemed to be incorporated therein by reference. All references in this Agreement to financial statements and schedules and other information which is “contained,” “included,” “described,” “referenced,” “set forth” or “stated” in the Registration Statement, the Prospectus or any Prospectus Supplement (and all other references of like import) shall be deemed to mean and include all such financial statements and schedules and other information which is or is deemed to be incorporated by reference in the Registration Statement, the Prospectus or any Prospectus Supplement, as the case may be. No stop order suspending the effectiveness of the Registration Statement or the use of the Prospectus or any Prospectus Supplement has been issued, and no proceeding for any such purpose is pending or has been initiated or, to the Company's knowledge, is threatened by the Commission. For purposes of this Agreement, “free writing prospectus” has the meaning set forth in Rule 405 under the Securities Act. The Company will not, without the prior consent of the Representative, prepare, use or refer to, any free writing prospectus.

(g) Issuance of Securities. The Securities are duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company. The Warrant Shares, when issued in accordance with the terms of the Warrants, will be validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company. The Company has reserved from its duly authorized capital stock the maximum number of shares of Common Stock issuable pursuant to this Agreement and the Warrants. The holder of the Securities will not be subject to personal liability by reason of being such holders. The Securities are not and will not be subject to the preemptive rights of any holders of any security of the Company or similar contractual rights granted by the Company. All corporate action required to be taken for the authorization, issuance and sale of the Securities has been duly and validly taken. The Securities conform in all material respects to all statements with respect thereto contained in the Registration Statement.

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(h) Capitalization. The capitalization of the Company is as set forth in the SEC Reports. The Company has not issued any capital stock since its most recently filed periodic report under the Exchange Act, other than pursuant to the exercise of employee stock options under the Company’s stock option plans, the issuance of shares of Common Stock to employees pursuant to the Company’s employee stock purchase plans and pursuant to the conversion and/or exercise of Common Stock Equivalents outstanding as of the date of the most recently filed periodic report under the Exchange Act. No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents. Except as a result of the purchase and sale of the Securities, there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock or the capital stock of any Subsidiary, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents or the capital stock of any Subsidiary. The issuance and sale of the Securities will not obligate the Company or any Subsidiary to issue shares of Common Stock or other securities to any Person (other than the Underwriters). There are no outstanding securities or instruments of the Company or any Subsidiary with any provision that adjusts the exercise, conversion, exchange or reset price of such security or instrument upon an issuance of securities by the Company or any Subsidiary. There are no outstanding securities or instruments of the Company or any Subsidiary that contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to redeem a security of the Company or such Subsidiary. The Company does not have any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement. All of the outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. The authorized shares of the Company conform in all material respects to all statements relating thereto contained in the Registration Statement and the Prospectus. The offers and sales of the Company’s securities were at all relevant times either registered under the Securities Act and the applicable state securities or Blue Sky laws or, based in part on the representations and warranties of the purchasers, exempt from such registration requirements. No further approval or authorization of any stockholder, the Board of Directors or others is required for the issuance and sale of the Securities. There are no stockholders agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders.

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(i) SEC Reports; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, together with the Prospectus and the Prospectus Supplement, being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments. The agreements and documents described in the Registration Statement, the Prospectus, the Prospectus Supplement and the SEC Reports conform to the descriptions thereof contained therein in all material respects and there are no agreements or other documents required by the Securities Act and the rules and regulations thereunder to be described in the Registration Statement, the Prospectus, the Prospectus Supplement or the SEC Reports or to be filed with the Commission as exhibits to the Registration Statement, that have not been so described or filed. Each agreement or other instrument (however characterized or described) to which the Company is a party or by which it is or may be bound or affected and (i) that is referred to in the Registration Statement, the Prospectus, the Prospectus Supplement or the SEC Reports, or (ii) is material to the Company’s business, has been duly authorized and validly executed by the Company, is in full force and effect in all material respects and is enforceable against the Company and, to the Company’s knowledge, the other parties thereto, in accordance with its terms, except (x) as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally, (y) as enforceability of any indemnification or contribution provision may be limited under the federal and state securities laws, and (z) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to the equitable defenses and to the discretion of the court before which any proceeding therefore may be brought. None of such agreements or instruments has been assigned by the Company, and neither the Company nor, to the best of the Company’s knowledge, any other party is in default thereunder and, to the best of the Company’s knowledge, no event has occurred that, with the lapse of time or the giving of notice, or both, would constitute a default thereunder. To the best of the Company’s knowledge, performance by the Company of the material provisions of such agreements or instruments will not result in a violation of any existing applicable law, rule, regulation, judgment, order or decree of any governmental agency or court, domestic or foreign, having jurisdiction over the Company or any of its assets or businesses, including, without limitation, those relating to environmental laws and regulations.

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(j) Material Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements included within the SEC Reports, except as specifically disclosed in a subsequent SEC Report filed prior to the date hereof, (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock, (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock option plans and (vi) no officer or director of the Company has resigned from any position with the Company. The Company does not have pending before the Commission any request for confidential treatment of information. Except for the issuance of the Securities contemplated by this Agreement, no event, liability, fact, circumstance, occurrence or development has occurred or exists or is reasonably expected to occur or exist with respect to the Company or its Subsidiaries or their respective businesses, prospects, properties, operations, assets or financial condition that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made or deemed made that has not been publicly disclosed at least 1 Trading Day prior to the date that this representation is made. Unless otherwise disclosed in an SEC Report filed prior to the date hereof, the Company has not: (i) issued any securities or incurred any liability or obligation, direct or contingent, for borrowed money; or (ii) declared or paid any dividend or made any other distribution on or in respect to its capital stock.

(k) Litigation. There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of the Company. The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act.

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(l) Labor Relations. No labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company, which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s or its Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe that their relationships with their employees are good. To the knowledge of the Company, no executive officer of the Company or any Subsidiary, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third party, and the continued employment of each such executive officer does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(m) Compliance. Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any judgment, decree or order of any court, arbitrator or other governmental authority or (iii) is or has been in violation of any statute, rule, ordinance or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety, product quality and safety and employment and labor matters, except in each case as could not have or reasonably be expected to result in a Material Adverse Effect.

(n) Regulatory Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports, except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (each, a “Material Permit”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any Material Permit. The disclosures in the Registration Statement concerning the effects of Federal, State, local and all foreign regulation on the Company’s business as currently contemplated are correct in all material respects.

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(o) Title to Assets. Except as set forth in the SEC Reports, the Company and its Subsidiaries have good and marketable title in fee simple to all real property owned by them and good and marketable title in all personal property owned by them that is material to the business of the Company and its Subsidiaries, in each case free and clear of all Liens and, except for Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and its Subsidiaries and Liens for the payment of federal, state or other taxes, for which appropriate reserves have been made therefor in accordance with GAAP, and the payment of which is neither delinquent nor subject to penalties. Any real property and facilities held under lease by the Company and its Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company and its Subsidiaries are in compliance.

(p) Intellectual Property. The Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights necessary or required for use in connection with their respective businesses as described in the SEC Reports and which the failure to do so could have a Material Adverse Effect (collectively, the “Intellectual Property Rights”). None of, and neither the Company nor any Subsidiary has received a notice (written or otherwise) that any of, the Intellectual Property Rights has expired, terminated or been abandoned, or is expected to expire or terminate or be abandoned, within two (2) years from the date of this Agreement. Neither the Company nor any Subsidiary has received, since the date of the latest audited financial statements included within the SEC Reports, a written notice of a claim or otherwise has any knowledge that the Intellectual Property Rights violate or infringe upon the rights of any Person. To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights. The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties, except where failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(q) Insurance. The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company and its Subsidiaries are engaged. Neither the Company nor any such Subsidiary has been refused any insurance coverage sought or applied for and neither the Company nor any such Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not materially and adversely affect the condition, financial or otherwise, or the earnings, business or operations of the Company and its Subsidiaries, taken as a whole.

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(r) Transactions With Affiliates and Employees. Except as set forth in the SEC Reports, to the knowledge of the Company, none of the Company’s stockholders, officers or directors or any family member or affiliate of any of the foregoing, has either directly or indirectly an interest in, or is a party to, any transaction that is required to be disclosed as a related party transaction pursuant to Item 404 of Regulation S-K promulgated under the Securities Act.

(s) Sarbanes-Oxley; Internal Accounting Controls. Except as set forth in the SEC Reports, the Company and the Subsidiaries are in compliance with any and all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations promulgated by the Commission thereunder that are effective as of the date hereof and as of the Closing Date. The Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company and the Subsidiaries have established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and the Subsidiaries and designed such disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. The Company’s certifying officers have evaluated the effectiveness of the disclosure controls and procedures of the Company and the Subsidiaries as of the end of the period covered by the most recently filed periodic report under the Exchange Act (such date, the “Evaluation Date”). The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no changes in the internal control over financial reporting (as such term is defined in the Exchange Act) of the Company and its Subsidiaries that have materially affected, or is reasonably likely to materially affect, the internal control over financial reporting of the Company and its Subsidiaries.

(t) Certain Fees. Except as set forth in the Prospectus Supplement, no brokerage or finder’s fees or commissions are or will be payable by the Company, any Subsidiary or Affiliate of the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents. To the Company’s knowledge, there are no other arrangements, agreements or understandings of the Company or, to the Company’s knowledge, any of its stockholders that may affect the Underwriters’ compensation, as determined by FINRA. The Company has not made any direct or indirect payments (in cash, securities or otherwise) to: (i) any person, as a finder’s fee, consulting fee or otherwise, in consideration of such person raising capital for the Company or introducing to the Company persons who raised or provided capital to the Company; (ii) any FINRA member; or (iii) any person or entity that has any direct or indirect affiliation or association with any FINRA member, within the twelve months prior to the Execution Date. None of the net proceeds of the Offering will be paid by the Company to any participating FINRA member or its affiliates, except as specifically authorized herein.

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(u) Investment Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended. The Company shall conduct its business in a manner so that it will not become an “investment company” subject to registration under the Investment Company Act of 1940, as amended.

(v) Registration Rights. Except as set forth in the SEC Reports, no Person has any right to cause the Company or any Subsidiary to effect the registration under the Securities Act of any securities of the Company or any Subsidiary.

(w) Listing and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) of the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock pursuant to the Exchange Act nor has the Company received any notification that the Commission is currently contemplating terminating such registration. The company has not, in the twelve (12) months preceding the date hereof, received any notice from any Person to the effect that the Company is not in compliance with the listing or maintenance requirements of the principal Trading Market. Except as disclosed in the SEC Reports, the Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements. The Common Stock is currently eligible for electronic transfer through the Depository Trust Company or another established clearing corporation and the Company is current in payment of the fees of the Depository Trust Company (or such other established clearing corporation) in connection with such electronic transfer.

(x) Application of Takeover Protections. The Company and the Board of Directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti takeover provision under the Company’s certificate of incorporation (or similar charter documents) or the laws of its state of incorporation that is or could become applicable as a result of the Underwriters and the Company fulfilling their obligations or exercising their rights under the Transaction Documents.

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(y) Disclosure; 10b-5. The Registration Statement (and any further documents to be filed with the Commission) contains all exhibits and schedules as required by the Securities Act. Each of the Registration Statement and any post-effective amendment thereto, if any, at the time it became effective, complied in all material respects with the Securities Act and the Exchange Act and the applicable rules and regulations under the Securities Act and did not and, as amended or supplemented, if applicable, will not, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. The Preliminary Prospectus, Prospectus and the Prospectus Supplement, each as of its respective date, comply in all material respects with the Securities Act and the Exchange Act and the applicable rules and regulations. Each of the Preliminary Prospectus, Prospectus and the Prospectus Supplement, as amended or supplemented, did not and will not contain as of the date thereof any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The SEC Reports, when they were filed with the Commission, conformed in all material respects to the requirements of the Exchange Act and the applicable rules and regulations, and none of such documents, when they were filed with the Commission, contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein (with respect to the SEC Reports incorporated by reference in the Preliminary Prospectus, Prospectus or Prospectus Supplement), in light of the circumstances under which they were made not misleading; and any further documents so filed and incorporated by reference in the Preliminary Prospectus, Prospectus or Prospectus Supplement, when such documents are filed with the Commission, will conform in all material respects to the requirements of the Exchange Act and the applicable rules and regulations, as applicable, and will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made not misleading. No post-effective amendment to the Registration Statement reflecting any facts or events arising after the date thereof which represent, individually or in the aggregate, a fundamental change in the information set forth therein is required to be filed with the Commission. There are no documents required to be filed with the Commission in connection with the transaction contemplated hereby that (x) have not been filed as required pursuant to the Securities Act or (y) will not be filed within the requisite time period. There are no contracts or other documents required to be described in the Preliminary Prospectus, Prospectus or Prospectus Supplement, or to be filed as exhibits or schedules to the Registration Statement, which have not been described or filed as required. The press releases disseminated by the Company during the twelve months preceding the date of this Agreement taken as a whole do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made and when made, not misleading.

(z) No Integrated Offering. Neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Securities to be integrated with prior offerings by the Company for purposes of any applicable shareholder approval provisions of any Trading Market on which any of the securities of the Company are listed or designated.

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(aa) Solvency. Based on the consolidated financial condition of the Company as of the Closing Date, after giving effect to the receipt by the Company of the proceeds from the sale of the Securities hereunder, (i) the fair saleable value of the Company’s assets exceeds the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including known contingent liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small capital to carry on its business as now conducted and as proposed to be conducted including its capital needs taking into account the particular capital requirements of the business conducted by the Company, consolidated and projected capital requirements and capital availability thereof, and (iii) the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its liabilities when such amounts are required to be paid. The Company does not intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt). The Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year from the Closing Date. The SEC Reports sets forth as of the date hereof all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary has commitments. Neither the Company nor any Subsidiary is in default in respect of any Indebtedness.

(bb) Tax Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, the Company and its Subsidiaries each (i) has made or filed all United States federal, state and local income and all foreign income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of all material taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company or of any Subsidiary know of no basis for any such claim. The provisions for taxes payable, if any, shown on the financial statements filed with or as part of the Registration Statement are sufficient for all accrued and unpaid taxes, whether or not disputed, and for all periods to and including the dates of such consolidated financial statements. The term “taxes” mean all federal, state, local, foreign, and other net income, gross income, gross receipts, sales, use, ad valorem, transfer, franchise, profits, license, lease, service, service use, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property, windfall profits, customs, duties or other taxes, fees, assessments, or charges of any kind whatsoever, together with any interest and any penalties, additions to tax, or additional amounts with respect thereto. The term “returns” means all returns, declarations, reports, statements, and other documents required to be filed in respect to taxes.

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(cc) Foreign Corrupt Practices. Neither the Company nor any Subsidiary, nor to the knowledge of the Company or any Subsidiary, any agent or other person acting on behalf of the Company or any Subsidiary, has (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made by any person acting on its behalf of which the Company is aware) which is in violation of law, or (iv) violated in any material respect any provision of FCPA. The Company has taken reasonable steps to ensure that its accounting controls and procedures are sufficient to cause the Company to comply in all material respects with the FCPA.

(dd) Accountants. To the knowledge and belief of the Company, the Company Auditor (i) is an independent registered public accounting firm as required by the Exchange Act and (ii) shall express its opinion with respect to the financial statements to be included in the Company’s Annual Report for the fiscal year ending December 31, 2021. The Company Auditor has not, during the periods covered by the financial statements included in the Prospectus, provided to the Company any non-audit services, as such term is used in Section 10A(g) of the Exchange Act.

(ee) FDA. As to each product subject to the jurisdiction of the U.S. Food and Drug Administration (“FDA”) under the Federal Food, Drug and Cosmetic Act, as amended, and the regulations thereunder (“FDCA”) that is manufactured, packaged, labeled, tested, distributed, sold, and/or marketed by the Company or any of its Subsidiaries (each such product, a “Pharmaceutical Product”), such Pharmaceutical Product is being manufactured, packaged, labeled, tested, distributed, sold and/or marketed by the Company in compliance with all applicable requirements under FDCA and similar laws, rules and regulations relating to registration, investigational use, premarket clearance, licensure, or application approval, good manufacturing practices, good laboratory practices, good clinical practices, product listing, quotas, labeling, advertising, record keeping and filing of reports, except where the failure to be in compliance would not have a Material Adverse Effect. There is no pending, completed or, to the Company's knowledge, threatened, action (including any lawsuit, arbitration, or legal or administrative or regulatory proceeding, charge, complaint, or investigation) against the Company or any of its Subsidiaries, and none of the Company or any of its Subsidiaries has received any notice, warning letter or other communication from the FDA or any other governmental entity, which (i) contests the premarket clearance, licensure, registration, or approval of, the uses of, the distribution of, the manufacturing or packaging of, the testing of, the sale of, or the labeling and promotion of any Pharmaceutical Product, (ii) withdraws its approval of, requests the recall, suspension, or seizure of, or withdraws or orders the withdrawal of advertising or sales promotional materials relating to, any Pharmaceutical Product, (iii) imposes a clinical hold on any clinical investigation by the Company or any of its Subsidiaries, (iv) enjoins production at any facility of the Company or any of its Subsidiaries, (v) enters or proposes to enter into a consent decree of permanent injunction with the Company or any of its Subsidiaries, or (vi) otherwise alleges any violation of any laws, rules or regulations by the Company or any of its Subsidiaries, and which, either individually or in the aggregate, would have a Material Adverse Effect. The properties, business and operations of the Company have been and are being conducted in all material respects in accordance with all applicable laws, rules and regulations of the FDA. The Company has not been informed by the FDA that the FDA will prohibit the marketing, sale, license or use in the United States of any product proposed to be developed, produced or marketed by the Company, nor has the FDA expressed any concern as to approving or clearing for marketing any product being developed or proposed to be developed by the Company.

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(ff) Office of Foreign Assets Control. Neither the Company nor any Subsidiary nor, to the Company's knowledge, any director, officer, agent, employee or affiliate of the Company or any Subsidiary is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department.

(gg) U.S. Real Property Holding Corporation. The Company is not and has never been a U.S. real property holding corporation within the meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company shall so certify upon the Representative’s request.

(hh) Bank Holding Company Act. Neither the Company nor any of its Subsidiaries or Affiliates is subject to the Bank Holding Company Act of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). Neither the Company nor any of its Subsidiaries or Affiliates owns or controls, directly or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent (25%) or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Company nor any of its Subsidiaries or Affiliates exercises a controlling influence over the management or policies of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve.

(ii) Money Laundering. The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with applicable financial record keeping and reporting requirements of the Currency and foreign Transactions Reporting Act of 1970, as amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money Laundering Laws”), and no Action or Proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any Subsidiary with respect to the Money Laundering Laws is pending or, to the knowledge of the Company or any Subsidiary, threatened.

(jj) D&O Questionnaires. To the Company’s knowledge, all information contained in the questionnaires completed by each of the Company’s directors and officers prior to the Offering as well as in the Lock-Up Agreement provided to the Underwriters is true and correct in all material respects and the Company has not become aware of any information which would cause the information disclosed in such questionnaires become inaccurate and incorrect.

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(kk) FINRA Affiliation. No officer, director or any beneficial owner of 5% or more of the Company’s unregistered securities has any direct or indirect affiliation or association with any FINRA member (as determined in accordance with the rules and regulations of FINRA) that is participating in the Offering. The Company will advise the Representative and EGS if it learns that any officer, director or owner of 5% or more of the Company’s outstanding shares of Common Stock or Common Stock Equivalents is or becomes an affiliate or associated person of a FINRA member firm.

(ll) Officers’ Certificate. Any certificate signed by any duly authorized officer of the Company and delivered to the Representative or EGS shall be deemed a representation and warranty by the Company to the Underwriters as to the matters covered thereby.

(mm) Board of Directors. The Board of Directors is comprised of the persons set forth under the heading of the Prospectus captioned “Management.” The qualifications of the persons serving as board members and the overall composition of the Board of Directors comply with the Sarbanes-Oxley Act of 2002 and the rules promulgated thereunder applicable to the Company and the rules of the Trading Market. At least one member of the Board of Directors qualifies as a “financial expert” as such term is defined under the Sarbanes-Oxley Act of 2002 and the rules promulgated thereunder and the rules of the Trading Market. In addition, at least a majority of the persons serving on the Board of Directors qualify as “independent” as defined under the rules of the Trading Market.

(nn) Stock Option Plans. Each stock option granted by the Company under the Company’s stock option plan was granted (i) in accordance with the terms of the Company’s stock option plan and (ii) with an exercise price at least equal to the fair market value of the Common Stock on the date such stock option would be considered granted under GAAP and applicable law. No stock option granted under the Company’s stock option plan has been backdated. The Company has not knowingly granted, and there is no and has been no Company policy or practice to knowingly grant, stock options prior to, or otherwise knowingly coordinate the grant of stock options with, the release or other public announcement of material information regarding the Company or its Subsidiaries or their financial results or prospects.

(oo) Environmental Laws. The Company and its Subsidiaries (i) are in compliance with all federal, state, local and foreign laws relating to pollution or protection of human health or the environment (including ambient air, surface water, groundwater, land surface or subsurface strata), including laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands, or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations, issued, entered, promulgated or approved thereunder (“Environmental Laws”); (ii) have received all permits licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses; and (iii) are in compliance with all terms and conditions of any such permit, license or approval where in each clause (i), (ii) and (iii), the failure to so comply could be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.

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ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

4.1 Amendments to Registration Statement. The Company has delivered, or will as promptly as practicable deliver, to the Underwriters complete conformed copies of the Registration Statement and of each consent and certificate of experts, as applicable, filed as a part thereof, and conformed copies of the Registration Statement (without exhibits), the Prospectus and the Prospectus Supplement, as amended or supplemented, in such quantities and at such places as an Underwriter reasonably requests. Neither the Company nor any of its directors and officers has distributed and none of them will distribute, prior to the Closing Date, any offering material in connection with the offering and sale of the Securities other than the Prospectus, the Prospectus Supplement, the Registration Statement, and copies of the documents incorporated by reference therein. The Company shall not file any such amendment or supplement to which the Representative shall reasonably object in writing.

4.2 Federal Securities Laws.

(a) Compliance. During the time when a Prospectus is required to be delivered under the Securities Act, the Company will use its best efforts to comply with all requirements imposed upon it by the Securities Act and the rules and regulations thereunder and the Exchange Act and the rules and regulations thereunder, as from time to time in force, so far as necessary to permit the continuance of sales of or dealings in the Securities in accordance with the provisions hereof and the Prospectus. If at any time when a Prospectus relating to the Securities is required to be delivered under the Securities Act, any event shall have occurred as a result of which, in the opinion of counsel for the Company or counsel for the Underwriters, the Prospectus, as then amended or supplemented, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, or if it is necessary at any time to amend the Prospectus to comply with the Securities Act, the Company will notify the Underwriters promptly and prepare and file with the Commission, subject to Section 4.1 hereof, an appropriate amendment or supplement in accordance with Section 10 of the Securities Act.

(b) Filing of Final Prospectus. The Company will file the Prospectus (in form and substance reasonably satisfactory to the Representative) with the Commission pursuant to the requirements of Rule 424.

(c) Exchange Act Registration. For a period of three years from the Execution Date, the Company will use its best efforts to maintain the registration of the Common Stock and the Common Warrants under the Exchange Act. The Company will not deregister the Common Stock or the Common Warrants under the Exchange Act without the prior written consent of the Representative.

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(d) Free Writing Prospectuses. The Company represents and agrees that it has not made and will not make any offer relating to the Securities that would constitute an issuer free writing prospectus, as defined in Rule 433 of the rules and regulations under the Securities Act, without the prior written consent of the Representative. Any such free writing prospectus consented to by the Representative is herein referred to as a “Permitted Free Writing Prospectus.” The Company represents that it will treat each Permitted Free Writing Prospectus as an “issuer free writing prospectus” as defined in rule and regulations under the Securities Act, and has complied and will comply with the applicable requirements of Rule 433 of the Securities Act, including timely Commission filing where required, legending and record keeping.

4.3 Delivery to the Underwriters of Prospectuses. The Company will deliver to the Underwriters, without charge, from time to time during the period when the Prospectus is required to be delivered under the Securities Act or the Exchange Act such number of copies of each Prospectus as the Underwriters may reasonably request and, as soon as the Registration Statement or any amendment or supplement thereto becomes effective, deliver to you two original executed Registration Statements, including exhibits, and all post-effective amendments thereto and copies of all exhibits filed therewith or incorporated therein by reference and all original executed consents of certified experts.

4.4 Effectiveness and Events Requiring Notice to the Underwriters. The Company will use its best efforts to cause the Registration Statement to remain effective with a current prospectus until the later of nine (9) months from the Execution Date and the date on which the Warrants are no longer outstanding, and will notify the Underwriters and holders of the Warrants immediately and confirm the notice in writing: (i) of the effectiveness of the Registration Statement and any amendment thereto; (ii) of the issuance by the Commission of any stop order or of the initiation, or the threatening, of any proceeding for that purpose; (iii) of the issuance by any state securities commission of any proceedings for the suspension of the qualification of the Securities for offering or sale in any jurisdiction or of the initiation, or the threatening, of any proceeding for that purpose; (iv) of the mailing and delivery to the Commission for filing of any amendment or supplement to the Registration Statement or Prospectus; (v) of the receipt of any comments or request for any additional information from the Commission; and (vi) of the happening of any event during the period described in this Section 4.4 that, in the judgment of the Company, makes any statement of a material fact made in the Registration Statement or the Prospectus untrue or that requires the making of any changes in the Registration Statement or the Prospectus in order to make the statements therein, in light of the circumstances under which they were made, not misleading. If the Commission or any state securities commission shall enter a stop order or suspend such qualification at any time, the Company will make every reasonable effort to obtain promptly the lifting of such order.

4.5 Review of Financial Statements. For a period of five (5) years from the Execution Date, the Company, at its expense, shall cause its regularly engaged independent registered public accountants to review (but not audit) the Company’s financial statements for each of the first three fiscal quarters prior to the announcement of quarterly financial information.

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4.6 Expenses of the Offering. The Company hereby agrees to pay on each of the Closing Date and each Option Closing Date, if any, to the extent not paid at the Closing Date, all expenses incident to the performance of the obligations of the Company under this Agreement, including, but not limited to: (a) all filing fees and communication expenses relating to the registration of the Securities to be sold in the Offering (including the Option Securities) with the Commission; (b) all FINRA Public Offering Filing System fees associated with the review of the Offering by FINRA; all fees and expenses relating to the listing of such Closing Shares, Option Shares and Warrant Shares on the Trading Market and such other stock exchanges as the Company and the Representative together determine; (c) all fees, expenses and disbursements relating to the registration or qualification of such Securities under the “blue sky” securities laws of such states and other foreign jurisdictions as the Representative may reasonably designate (including, without limitation, all filing and registration fees, and the fees and expenses of Blue Sky counsel; (d) the costs of all mailing and printing of the underwriting documents (including, without limitation, the Underwriting Agreement, any Blue Sky Surveys and, if appropriate, any Agreement Among Underwriters, Selected Dealers’ Agreement, Underwriters’ Questionnaire and Power of Attorney), Registration Statements, Prospectuses and all amendments, supplements and exhibits thereto and as many preliminary and final Prospectuses as the Representative may reasonably deem necessary; (e) the costs and expenses of the Company’s public relations firm; (f) the costs of preparing, printing and delivering the Securities; (g) fees and expenses of the Transfer Agent for the Securities (including, without limitation, any fees required for same-day processing of any instruction letter delivered by the Company); (h) stock transfer and/or stamp taxes, if any, payable upon the transfer of securities from the Company to the Underwriters; (i) the fees and expenses of the Company’s accountants; (j) the fees and expenses of the Company’s legal counsel and other agents and representatives; (k) the Underwriters’ costs of mailing prospectuses to prospective investors; (l) the costs associated with advertising the Offering in the national editions of the Wall Street Journal and New York Times after the Closing Date; (m) up to $_______ for the fees and expenses of PC; (n) all fees, expenses and disbursements relating to background checks of the Company’s officers and directors in an amount not to exceed $5,000 per individual; (o) up to $___ for the Underwriters’ use of i-Deal’s book-building, prospectus tracking and compliance software (or other similar software) for the Offering; and (q) up to $____ for the Underwriters’ actual “road show” expenses for the Offering. The Underwriters may also deduct from the net proceeds of the Offering payable to the Company on the Closing Date, or each Option Closing Date, if any, the expenses set forth herein to be paid by the Company to the Underwriters.

4.7 Application of Net Proceeds. The Company will apply the net proceeds from the Offering received by it in a manner consistent with the application described under the caption “Use of Proceeds” in the Prospectus.

4.8 Delivery of Earnings Statements to Security Holders. The Company will make generally available to its security holders as soon as practicable, but not later than the first day of the fifteenth full calendar month following the Execution Date, an earnings statement (which need not be certified by independent public or independent certified public accountants unless required by the Securities Act or the Rules and Regulations under the Securities Act, but which shall satisfy the provisions of Rule 158(a) under Section 11(a) of the Securities Act) covering a period of at least twelve consecutive months beginning after the Execution Date.

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4.9 Stabilization. Neither the Company, nor, to its knowledge, any of its employees, directors or shareholders (without the consent of the Representative) has taken or will take, directly or indirectly, any action designed to or that has constituted or that might reasonably be expected to cause or result in, under the Exchange Act, or otherwise, stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Securities.

4.10 Internal Controls. The Company will maintain a system of internal accounting controls sufficient to provide reasonable assurances that: (i) transactions are executed in accordance with management’s general or specific authorization; (ii) transactions are recorded as necessary in order to permit preparation of financial statements in accordance with GAAP and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

4.11 Accountants. The Company shall continue to retain a nationally recognized independent certified public accounting firm for a period of at least three years after the Execution Date. The Underwriters acknowledge that the Company Auditor is acceptable to the Underwriters.

4.12 FINRA. The Company shall advise the Underwriters (who shall make an appropriate filing with FINRA) if it is aware that any 5% or greater shareholder of the Company becomes an affiliate or associated person of an Underwriter.

4.13 No Fiduciary Duties. The Company acknowledges and agrees that the Underwriters’ responsibility to the Company is solely contractual and commercial in nature, based on arms-length negotiations and that neither the Underwriters nor their affiliates or any selected dealer shall be deemed to be acting in a fiduciary capacity, or otherwise owes any fiduciary duty to the Company or any of its affiliates in connection with the Offering and the other transactions contemplated by this Agreement. Notwithstanding anything in this Agreement to the contrary, the Company acknowledges that the Underwriters may have financial interests in the success of the Offering that are not limited to the difference between the price to the public and the purchase price paid to the Company by the Underwriters for the shares and the Underwriters have no obligation to disclose, or account to the Company for, any of such additional financial interests. The Company hereby waives and releases, to the fullest extent permitted by law, any claims that the Company may have against the Underwriters with respect to any breach or alleged breach of fiduciary duty.

4.14 Warrant Shares. If all or any portion of a Warrant is exercised at a time when there is an effective registration statement to cover the issuance of the Warrant Shares or if the Warrant is exercised via cashless exercise at a time when such Warrant Shares would be eligible for resale under Rule 144 by a non-affiliate of the Company, the Warrant Shares issued pursuant to any such exercise shall be issued free of all restrictive legends. If at any time following the date hereof the Registration Statement (or any subsequent registration statement registering the sale or resale of the Warrant Shares) is not effective or is not otherwise available for the sale of the Warrant Shares, the Company shall immediately notify the holders of the Warrants in writing that such registration statement is not then effective and thereafter shall promptly notify such holders when the registration statement is effective again and available for the sale of the Warrant Shares (it being understood and agreed that the foregoing shall not limit the ability of the Company to issue, or any holder thereof to sell, any of the Warrant Shares in compliance with applicable federal and state securities laws).

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4.15 Board Composition and Board Designations. The Company shall ensure that: (i) the qualifications of the persons serving as board members and the overall composition of the Board of Directors comply with the Sarbanes-Oxley Act of 2002 and the rules promulgated thereunder and with the listing requirements of the Trading Market and (ii) if applicable, at least one member of the Board of Directors qualifies as a “financial expert” as such term is defined under the Sarbanes-Oxley Act of 2002 and the rules promulgated thereunder.

4.16 Securities Laws Disclosure; Publicity. At the request of the Representative, by 8:30 a.m. (New York City time) on the date hereof, the Company shall issue a press release disclosing the material terms of the Offering. The Company and the Representative shall consult with each other in issuing any other press releases with respect to the Offering, and neither the Company nor any Underwriter shall issue any such press release nor otherwise make any such public statement without the prior consent of the Company, with respect to any press release of such Underwriter, or without the prior consent of such Underwriter, with respect to any press release of the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement or communication. The Company will not issue press releases or engage in any other publicity, without the Representative’s prior written consent, for a period ending at 5:00 p.m. (New York City time) on the first business day following the 45th day following the Closing Date, other than normal and customary releases issued in the ordinary course of the Company’s business.

4.17 Shareholder Rights Plan. No claim will be made or enforced by the Company or, with the consent of the Company, any other Person, that any Underwriter of the Securities is an “Acquiring Person” under any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted by the Company, or that any Underwriter of Securities could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Securities.

4.18 Reservation of Common Stock. As of the date hereof, the Company has reserved and the Company shall continue to reserve and keep available at all times, free of preemptive rights, a sufficient number of shares of Common Stock for the purpose of enabling the Company to issue Option Shares pursuant to the Over-Allotment Option and Warrant Shares pursuant to any exercise of the Warrants.

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4.19 Listing of Common Stock. The Company hereby agrees to use its best efforts to maintain the listing or quotation of the Common Stock on the Trading Market on which it is currently listed, and concurrently with the Closing, the Company shall apply to list or quote all of the Closing Shares, Option Shares and Warrant Shares on such Trading Market and promptly secure the listing of all of the Closing Shares, Option Shares and Warrant Shares on such Trading Market. The Company further agrees, if the Company applies to have the Common Stock traded on any other Trading Market, it will then include in such application all of the Closing Shares, Option Shares and Warrant Shares, and will take such other action as is necessary to cause all of the Closing Shares, Option Shares and Warrant Shares to be listed or quoted on such other Trading Market as promptly as possible. The Company will then take all action reasonably necessary to continue the listing and trading of its Common Stock on a Trading Market and will comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Trading Market. The Company agrees to maintain the eligibility of the Common Stock for electronic transfer through the Depository Trust Company or another established clearing corporation, including, without limitation, by timely payment of fees to the Depository Trust Company or such other established clearing corporation in connection with such electronic transfer.

4.20 Subsequent Equity Sales.

(a) From the date hereof until ninety (90) days following the Closing Date, neither the Company nor any Subsidiary shall issue, enter into any agreement to issue or announce the issuance or proposed issuance of any shares of Common Stock or Common Stock Equivalents.

(b) From the date hereof until ninety (90) days following the Closing Date, the Company shall be prohibited from effecting or entering into an agreement to effect any issuance by the Company or any of its Subsidiaries of Common Stock or Common Stock Equivalents (or a combination of units thereof) involving a Variable Rate Transaction. “Variable Rate Transaction” means a transaction in which the Company (i) issues or sells any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive, additional shares of Common Stock either (A) at a conversion price, exercise price or exchange rate or other price that is based upon, and/or varies with, the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of such debt or equity securities or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the Common Stock or (ii) enters into, or effects a transaction under, any agreement, including, but not limited to, an equity line of credit, whereby the Company may issue securities at a future determined price. Any Underwriter shall be entitled to obtain injunctive relief against the Company to preclude any such issuance, which remedy shall be in addition to any right to collect damages.

(c) Notwithstanding the foregoing, this Section 4.19 shall not apply in respect of an Exempt Issuance, except that no Variable Rate Transaction shall be an Exempt Issuance.

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4.21 Research Independence. The Company acknowledges that each Underwriter’s research analysts and research departments, if any, are required to be independent from their respective investment banking divisions and are subject to certain regulations and internal policies, and that such Underwriter’s research analysts may hold and make statements or investment recommendations and/or publish research reports with respect to the Company and/or the offering that differ from the views of its investment bankers. The Company hereby waives and releases, to the fullest extent permitted by law, any claims that the Company may have against such Underwriter with respect to any conflict of interest that may arise from the fact that the views expressed by their independent research analysts and research departments may be different from or inconsistent with the views or advice communicated to the Company by such Underwriter’s investment banking divisions. The Company acknowledges that the Representative is a full service securities firm and as such from time to time, subject to applicable securities laws, may effect transactions for its own account or the account of its customers and hold long or short position in debt or equity securities of the Company.

ARTICLE V.

DEFAULT BY UNDERWRITERS

If on the Closing Date or any Option Closing Date, if any, any Underwriter shall fail to purchase and pay for the portion of the Closing Securities or Option Securities, as the case may be, which such Underwriter has agreed to purchase and pay for on such date (otherwise than by reason of any default on the part of the Company), the Representative, or if the Representative is the defaulting Underwriter, the non-defaulting Underwriters, shall use their reasonable efforts to procure within 36 hours thereafter one or more of the other Underwriters, or any others, to purchase from the Company such amounts as may be agreed upon and upon the terms set forth herein, the Closing Securities or Option Securities , as the case may be, which the defaulting Underwriter or Underwriters failed to purchase. If during such 36 hours the Representative shall not have procured such other Underwriters, or any others, to purchase the Closing Securities or Option Securities, as the case may be, agreed to be purchased by the defaulting Underwriter or Underwriters, then (a) if the aggregate number of Closing Securities or Option Securities, as the case may be, with respect to which such default shall occur does not exceed 10% of the Closing Securities or Option Securities, as the case may be, covered hereby, the other Underwriters shall be obligated, severally, in proportion to the respective numbers of Closing Securities or Option Securities, as the case may be, which they are obligated to purchase hereunder, to purchase the Closing Securities or Option Securities, as the case may be, which such defaulting Underwriter or Underwriters failed to purchase, or (b) if the aggregate number of Closing Securities or Option Securities, as the case may be, with respect to which such default shall occur exceeds 10% of the Closing Securities or Option Securities, as the case may be, covered hereby, the Company or the Representative will have the right to terminate this Agreement without liability on the part of the non-defaulting Underwriters or of the Company except to the extent provided in Article VI hereof. In the event of a default by any Underwriter or Underwriters, as set forth in this Article V, the applicable Closing Date may be postponed for such period, not exceeding seven days, as the Representative, or if the Representative is the defaulting Underwriter, the non-defaulting Underwriters, may determine in order that the required changes in the Prospectus or in any other documents or arrangements may be effected. The term “Underwriter” includes any person substituted for a defaulting Underwriter. Any action taken under this Section shall not relieve any defaulting Underwriter from liability in respect of any default of such Underwriter under this Agreement.

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ARTICLE VI.

INDEMNIFICATION

6.1 Indemnification of the Underwriters. Subject to the conditions set forth below, the Company agrees to indemnify and hold harmless the Underwriters, and each dealer selected by each Underwriter that participates in the offer and sale of the Securities (each a “Selected Dealer”) and each of their respective directors, officers and employees and each Person, if any, who controls such Underwriter or any Selected Dealer (“Controlling Person”) within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, against any and all loss, liability, claim, damage and expense whatsoever (including but not limited to any and all legal or other documented expenses reasonably incurred in investigating, preparing or defending against any litigation, commenced or threatened, or any claim whatsoever, whether arising out of any action between such Underwriter and the Company or between such Underwriter and any third party or otherwise) to which they or any of them may become subject under the Securities Act, the Exchange Act or any other statute or at common law or otherwise or under the laws of foreign countries, arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in (i) any Preliminary Prospectus, if any, the Registration Statement or the Prospectus (as from time to time each may be amended and supplemented); (ii) any materials or information provided to investors by, or with the approval of, the Company in connection with the marketing of the offering of the Securities, including any “road show” or investor presentations made to investors by the Company (whether in person or electronically); or (iii) any application or other document or written communication (in this Article VI, collectively called “application”) executed by the Company or based upon written information furnished by the Company in any jurisdiction in order to qualify the Securities under the securities laws thereof or filed with the Commission, any state securities commission or agency, Trading Market or any securities exchange; or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, unless such statement or omission was made in reliance upon and in conformity with written information furnished to the Company with respect to the applicable Underwriter by or on behalf of such Underwriter expressly for use in any Preliminary Prospectus, if any, the Registration Statement or Prospectus, or any amendment or supplement thereto, or in any application, as the case may be. With respect to any untrue statement or omission or alleged untrue statement or omission made in the Preliminary Prospectus, if any, the indemnity agreement contained in this Section 6.1 shall not inure to the benefit of an Underwriter to the extent that any loss, liability, claim, damage or expense of such Underwriter results from the fact that a copy of the Prospectus was not given or sent to the Person asserting any such loss, liability, claim or damage at or prior to the written confirmation of sale of the Securities to such Person as required by the Securities Act and the rules and regulations thereunder, and if the untrue statement or omission has been corrected in the Prospectus, unless such failure to deliver the Prospectus was a result of non-compliance by the Company with its obligations under this Agreement. The Company agrees promptly to notify each Underwriter of the commencement of any litigation or proceedings against the Company or any of its officers, directors or Controlling Persons in connection with the issue and sale of the Public Securities or in connection with the Registration Statement or Prospectus.

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6.2 Procedure. If any action is brought against an Underwriter, a Selected Dealer or a Controlling Person in respect of which indemnity may be sought against the Company pursuant to Section 6.1, such Underwriter, such Selected Dealer or Controlling Person, as the case may be, shall promptly notify the Company in writing of the institution of such action and the Company shall assume the defense of such action, including the employment and fees of counsel (subject to the reasonable approval of such Underwriter or such Selected Dealer, as the case may be) and payment of actual expenses. Such Underwriter, such Selected Dealer or Controlling Person shall have the right to employ its or their own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of such Underwriter, such Selected Dealer or Controlling Person unless (i) the employment of such counsel at the expense of the Company shall have been authorized in writing by the Company in connection with the defense of such action, or (ii) the Company shall not have employed counsel to have charge of the defense of such action, or (iii) such indemnified party or parties shall have reasonably concluded that there may be defenses available to it or them which are different from or additional to those available to the Company (in which case the Company shall not have the right to direct the defense of such action on behalf of the indemnified party or parties), in any of which events the reasonable fees and expenses of not more than one additional firm of attorneys selected by such Underwriter (in addition to local counsel), Selected Dealer and/or Controlling Person shall be borne by the Company. Notwithstanding anything to the contrary contained herein, if any Underwriter, Selected Dealer or Controlling Person shall assume the defense of such action as provided above, the Company shall have the right to approve the terms of any settlement of such action which approval shall not be unreasonably withheld.

6.3 Indemnification of the Company. Each Underwriter severally and not jointly agrees to indemnify and hold harmless the Company, its directors, officers and employees and agents who control the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act against any and all loss, liability, claim, damage and expense described in the foregoing indemnity from the Company to such Underwriter, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions made in any Preliminary Prospectus, if any, the Registration Statement or Prospectus or any amendment or supplement thereto or in any application, in reliance upon, and in strict conformity with, written information furnished to the Company with respect to such Underwriter by or on behalf of such Underwriter expressly for use in such Preliminary Prospectus, if any, the Registration Statement or Prospectus or any amendment or supplement thereto or in any such application. In case any action shall be brought against the Company or any other Person so indemnified based on any Preliminary Prospectus, if any, the Registration Statement or Prospectus or any amendment or supplement thereto or any application, and in respect of which indemnity may be sought against such Underwriter, such Underwriter shall have the rights and duties given to the Company, and the Company and each other Person so indemnified shall have the rights and duties given to such Underwriter by the provisions of this Article VI. Notwithstanding the provisions of this Section 6.3, no Underwriter shall be required to indemnify the Company for any amount in excess of the underwriting discounts and commissions applicable to the Securities purchased by such Underwriter. The Underwriters' obligations in this Section 6.3 to indemnify the Company are several in proportion to their respective underwriting obligations and not joint.

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6.4 Contribution.

(a) Contribution Rights. In order to provide for just and equitable contribution under the Securities Act in any case in which (i) any Person entitled to indemnification under this Article VI makes a claim for indemnification pursuant hereto but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding the fact that this Article VI provides for indemnification in such case, or (ii) contribution under the Securities Act, the Exchange Act or otherwise may be required on the part of any such Person in circumstances for which indemnification is provided under this Article VI, then, and in each such case, the Company and each Underwriter, severally and not jointly, shall contribute to the aggregate losses, liabilities, claims, damages and expenses of the nature contemplated by said indemnity agreement incurred by the Company and such Underwriter, as incurred, in such proportions that such Underwriter is responsible for that portion represented by the percentage that the underwriting discount appearing on the cover page of the Prospectus bears to the initial offering price appearing thereon and the Company is responsible for the balance; provided, that, no Person guilty of a fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. For purposes of this Section, each director, officer and employee of such Underwriter or the Company, as applicable, and each Person, if any, who controls such Underwriter or the Company, as applicable, within the meaning of Section 15 of the Securities Act shall have the same rights to contribution as such Underwriter or the Company, as applicable. Notwithstanding the provisions of this Section 6.4, no Underwriter shall be required to contribute any amount in excess of the underwriting discounts and commissions applicable to the Securities purchased by such Underwriter. The Underwriters' obligations in this Section 6.4 to contribute are several in proportion to their respective underwriting obligations and not joint.

(b) Contribution Procedure. Within fifteen days after receipt by any party to this Agreement (or its representative) of notice of the commencement of any action, suit or proceeding, such party will, if a claim for contribution in respect thereof is to be made against another party (“contributing party”), notify the contributing party of the commencement thereof, but the failure to so notify the contributing party will not relieve it from any liability which it may have to any other party other than for contribution hereunder. In case any such action, suit or proceeding is brought against any party, and such party notifies a contributing party or its representative of the commencement thereof within the aforesaid fifteen days, the contributing party will be entitled to participate therein with the notifying party and any other contributing party similarly notified. Any such contributing party shall not be liable to any party seeking contribution on account of any settlement of any claim, action or proceeding affected by such party seeking contribution without the written consent of such contributing party. The contribution provisions contained in this Section 6.4 are intended to supersede, to the extent permitted by law, any right to contribution under the Securities Act, the Exchange Act or otherwise available.

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ARTICLE VII.

MISCELLANEOUS

7.1 Termination.

(a) Termination Right. The Representative shall have the right to terminate this Agreement at any time prior to any Closing Date, (i) if any domestic or international event or act or occurrence has materially disrupted, or in its reasonable opinion will in the immediate future materially disrupt, general securities markets in the United States; or (ii) if trading on any Trading Market shall have been suspended or materially limited, or minimum or maximum prices for trading shall have been fixed, or maximum ranges for prices for securities shall have been required by FINRA or by order of the Commission or any other government authority having jurisdiction, or (iii) if the United States shall have become involved in a new war or an increase in major hostilities, or (iv) if a banking moratorium has been declared by a New York State or federal authority, or (v) if a moratorium on foreign exchange trading has been declared which materially adversely impacts the United States securities markets, or (vi) if the Company shall have sustained a material loss by fire, flood, accident, hurricane, earthquake, theft, sabotage or other calamity or malicious act which, whether or not such loss shall have been insured, will, in the Representative’s reasonable opinion, make it inadvisable to proceed with the delivery of the Securities, or (vii) if the Company is in material breach of any of its representations, warranties or covenants hereunder, or (viii) if the Representative shall have become aware after the date hereof of such a material adverse change in the conditions or prospects of the Company, or such adverse material change in general market conditions as in the Representative’s reasonable judgment would make it impracticable to proceed with the offering, sale and/or delivery of the Securities or to enforce contracts made by the Underwriters for the sale of the Securities.

(b) Expenses. In the event this Agreement shall be terminated pursuant to Section 7.1(a), within the time specified herein or any extensions thereof pursuant to the terms herein, the Company shall be obligated to pay to the Representative its actual and accountable out of pocket expenses related to the transactions contemplated herein then due and payable, up to $_______ (provided, however, that such expense cap in no way limits or impairs the indemnification and contribution provisions of this Agreement).

(c) Indemnification. Notwithstanding any contrary provision contained in this Agreement, any election hereunder or any termination of this Agreement, and whether or not this Agreement is otherwise carried out, the provisions of Article VI shall not be in any way effected by such election or termination or failure to carry out the terms of this Agreement or any part hereof.

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7.2 Entire Agreement. The Transaction Documents, together with the exhibits and schedules thereto, the Prospectus and the Prospectus Supplement, contain the entire understanding of the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules. Notwithstanding anything herein to the contrary, the engagement letter, dated _______, 2021 (“Engagement Letter”), by and between the Company and the Representative, shall continue to be effective and the terms therein, including, without limitation, Section __ with respect to any future offerings, shall continue to survive and be enforceable by the Representative in accordance with its terms, provided that, in the event of a conflict between the terms of the Engagement Agreement and this Agreement, the terms of this Agreement shall prevail.

7.3 Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number or e-mail attachment at the email address set forth on the signature pages attached hereto at or prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number or e-mail attachment at the e-mail address as set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second (2^nd) Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto.

7.4 Amendments; Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Company and the Representative. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.

7.5 Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.

7.6 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns.

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7.7 Governing Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any action, suit or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either party shall commence an action or proceeding to enforce any provisions of the Transaction Documents, then, in addition to the obligations of the Company under Article VI, the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.

7.8 Survival. The representations and warranties contained herein shall survive the Closing and the Option Closing, if any, and the delivery of the Securities.

7.9 Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to each other party, it being understood that the parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

7.10 Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

7.11 Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, the Underwriters and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction Documents and hereby agree to waive and not to assert in any action for specific performance of any such obligation the defense that a remedy at law would be adequate.

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7.12 Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.

7.13 Construction. The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments thereto. In addition, each and every reference to share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement.

7.14 WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVE FOREVER ANY RIGHT TO TRIAL BY JURY.

(Signature Pages Follow)

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 If the foregoing correctly sets forth the understanding between the Underwriters and the Company, please so indicate in the space provided below for that purpose, whereupon this letter shall constitute a binding agreement among the Company and the several Underwriters in accordance with its terms.

Very truly yours, GUIDED THERAPEUTICS, INC.
By:
	Name:
	Title:

Address for Notice:

Copy to:

Accepted on the date first above written.

ROTH CAPITAL, PARTNERS, LLC

As the Representative of the several

Underwriters listed on Schedule I

By:                                                                      

Name:

Title:

Address for Notice:

888 San Clemente Drive, Suite 400

Newport Beach, CA 926690

Copy to:

Ellenoff Grossman & Schole LLP

1345 Avenue of the Americas

New York, New York 10105

E-mail: capmkts@egsllp.com

Attn: Charles E. Phillips

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SCHEDULE I

Schedule of Underwriters

Underwriters	Closing Shares	Closing Pre-Funded Warrants	Closing Common Warrants	Closing Purchase Price
Roth Capital Partners, LLC
Total

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EX-4.36

 EXHIBIT 4.36

WARRANT AGENCY AGREEMENT

WARRANT AGENCY AGREEMENT, dated as of ________ , 2022 (“Agreement”), among Guided Therapeutics, Inc., a Delaware corporation (the “Company”), and Computershare, Inc., a Delaware corporation (“Computershare”), and its wholly-owned subsidiary, Computershare Trust Company, N.A., a federally chartered trust company (collectively with Computershare, the “Warrant Agent”).

W I T N E S S E T H

WHEREAS, in an underwritten offering, the Company is offering shares of common stock, $0.001 par value per share (the “Common Stock”), prefunded warrants to purchase shares of Common Stock (the “Prefunded Warrants”), and warrants to purchase shares of Common Stock (the “Warrants”) in fixed combinations thereof (the “Offering”);

WHEREAS, the shares of Common Stock, Prefunded Warrants and Warrants to be issued in the Offering shall be immediately separable and will be issued separately, but will be purchased together in fixed combinations in the Offering;

WHEREAS, pursuant to an effective registration statement on Form S-1 (File No. 333-259871) (the “Registration Statement”) and the terms of the Warrant Certificate, the Company wishes to issue the Warrants in book entry form entitling the respective holders of the Warrants (the “Holders”, which term shall include a Holder’s transferees, successors and assigns and “Holder” shall include, if the Warrants are held in “street name,” a Participant (as defined below) or a designee appointed by such Participant) to purchase an aggregate of up to _____ shares of Common Stock (which includes Warrants to purchase up to _____ shares of Common Stock pursuant to an overallotment option granted to the underwriters in the Offering); and

WHEREAS, the Company wishes the Warrant Agent to act on behalf of the Company, and the Warrant Agent is willing so to act, in connection with the issuance, registration, transfer, exchange, exercise and replacement of the Warrants.

NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereby agree as follows:

Section 1. Certain Definitions. For purposes of this Agreement, the following terms have the meanings indicated:

(a) “Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.

(b) “Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in the City of New York are authorized or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in the City of New York generally are open for use by customers on such day.

(c) “Close of Business” on any given date means 5:00 p.m. (New York City time) on such date; provided, however, that if such date is not a Business Day it means 5:00 p.m. (New York City time) on the next succeeding Business Day.

(d) “Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

(e) “Warrant Certificate” means a certificate in the form attached as Exhibit 1 hereto, evidencing Warrants to purchase such number of Warrant Shares as is indicated therein, provided that any reference to the delivery of a Warrant Certificate in this Agreement shall include the delivery of a Global Warrant or a Definitive Certificate.

All other capitalized terms used but not otherwise defined herein shall have the meaning ascribed to such terms in the Warrant Certificate.

Section 2. Appointment of Warrant Agent. The Company hereby appoints the Warrant Agent to act as agent for the Company in accordance with the express terms and conditions hereof (and no implied terms and conditions), and the Warrant Agent hereby accepts such appointment.

Section 3. Global Warrants.

(a) The Warrants shall be registered securities and shall be evidenced by a global warrant certificate in the form of the Warrant Certificate (the Warrants evidenced by such global warrant certificate, the “Global Warrants”), which shall be deposited with the Warrant Agent and registered in the name of Cede & Co., a nominee of The Depository Trust Company (the “Depository”), or as otherwise directed by the Depository. The ownership of beneficial interests in the Global Warrants shall be shown on, and the transfer of such ownership shall be effected through, the records maintained by (i) the Depository or its nominee for each Global Warrant or (ii) institutions that have accounts with the Depository (such institution, with respect to a Global Warrant in its account, a “Participant”). The terms of this Agreement shall be read in conjunction with the terms of the Warrant Certificate. If there is a conflict between the express terms of this Agreement and the Warrant Certificate, the terms of the Warrant Certificate shall govern and be controlling, provided, however, that all provisions with respect to the rights, duties, protections and liability of the Warrant Agent only shall be determined and interpreted solely by the provisions of this Agreement and provided, further, that no provision of this Agreement shall affect or limit the obligations of the Company to the Holders under the Global Warrants or the Definitive Certificates.

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(b) If the Depository subsequently ceases to make its book-entry settlement system available for the Warrants, the Company may instruct the Warrant Agent regarding other arrangements for book-entry settlement. In the event that the Warrants are not eligible for, or it is no longer necessary to have the Warrants available in, book-entry form, the Warrant Agent shall provide written instructions to the Depository to deliver to the Warrant Agent for cancellation each Global Warrant, and the Company shall instruct the Warrant Agent to deliver to each Holder a certificate for such Holder’s Warrants in the form of the Warrant Certificate. The Company shall use its best efforts to enable the Warrants to be “DTC eligible” so that interests in the Warrants may be held in book-entry through the Depository for the term of the Warrants.

(c) A Holder has the right to elect at any time or from time to time a Warrant Exchange (as defined below) pursuant to a Warrant Certificate Request Notice (as defined below). Upon written notice by a Holder to the Warrant Agent for the exchange of some or all of such Holder’s Global Warrants for a separate certificate in the form attached hereto as Exhibit 1 (such separate certificate, a “Definitive Certificate”) evidencing the same number of Warrants, which request shall be in the form attached hereto as Annex A (a “Warrant Certificate Request Notice” and the date of delivery of such Warrant Certificate Request Notice by the Holder, the “Warrant Certificate Request Notice Date” and the deemed surrender upon delivery by the Holder of a number of Global Warrants for the same number of Warrants evidenced by a Definitive Certificate, a “Warrant Exchange”), the Warrant Agent shall promptly effect the Warrant Exchange and shall promptly issue and deliver, at the expense of the Company, to the Holder a Definitive Certificate for such number of Warrants in the name set forth in the Warrant Certificate Request Notice. Such Definitive Certificate shall be dated the original issue date of the Warrants, shall be manually executed by an authorized signatory of the Company, shall be in the form attached hereto as Exhibit 1, and shall be reasonably acceptable in all respects to such Holder. In connection with a Warrant Exchange, the Company agrees to deliver, or to direct the Warrant Agent to deliver, the Definitive Certificate to the Holder within five (5) Business Days of the Warrant Certificate Request Notice pursuant to the delivery instructions in the Warrant Certificate Request Notice (“Warrant Certificate Delivery Date”). If the Company fails for any reason to deliver to the Holder the Definitive Certificate subject to the Warrant Certificate Request Notice by the Warrant Certificate Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares evidenced by such Definitive Certificate (based on the VWAP (as defined in the Warrant Certificate) of the Common Stock on the Warrant Certificate Request Notice Date), $10 per Business Day for each Business Day after such Warrant Certificate Delivery Date until such Definitive Certificate is delivered or, prior to delivery of such Definitive Certificate, the Holder rescinds such Warrant Exchange. In no event shall the Warrant Agent be liable for the Company’s failure to deliver the Definitive Certificate by the Warrant Certificate Delivery Date. The Company covenants and agrees that, on the date of delivery of the Warrant Certificate Request Notice, the Holder shall be deemed to be the holder of the Definitive Certificate and, notwithstanding anything to the contrary set forth herein, the Definitive Certificate shall be deemed for all purposes to contain all of the terms and conditions of such Definitive Certificate and the terms of this Agreement, other than this Section 3(c), 3(d) and Section 9 herein, shall not apply to the Warrants evidenced by the Definitive Certificate. For purposes of this Section 3(c), the term “Holder” shall be deemed to be the beneficial owner of record of the Global Warrant. For purposes of clarity, notwithstanding anything contained in a Definitive Certificate, solely with respect to the rights, duties, obligations, protections, immunities and liability of the Warrant Agent, if any, this Agreement shall control.

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(d) A Holder of a Definitive Certificate (pursuant to a Warrant Exchange or otherwise) has the right to elect at any time or from time to time a Global Warrants Exchange (as defined below) pursuant to a Global Warrants Request Notice (as defined below). Upon written notice by a Holder to the Company for the exchange of some or all of such Holder’s Warrants evidenced by a Definitive Certificate for a beneficial interest in Global Warrants held in book-entry form through the Depositary evidencing the same number of Warrants, which request shall be in the form attached hereto as Annex B (a “Global Warrants Request Notice” and the date of delivery of such Global Warrants Request Notice by the Holder, the “Global Warrants Request Notice Date” and the surrender upon delivery by the Holder of the Warrants evidenced by Definitive Certificates for the same number of Warrants evidenced by a beneficial interest in Global Warrants held in book-entry form through the Depositary, a “Global Warrants Exchange”), the Company shall promptly effect the Global Warrants Exchange and shall promptly direct the Warrant Agent to issue and deliver to the Holder the Global Warrants for such number of Warrants in the Global Warrants Request Notice, which beneficial interest in such Global Warrants shall be delivered by the Depositary’s Deposit or Withdrawal at Custodian system to the Holder pursuant to the instructions in the Global Warrants Request Notice. In connection with a Global Warrants Exchange, the Company shall direct the Warrant Agent to deliver the beneficial interest in such Global Warrants to the Holder within three (3) Business Days of the Global Warrants Request Notice pursuant to the delivery instructions in the Global Warrant Request Notice (“Global Warrants Delivery Date”). If the Company fails for any reason to deliver to the Holder Global Warrants subject to the Global Warrants Request Notice by the Global Warrants Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares evidenced by such Global Warrants (based on the VWAP (as defined in the Warrants) of the Common Stock on the Global Warrants Request Notice Date), $10 per Business Day for each Business Day after such Global Warrants Delivery Date until such Global Warrants are delivered or, prior to delivery of such Global Warrants, the Holder rescinds such Global Warrants Exchange. In no event shall the Warrant Agent be liable for the Company’s failure to deliver the Global Warrants by the Global Warrants Delivery Date. The Company covenants and agrees that, upon the date of delivery of the Global Warrants Request Notice, the Holder shall be deemed to be the beneficial holder of the Global Warrants.

Section 4. Form of Warrants. The Warrant Certificate, together with the form of election to purchase Common Stock (“Notice of Exercise”) and the form of assignment to be printed on the reverse thereof, shall be in the form of the Warrant Certificate attached as Exhibit 1 hereto.

Section 5. Countersignature and Registration.

(a) Each Warrant Certificate shall be executed on behalf of the Company by its Chief Executive Officer, Chief Financial Officer or other authorized officer, either manually, by facsimile or by some other form of electronic signature. Each Warrant Certificate (other than any Definitive Certificate issued pursuant to a Warrant Exchange, which shall not require a countersignature of the Warrant Agent) shall be countersigned by the Warrant Agent either manually, by facsimile or by some other form of electronic signature and shall not be valid for any purpose unless so countersigned. In case any officer of the Company who shall have signed any of the Warrant Certificates shall cease to be such officer of the Company before countersignature by the Warrant Agent and issuance and delivery by the Company, such Warrant Certificates may be countersigned by the Warrant Agent, issued and delivered with the same force and effect as though the person who signed such Warrant Certificate had not ceased to be such officer of the Company; and any Warrant Certificate may be signed on behalf of the Company by any person who, at the actual date of the execution of such Warrant Certificate, shall be a proper officer of the Company to sign such Warrant Certificate, although at the date of the execution of this Agreement any such person was not such an officer.

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(b) The Warrant Agent will keep or cause to be kept, at one of its offices, or at the office of one of its agents, books for registration and transfer of the Warrant Certificates issued hereunder, other than the Warrants evidenced by any Definitive Certificate. Such books shall show the names and addresses of the respective Holders of the Warrant Certificates, the number of warrants evidenced on the face of each of such Warrant Certificate and the date of each of such Warrant Certificate. The Warrant Agent will create a special account for the issuance of Warrant Certificates. For purposes of clarity, the Warrant Agent shall not be required to keep a book for registration and transfer of Definitive Certificates.

Section 6. Transfer, Split Up, Combination and Exchange of Warrant Certificates; Mutilated, Destroyed, Lost or Stolen Warrant Certificates.

(a) With respect to the Global Warrants, subject to the provisions of the Warrant Certificate and the last sentence of this first paragraph of Section 6, at any time on or after the closing date of the Offering, and at or prior to the Close of Business on the Termination Date (as defined in the Warrant Certificate), any Warrant Certificate or Warrant Certificates or Global Warrant or Global Warrants may be transferred, split up, combined or exchanged for another Warrant Certificate or Warrant Certificates or Global Warrant or Global Warrants, entitling the Holder to purchase the same number of shares of Common Stock as the Warrant Certificate or Warrant Certificates or Global Warrant or Global Warrants surrendered then entitled such Holder to purchase. Any Holder desiring to transfer, split up, combine or exchange any Warrant Certificate or Global Warrant shall make such request in writing delivered to the Warrant Agent, and shall surrender the Warrant Certificate or Warrant Certificates or Global Warrant or Global Warrants, together with the required form of assignment and certificate duly executed and properly completed and such other documentation as the Warrant Agent may reasonably request (which in case of a Warrant in book entry or electronic form held through the Depository, including, without limitation, the Global Warrants, shall not include any ink-original documents and shall not include any medallion guarantee or other type of guarantee or notarization), to be transferred, split up, combined or exchanged at the office of the Warrant Agent designated for such purpose, provided that no such surrender is applicable to the Holder of a Definitive Certificate. Any requested transfer of Warrants in book-entry form shall be accompanied by customary evidence of authority of the party making such request that may be reasonably required by the Warrant Agent. Thereupon the Warrant Agent shall, subject to the last sentence of this first paragraph of Section 6, countersign and deliver to the Person entitled thereto a Warrant Certificate or Warrant Certificates or Global Warrant or Global Warrants, as the case may be, as so requested. The Company may require payment from the Holder of a sum sufficient to cover any tax or governmental charge, if any, that may be imposed in connection with any transfer, split up, combination or exchange of Warrant Certificates or Global Warrants. The Warrant Agent shall not have any duty or obligation to take any action under any section of this Agreement or any Warrant Certificate or Global Warrant that requires the payment of taxes and/or charges unless and until the Warrant Agent is reasonably satisfied that all such payments have been made.

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(b) Upon receipt by the Warrant Agent of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of any Warrant Certificate or Warrant Certificates or Global Warrant or Global Warrants, which evidence shall include an affidavit of loss, or in the case of mutilated certificates, the certificate or portion thereof remaining, and, in case of loss, theft or destruction, of indemnity or security acceptable to the Company and the Warrant Agent, including the posting of a surety bond (provided, however, that no posting of a surety bond shall be required in connection with any Global Warrants in book entry or electronic form held through the Depository) and satisfaction of any other reasonable requirements established by Section 8-405 of the Uniform Commercial Code as in effect in the State of New York, and reimbursement to the Company and the Warrant Agent of all reasonable expenses incidental thereto, and upon surrender to the Warrant Agent and cancellation of the Warrant Certificate or Warrant Certificates or Global Warrant or Global Warrants if mutilated, the Company will make and deliver a new Warrant Certificate or Warrant Certificates or Global Warrant or Global Warrants of like tenor to the Warrant Agent for delivery to the Holder in lieu of the Warrant Certificate or Warrant Certificates or Global Warrant or Global Warrants so lost, stolen, destroyed or mutilated; provided, however, that this Section 6(b) shall not apply to a Definitive Certificate which shall be governed by the terms of the Warrant Certificate.

Section 7. Exercise of Warrants; Exercise Price; Termination Date.

(a) The Warrants shall be exercisable commencing on the Initial Exercise Date. The Warrants shall cease to be exercisable and shall terminate and become void as set forth in Warrant Certificate. Subject to Section 7(b) below, the Holder of a Warrant may exercise the Warrant in whole or in part upon surrender of the Warrant Certificates or Global Warrants, if required pursuant to the terms of the Warrant Certificate, with the properly completed and duly executed Notice of Exercise and payment of the aggregate Exercise Price (unless exercised via a cashless exercise), which may be made, at the option of the Holder, by wire transfer or by certified or official bank check in United States dollars, to the Warrant Agent at the office of the Warrant Agent designated for such purposes. In the case of the Holder of a Global Warrant, the Holder shall deliver the executed Notice of Exercise (which shall not require any ink-original documents and shall not require any medallion guarantee or other type of guarantee or notarization of a Notice of Exercise) and the payment of the aggregate Exercise Price as described in this Section 7(a) and the Warrant Certificate. Notwithstanding any other provision in this Agreement, a holder whose interest in a Global Warrant is a beneficial interest in a Global Warrant held in book-entry form through the Depository (or another established clearing corporation performing similar functions), shall effect exercises by delivering to the Depository (or such other clearing corporation, as applicable) the appropriate instruction form for exercise, complying with the procedures to effect exercise that are required by the Depository (or such other clearing corporation, as applicable). Notwithstanding anything herein to the contrary, the Company acknowledges and agrees that, upon delivery of a Notice of Exercise or upon a Holder’s delivery of irrevocable instructions to such Holder’s Participant to exercise such Global Warrants, solely for purposes of Regulation SHO, such Holder shall be deemed for all corporate purposes to have exercised the Global Warrants and become the holder of record of the Warrant Shares with respect to such exercise at the time of such delivery, irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate Exercise Price (other than in the case of a cashless exercise) is received by the Warrant Agent by 3:00 p.m. (New York City time) on the second Trading Day (as defined in the Warrant Certificate) following the date of delivery of the Notice of Exercise or such delivery of irrevocable instructions to such Holder’s Participant to exercise such Global Warrants.

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(b) Upon the Warrant Agent’s receipt of the appropriate instruction form for exercise complying with the procedures to effect exercise of Global Warrants that are required by the Depository, accompanied by payment of the aggregate Exercise Price for the Warrant Shares to be purchased (other than in the case of a cashless exercise) (which shall not require any ink-original documents and shall not require any medallion guarantee or other type of guarantee or notarization of a Notice of Exercise or instruction form for exercise), the Company shall cause the Warrant Agent (or the transfer agent for the Common Stock) to, and the Warrant Agent (or the transfer agent for the Common Stock) shall, deliver the Warrant Shares underlying such Warrant Certificate or Global Warrant to be delivered to or upon the order of the Holder of such Warrant Certificate or Global Warrant, registered in such name or names as may be designated by such Holder, no later than the Warrant Share Delivery Date (as defined in the Warrant Certificate). If the Company is then a participant in the DWAC system of the Depository and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder or (B) the Warrant is being exercised via cashless exercise, then the Warrant Shares shall be transmitted by the Warrant Agent (or the transfer agent for the Common Stock) to the Holder by crediting the account of the Holder’s broker with the Depository through the DWAC system. Notwithstanding anything else to the contrary in this Agreement, except in the case of a cashless exercise, if any Holder fails to duly deliver payment to the Warrant Agent of an amount equal to the aggregate Exercise Price of the Warrant Shares to be purchased upon exercise of such Holder’s Warrant as set forth in Section 7(a) hereof by the Warrant Share Delivery Date, the Company will not obligated to cause the Warrant Agent (or the transfer agent for the Common Stock) to deliver any such Warrant Shares (via DWAC or otherwise) until the receipt of such payment, and the applicable Warrant Share Delivery Date shall be deemed to be extended by one Trading Day for each Trading Day (or part thereof) until such payment is delivered to the Warrant Agent. Upon receipt of a Notice of Exercise for a cashless exercise, the Warrant Agent shall deliver a copy of the Notice of Exercise to the Company and request from the Company, and the Company shall promptly calculate and transmit to the Warrant Agent in writing, the number of Warrant Shares issuable in connection with such cashless exercise. The Warrant Agent shall have no obligation under this Agreement to calculate the number of Warrant Shares issuable in connection with a cashless exercise nor shall the Warrant Agent have any duty or obligation to investigate or confirm whether the Company’s determination of the number of Warrant Shares issuable upon such exercise, pursuant to this Section 7, is accurate or correct.

(c) In case the Holder of any Warrant Certificate or Global Warrant shall exercise fewer than all Warrants evidenced thereby, upon the request of the Holder, a new Warrant Certificate or Global Warrant evidencing the number of Warrants equivalent to the number of Warrants remaining unexercised may be executed and delivered by the Company and, upon written instruction, countersigned by the Warrant Agent and delivered to the Holder of such Warrant Certificate or Global Warrant or to his duly authorized assigns in accordance with Section 4 of the Warrant Certificate, subject to the provisions of Section 6 hereof; provided, however, that this Section 7(c) shall not apply to a Definitive Certificate which shall be governed by the terms of the Warrant Certificate.

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(d) Cost Basis Information.

(1) In the event of a cash exercise of the Warrants, the Company hereby instructs the Warrant Agent to record cost basis for newly issued Warrant Shares to be equal to the Exercise Price.

(2) In the event of a cashless exercise, the Company shall provide cost basis for Warrant Shares issued pursuant to a cashless exercise at the time that the Company confirms the number of Warrant Shares issuable in connection with the cashless exercise to the Warrant Agent pursuant to Section 7(b) hereof.

Section 8. Cancellation and Destruction of Warrant Certificates. All Warrant Certificates surrendered for the purpose of exercise, transfer, split up, combination or exchange shall, if surrendered to the Company or to any of its agents, be delivered to the Warrant Agent for cancellation or in canceled form, or, if surrendered to the Warrant Agent, shall be canceled by it, and no Warrant Certificates shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Agreement or the Warrant Certificate. The Company shall deliver to the Warrant Agent for cancellation and retirement, and the Warrant Agent shall so cancel and retire, any other Warrant Certificate purchased or acquired by the Company otherwise than upon the exercise thereof.

Section 9. Certain Representations; Reservation and Availability of Shares of Common Stock or Cash.

(a) This Agreement has been duly authorized, executed and delivered by the Company and, assuming due authorization, execution and delivery hereof by the Warrant Agent, constitutes a valid and legally binding obligation of the Company enforceable against the Company in accordance with its terms, and the Warrants have been duly authorized, executed and issued by the Company and, assuming due authentication thereof by the Warrant Agent pursuant hereto and payment therefor by the Holders as provided in the Registration Statement, constitute valid and legally binding obligations of the Company enforceable against the Company in accordance with their terms and entitled to the benefits hereof; in each case except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally or by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law).

(b) The Company covenants and agrees that the Company shall cause to be reserved and kept available out of its authorized and unissued shares of Common Stock or its authorized and issued shares of Common Stock held in its treasury, free from preemptive rights, the number of shares of Common Stock that will be sufficient to permit the exercise in full of all outstanding Warrants.

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(c) The Warrant Agent will create a reserve account, into which shall be reserved such number of shares of Common Stock that are issuable upon the exercise of the Warrants in full, and from such reserve account the Common Stock shall be issued upon the exercise of Warrants.

(d) The Company further covenants and agrees that the Company shall pay when due and payable any and all federal and state transfer taxes and charges which may be payable in respect of the original issuance or delivery of the Warrant Certificates or the Warrant Shares upon exercise of the Warrants. The Company shall not, however, be required to pay any tax or governmental charge which may be payable in respect of any transfer involved in the transfer or delivery of Warrant Certificates or the issuance or delivery of Warrant Shares in a name other than that of the Holder of the Warrant Certificate evidencing the Warrants surrendered for exercise or to issue or deliver any Warrant Shares upon the exercise of any Warrants until any such tax or governmental charge shall have been paid (any such tax or governmental charge being payable by the Holder of such Warrant Certificate at the time of surrender) or until it has been established to the reasonable satisfaction of the Company and the Warrant Agent that no such tax or governmental charge is due. The Warrant Agent shall not have any duty or obligation to take any action under any section of this Agreement or any Warrant that requires the payment of taxes and/or charges unless and until the Warrant Agent is reasonably satisfied that all such payments have been made.

Section 10. Common Stock Record Date. Each Person in whose name any certificate for shares of Common Stock is issued (or to whose broker’s account is credited shares of Common Stock through the DWAC system) upon the exercise of Warrants shall for all purposes be deemed to have become the holder of record for the Common Stock represented thereby on, and such certificate shall be dated the date on which submission of the Notice of Exercise was made, provided that the Warrant Certificate evidencing such Warrant was duly surrendered (but only if required pursuant to the terms of the Warrant Certificate) and payment of the aggregate Exercise Price (and any applicable transfer taxes) was received on or prior to the time set forth in Section 7; provided, however, that if the date of submission of the Notice of Exercise is a date upon which the Common Stock transfer books of the Company are closed, such Person shall be deemed to have become the record holder of such shares on, and such certificate shall be dated, the next succeeding day on which the Common Stock transfer books of the Company are open.

Section 11. Adjustment of Exercise Price, Number of Shares of Common Stock or Number of the Warrants. The Exercise Price, the number of shares underlying each Warrant and the number of Warrants outstanding are subject to adjustment from time to time as provided in Section 3 of the Warrant Certificate. In the event that at any time, as a result of an adjustment made pursuant to Section 3 of the Warrant Certificate, the Holder of any Warrant thereafter exercised shall become entitled to receive any shares of capital stock of the Company other than shares of Common Stock, thereafter the number of such other shares so receivable upon exercise of any Warrant shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the shares contained in Section 3 of the Warrant Certificate, and the provisions of Sections 7, 9 and 14 of this Agreement with respect to the shares of Common Stock shall apply on like terms to any such other shares. All Warrants originally issued by the Company subsequent to any adjustment made to the Exercise Price pursuant to the Warrant Certificate shall evidence the right to purchase, at the adjusted Exercise Price, the number of shares of Common Stock purchasable from time to time hereunder upon exercise of the Warrants, all subject to further adjustment as provided herein.

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Section 12. Certification of Adjusted Exercise Price or Number of Shares of Common Stock. Whenever the Exercise Price or the number of shares of Common Stock issuable upon the exercise of each Warrant is adjusted as provided in Section 3 of the Warrant Certificate, the Company shall promptly deliver a certificate to the Warrant Agent and each transfer agent of the Common Stock setting forth the Exercise Price of each Warrant as so adjusted, and a brief statement of the facts accounting for such adjustment. The Warrant Agent shall be fully protected in relying on such certificate and on any adjustment or statement contained therein and shall have no duty or liability with respect to, and shall not be deemed to have knowledge of any such adjustment or any such event unless and until it shall have received such certificate.

Section 13. Bank Accounts. All funds received by Computershare under this Agreement that are to be distributed or applied by the Warrant Agent in the performance of services to be provided hereunder (the “Funds”) shall be held by Computershare as agent for the Company and deposited in one or more bank accounts to be maintained by Computershare in its name as agent for the Company. Until paid pursuant to the terms of this Agreement, Computershare will hold the Funds through such accounts in: deposit accounts of commercial banks with Tier 1 capital exceeding $1 billion or with an average rating above investment grade by S&P (LT Local Issuer Credit Rating), Moody’s (Long Term Rating) and Fitch Ratings, Inc. (LT Issuer Default Rating) (each as reported by Bloomberg Finance L.P.). The Warrant Agent shall have no responsibility or liability for any diminution of the Funds that may result from any deposit made by Computershare Inc. in accordance with this paragraph, including any losses resulting from a default by any bank, financial institution or other third party. Computershare may from time to time receive interest, dividends or other earnings in connection with such deposits. The Warrant Agent shall not be obligated to pay such interest, dividends or earnings to the Company, any holder or any other party.

Section 14. Fractional Shares of Common Stock.

(a) The Company shall not issue fractions of Warrants or distribute Warrant Certificates which evidence fractional Warrants. Whenever any fractional Warrant would otherwise be required to be issued or distributed, the actual issuance or distribution shall reflect a rounding up of such fraction to the nearest whole Warrant.

(b) The Company shall not issue fractions of Warrant Shares upon exercise of Warrants or distribute stock certificates which evidence fractional shares of Common Stock. Whenever any fraction of a share of Common Stock would otherwise be required to be issued or distributed, the actual issuance or distribution in respect thereof shall be made in accordance with Section 2(d)(v) of the Warrant Certificate.

Section 15. Conditions of the Warrant Agent’s Obligations. The Warrant Agent accepts its obligations herein set forth upon the express terms and conditions hereof, including the following to all of which the Company agrees and to all of which the rights hereunder of the Holders from time to time of the Warrants shall be subject:

(a) Compensation. The Company agrees to pay the Warrant Agent compensation for its services in accordance with the fee schedule agreed between the Company and Warrant Agent and shall reimburse the Warrant Agent upon demand for all expenditures that the Warrant Agent may reasonably incur (including, without limitation, reasonable fees and expenses of counsel) in connection with the preparation, delivery, negotiation, amendment, administration and the execution of this Agreement and the exercise and performance of its duties hereunder.

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(b) Indemnification. The Company covenants and agrees to indemnify and to hold the Warrant Agent harmless against any costs, expenses (including reasonable fees and expenses of its legal counsel), losses or damages, which may be paid, incurred or suffered by or to which it may become subject, arising from or out of, directly or indirectly, any claims or liability resulting from its actions or omissions as Warrant Agent pursuant hereto; provided, that such covenant and agreement does not extend to, and the Warrant Agent shall not be indemnified with respect to, such costs, expenses, losses and damages incurred or suffered by the Warrant Agent as a result of, or arising out of, its gross negligence, bad faith, or willful misconduct (each as determined in a final non-appealable judgment by a court of competent jurisdiction). The costs and expenses incurred by the Warrant Agent in enforcing this right of indemnification shall be paid by the Company.

(c) Agent for the Company. In acting under this Agreement and in connection with the Warrants, the Warrant Agent is acting solely as agent of the Company and does not assume any obligations or relationship of agency or trust for or with any of the Holders of Warrants or beneficial owners of Warrants.

(d) Counsel. The Warrant Agent may consult with counsel satisfactory to it, which may include counsel for the Company, and the advice of such counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted to be taken by it hereunder in the absence of bad faith and in accordance with the advice of such counsel.

(e) Documents. The Warrant Agent shall be protected and shall incur no liability for or in respect of any action taken or omitted by it in reliance upon the Global Warrants, any Warrant Certificate, notice, direction, consent, certificate, affidavit, statement or other paper or document reasonably believed by it to be genuine and to have been presented or signed by the proper parties.

(f) Certain Transactions. The Warrant Agent, and its officers, directors, Affiliates and employees, may become the owner of, or acquire any interest in, Warrants, with the same rights that it or they would have if it were not the Warrant Agent hereunder, and, to the extent permitted by applicable law, it or they may engage or be interested in any financial or other transaction with the Company and may act on, or as Depository, trustee or agent for, any committee or body of Holders of Warrants or other obligations of the Company as freely as if it were not the Warrant Agent hereunder. Nothing in this Agreement shall be deemed to prevent the Warrant Agent from acting as trustee under any indenture to which the Company is a party.

(g) No Liability for Interest. Unless otherwise agreed with the Company, the Warrant Agent shall have no liability for interest on any monies at any time received by it pursuant to any of the provisions of this Agreement or of the Warrant Certificates.

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(h) No Implied Obligations. The Warrant Agent shall be obligated to perform only such duties as are expressly set forth herein and no implied duties or obligations shall be read into this Agreement or the Warrant Certificates against the Warrant Agent. The Warrant Agent shall not be under any obligation to take any action hereunder which may tend to involve it in any expense or liability, the payment of which within a reasonable time is not, in its reasonable opinion, assured to it. The Warrant Agent shall not be accountable or under any duty or responsibility for the use by the Company of any of the Warrant Certificates authenticated by the Warrant Agent and delivered by it to the Company pursuant to this Agreement or for the application by the Company of the proceeds of the exercise of the Warrants. The Warrant Agent shall have no duty or responsibility in case of any default by the Company in the performance of its covenants or agreements contained herein or in the Warrant Certificates or in the case of the receipt of any written demand from a Holder of a Warrant Certificate with respect to such default, including, without limiting the generality of the foregoing, any duty or responsibility to initiate or attempt to initiate any proceedings at law.

(i) Instructions; Certifications. From time to time, the Company may provide the Warrant Agent with instructions or certifications concerning or related to the services performed by the Warrant Agent hereunder. In addition, at any time the Warrant Agent may apply to any officer of the Company for instruction, and may consult with legal counsel for the Warrant Agent or the Company with respect to any matter arising in connection with the services to be performed by the Warrant Agent under this Agreement. The Warrant Agent and its employees, agents and subcontractors shall not be liable and shall be indemnified by the Company for any action taken, suffered or omitted to be taken by Warrant Agent, its employees, agents and subcontractors in reliance upon any Company instructions, certifications or upon the advice or opinion of such counsel. The Warrant Agent shall not be held to have notice of any change of authority of any person, until receipt of written notice thereof from the Company.

(j) The Warrant Agent shall not have any duty or responsibility in the case of the receipt of any written demand from any holder of Warrants with respect to any action or default by the Company, including, without limiting the generality of the foregoing, any duty or responsibility to initiate or attempt to initiate any proceedings at law or otherwise or to make any demand upon the Company.

(k) The Warrant Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its attorney or agents, and the Warrant Agent shall not be answerable or accountable for any act, default, neglect or misconduct of any such attorney or agents or for any loss to the Company resulting from any such act, default, neglect or misconduct, absent gross negligence, bad faith or willful misconduct (each as determined by a final non-appealable judgment of a court of competent jurisdiction) in the selection and continued employment thereof.

(l) The Warrant Agent shall not be obligated to expend or risk its own funds or to take any action that it believes would expose or subject it to expense or liability or to a risk of incurring expense or liability, unless it has been furnished with assurances of repayment or indemnity satisfactory to it.

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(m) The Warrant Agent shall not be liable or responsible for any failure of the Company to comply with any of its obligations relating to any registration statement filed with the Commission or this Agreement, including without limitation obligations under applicable regulation or law.

(n) The Warrant Agent shall not be accountable or under any duty or responsibility for the use by the Company of any Warrants authenticated by the Warrant Agent and delivered by it to the Company pursuant to this Agreement or for the application by the Company of the proceeds of the issue and sale, or exercise, of the Warrants.

(o) The Warrant Agent may rely on and be fully authorized and protected in acting or failing to act upon (a) any guaranty of signature by an “eligible guarantor institution” that is a member or participant in the Securities Transfer Agents Medallion Program or other comparable “signature guarantee program” or insurance program in addition to, or in substitution for, the foregoing; or (b) any law, act, regulation or any interpretation of the same even though such law, act, or regulation may thereafter have been altered, changed, amended or repealed.

(p) In the event the Warrant Agent believes any ambiguity or uncertainty exists hereunder or in any notice, instruction, direction, request or other communication, paper or document received by the Warrant Agent hereunder, the Warrant Agent, may, in its sole discretion, refrain from taking any action, and shall be fully protected and shall not be liable in any way to Company, the holder of any Warrant or any other Person for refraining from taking such action, unless the Warrant Agent receives written instructions signed by the Company which eliminates such ambiguity or uncertainty to the satisfaction of Warrant Agent.

(q) Delivery of Exercise Price. The Warrant Agent shall forward funds received for warrant exercises under this Agreement in a given month by the fifth (5^th) Business Day of the following month by wire transfer to an account designated by the Company.

(r) Opinion of Counsel. The Company shall provide an opinion of counsel reasonably satisfactory to counsel to the Warrant Agent prior to the effective date of this Agreement to set up a reserve of Warrants and related shares of Common Stock. The opinion shall state that all Warrants or Common Stock, as applicable, are: (1) registered under the Securities Act or are exempt from such registration, and all appropriate state securities law filings have been made with respect to the warrants or shares; and (2) validly issued, fully paid and non-assessable.

(s) Confidentiality. The Warrant Agent and the Company agree that all books, records, information and data pertaining to the business of the other party, including inter alia, personal, non-public Holder information, which are exchanged or received pursuant to the negotiation or the carrying out of this Agreement including the compensation for services performed hereunder shall remain confidential, and shall not be voluntarily disclosed to any other person, except as may be required by law, including, without limitation, pursuant to subpoenas from state or federal government authorities (e.g., in divorce and criminal actions).

(t) Consequential Damages. Neither party to this Agreement shall be liable to the other party for any consequential, indirect, punitive, special or incidental damages under any provisions of this Agreement or for any consequential, indirect, punitive, special or incidental damages arising out of any act or failure to act hereunder even if that party has been advised of or has foreseen the possibility of such damages.

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(u) Limitation of Liability. Notwithstanding anything contained herein to the contrary, the Warrant Agent’s aggregate liability during any term of this Agreement with respect to, arising from, or arising in connection with this Agreement, or from all services provided or omitted to be provided under this Agreement, whether in contract, or in tort, or otherwise, is limited to, and shall not exceed, the amounts paid hereunder by the Company to the Warrant Agent as fees and charges, but not including reimbursable expenses, during the twelve (12) months immediately preceding the event for which recovery from the Warrant Agent is being sought.

(v) The rights and obligations of the parties set forth in this Section 15 shall survive the termination of the Warrants, the termination of this Agreement and the resignation, replacement or removal of the Warrant Agent.

Section 16. Purchase or Consolidation or Change of Name of Warrant Agent.

(a) Any Person into which the Warrant Agent or any successor Warrant Agent may be merged or with which it may be consolidated, or any Person resulting from any merger or consolidation to which the Warrant Agent or any successor Warrant Agent shall be party, or any Person succeeding to the shareholder services business of the Warrant Agent or any successor Warrant Agent, shall be the successor to the Warrant Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided that such Person would be eligible for appointment as a successor Warrant Agent under the provisions of Section 18. In case at the time such successor Warrant Agent shall succeed to the agency created by this Agreement any of the Warrant Certificates shall have been countersigned but not delivered, any such successor Warrant Agent may adopt the countersignature of the predecessor Warrant Agent and deliver such Warrant Certificates so countersigned; and in case at that time any of the Warrant Certificates shall not have been countersigned, any successor Warrant Agent may countersign such Warrant Certificates either in the name of the predecessor Warrant Agent or in the name of the successor Warrant Agent; and in all such cases such Warrant Certificates shall have the full force provided in the Warrant Certificates and in this Agreement.

(b) In case at any time the name of the Warrant Agent shall be changed and at such time any of the Warrant Certificates shall have been countersigned but not delivered, the Warrant Agent may adopt the countersignature under its prior name and deliver Warrant Certificates so countersigned; and in case at that time any of the Warrant Certificates shall not have been countersigned, the Warrant Agent may countersign such Warrant Certificates either in its prior name or in its changed name; and in all such cases such Warrant Certificates shall have the full force provided in the Warrant Certificates and in this Agreement.

Section 17. Duties of Warrant Agent. The Warrant Agent undertakes the duties and obligations imposed by this Agreement upon the following express terms and conditions, by all of which the Company, by its acceptance hereof, shall be bound:

(a) Whenever in the performance of its duties under this Agreement the Warrant Agent shall deem it necessary or desirable that any fact or matter be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed by the Chief Executive Officer, Chief Financial Officer or President of the Company; and such certificate shall be full authorization and protection to the Warrant Agent, and the Warrant Agent shall incur no liability for or in respect of for any action taken, suffered or omitted to be taken by it under the provisions of this Agreement in reliance upon such certificate.

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(b) Subject to the limitation set forth in Section 15, the Warrant Agent shall be liable hereunder only for its own gross negligence, bad faith or willful misconduct (each as determined by a final, non-appealable judgment of a court of competent jurisdiction).

(c) The Warrant Agent shall not be liable for or by reason of any of the statements of fact or recitals contained in this Agreement or in the Warrant Certificates (except its countersignature thereof) by the Company or be required to verify the same, but all such statements and recitals are and shall be deemed to have been made by the Company only.

(d) The Warrant Agent shall not have any liability or be under any responsibility in respect of the validity of this Agreement or the execution and delivery hereof (except the due execution hereof by the Warrant Agent) or in respect of the validity or execution of any Warrant Certificate (except its countersignature thereof); nor shall it be responsible for any breach by the Company of any covenant or condition contained in this Agreement or in any Warrant Certificate; nor shall it be responsible for the adjustment of the Exercise Price or the making of any change in the number of Warrant Shares required under the provisions of Section 11 or responsible for the manner, method or amount of any such change or adjustment or the ascertaining of the existence of facts that would require any such adjustment or change (except with respect to the exercise of Warrants evidenced by Warrant Certificates after actual notice of any adjustment of the Exercise Price); nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any shares of Common Stock to be issued pursuant to this Agreement or any Warrant Certificate or as to whether any shares of Common Stock will, when issued, be duly authorized, validly issued, fully paid and nonassessable.

(e) Each party hereto agrees that it will perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further and other acts, instruments and assurances as may reasonably be required by the other party hereto for the carrying out or performing by any party of the provisions of this Agreement.

(f) The Warrant Agent shall not be obligated to expend or risk its own funds or to take any action that it believes would expose or subject it to expense or liability or to a risk of incurring expense or liability, unless it has been furnished with assurances of repayment or indemnity satisfactory to it.

(g) This Section 17 shall survive the termination of the Warrants, the termination of this Agreement and the resignation, replacement or removal of the Warrant Agent.

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Section 18. Change of Warrant Agent. The Warrant Agent may resign and be discharged from its duties under this Agreement upon thirty (30) days’ notice in writing sent to the Company and, in the event that the Warrant Agent or one of its Affiliates is not also the transfer agent for the Company, to each transfer agent of the Common Stock. In the event the transfer agency relationship in effect between the Company and the Warrant Agent terminates, the Warrant Agent will be deemed to have resigned automatically and be discharged from its duties under this Agreement as of the effective date of such termination, and the Company shall be responsible for sending any required notice thereunder. The Company may remove the Warrant Agent or any successor Warrant Agent upon thirty (30) days’ notice in writing, sent to the Warrant Agent or successor Warrant Agent, as the case may be, and to each transfer agent of the Common Stock, and to the Holders of the Warrant Certificates. If the Warrant Agent shall resign or be removed or shall otherwise become incapable of acting, the Company shall appoint a successor to the Warrant Agent. If the Company shall fail to make such appointment within a period of thirty (30) days after such removal or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Warrant Agent or by the Holder of a Warrant Certificate (which shall, with such notice, submit its Warrant Certificate for inspection by the Company), then the Holder of any Warrant Certificate may apply to any court of competent jurisdiction for the appointment of a new Warrant Agent, provided that, for purposes of this Agreement, the Company shall be deemed to be the Warrant Agent until a new warrant agent is appointed. Any successor Warrant Agent, whether appointed by the Company or by such a court, shall be a Person (other than a natural person) organized and doing business under the laws of the United States or of a state thereof, in good standing, which is authorized under such laws to exercise shareholder services powers and is subject to supervision or examination by federal or state authority and which has at the time of its appointment as Warrant Agent a combined capital and surplus (together with its Affiliates) of at least $50,000,000. After appointment, the successor Warrant Agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Warrant Agent without further act or deed; but the predecessor Warrant Agent shall deliver and transfer to the successor Warrant Agent any property at the time held by it hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for the purpose but such predecessor Warrant Agent shall not be required to make any additional expenditure (without prompt reimbursement by the Company) or assume any additional liability in connection with the foregoing. Not later than the effective date of any such appointment, the Company shall file notice thereof in writing with the predecessor Warrant Agent and each transfer agent of the Common Stock, and mail a notice thereof in writing to the Holders of the Warrant Certificates. However, failure to give any notice provided for in this Section 18, or any defect therein, shall not affect the legality or validity of the resignation or removal of the Warrant Agent or the appointment of the successor Warrant Agent, as the case may be.

Section 19. Issuance of New Warrant Certificates. Notwithstanding any of the provisions of this Agreement, but subject to the terms of the Warrant Certificate, the Company may, at its option, issue new Warrant Certificates or Global Warrants evidencing Warrants in such form as may be approved by its Board of Directors to reflect any adjustment or change in the Exercise Price per share and the number or kind or class of shares of stock or other securities or property purchasable under the several Warrant Certificates or Global Warrants made in accordance with the provisions of this Agreement.

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Section 20. Notices. Notices or demands authorized by this Agreement to be given or made (i) by the Warrant Agent or by the Holder of any Global Warrants or Warrant Certificate to or on the Company, (ii) by the Company or by the Holder of any Global Warrants or Warrant Certificate to or on the Warrant Agent or (iii) by the Company or the Warrant Agent to the Holder of any Global Warrants or Warrant Certificate, shall be deemed given when in writing (a) on the date delivered, if delivered personally, (b) on the first Business Day following the deposit thereof with Federal Express or another recognized overnight courier, if sent by Federal Express or another recognized overnight courier, (c) on the fourth Business Day following the mailing thereof with postage prepaid, if mailed by registered or certified mail (return receipt requested), and (d) the date of transmission, if such notice or communication is delivered via facsimile or email attachment at or prior to 5:30 p.m. (New York City time) on a Business Day and (e) the next Business Day after the date of transmission, if such notice or communication is delivered via facsimile or email attachment on a day that is not a Business Day or later than 5:30 p.m. (New York City time) on any Business Day, in each case to the parties at the following addresses (or at such other address for a party as shall be specified by like notice); provided, however, that email notice shall not constitute effective notice to the Warrant Agent unless receipt is confirmed in writing by the Warrant Agent, or, if no such confirmation is provided by the Warrant Agent, such email is followed by notice sent by overnight courier service to be delivered on the next Business Day following such email:

(a) If to the Company, to:

Guided Therapeutics, Inc.

5835 Peachtree Corners East, Suite B

Norcross, Georgia 30092

Attention:

E-mail:

Facsimile Number:

(b) If to the Warrant Agent, to:

Computershare Inc.

Computershare Trust Company, N.A.

150 Royall Street

Canton, MA 02021

Attention: Client Services

E-mail:

Facsimile Number:

(c) If to the Holder of any Global Warrants or Warrant Certificates, to the address of such Holder as shown on the registry books of the Company. Any notice required to be delivered by the Company to the Holder of any Warrant may be given by the Warrant Agent on behalf of the Company. Notwithstanding any other provision of this Agreement, where this Agreement provides for notice of any event to a Holder of any Warrant, such notice shall be sufficiently given if given to the Depository (or its designee) pursuant to the procedures of the Depository or its designee.

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Section 21. Supplements and Amendments.

(a) The Company and the Warrant Agent may from time to time supplement or amend this Agreement without the approval of any Holders of Global Warrants in order to (i) add to the covenants and agreements of the Company for the benefit of the Holders of the Global Warrants, (ii) to surrender any rights or power reserved to or conferred upon the Company in this Agreement, (iii) cure any ambiguity, or (iv) correct or supplement any provision herein which may be defective or inconsistent with any other provision herein, provided that such addition, correction, cure or surrender shall not adversely affect the interests or rights of the Holders of the Global Warrants or Warrant Certificates in any material respect. As a condition precedent to the Warrant Agent’s execution of any supplement or amendment, the Company shall deliver to the Warrant Agent a certificate from a duly authorized officer of the Company that states that the proposed amendment complies with the terms of this Section 21. No supplement or amendment to this Agreement shall be effective unless executed by the Warrant Agent. The Warrant Agent may, but shall not be obligated to, execute any amendment or supplement or waiver that affects the Warrant Agent’s own rights, duties or immunities under this Agreement.

Section 22. Successors. All covenants and provisions of this Agreement by or for the benefit of the Company or the Warrant Agent shall bind and inure to the benefit of their respective successors and assigns hereunder.

Section 23. Benefits of this Agreement. Nothing in this Agreement shall be construed to give any Person other than the Company, the Holders of Global Warrants or Warrant Certificates and the Warrant Agent any legal or equitable right, remedy or claim under this Agreement; but this Agreement shall be for the sole and exclusive benefit of the Company, the Warrant Agent and the Holders of the Global Warrants or Warrant Certificates.

Section 24. Governing Law. This Agreement and each Warrant Certificate and Global Warrant issued hereunder shall be governed by, and construed in accordance with, the laws of the State of New York without giving effect to the conflicts of law principles thereof.

Section 25. Counterparts. This Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. A signature to this Agreement transmitted electronically shall have the same authority, effect and enforceability as an original signature.

Section 26. Captions. The captions of the sections of this Agreement have been inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof.

Section 27. Information. The Company agrees to promptly provide to the Holders of the Warrants any information it provides to the holders of the Common Stock, except to the extent any such information is publicly available on the EDGAR system (or any successor thereof) of the Securities and Exchange Commission.

Section 28. USA PATRIOT Act Notice. The Warrant Agent hereby notifies the Company that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Patriot Act”), it must obtain, verify and record certain information that identifies the Company, which information includes the name and address of the Company and other information that will allow the Warrant Agent to identify the Company in accordance with the Patriot Act.

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Section 29. Force Majeure. Notwithstanding anything to the contrary contained herein, the Warrant Agent will not be liable for any delays or failures in performance resulting from acts beyond its reasonable control including, without limitation, acts of God, terrorist acts, shortage of supply, breakdowns or malfunctions, interruptions or malfunction of computer facilities, or loss of data due to power failures or mechanical difficulties with information storage or retrieval systems, labor difficulties, war, or civil unrest; provided, however, that this provision shall not affect or limit in any way the obligations of the Company to the Holders under the Global Warrants or the Warrant Certificates.

Section 30. Severability. Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Agreement; provided, however, that if such prohibited and invalid provision shall adversely affect the rights, immunities, liabilities, duties or obligations of the Warrant Agent, the Warrant Agent shall be entitled to resign immediately upon written notice to the Company.

(Signature page follows)

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.

GUIDED THERAPEUTICS, INC.

By:

Name:

Title:

COMPUTERSHARE, INC., AND

COMPUTERSHARE TRUST COMPANY, N.A.

as Warrant Agent

By:

Name:

Title:

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Annex A: Form of Warrant Certificate Request Notice

WARRANT CERTIFICATE REQUEST NOTICE

To: Computershare, Inc. and Computershare Trust Company, N.A., collectively as Warrant Agent for Guided Therapeutics, Inc. (the “Company”)

The undersigned Holder of Common Stock Purchase Warrants (“Warrants”) in the form of Global Warrants issued by the Company hereby elects to receive a Warrant Certificate evidencing the Warrants held by the Holder as specified below:

1. Name of Holder of Warrants in form of Global Warrants: _____________________________

2. Name of Holder in Warrant Certificate (if different from name of Holder of Warrants in form of Global Warrants): ________________________________

3. Number of Warrants in name of Holder in form of Global Warrants: ___________________

4. Number of Warrants for which Warrant Certificate shall be issued: __________________

5. Number of Warrants in name of Holder in form of Global Warrants after issuance of Warrant Certificate, if any: ___________

6. Warrant Certificate shall be delivered to the following address:

______________________________

______________________________

______________________________

______________________________

The undersigned hereby acknowledges and agrees that, in connection with this Warrant Exchange and the issuance of the Warrant Certificate, the Holder is deemed to have surrendered the number of Warrants in form of Global Warrants in the name of the Holder equal to the number of Warrants evidenced by the Warrant Certificate.

[SIGNATURE OF HOLDER]

Name of Investing Entity: __________________________________________________

Signature of Authorized Signatory of Investing Entity: ___________________________

Name of Authorized Signatory: ______________________________________________

Title of Authorized Signatory: _______________________________________________

Date: ___________________________________________________________________

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Annex B: Form of Global Warrants Request Notice

GLOBAL WARRANTS REQUEST NOTICE

To: Computershare, Inc. and Computershare Trust Company, N.A., collectively as Warrant Agent for Guided Therapeutics, Inc. (the “Company”)

The undersigned Holder of Common Stock Purchase Warrants (“Warrants”) in the form of Definitive Certificate issued by the Company hereby elects to receive Global Warrants evidencing the Warrants held by the Holder as specified below:

1. Name of Holder of Warrants in form of Definitive Certificate: _____________________________

2. Name of Holder of Global Warrant (if different from name of Holder of Warrants in form of Definitive Certificate): ________________________________

3. Number of Warrants in name of Holder in form of Definitive Certificate: ___________________

4. Number of Warrants for which Global Warrants shall be issued: __________________

5. Number of Warrants in name of Holder in form of Definitive Certificate after issuance of Global Warrants, if any: ___________

6. Global Warrants shall be delivered pursuant to the following DWAC instructions:

______________________________

______________________________

______________________________

______________________________

The undersigned hereby acknowledges and agrees that, in connection with this Global Warrants Exchange and the issuance of the Global Warrants, the Holder is deemed to have surrendered the number of Warrants in form of Definitive Certificate in the name of the Holder equal to the number of Warrants evidenced by the Global Warrants.

[SIGNATURE OF HOLDER]

Name of Investing Entity: __________________________________________________

Signature of Authorized Signatory of Investing Entity: ___________________________

Name of Authorized Signatory: ______________________________________________

Title of Authorized Signatory: _______________________________________________

Date: ___________________________________________________________________

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Exhibit 1: Form of Warrant Certificate

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EX-5.1

EXHIBIT 5.1

 1345 AVENUE OF THE AMERICAS, 11th FLOOR NEW YORK, NEW YORK 10017 TELEPHONE: (212) 370-1300 FACSIMILE: (212) 370-7889 www.egsllp.com

June 29, 2022

Guided Therapeutics, Inc.

5835 Peachtree Corners East, Suite B

Norcross, Georgia 33606

Re: Registration Statement on Form S-1 (333-259871)

Ladies and Gentlemen:

We have acted as counsel to Guided Therapeutics, Inc., a Delaware corporation (the “ Company”), in connection with the above-referenced registration statement (the “Registration Statement”) initially filed with the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “Act”), on September 29, 2021 (the “Registration Statement”), relating to the offering by the Company of shares (the “Shares”) of the Company’s common stock, par value $0.001 per share (“ Common Stock”), pre-funded warrants to purchase Common Stock (“Pre-Funded Warrants”), and warrants to purchase shares of Common Stock (the “Public Warrants” and collectively with the Pre- Funded Warrants, the “Warrants”) and shares of Common Stock issuable upon the exercise of the Warrants (the “Warrant Shares”).

The Shares, Warrants and Warrant Shares are to be sold by the Company pursuant to an underwriting agreement (the “Underwriting Agreement”) to be entered into by and between the Company and Roth Capital Partners, LLC on behalf of themselves and as representative to the several underwriters to be named therein. The securities are to be offered and sold in the manner described in the Registration Statement and the related prospectus included therein (the “Prospectus”).

For purposes of rendering the opinions set forth below, we have examined such documents and reviewed such questions of law as we have considered necessary and appropriate for the purposes of our opinion including (i) the Registration Statement, including the exhibits filed therewith, (ii) the Prospectus, (iii) the Company’s fifth amended and restated certificate of incorporation (as amended, the “Certificate of Incorporation”), (iv) the Company’s amended and restated bylaws (as amended, the “ Bylaws”), (v) the corporate resolutions and other actions of the Company that authorize and provide for the filing of the Registration Statement, and we have made such other investigation as we have deemed appropriate. We have not independently established any of the facts so relied on.

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We have further assumed the legal capacity of natural persons, and we have assumed that each party to the documents we have examined or relied on (other than the Company) has the legal capacity or authority and has satisfied all legal requirements that are applicable to that party to the extent necessary to make such documents enforceable against that party. We have also assumed that all of the shares of Common Stock issuable or eligible for issuance pursuant to exercise of the Warrants following the date hereof will be issued for not less than par value.

Based on the foregoing, we are of the opinion that:

1. Common Stock. When the Registration Statement becomes effective under the Act and when the offering is completed as contemplated by the Registration Statement, the shares of Common Stock will be validly issued, fully paid and non-assessable.

2. Pre-Funded Warrants. When the Registration Statement becomes effective under the Act and when the Pre-Funded Warrants are issued, delivered and paid for, as contemplated by the Registration Statement, such Pre-Funded Warrants will be legally binding obligations of the Company enforceable in accordance with their terms except: (a) as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally and by general equitable principles (regardless of whether enforceability is considered in a proceeding in equity or at law); (b) as enforceability of any indemnification or contribution provision may be limited under the federal and state securities laws; (c) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to the equitable defenses and to the discretion of the court before which any proceeding therefor may be brought; and (d) we express no opinion as to whether a state court outside of the State of New York or a federal court of the United States would give effect to the choice of New York law provided for in the Pre-Funded Warrants and the Warrant Agency Agreement.

3. Public Warrants. When the Registration Statement becomes effective under the Act and when the Public Warrants are issued, delivered and paid for, as contemplated by the Registration Statement, such Public Warrants will be legally binding obligations of the Company enforceable in accordance with their terms except: (a) as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally and by general equitable principles (regardless of whether enforceability is considered in a proceeding in equity or at law); (b) as enforceability of any indemnification or contribution provision may be limited under the federal and state securities laws; (c) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to the equitable defenses and to the discretion of the court before which any proceeding therefor may be brought; and (d) we express no opinion as to whether a state court outside of the State of New York or a federal court of the United States would give effect to the choice of New York law provided for in the Public Warrants and the Warrant Agency Agreement.

4. Common Stock underlying Warrants. When the Registration Statement becomes effective under the Act and when the offering is completed as contemplated by the Registration Statement, the shares of Common Stock issuable upon exercise of the Pre-Funded Warrants and Public Warrants will be validly issued, fully paid and non-assessable.

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We express no opinion as to matters governed by any laws other than the Delaware General Corporation Law, the laws of the state of New York and the federal laws of the United States of America, as in effect on the date hereof.

We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to our firm under the caption “Legal Matters” in the Prospectus. In giving such permission, we do not admit hereby that we come within the category of persons whose consent is required under Section 7 of the Act, or the rules and regulations of the Commission thereunder. This opinion is expressed as of the date hereof, and we disclaim any undertaking to advise you of any subsequent changes in the facts stated or assumed herein or of any subsequent changes in applicable law.

Very truly yours,

/s/ Ellenoff Grossman & Schole LLP

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EX-10.61

EXHIBIT 10.61

EXCHANGE AGREEMENT

This EXCHANGE AGREEMENT (this “ Agreement”) is made and entered into effective as of the 23 day of June, 2020, by and between GUIDED THERAPEUTICS, INC., a Delaware corporation (the “Company”) and the undersigned creditor of the Company (the “Creditor”).

W I T N E S S E T H :

WHEREAS, the Creditor is the payee of certain obligations owed to the Creditor by the Company as set forth on Exhibit A hereto (the “Obligations”);

WHEREAS, in satisfaction in full of the Obligations, the Creditor is willing to accept certain securities of the Company as set forth on Exhibit B hereto (the “Securities” and such transaction, the “Exchange”);

WHEREAS, the Exchange is being made in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act; and

WHEREAS, the Company and the Creditor desire to enter into this Agreement to evidence and set forth the terms of the exchange of the Securities for and in satisfaction of the Obligations;

NOW, THEREFORE, in consideration of the mutual covenants herein contained, and intending to be legally bound hereby, the parties hereto, being duly sworn, do covenant, agree and certify as follows:

1. Recitals. The parties hereto acknowledge and agree that the foregoing recitals are true and accurate and constitute part of this Agreement to the same extent as if contained in the body hereof.

2. Definitions. In addition to the terms defined elsewhere in this Agreement: (a) capitalized terms that are not otherwise defined herein have the meanings given to such terms in the Obligations (as defined herein), and (b) the following terms have the meanings set forth in this Section 1.1:

“Affiliate” means any Creditor that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Creditor, as such terms are used in and construed under Rule 405 under the Securities Act.

“Board of Directors” means the board of directors of the Company.

“Common Stock” means the common stock of the Company, par value $0.001 per share, and any other class of securities into which such securities may hereafter be reclassified or changed.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

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“Liens” means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

“Creditor” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

“Securities” has the meaning set forth in the Preamble of this Agreement.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

3. Exchange and Satisfaction. The Obligations are hereby surrendered by the Creditor and exchanged for the Securities and other considerations according to the following terms and conditions.

a. The Creditor currently holds an unsecured note with Company in the amount of $135,213, including both principal and interest. Both the Company and Creditor wish to continue their relationship under mutually agreeable terms.

b. In lieu of agreeing to dismiss $125,000 of the amount currently owed by the Company to the Creditor, the Creditor agrees to accept in exchange 500,000 shares of the Company’s Stock and warrants to purchase 250,000 shares the Company’s common stock, pursuant to a separate warrant agreement attached to this Agreement as Exhibit A. The warrants will have an exercise price of $0.50, be exercisable immediately and will expire after three years.

c. The remaining amount owed to the Creditor (i.e., $10,213) will be paid in full within five business days of the closing of the Series E Convertible Preferred Offering.

4. Representations and Warranties of the Company. The Company hereby makes the following representations and warranties to Creditor:

(a) Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The execution and delivery of this Agreement by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, the Board of Directors or the Company’s stockholders in connection herewith or therewith. This Agreement have been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligations of the Company enforceable against the Company in accordance with their terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

2

(b) Issuance of the Securities. The Securities are duly authorized and, when issued and paid for in accordance with this Agreement, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company. The shares of Common Stock underlying the Securities (if any), when issued in accordance with the terms of the Securities, will be validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company other than restrictions on transfer required by law.

5. Representations and Warranties of the Creditor. Creditor hereby represents and warrants as of the date hereof and as of the Closing Date to the Company as follows (unless as of a specific date therein):

(a) Own Account. Creditor understands that the Securities are “restricted securities” and have not been registered under the Securities Act or any applicable state securities law and is acquiring the Securities as principal for its own account and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other Creditors to distribute or regarding the distribution of such Securities in violation of the Securities Act or any applicable state securities law (this representation and warranty not limiting such Creditor’s right to sell the Securities pursuant to the Registration Statement or otherwise in compliance with applicable federal and state securities laws). The Creditor is acquiring the Securities hereunder in the ordinary course of its business.

(c) Creditor’s Status. At the time the Creditor was offered the Securities, it was, and as of the date hereof it is, an “accredited investor” as defined in Rule 501(a) under the Securities Act.

(d) Experience of Creditor. Creditor, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment. Such Creditor is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.

1. Release. The Creditor acknowledges and agrees that it shall have no further rights or interest in, and shall not receive any further consideration, payment or distribution of any kind with respect to, the Obligations. In such regard, the Creditor hereby waives, relinquishes, remises and releases all rights, claims, interests or liabilities, known and unknown, of any nature whatsoever in law or equity which the Creditor may previously have had or may now or hereafter have as against or to receive from the Company arising out of, resulting from or relating to the Obligations or any rights or interest of the Creditor with respect thereto.

2. Transfer Restrictions. The Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Securities other than pursuant to an effective registration statement or Rule 144 under the Securities Act, to the Company or to an Affiliate of a Creditor, the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Securities under the Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement. The Creditors agree to the imprinting of a legend on any of the Securities in the following form:

3

[NEITHER] THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS [EXERCISABLE] [CONVERTIBLE]] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY [AND THE SECURITIES ISSUABLE UPON [EXERCISE] [CONVERSION] OF THIS SECURITY] MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.

1. Further Assurances. The Creditor shall hereafter, without further consideration, execute and deliver promptly to the Company such further consents, waivers, assignments, endorsements and other documents and instruments, and to take all such further actions, as the Company may from time to time reasonably request with respect to the exchange and satisfaction of the Obligations Interest and the consummation in full thereof.

2. Successors and Assigns. This Agreement is binding upon, and shall inure to the benefit of, the parties hereto and their respective successors and assigns.

3. Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original and all of which, when taken together, shall constitute one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have affixed their hands and seals by signing this Agreement as of the day and year first above written.

[Signatures on Following Page]

4

Company: GUIDED THERAPEUTICS, INC.
By:	/s/ Gene S. Cartwright
Name:	Gene Cartwright
Title:	CEO
Creditor:
By:	/s/ James Clavijo
Name:	James Clavijo

5

EX-23.1

EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the inclusion in the Registration Statement on Form S-1 of our report dated March 29, 2022 relating to the consolidated financial statements of Guided Therapeutics, Inc. as of and for the years ended December 31, 2021 and 2020 and consent to the reference to our Firm under the caption “Experts” in the Registration Statement.

/s/ UHY LLP

Sterling Heights Michigan

June 29, 2022

EX-FILING FEES.107

EXHIBIT 107

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered	Proposed Maximum Aggregate Offering Price(1)(2)		Amount of Registration Fee(3)(4)
Common stock, par value	$	10,235,000	$	948.79
Common stock Purchase Warrants
Shares of common stock underlying shares of common stock purchase warrants	$	10,235,000	$	948.79
Pre-funded warrants to purchase shares of common stock
Shares of common stock underlying pre-funded warrants	$		$
Total(4)	$	20,470,000	$	1,897.58

(1)	Pursuant to Rule 416 under the Securities Act, the shares of common stock registered hereby also include an indeterminate number of additional shares of common stock as may from time to time become issuable by reason of stock splits, stock dividends, recapitalizations or other similar transactions.
(2)	Estimated solely for purposes of calculating the registration fee in accordance with Rule 457(o) under the Securities Act of 1933, as amended.
(3)	The proposed maximum aggregate offering price of the shares of common stock proposed to be sold in the offering will be reduced on a dollar-for-dollar basis based on the aggregate offering price of the pre-funded warrants offered and sold in the offering (plus the aggregate exercise price of the shares of common stock issuable upon exercise of the pre-funded warrants), and as such the proposed aggregate maximum offering price of the shares of common stock and pre-funded warrants (including the shares of common stock issuable upon exercise of the pre-funded warrants), if any, is $20,470,000.
(4)	$3,763.96 previously paid.

XML

Cover	3 Months Ended
	Mar. 31, 2022
Cover [Abstract]
Entity Registrant Name	GUIDED THERAPEUTICS, INC.
Entity Central Index Key	0000924515
Document Type	S-1/A
Amendment Flag	true
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Filer Category	Non-accelerated Filer
Entity Incorporation State Country Code	DE
Entity Tax Identification Number	58-2029543
Entity Address Address Line 1	5835 Peachtree Corners East
Entity Address Address Line 2	Suite B
Entity Address City Or Town	Norcross
Entity Address State Or Province	GA
Entity Address Postal Zip Code	30092
City Area Code	770
Amendment Description	The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Commission acting pursuant to said Section 8(a), may determine.
Local Phone Number	242-8723

XML

CONSOLIDATED BALANCE SHEETS - USD ($)	Mar. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Current Assets:
Cash And Cash Equivalents	$ 725,000	$ 643,000	$ 182,000
Accounts Receivable, Net Of Allowance For Doubtful Accounts	39,000	46,000	24,000
Inventory, Net Of Reserves	570,000	571,000	605,000
Other Current Assets	453,000	377,000	85,000
Total Current Assets	1,787,000	1,637,000	896,000
Non-current Assets:
Property And Equipment, Net	28,000	14,000	1,000
Operating Lease Right-of-use Asset, Net Of Amortization	355,000	372,000	453,000
Other Assets	17,000	17,000	0
Total Non-current Assets	400,000	403,000	454,000
Total Assets	2,187,000	2,040,000	1,350,000
Current Liabilities:
Accounts Payable	2,476,000	2,362,000	2,419,000
Accounts Payable, Related Parties	80,000	87,000	116,000
Accrued Liabilities	1,228,000	1,768,000	2,995,000
Deferred Revenue	514,000	337,000	42,000
Current Portion Of Lease Liability	70,000	67,000	56,000
Current Portion Of Long-term Debt	67,000	88,000	28,000
Notes Payable In Default		0	328,000
Notes Payable In Default, Related Parties		0	1,000
Short-term Notes Payable	12,000	48,000	45,000
Short-term Notes Payable, Related Parties	31,000	40,000	51,000
Convertible Notes Payable In Default	161,000	161,000	0
Convertible Notes Payable, Past Due		0	1,930,000
Short-term Convertible Notes Payable	745,000	736,000	951,000
Derivatives Liability current	38,000	0
Current portion of long-term debt, related parties	27,000	0
Total Current Liabilities	5,449,000	5,694,000	8,962,000
Long-term Liabilities
Warrants, At Fair Value		0	2,203,000
Long-term Lease Liability	307,000	325,000	392,000
Derivative Liability	0	32,000	25,000
Long-term Convertible Debt	852,000	820,000	23,000
Long-term Debt	0	22,000	0
Long-term Debt, Related Parties	568,000	592,000	600,000
Total Long-term Liabilities	1,727,000	1,791,000	3,243,000
Total Liabilities	7,176,000	7,485,000	12,205,000
Stockholders' Deficit:
Common Stock Value	3,410,000	3,403,000	3,403,000
Additional Paid In Capital	129,042,000	126,800,000	123,109,000
Treasury Stock At Cost	(132,000)	(132,000)	(132,000)
Accumulated Deficit	(143,442,000)	(142,387,000)	(139,956,000)
Total Stockholders Deficit	(4,989,000)	(5,445,000)	(10,855,000)
Total Liabilities And Stockholders Deficit	2,187,000	2,040,000	1,350,000
Series C Convertible Preferred Shares
Stockholders' Deficit:
Preferred Stock Value	105,000	105,000	105,000
Series C1 Convertible Preferred Shares
Stockholders' Deficit:
Preferred Stock Value	170,000	170,000	170,000
Series C2 Convertible Preferred Shares
Stockholders' Deficit:
Preferred Stock Value	531,000	531,000	531,000
Series D Convertible Preferred Shares
Stockholders' Deficit:
Preferred Stock Value	276,000	276,000	276,000
Series E Convertible Preferred Shares
Stockholders' Deficit:
Preferred Stock Value	914,000	1,639,000	1,639,000
Series F Convertible Preferred Shares
Stockholders' Deficit:
Preferred Stock Value	1,174,000	1,187,000	0
Series F-2 Convertible Preferred Shares
Stockholders' Deficit:
Preferred Stock Value	2,963,000	2,963,000	0
Series G Convertible Preferred Shares
Stockholders' Deficit:
Preferred Stock Value	$ 0	$ 0	$ 0

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Mar. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Accounts receivable, net of allowance	$ 126,000	$ 126,000	$ 126,000
Inventory, net of reserves	$ 785,000	$ 785,000	$ 758,000
Common stock, par value	$ 0.001	$ 0.001	$ 0.001
Common stock, authorized	500,000,000	500,000,000	500,000,000
Common stock, issued	22,316,000	13,673,000	13,138,000
Common stock, outstanding	22,316,000	13,673,000	13,138,000
Series C Convertible Preferred Shares
Preferred stock, par value	$ 0.001	$ 0.001	$ 0.001
Preferred stock, authorized	9,000.0	9,000.0	9,000.0
Preferred stock, liquidation preference	$ 286,000	$ 286,000	$ 286,000
Preferred stock, issued	300	300.0	300
Preferred stock, outstanding	300.0	300.0	300.0
Series D Convertible Preferred Shares
Preferred stock, par value	$ 0.001	$ 0.001	$ 0.001
Preferred stock, authorized	6,000.0	6,000.0	6,000.0
Preferred stock, liquidation preference	$ 763,000	$ 763,000	$ 763,000
Preferred stock, issued	800	800.0	800
Preferred stock, outstanding	800.0	800.0	800.0
Series E Convertible Preferred Shares
Preferred stock, par value	$ 0.001	$ 0.001	$ 0.001
Preferred stock, authorized	5,000.0	5,000.0	5,000.0
Preferred stock, liquidation preference	$ 968,000	$ 1,736,000	$ 1,736,000
Preferred stock, issued	1,000.0	1,700.0	1,700
Preferred stock, outstanding	1,000.0	1,700.0	1,700.0
Series F Convertible Preferred Shares
Preferred stock, par value	$ 0.001	$ 0.001	$ 0.001
Preferred stock, authorized	1,500	1,500.0	1,500
Preferred stock, liquidation preference	$ 1,411,000	$ 1,426,000	$ 0
Preferred stock, issued	1,400	1,400	0
Preferred stock, outstanding	1,400.0	1,400.0	0
Series F-2 Convertible Preferred Shares
Preferred stock, par value	$ 0.001	$ 0.001	$ 0.001
Preferred stock, authorized	5,000.0	3,500.0	3,500.0
Preferred stock, liquidation preference	$ 3,237,000	$ 3,237,000	$ 0
Preferred stock, issued	3,200	3,200	0
Preferred stock, outstanding	3,200.0	3,200.0	0
Series C-1 Convertible Preferred Shares
Preferred stock, par value	$ 0.001	$ 0.001	$ 0.001
Preferred stock, authorized	20,300	20,300.0	20,300
Preferred stock, liquidation preference	$ 1,049,000	$ 1,049,000	$ 1,049,000
Preferred stock, issued	1,000.0	1,000.0	1,000.0
Preferred stock, outstanding	1,000.0	1,000.0	1,000.0
Series C-2 Convertible Preferred Shares
Preferred stock, par value	$ 0.001	$ 0.001	$ 0.001
Preferred stock, authorized	5,000,000	5,000,000	5,000,000
Preferred stock, liquidation preference	$ 3,263,000	$ 3,263,000	$ 3,263,000
Preferred stock, issued	3,300	3,300.0	3,300
Preferred stock, outstanding	3,300.0	3,300.0	3,300.0
Series G Convertible Preferred Shares
Preferred stock, par value	$ 0.001	$ 0.001	$ 0.001
Preferred stock, authorized	1,000,000	1,000,000	1,000,000
Preferred stock, liquidation preference	$ 0	$ 0	$ 0
Preferred stock, issued	0	0	0
Preferred stock, outstanding	0	0	0

XML

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021	Dec. 31, 2020
CONSOLIDATED STATEMENTS OF OPERATIONS
Sales - devices and disposables	$ 5	$ 0	$ 81	$ 102
Cost of goods sold	1	0	61	(41)
Gross profit	4	0	20	143
Operating Expenses:
Research and development	21	16	69	143
Sales and marketing	40	36	141	139
General and administrative	386	771	2,172	913
Total Operating Expenses	447	823	2,382	1,195
Loss From Operations	(443)	(823)	(2,362)	(1,052)
Other Income (expenses):
Interest expense	(101)	(141)	(1,150)	(1,056)
Change In Fair Value Of Derivative Liability	(6)	(88)	(91)	(25)
Gain from extinguishment of debt	41	87	578	(296)
Change in fair value of warrants	0	448	448	1,879
Other expenses	2	0
Other Income			507	271
Total other income (expense)	(64)	306	292	773
Loss Before Income Taxes	(507)	(517)	(2,070)	(279)
Provision for income taxes	0	0	0	0
Net Loss	(507)	(517)	(2,070)	(279)
Preferred stock dividends	(548)	(55)	(361)	(122)
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS	$ (1,055)	$ (572)	$ (2,431)	$ (401)
NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS
Basic	$ (0.05)	$ (0.04)	$ (0.18)	$ (0.04)
Diluted	$ (0.05)	$ (0.04)	$ (0.18)	$ (0.04)
Weighted Average Shares Outstanding
Weighted Average Shares Outstanding Basic	20,683	13,172	13,377	10,767
Weighted Average Shares Outstanding Diluted	20,683	13,172	13,377	10,767

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021	Dec. 31, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (507,000)	$ (517,000)	$ (2,071,000)	$ (279,000)
Adjustments To Reconcile Net Loss To Net Cash Used In Operating Activities:
Bad Debt Expense			0	12,000
Amortization of debt issuance costs and discounts	41,000	64,000	320,000	394,000
Amortization of beneficial conversion feature	0	8,000	8,000	102,000
Stock based compensation	44,000	62,000	228,000	310,000
Depreciation			1,000	0
Change In Fair Value Of Warrants	0	(448,000)	(448,000)	(1,879,000)
Extinguishment Of Derivative Liability			(84,000)	0
Inventory Reserve			0	(73,000)
Change In Fair Value Of Derivatives	6,000	88,000	91,000	25,000
Loss On Extinguishment Of Debt			0	296,000
Amortization of lease right-of-use-asset	16,000	0	82,000	0
Expense for warrants issued to consultants	79,000	398,000	664,000	0
Gain From Forgiveness Of Debt	(41,000)	(87,000)	(578,000)	0
Other Non-cash Expenses (income)	6,000	0	117,000	0
Change In Operating Assets And Liabilities:
Accounts Receivable	6,000	0	(22,000)	(23,000)
Inventory	1,000	(1,000)	33,000	(483,000)
Other Current Assets	(76,000)	46,000	(292,000)	(15,000)
Other Non-current Assets	0	18,000	(17,000)	18,000
Accounts payable and accrued liabilities	84,000	65,000	136,000	(221,000)
Lease Liabilities	(15,000)	0	(56,000)	0
Deferred revenue	177,000	20,000	296,000	(59,000)
Net Cash Used In Operating Activities	(179,000)	(320,000)	(1,592,000)	(1,875,000)
Cash Flows From Investing Activities:
Purchase of property and equipment	(14,000)	(1,000)	(14,000)	(1,000)
Net Cash Used For Investing Activities	(14,000)	(1,000)	(14,000)	(1,000)
Cash Flows From Financing Activities:
Note Payable Default Penalty			398,000	0
Proceeds From Issuance Of Series D Preferred Stock			0	102,000
Proceeds From Issuance Of Series E Preferred Stock			0	1,639,000
Payments Of Debt Issuance Costs			(86,000)	0
Proceeds From Issuance Of Common Stock, Net Of Costs			0	0
Redemption Of Series G Preferred Stock			(125,000)	0
Proceeds From Series F-2 Offering, Net Of Costs			539,000	0
Proceeds From Debt Financing			1,248,000	519,000
Proceeds from warrant exercises	365,000	0
Payments made on notes payable	(90,000)	(557,000)	(1,468,000)	(1,101,000)
Proceeds from Series F offering, net of costs	0	1,818,000	1,436,000	0
Proceeds from Series G offering, net of costs	0	125,000	125,000	0
Net Cash Provided By Financing Activities	275,000	1,386,000	2,067,000	1,159,000
Net Change In Cash	82,000	1,065,000	461,000	(717,000)
Cash At Beginning Of Period	643,000	182,000	182,000	899,000
CASH AT END OF PERIOD	725,000	1,247,000	643,000	182,000
Supplemental Disclosure For Operating Activities:
Cash paid for interest	6,000	405,000	557,000	295,000
Supplemental Disclosure For Non-cash Investing And Financing Activities:
Dividends on preferred stock	548,000	55,000	361,000	122,000
Common stock issued for payment of interest	81,000	0
Common stock issued for payment of dividends	592,000	14,000
Conversion of Series E Preferred Shares into Common Stock	725,000	1,755,000
Issuance of warrants to finders in connection with Series F and Series F-2 preferred stock	0	151,000	377,000	0
Issuance of series F-2 preferred stock	0	2,559,000	2,236,000	0
Debt From Related Parties Exchanged For Preferred Series F-2			323,000	0
Settlement Of Dividends Through Common Stock Issuance			171,000	40,000
Settlement Of Accounts Payable Through Common Stock Issuance			62,000	0
Warrants Exchanged For Fixed Price Warrants			1,755,000	131,000
Warrants Issued With Debt			304,000	0
Settlement Of Accounts Payable Through Issuance Of Promissory Note			97,000	0
Issuance Of Common Stock As Debt Repayment			0	2,929,000
Conversion Of Preferred Series F To Common Stock	$ 13,000	$ 0	8,000	0
Subscription Receivable			$ 0	$ 635,000

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT - USD ($)	Total	Preferred Stock Series C [Member]	Preferred Stock Series C1 [Member]	Preferred Stock Series C2 [Member]	Preferred Stock Series D [Member]	Preferred Stock Series E [Member]	Preferred Stock Series F [Member]	Preferred Stock Series F-2 [Member]	Preferred Stock Series G [Member]	Common Stock [Member]	Additional Paid-In Capital	Treasury Stock [Member]	Accumulated Deficit [Member]
Balance, Shares at Dec. 31, 2019			1,000	3,000						3,319,000
Balance, Amount at Dec. 31, 2019	$ (16,935,000)	$ 105,000	$ 170,000	$ 531,000	$ 0					$ 3,394,000	$ 118,552,000	$ (132,000)	$ (139,555,000)
Issuance Of Preferred Stock In Financing, Shares					1,000	2,000
Issuance Of Preferred Stock In Financing, Amount	1,915,000	0	0	0	$ 276,000	$ 1,639,000	$ 0	$ 0	$ 0
Conversion Of Debt Into Common Stock		0	0	0	0
Conversion Of Debt Into Common Stock, Shares										8,132,000
Conversion Of Debt Into Common Stock, Amount	2,929,000									$ 8,000	2,921,000
Issuance Of Common Stock In Financing		0	0	0	0
Warrants Exchanged For Fixed Price Warrants	131,000	0	0	0	0
Issuance Of Common Stock In Financing, Shares										1,526,000
Issuance Of Common Stock In Financing, Amount	461,000									$ 1,000	460,000
Issuance Of Common Stock For Manufacturing Agreements		0	0	0	0
Issuance Of Common Stock For Payment Of Series D Preferred Dividends		0	0	0	0
Issuance Of Warrants In Financing	117,000										117,000
Beneficial Conversion Feature Of Convertible Debt	82,000	0	0	0	0						82,000
Issuance Of Common Stock For Manufacturing Agreements, Shares										12,000
Adjustment To Warrant Liability For Adoption Of Asu 2017-11	627,000	0	0	0	0						627,000
Stock Based Compensation	310,000	0	0	0	0						310,000
Issuance Of Common Stock For Payment Of Series D Preferred Dividends, Shares										149,000
Accrued Series D Preferred Stock Dividends	(122,000)	0	$ 0	$ 0	$ 0								(122,000)
Issuance Of Common Stock For Payment Of Series D Preferred Dividends, Amount	40,000										40,000
Net Loss	(279,000)	0											(279,000)
Stock-based compensation	310,000
Expense for warrants issued to consultants	$ 0
Balance, Shares at Dec. 31, 2020	13,138,282		1,000	3,000	1,000	2,000				13,138,000
Balance, Amount at Dec. 31, 2020	$ (10,855,000)	105,000	$ 170,000	$ 531,000	$ 276,000	$ 1,639,000		0	0	$ 3,403,000	123,109,000	(132,000)	(139,956,000)
Issuance Of Common Stock For Payment Of Series D Preferred Dividends, Shares										42,000
Issuance Of Common Stock For Payment Of Series D Preferred Dividends, Amount											14,000
Net Loss	(517,000)												(517,000)
Issuance of warrants to consultants											398,000
Conversions of warrants from liability to equity											1,755,000
Accrued preferred dividends													(55,000)
Stock-based compensation	62,000										62,000
Series F preferred offering, shares							2,000
Series F preferred offering, amount	1,667,000								$ 1,667,000
Series G preferred offering, shares									153,000
Issuance of warrants to finders						$ 2,559,000					151,000
Expense for warrants issued to consultants	$ 398,000
Balance, Shares at Mar. 31, 2021	13,180,417		1,000	3,000	1,000	2,000	4,000		153,000	13,180,000
Balance, Amount at Mar. 31, 2021		105,000	$ 170,000	$ 531,000		$ 1,639,000				$ 3,403,000	125,489,000	(132,000)	(140,528,000)
Balance, Shares at Dec. 31, 2020	13,138,282		1,000	3,000	1,000	2,000				13,138,000
Balance, Amount at Dec. 31, 2020	$ (10,855,000)	105,000	$ 170,000	$ 531,000	$ 276,000	$ 1,639,000		0	$ 0	$ 3,403,000	123,109,000	(132,000)	(139,956,000)
Warrants Exchanged For Fixed Price Warrants	1,755,000
Issuance Of Common Stock For Payment Of Series D Preferred Dividends		0	0	0	0	0	$ 0	0	0
Stock Based Compensation	227,000	0	0	0	0	0	0	0	0	$ 0	227,000	0	0
Issuance Of Common Stock For Payment Of Series D Preferred Dividends, Shares										109,000
Issuance Of Common Stock For Payment Of Series D Preferred Dividends, Amount	53,000									$ 0	53,000	0	0
Net Loss	(2,070,000)	0	0	0	0	0	0	0	0	0	0	0	(2,070,000)
Series G preferred offering	0	0	0	0	0					0	0	0	0
Issuance of warrants to consultants	1,172,000	0	0	0	0	0	0	0	0	0	1,172,000	0	0
Accrued preferred dividends	(361,000)	0	0	0	0	0	$ 0	0	0	0	0	0	(361,000)
Stock-based compensation	228,000
Series F preferred offering, shares							1,000
Series G preferred offering, amount						0	$ 0	0	0
Series F preferred offering	1,195,000									0	0	0	0
Series F preferred offering, amount						0	1,195,000	$ 0	$ 0
Series G preferred offering, shares									153,000
Series F-2 Preferred Offering	404,000									0	0	0	0
Conversion Of Debt And Expenses For Series F-2 Preferred Stock	2,559,000									0	0	0	0
Issuance Of Common Stock To Finders, Amount	54,000									0	54,000	0	0
Series F-2 Preferred Offering, Shares								1,000
Series G Redemption	0	0	0	0	0					$ 0	0	0	0
Conversion Of Debt And Expenses For Series F-2 Preferred Stock								2,000
Issuance Of Common Stock For Payment Of Series E Preferred Dividends, Shares										288,000
Series F-2 Preferred Offering, Amount						0	0	$ 404,000	$ 0
Issuance Of Common Stock For Payment Of Series E Preferred Dividends, Amount	118,000									$ 0	118,000	0	0
Warrants Issued With Debt	304,000	0	0	0	0	0	0	0	0	0	304,000	0	0
Conversion Of Debt And Expenses For Series F-2 Preferred Stock, Amount						0	0	2,559,000	0
Conversion Of Warrants From Liabilities To Equity	1,755,000	0	0	0	0	0	0	0	0	$ 0	1,755,000	0	0
Conversion Of Series F Preferred Shares Into Common Stock, Shares										40,000
Conversion Of Series F Preferred Shares Into Common Stock, Amount	0									$ 0	8,000	0	0
Issuance Of Common Stock For Payment Of Series E Preferred Dividends		0	0	0	0	0	0	0	$ 0
Series G Redemption, Shares									(153,000)
Series G Redemption, Amount						0	0	0	$ 0
Conversion Of Series F Preferred Shares Into Common Stock		0	$ 0	$ 0	$ 0	$ 0	$ (8,000)	$ 0	0
Expense for warrants issued to consultants	$ 664,000
Balance, Shares at Dec. 31, 2021	13,607,609		1,000	3,000	1,000	2,000	1,000	3,000		13,673,000
Balance, Amount at Dec. 31, 2021	$ (5,445,000)	105,000	$ 170,000	$ 531,000	$ 276,000	$ 1,639,000	$ 1,187,000	$ 2,963,000	$ 0	$ 3,403,000	126,800,000	(132,000)	(142,387,000)
Issuance Of Common Stock For Payment Of Series D Preferred Dividends, Shares										23,000
Issuance Of Common Stock For Payment Of Series D Preferred Dividends, Amount	15,000										$ 15,000
Net Loss	(507,000)												(507,000)
Accrued preferred dividends	(548,000)					(725,000)							(548,000)
Stock-based compensation	$ 44,000
Issuance Of Common Stock For Payment Of Series E Preferred Dividends, Shares	64,000						(13,000)				64,000
Issuance Of Common Stock For Payment Of Series E Preferred Dividends, Amount	$ 8,000									$ 13,000	$ 8,000
Common stock warrants exercised, shares										4,478,000
Common stock warrants exercised, amount	$ 716,000									$ 4,000	$ 712,000	0	0
Issuance of common stock for payment of Series F preferred dividends, shares	105,000									158,000	105,000
Issuance of common stock for payment of Series F preferred dividends, amount	$ 81,000									$ 96,000	$ 81,000
Issuance of common stock for Series F and Series F-2 one-time 15% dividends	399,000					$ (1,000)					$ 399,000
Conversion of Series E preferred stock to common stock, shares										624,000	722,000
Conversion of Series F preferred stock to common stock, shares										3,070,000	13,000
Issuance of common stock for payment of interest, shares										3,000
Issuance of common stock for payment of interest, amount										$ 121,000
Expense for warrants issued to consultants	79,000										$ 79,000	0	0
expense for warrants issued to con										60,000
Balance, Shares at Mar. 31, 2022			1,000	3,000	1,000	1,000	1,000	3,000		22,316,000
Balance, Amount at Mar. 31, 2022	$ (4,989,000)	$ 105,000	$ 170,000	$ 531,000	$ 276,000	$ 914,000	$ 1,174,000	$ 2,963,000		$ 3,410,000	$ 129,042,000	$ (132,000)	$ (143,442,000)

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ORGANIZATION BACKGROUND AND BASIS OF PRESENTATION

3 Months Ended

12 Months Ended

Mar. 31, 2022

Dec. 31, 2021

ORGANIZATION BACKGROUND AND BASIS OF PRESENTATION

ORGANIZATION, BACKGROUND, AND BASIS OF PRESENTATION

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.

During the year ended December 31, 2021, the Board simultaneously approved a 1-for-20 reverse stock split of our common stock and decreased the total number of authorized common shares to 500,000,000. On November 18, 2021, the Company submitted an Issuer Company Related Action Notification regarding the reverse stock split to the Financial Industry Regulatory Authority (“FINRA”). FINRA has not yet declared an effective date for the reverse stock split. The Company will adjust the number of shares available for future grant under its equity incentive plan and employee stock purchase plans and will also adjust the number of outstanding awards issued to reflect the effects of its reverse split. All historical share and per share amounts reflected throughout this report will be adjusted to reflect stock split at the time it becomes effective.

Basis of Presentation

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, 2021 filed with the Securities and Exchange Commission (“SEC”) pursuant to Section 13 or 15(d) under the Securities Exchange Act of 1934. The December 31, 2021 balances reported herein are derived from the audited consolidated financial statements for the year ended December 31, 2021. The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year.

All intercompany transactions and balances have been eliminated in consolidation. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the Company as of March 31, 2022 and December 31, 2021, and the consolidated results of operations and cash flows for the three-month periods ended March 31, 2022 and 2021 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, 2022, it had an accumulated deficit of approximately $143.4 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.

The Company is not organized by multiple operating segments for the purpose of making operating decisions or assessing performance. Accordingly, the Company operates in one reportable operating segment. The Company’s principal decision makers are the Chief Executive Officer and its Chief Financial Officer. Management believes that its business operates as one reportable segment because: a) the Company measures profit and loss as a whole; b) the principal decision makers do not review information based on any operating segment; c) the Company does not maintain discrete financial information on any specific segment; d) the Company has not chosen to organize its business around different products and services, and e) the Company has not chosen to organize its business around geographic areas.

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, 2022, the Company had a negative working capital of approximately $3.7 million, accumulated deficit of $143.4 million, and incurred a net loss including preferred dividends of $1.1 million for the three months then ended. Stockholders’ deficit totaled approximately $5.0 million at March 31, 2022, primarily due to recurring net losses from operations.

During the three-month period ended March 31, 2022, the Company raised $0.4 million of proceeds from warrant exercises. 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, 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 25.4 million shares of its common stock outstanding at March 31, 2022, with exercise prices ranging between $0.15 and $0.80 per share. Exercises of in-the-money warrants would generate a total of approximately $4.7 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.

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.

During the year ended December 31, 2021, the Board simultaneously approved a 1-for-20 reverse stock split of our common stock and decreased the total number of authorized common shares to 500,000,000. On November 18, 2021, the Company submitted an Issuer Company Related Action Notification regarding the reverse stock split to the Financial Industry Regulatory Authority (“FINRA”). FINRA has not yet declared an effective date for the reverse stock split. The Company will adjust the number of shares available for future grant under its equity incentive plan and employee stock purchase plans and will also adjust the number of outstanding awards issued to reflect the effects of its reverse split. All historical share and per share amounts reflected throughout this report will be adjusted to reflect the stock split at the time it becomes effective.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principals generally accepted in the United States of America, or U.S. GAAP. All intercompany transactions and balances have been eliminated in consolidation. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the Company as of December 31, 2021 and 2020, and the consolidated results of operations and cash flows for the years ended December 31, 2021 and 2020 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 December 31, 2021, it had an accumulated deficit of approximately $142.4 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.

The Company is not organized by multiple operating segments for the purpose of making operating decisions or assessing performance. Accordingly, the Company operates in one reportable operating segment. The Company’s principal decision makers are the Chief Executive Officer and its Chief Financial Officer. Management believes that its business operates as one reportable segment because: a) the Company measures profit and loss as a whole; b) the principal decision makers do not review information based on any operating segment; c) the Company does not maintain discrete financial information on any specific segment; d) the Company has not chosen to organize its business around different products and services, and e) the Company has not chosen to organize its business around geographic areas.

Going Concern

The Company’s consolidated financial statements have been prepared and presented on a basis assuming it will continue as a going concern. The factors below raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary from the outcome of this uncertainty.

At December 31, 2021, the Company had a negative working capital of approximately $4.1 million, accumulated deficit of $142.4 million, and incurred a net loss including preferred dividends of $2.4 million for the year then ended. Stockholders’ deficit totaled approximately $5.4 million at December 31, 2021, primarily due to recurring net losses from operations.

During the year ended December 31, 2021, the Company raised $3.2 million of funds from the sale of preferred stock and 10% convertible debentures. 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, 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 27.7 million shares of its common stock outstanding at December 31, 2021, with exercise prices ranging between $0.15 and $0.80 per share. Exercises of in-the-money warrants would generate a total of approximately $5.1 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.

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SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

12 Months Ended

Mar. 31, 2022

Dec. 31, 2021

SIGNIFICANT ACCOUNTING POLICIES

SIGNIFICANT ACCOUNTING POLICIES

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.

Accounting Standard Updates

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. As of March 31, 2022 and December 31, 2021, our inventories were as follows:

	(in thousands)
	March 31, 2022			December 31, 2021
Raw materials	$	1,254		$	1,255
Work-in-progress		69			69
Finished goods		32			32
Inventory reserve		(785	)		(785	)
Total inventory	$	570		$	571

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, 2022 and December 31, 2021:

	(in thousands)
	March 31, 2022			December 31, 2021
Equipment	$	1,049		$	1,048
Software		652			652
Furniture and fixtures		41			41
Leasehold improvements		12			12
Construction in progress		21			8
Subtotal		1,775			1,761
Less accumulated depreciation		(1,747	)		(1,747	)
Property, equipment and leasehold improvements, net	$	28		$	14

Depreciation expense related to property and equipment for the three months ended March 31, 2022 and 2021 was not material.

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 were not material for the three months ended March 31, 2022 and 2021.

Leases

A lease provides the lessee the right to control the use of an identified asset for a period of time in exchange for consideration. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. The Company determines if an arrangement is a lease at inception. Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term.

Where an operating lease contains extension options that the Company is reasonably certain to exercise, the extension period is included in the calculation of the right-of-use assets and lease liabilities.

The discount rate used to determine the commencement date present value of lease payments is the interest rate implicit in the lease, or when that is not readily determinable, the Company utilizes its secured borrowing rate. Right-of-use assets include any lease payments required to be made prior to commencement and exclude lease incentives. Both right-of-use assets and lease liabilities exclude variable payments not based on an index or rate, which are treated as period costs. The Company’s lease agreements do not contain significant residual value guarantees, restrictions or covenants. See Note 7 - Commitments and Contingencies.

Accrued Liabilities

Accrued liabilities as of March 31, 2022 and December 31, 2021 are summarized as follows:

	(in thousands)
	March 31, 2022		December 31, 2021
Compensation	$	573	$	621
Professional fees		41		98
Stock Subscription Payable		-		351
Interest		232		261
Vacation		42		39
Preferred dividends		299		349
Other accrued expenses		41		49
Total	$	1,228	$	1,768

Stock Subscription Payable

Cash received from investors for common stock shares that have not yet been issued is recorded as a liability, which is presented within Accrued Liabilities on the consolidated balance sheet.

Revenue Recognition

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 recognize material revenues during the three-month periods ended March 31, 2022 or 2021. The Company’s revenues do not require significant estimates or judgments. The Company is not party to contracts that include multiple performance obligations or material variable consideration.

Contract Balances

The Company defers payments received as revenue until earned based on the related contracts and applying ASC 606 as required. As of March 31, 2022 and December 31, 2021, the Company had $514,000 and $337,000 in deferred revenue, respectively.

Significant Distributors

As of March 31, 2022, accounts receivable outstanding was $165,000, the outstanding amount was netted against a $126,000 allowance, leaving a balance of $39,000 which was from two distributors. As of December 31, 2021, accounts receivable outstanding was $172,000; the outstanding amount was netted against a $126,000 allowance, leaving a balance of $46,000, which was from two distributors.

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 provision for income taxes is determined in accordance with ASC 740, “Income Taxes”. The Company provides for income taxes based on enacted tax law and statutory tax rates at which items of income and expense are expected to be settled in our income tax return. Certain items of revenue and expense are reported for Federal income tax purposes in different periods than for financial reporting purposes, thereby resulting in deferred income taxes. Deferred taxes are also recognized for operating losses that are available to offset future taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

The Company has filed its 2021 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 March 31, 2022, the Company had approximately $61.6 million of net operating losses carryforward available. 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 Company recognizes uncertain tax positions based on a benefit recognition model. Provided that the tax position is deemed more likely than not of being sustained, the Company recognizes the largest amount of tax benefit that is greater than 50.0% likely of being ultimately realized upon settlement. The tax position is derecognized when it is no longer more likely than not of being sustained. The Company classifies income tax related interest and penalties as interest expense and selling, general and administrative expense, respectively, on the consolidated statements of operations.

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 accounts for its stock-based awards in accordance with ASC Subtopic 718, “Compensation - Stock Compensation”, which requires fair value measurement on the grant date and recognition of compensation expense for all stock-based payment awards made to employees and directors. The Company determines the fair value of stock options using the Black-Scholes model. The fair value of restricted stock awards is based upon the quoted market price of the common shares on the date of grant. The fair value of stock-based awards is expensed over the requisite service periods of the awards. The Company accounts for forfeitures of stock-based awards as they occur.

The Black-Scholes option pricing model requires the input of certain assumptions that require the Company’s judgment, including the expected term and the expected stock price volatility of the underlying stock. The assumptions used in calculating the fair value of stock-based compensation represent management’s best estimates, but these estimates involve inherent uncertainties and the application of judgment. As a result, if factors change resulting in the use of different assumptions, stock-based compensation expense could be materially different in the future.

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 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 freestanding warrants.

Accounting Standard Updates

FASB ASU 2021-04, “Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options” - Issued in May 2021, ASU No. 2021-04 provides guidance to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. The amendments in this ASU No. 2021-04 are effective for all entities for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years, with early adoption permitted, including interim periods within those fiscal years. We adopted ASU 2021-04 in the third quarter of 2021. Adoption of this standard had no material impact on our consolidated financial statements.

FASB ASU NO. 2020-06, “Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” - Issued in August 2020, ASU 2020-06 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 are classification 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 early adopted ASU No. 2020-06 under a modified retrospective basis on January 1, 2021. Adoption had no material impact on our consolidated financial statements.

FASB ASU NO. 2019-12, “Simplifying the Accounting for Income Taxes” - Issued in December 2019, 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. Adoption had no material impact on our 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. As of December 31, 2021 and 2020, our inventories were as follows:

	(in thousands)
	December 31,			December 31,
	2021			2020
Raw materials	$	1,255		$	1,276
Work-in-progress		69			80
Finished goods		32			7
Inventory reserve		(785	)		(758	)
Total inventory	$	571		$	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 December 31, 2021 and 2020:

	(in thousands)
	December 31,			December 31,
	2021			2020
Equipment	$	1,048		$	1,042
Software		652			652
Furniture and fixtures		41			41
Leasehold improvements		12			12
Construction in progress		8			-
Subtotal		1,761			1,747
Less accumulated depreciation		(1,747	)		(1,746	)
Property, equipment and leasehold improvements, net
	$	14		$	1

Depreciation expense related to property and equipment for the years ended December 31, 2021 and 2020 was not material.

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

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 to approximately $14,800 and $17,000 for the years ended December 31, 2021 and 2020, respectively.

Leases

A lease provides the lessee the right to control the use of an identified asset for a period of time in exchange for consideration. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. The Company determines if an arrangement is a lease at inception. Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term.

Where an operating lease contains extension options that the Company is reasonably certain to exercise, the extension period is included in the calculation of the right-of-use assets and lease liabilities.

The discount rate used to determine the commencement date present value of lease payments is the interest rate implicit in the lease, or when that is not readily determinable, the Company utilizes its secured borrowing rate. Right-of-use assets include any lease payments required to be made prior to commencement and exclude lease incentives. Both right-of-use assets and lease liabilities exclude variable payments not based on an index or rate, which are treated as period costs. The Company’s lease agreements do not contain significant residual value guarantees, restrictions or covenants. See Note 7 - Commitments and Contingencies.

Accrued Liabilities

Accrued liabilities as of December 31, 2021 and 2020 are summarized as follows:

	(in thousands)
	December 31,		December 31,
	2021		2020
Compensation	$	621	$	1,094
Professional fees		98		83
Interest		261		1,517
Vacation		39		34
Preferred dividends		349		202
Stock subscription payable		351		-
Other accrued expenses		49		65
Total	$	1,768	$	2,995

Stock Subscription Payable

Cash received from investors for common stock shares that have not yet been issued is recorded as a liability, which is presented within Accrued Liabilities on the consolidated balance sheet.

Revenue Recognition

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 recognize material revenues during the years ended December 31, 2021 or 2020. The Company’s revenues do not require significant estimates or judgments. The Company is not party to contracts that include multiple performance obligations or material variable consideration.

Contract Balances

The Company defers payments received as revenue until earned based on the related contracts and applying ASC 606 as required. As of December 31 2021 and 2020, the Company had $337,000 and $42,000 of deferred revenue, respectively.

Significant Distributors

As of December 31, 2021, accounts receivable outstanding was $172,000; the outstanding amount was netted against a $126,000 allowance, leaving a balance of $46,000 which was from two distributors. As of December 31, 2020, accounts receivable outstanding was $150,000, the outstanding amount was netted against a $126,000 allowance, leaving a balance of $24,000 which was from one distributor.

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 provision for income taxes is determined in accordance with ASC 740, “Income Taxes”. The Company provides for income taxes based on enacted tax law and statutory tax rates at which items of income and expense are expected to be settled in our income tax return. Certain items of revenue and expense are reported for Federal income tax purposes in different periods than for financial reporting purposes, thereby resulting in deferred income taxes. Deferred taxes are also recognized for operating losses that are available to offset future taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected 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, 2021, the Company had approximately $61.6 million of net operating losses carryforward available. 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 Company recognizes uncertain tax positions based on a benefit recognition model. Provided that the tax position is deemed more likely than not of being sustained, the Company recognizes the largest amount of tax benefit that is greater than 50.0% likely of being ultimately realized upon settlement. The tax position is derecognized when it is no longer more likely than not of being sustained. The Company classifies income tax related interest and penalties as interest expense and selling, general and administrative expense, respectively, on the consolidated statements of operations.

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 accounts for its stock-based awards in accordance with ASC Subtopic 718, “Compensation - Stock Compensation”, which requires fair value measurement on the grant date and recognition of compensation expense for all stock-based payment awards made to employees and directors. The Company determines the fair value of stock options using the Black-Scholes model. The fair value of restricted stock awards is based upon the quoted market price of the common shares on the date of grant. The fair value of stock-based awards is expensed over the requisite service periods of the awards. The Company accounts for forfeitures of stock-based awards as they occur.

The Black-Scholes option pricing model requires the input of certain assumptions that require the Company’s judgment, including the expected term and the expected stock price volatility of the underlying stock. The assumptions used in calculating the fair value of stock-based compensation represent management’s best estimates, but these estimates involve inherent uncertainties and the application of judgment. As a result, if factors change resulting in the use of different assumptions, stock-based compensation expense could be materially different in the future.

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 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.

During 2021, the Company adopted ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, 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, the new standard eliminates the liability and equity separation model for convertible instruments with a cash conversion feature. As a result of adoption of the standard, the Company 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.

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FAIR VALUE OF FINANCIAL INSTRUMENTS

3 Months Ended

12 Months Ended

Mar. 31, 2022

Dec. 31, 2021

FAIR VALUE OF FINANCIAL INSTRUMENTS

FAIR VALUE OF FINANCIAL INSTRUMENTS

3. FAIR VALUE OF FINANCIAL INSTRUMENTS

The guidance for fair value measurements, ASC 820, Fair Value Measurements and Disclosures, establishes the authoritative definition of fair value, sets out a framework for measuring fair value, and outlines the required disclosures regarding fair value measurements. Fair value is the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The Company uses a three-tier fair value hierarchy based upon observable and non-observable inputs as follow:

· Level 1-Quoted market prices in active markets for identical assets and liabilities;

· Level 2-Inputs, other than level 1 inputs, either directly or indirectly observable; and

· Level 3-Unobservable inputs developed using internal estimates and assumptions (there is little or no market date) which reflect those that market participants would use.

The Company records its derivative activities at fair value. As of March 31, 2022 we had one instrument that we valued for the derivative liability associated with the bifurcated conversion option of the Auctus loan for $400,000. There was no movement of instruments between fair value hierarchy tiers during the three months ended March 31, 2022.

The following tables present the fair value of those liabilities measured on a recurring basis as of March 31, 2022 and December 31, 2021:

	Fair Value at March 31, 2022 (in thousands)
	Level 1		Level 2		Level 3			Total
Derivative liability/bifurcated conversion option in connection with Auctus $400,000 loan on December 17, 2019	$	-	$	-	$	(38	)	$	(38	)
Total short-term liabilities at fair value	$	-	$	-	$	(38	)	$	(38	)

	Fair Value at December 31, 2021 (in thousands)
	Level 1		Level 2		Level 3			Total
Derivative liability/bifurcated conversion option in connection with Auctus $400,000 loan on December 17, 2019		-		-		(32	)		(32	)
Total long-term liabilities at fair value	$	-	$	-	$	(32	)	$	(32	)

The following is a summary of changes to Level 3 instruments during the three months ended March 31, 2022:

	(in thousands)
	Senior Secured Debt		Derivative			Total
Balance, December 31, 2021	$	-	$	(32	)	$	(32	)
Change in fair value during the period		-		(6	)		(6	)
Balance, March 31, 2022	$	-	$	(38	)	$	(38	)

3.   FAIR VALUE OF FINANCIAL INSTRUMENTS

The guidance for fair value measurements, ASC 820, Fair Value Measurements and Disclosures, establishes the authoritative definition of fair value, sets out a framework for measuring fair value, and outlines the required disclosures regarding fair value measurements. Fair value is the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The Company uses a three-tier fair value hierarchy based upon observable and non-observable inputs as follow:

· Level 1 – Quoted market prices in active markets for identical assets and liabilities;

· Level 2 – Inputs, other than level 1 inputs, either directly or indirectly observable; and

· Level 3 – Unobservable inputs developed using internal estimates and assumptions (there is little or no market date) which reflect those that market participants would use.

The Company records its derivative activities at fair value. As of December 31, 2021 we had one instrument that we valued for the derivative liability associated with the bifurcated conversion option of the Auctus loan for $400,000 ($700,000 of the $1,100,000 was paid in during the year ended December 31, 2021). There was no movement of instruments between fair value hierarchy tiers during the years ended December 31, 2021 or 2020.  

The following tables present the fair value of those liabilities measured on a recurring basis as of December 31, 2021 and 2020:

	Fair Value at December 31, 2021 (in thousands)
	Level 1		Level 2		Level 3			Total
Derivative liability/bifurcated conversion option in connection with Auctus $400,000 loan on December 17, 2019	$	-	$	-	$	(32	)	$	(32	)
Total long-term liabilities at fair value	$	-	$	-	$	(32	)	$	(32	)

	Fair Value at December 31, 2020 (in thousands)
	Level 1		Level 2		Level 3			Total
Warrants issued in connection with Senior Secured Debt	$		$		$	(2,203	)	$	(2,203	)
Derivative liability/bifurcated conversion option in connection with Auctus $400,000 loan on December 17, 2019		-		-		(25	)		(25	)
Total long-term liabilities at fair value	$	-	$	-	$	(2,228	)	$	(2,228	)

The following is a summary of changes to Level 3 instruments during the year ended December 31, 2021:

	(in thousands)
	Senior Secured Debt			Derivative			Total
Balance, December 31, 2020	$	(2,203	)	$	(25	)	$	(2,228	)
Change in the terms of warrants previously recorded as a liability and now reclassified to equity		1,755			-			1,755
Change in value due to warrants expiring during the year		448			-			448
Extinguishment of derivative liability due to payoff of $700,000 loan to Auctus		-			84			84
Change in fair value during the year		-			(91	)		(91	)
Balance, December 31, 2021	$	-		$	(32	)	$	(32	)

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STOCKHOLDERS DEFICIT

3 Months Ended

12 Months Ended

Mar. 31, 2022

Dec. 31, 2021

Stockholders' Deficit:

STOCKHOLDERS' DEFICIT

4. STOCKHOLDERS’ DEFICIT

Common Stock

The Company has authorized 500,000,000 shares of common stock with $0.001 par value. As of March 31, 2022 and December 31, 2021, 22,316,412 and 13,673,583 shares were issued and outstanding, respectively.

During the three months ended March 31, 2022, the Company issued 8,642,829 shares of common stock:

	Number of Shares
Common stock warrants exercised		4,477,923
Issuance of common stock for payment of Series D preferred dividends		23,109
Issuance of common stock for payment of Series E preferred dividends		12,432
Issuance of common stock for payment of Series F preferred dividends		158,662
Issuance of common stock for payment of Series F-2 preferred dividends		95,535
Issuance of common stock for payment of interest		121,262
Issuance of common stock for Series F one-time 15% dividend		255,401
Issuance of common stock for Series F-2 one-time 15% dividend		368,505
Conversion of Series E preferred stock to common stock		3,070,000
Conversion of Series F preferred stock to common stock		60,000
Issued during the three months ended March 31, 2022		8,642,829
Summary table of common stock share transactions:
Balance at December 31, 2021		13,673,583
Issued in 2022		8,642,829
Balance at March 31, 2022		22,316,412

Preferred Stock

The Company has authorized 5,000,000 shares of preferred stock with a $0.001 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, 2022 and December 31, 2021, 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. Unpaid accrued dividends were $120,120 as of March 31, 2022. 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, 2022 and December 31, 2021, 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. As of March 31, 2022, these warrants had expired.

Series C1 Convertible Preferred Stock

The board designated 20,250 shares of preferred stock as Series C1 Preferred Stock, of which 1,049 shares were issued and outstanding at March 31, 2022 and December 31, 2021. 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, 2022 and December 31, 2021, 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.

At March 31, 2022 and December 31, 2021, 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, 2022 and December 31, 2021, 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 remained outstanding as of March 31, 2022 and December 31, 2021. On January 8, 2021, 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 at $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, 2022, none of the 763 Series D 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.

During the three months ended March 31, 2022, the Company issued 23,109 common stock shares for the payment of accrued Series D Preferred Stock dividends. As of March 31, 2022, the Company had accrued dividends of $14,306.

Series E Convertible Preferred Stock

The Board designated 5,000 shares of preferred stock as Series E Preferred Stock, 968 and 1,736 of which remained outstanding as of March 31, 2022 and December 31, 2021, respectively. 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.

Each share of Series E Preferred Stock has a par value of 0.001 per share and a Stated Value equal to $1,000, subject to increase set forth in its Certificate of Designation.

Each holder of Series E Preferred Stock is entitled to receive cumulative dividends of 8% per annum, payable

annually in cash or, following the listing of the Company’s common stock on certain Canadian trading markets and at the option of the Company, shares of common stock.

During the three months ended March 31, 2022, the Company issued 3,070,000 common stock shares for the conversion of 768 shares of Series E Convertible Preferred Stock.

During the three months ended March 31, 2022, the Company issued 12,432 common stock shares for the payment of Series E Preferred Stock dividends accrued. As of March 31, 2022, the Company had accrued dividends of $71,099.

Series F Convertible Preferred Stock

The Board designated 1,500 shares of preferred stock as Series F Preferred Stock, 1,411 and 1,426 of which were issued and outstanding as of March 31, 2022 and December 31, 2021, respectively. During 2021, the Company entered into a Stock Purchase Agreement with certain accredited investors (“the Series F Investors”). In total, for $1,436,000 the Company issued 1,436 shares of Series F Preferred Stock. Each Series F Preferred Stock is convertible into 4,000 common stock shares. The Series F Preferred Stock is entitled to cumulative dividends at the rate per share of 6% per annum. The stated value on the Series F Preferred Stock is $1,411.

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.

During the three months ended March 31, 2022, the Company issued 60,000 common stock shares for the conversion of 15 shares of Series F Convertible Preferred Stock.

During the three months ended March 31, 2022, the Company issued 158,662 common stock shares for the payment of annual Series F Preferred Stock dividends. Additionally, During the three months ended March 31, 2022, the Company issued 255,401 common stock shares for the payment of a one-time, non-recurring 15% dividend to the Series F Preferred shareholders (as required by the Series F Certificate of Designation in the event the Company did not uplist to the NASDAQ stock exchange or file its clinical data intended for FDA approval of LuViva by December 31, 2021). As of March 31, 2022, accrued dividends totaled $1,998.

Series F-2 Convertible Preferred Stock

The Company was oversubscribed for its Series F Convertible Preferred Stock, resulting in the requirement to file an additional Certificate of Designation for Series F-2 Convertible Preferred Stock with substantially the same terms as the Series F Convertible Preferred Stock. The Board designated 3,500 shares of preferred stock as Series F-2 Preferred Stock, 3,237 of which were issued and outstanding as of March 31, 2022 and December 31, 2021. During 2021, the Company entered into a Stock Purchase Agreement with certain accredited investors (“the Series F-2 Investors”). In total, for $678,000 the Company issued 678 shares of Series F-2 Preferred Stock. In addition, the Company exchanged outstanding debt of $2,559,000 for 2,559 shares of Series F-2 Preferred Stock. Each Series F-2 Preferred Stock is convertible into 4,000 common stock shares. The Series F-2 Preferred Stock will have cumulative dividends at the rate per share of 6% per annum. The stated value on the Series F-2 Preferred Stock is 3,237.

Each share of Series F-2 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-2 Certificate of Designation (the “Series F-2 Conversion Price”). The conversion of Series F-2 Preferred is subject to a 4.99% beneficial ownership limitation, which may be increased to 9.99% at the election of the holders of the Series F-2 Preferred. If the average of the VWAPs (as defined in the Series F-2 Certificate of Designation) for any consecutive 5 trading day period (“Measurement Period”) exceeds 200% of the then Series F-2 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-2 Preferred, for cash in an amount equal to aggregate Stated Value then outstanding plus accrued but unpaid dividends.

During the three months ended March 31, 2022, the Company issued 95,535 common stock shares for the payment of annual Series F-2 Preferred Stock dividends. Additionally, During the three months ended March 31, 2022, the Company issued 368,505 common stock shares for the payment of a one-time, non-recurring 15% dividend to the Series F-2 Preferred shareholders (as required by the Series F-2 Certificate of Designation in the event the Company did not uplist to the NASDAQ stock exchange or file its clinical data intended for FDA approval of LuViva by December 31, 2021). As of March 31, 2022, accrued dividends totaled $91,592.

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. The Company has redeemed all of the Series G preferred stock and the balance is paid.

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 125,000 was recorded as a liability. On June 4, 2021, the Company redeemed the January 2021 investment of $75,000 for $114,597, this $39,597 difference was recorded as interest expense. On July 8, 2021, the Company redeemed the February 2021 investment of $50,000 for $78,094. The difference of 28,094 was recorded as interest expense. As of March 31, 2022 and December 31, 2021, the amount outstanding was nil.

Warrants

The following table summarizes transactions involving the Company’s outstanding warrants to purchase common stock for the three months ended March 31, 2022:

	Warrants (Underlying Shares)			Weighted-Average Exercise Price Per Share
Outstanding, December 31, 2021		27,669,634		$	0.29
Warrants exercised		(2,284,324	)	$	0.16
Outstanding, March 31, 2022		25,385,310		$	0.30

4.  STOCKHOLDERS’ DEFICIT

Common Stock

The Company has authorized 500,000,000 shares of common stock with $0.001 par value. As of December 31, 2021 and 2020, 13,673,583 and 13,138,282 shares were issued and outstanding, respectively.

During the years ended December 31, 2021 and 2020 the Company issued 535,301 and 9,818,813 shares of common stock, respectively:

	Number of Shares
Conversion of debt into common shares - exchange agreements		7,957,013
Conversion of debt into common shares		175,000
Shares issued for manufacturing agreements		12,147
Shares issued for payment of Series D dividends		148,653
Shares issued to investors		1,526,000
Issued during the year ended December 31, 2020		9,818,813
Shares issued for payment of Series D dividends		109,039
Shares issued for payment of Series E dividends		288,262
Shares issued for payment of finder fee		98,000
Conversion of Series F Preferred shares into common stock		40,000
Issued during the year ended December 31, 2021		535,301
Summary table of common stock share transactions:
Outstanding at December 31, 2019		3,319,469
Issued in 2020		9,818,813
Outstanding at December 31, 2020		13,138,282
Issued in 2021		535,301
Outstanding at December 31, 2021		13,673,583

Conversion of Debt into Common Shares - 2020 Exchange Agreements

On January 8, 2020, the Company exchanged $2,064,366 in debt for several equity instruments with an estimated 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 during the year ended December 31, 2020.

On June 3, 2020, the Company exchanged $328,422 of debt held by Auctus, (summarized in Note 10, “Convertible Notes”), for 500,000 shares of common stock and 700,000 warrants to purchase common stock shares. The fair value of the common shares was $250,000 and the fair value of the warrants was $196,818 (based on an estimated fair value of $0.281, as determined utilizing the Black-Scholes option pricing model). This resulted in a net loss on extinguishment of debt of $118,396 ($446,818 fair value less $328,422 of exchanged debt).

On June 30, 2020, the Company exchanged $125,000 of debt held by Mr. James Clavijo, for 500,000 shares of common stock and 250,000 warrants to purchase common shares. The fair value of the common shares was $250,000 and the fair value of the warrants was $99,963 (based on an estimated fair value of $0.40, as determined utilizing the Black-Scholes option pricing model). This resulted in a net loss on extinguishment of debt of $224,963 ($349,963 fair value less $125,000 of exchanged debt).

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. During the year ended December 31, 2021, the Company obtained the minimum amount of financing and issued the promissory note to Mr. Wells in accordance with the agreement described above.

The following table summarizes the debt exchanges:

	Total Debt and Accrued Interest		Total Debt		Total Accrued Interest		Common Stock Shares		Warrants (Exercise $0.15)		Warrants (Exercise $0.20)		Warrants (Exercise $0.25)		Warrants (Exercise $0.50)		Warrants (Exercise $0.75)
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		-		496,602		704,334		-		704,334
Mr. Blumberg		305,320		292,290		13,030		1,167,630		-		928,318		119,656		-		119,656
Mr. Case		179,291		150,000		29,291		896,456		-		896,456		-		-		-
Mr. Grimm		51,110		50,000		1,110		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		-		1,497,367		100,944		-		100,944
Ms. Rosenstock1		50,000		50,000		-		100,000		-		-		50,000		-		50,000
Mr. James2		2,286		2,000		286		7,745		-		5,291		1,227		-		1,227
Auctus		328,422		249,119		79,303		500,000		700,000		-		-				-
Mr. Clavijo		125,000		125,000		-		500,000		-		-		-		250,000		-
Mr. Wells4		220,000		220,000		-		-		-		-		-		-		-
	$	2,737,847	$	2,496,316	$	241,531		7,957,013		700,000		4,713,603		1,121,705		250,000		1,121,705

____________ 

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. 

Conversion of Debt into Common Shares - 2020

Effective September 10, 2014, the Company sold a secured convertible promissory note to an accredited investor, GHS Investments, LLC (“GHS”), with an initial principal amount of $1,275,000, for a purchase price of $570,000 (less an original issue discount of $560,000 and debt issuance costs of $145,000). The outstanding balance of the note was convertible into shares of common stock at a conversion price per share equal to 75% of the lowest daily volume average price of common stock during the five days prior to conversion. During 2020, GHS converted $50,454 of principal and interest owed for 175,000 shares of common stock. As of December 31, 2020, there was no remaining amount due on the note.

Shares Issued for Manufacturing Agreements - 2020

During the year ended December 31, 2020, the Company issued 12,147 shares of common stock to Shandong Yaohua Medical Instrument Corporation (“SMI”), as compensation for manufacturing and distribution services. Refer to Note 7, “Commitments and Contingencies.”

Shares Issued to Investors - 2020

During the year ended December 31, 2020, the Company issued 1,526,000 shares of common stock to certain accredited investors as part of the Series D Preferred Stock offering (see “Series D Preferred Stock” below).

Shares Issued as Payment for Finder’s Fee - 2021

During 2021, the Company issued 98,000 shares of common stock as compensation for the “finder’s fee” associated with the Series F and Series F-2 Preferred Stock offerings (see “Series F Convertible Preferred Stock” and “Series F-2 Convertible Preferred Stock” below).

Conversion of Series F Preferred Shares into Common Stock - 2021

During the year ended December 31, 2021, 10 shares of Series F Preferred were converted into 40,000 shares of the Company’s common stock (see “Series F Convertible Preferred Stock” below).

Preferred Stock

The Company has authorized 5,000,000 shares of preferred stock with a $0.001 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 December 31, 2021 and 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 of 572,000 common 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. Unpaid accrued dividends were $120,120 as of December 31, 2021. Upon conversion of the Series C preferred stock prior to the Dividend End Date, the Company will also pay to the converting holder a “make-whole payment” equal to the number of unpaid dividends through the Dividend End Date on the converted shares. At December 31, 2021 and 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. As of December 31, 2021, these warrants had expired.

Series C1 Convertible Preferred Stock

The board designated 20,250 shares of preferred stock as Series C1 Preferred Stock, of which 1,049 shares were issued and outstanding at December 31, 2021 and 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 December 31, 2021 and 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.

At December 31, 2021 and 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 of 2,098,500 common shares.

The Series C1 preferred stock has terms that are substantially the same as the Series C preferred stock, except that the Series C1 preferred stock does not pay dividends (unless and to the extent declared on the common stock) or at-the-market “make-whole payments” and, while it has the same anti-dilution protections afforded the Series C preferred stock, it does not automatically reset in connection with a reverse stock split or conversion of our outstanding convertible debt.

Series C2 Convertible Preferred Stock

On August 31, 2018, the Company entered into agreements with certain holders of the Company’s Series C1 Preferred Stock, including the chairman of the Company’s board of directors, and the Chief Operating Officer and a director of the Company pursuant to which those holders separately agreed to exchange each share of the Series C1 Preferred Stock held for one (1) share of the Company’s newly created Series C2 Preferred Stock. In total, for 3,262.25 shares of Series C1 Preferred Stock to be surrendered, the Company issued 3,262.25 shares of Series C2 Preferred Stock. At December 31, 2021 and 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 of 6,524,500 common 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 remained outstanding as of December 31, 2021. 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 at $0.75. Each Series D Preferred Stock is convertible into 3,000 common 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 December 31, 2021, none of the 763 Series D 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.

During the year ended December 31, 2021, the Company issued 109,039 shares of common stock for the payment of accrued Series D Preferred Stock dividends. As of December 31, 2021, the Company had accrued dividends of $14,306.

Series E Convertible Preferred Stock

The Board designated 5,000 shares of preferred stock as Series E Preferred Stock, 1,736 of which remain outstanding. 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.

Each share of Series E Preferred Stock has a par value of $0.001 per share and a Stated Value equal to $1,000, subject to increase set forth in its Certificate of Designation.

Each holder of Series E Preferred Stock is entitled to receive cumulative dividends of 8% per annum, payable annually on the Stated Value in cash or, following the listing of the Company’s common stock on certain Canadian trading markets and at the option of the Company, shares of common stock.

During the year ended December 31, 2021, the Company issued 288,262 shares of common for the payment of Series E Preferred Stock dividends accrued. As of December 31, 2021, the Company had accrued dividends of $54,521.

Series F Convertible Preferred Stock

The Company was oversubscribed for its Series F Convertible Preferred Stock, resulting in the requirement to file an additional Certificate of Designation for Series F-2 Convertible Preferred Stock with substantially the same terms as the Series F Convertible Preferred Stock. The Board designated 1,500 shares of preferred stock as Series F Preferred Stock, 1,426 of which are issued and outstanding. During 2021, the Company entered into a Stock Purchase Agreement with certain accredited investors (“the Series F Investors”). In total, for $1,436,000 the Company issued 1,436 shares of Series F Preferred Stock. Each Series F Preferred Stock is convertible into 4,000 common stock shares. The Series F Preferred Stock will have cumulative dividends at the rate per share of 6% per annum. The stated value and liquidation preference on the Series F Preferred Stock is $1,436.

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.

During the year ended December 31, 2021, 10 shares of Series F Preferred were converted into 40,000 shares of the Company’s common stock. As of December 31, 2021, the Company had not issued shares as payment of Series F Preferred Stock dividends. As of December 31, 2021, the Company had accrued dividends of $65,718.

Series F-2 Convertible Preferred Stock

The Board designated 3,500 shares of preferred stock as Series F-2 Preferred Stock, 3,237 of which are issued and outstanding. During 2021, the Company entered into a Stock Purchase Agreement with certain accredited investors (“the Series F-2 Investors”). In total, for $678,000 the Company issued 678 shares of Series F-2 Preferred Stock. In addition, the Company exchanged outstanding debt of $2,559,000 for 2,559 shares of Series F-2 Preferred Stock (see Note 9, “Convertible Debt”). Each Series F-2 Preferred Stock is convertible into 4,000 common stock shares. The Series F-2 Preferred Stock will have cumulative dividends at the rate per share of 6% per annum. The stated value and liquidation preference on the Series F-2 Preferred Stock is $3,237.

Each share of Series F-2 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-2 Certificate of Designation (the “Series F-2 Conversion Price”). The conversion of Series F-2 Preferred is subject to a 4.99% beneficial ownership limitation, which may be increased to 9.99% at the election of the holders of the Series F-2 Preferred. If the average of the VWAPs (as defined in the Series F-2 Certificate of Designation) for any consecutive 5 trading day period (“Measurement Period”) exceeds 200% of the then Series F-2 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-2 Preferred, for cash in an amount equal to aggregate Stated Value then outstanding plus accrued but unpaid dividends. As of December 31, 2021, the Company had not issued shares as payment of Series F-2 Preferred Stock dividends. As of December 31, 2021, the Company had accrued dividends of $94,907.

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. The Company has redeemed all of the Series G preferred stock and the balance is paid.

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. On June 4, 2021, the Company redeemed the January 2021 investment of $75,000 for $114,597, this $39,597 difference was recorded as interest expense. On July 8, 2021, the Company redeemed the February 2021 investment of $50,000 for $78,094. The difference of $28,094 was recorded as interest expense. As of December 31, 2021, the amount outstanding was nil.

Warrants

The following table summarizes transactions involving the Company’s outstanding warrants to purchase common stock for the years ended December 31, 2021 and 2020:

	Warrants (Underlying Shares)			Weighted-Average Exercise Price Per Share
Outstanding, January 1, 2020		46,016,840		$	1.71
Warrants issued		11,270,013		$	0.34
Warrants cancelled/expired		(70	)	$	1,068,423
Warrants exchanged		(28,962,508	)	$	0.04
Outstanding, December 31, 2020		28,324,275		$	0.25
Warrants issued		7,982,223		$	0.30
Warrants cancelled/expired		(1,729,662	)	$	0.04
Warrants exchanged		(4,713,603	)	$	0.20
Warrants exercised		(2,193,599	)	$	0.16
Outstanding, December 31, 2021		27,669,634		$	0.29

Warrant Exchanges - 2021

During the year ended December 31, 2021, the Company entered into various agreements with holders of the Company’s $0.20 strike price warrants, pursuant to which each holder separately agreed to exchange 4,713,603 common stock warrants with a strike price of $0.20 for 4,477,923 common stock warrants with a strike price of $0.16 and a contractual term of 15 days. During the year ended December 31, 2021, the Company received approximately $351,000 from the holders for the exercise of 2,193,599 warrants, which was included in Accrued Liabilities as of December 31, 2021, pending issuance of the common shares. The Company measured the effect of the exchange as the excess of fair value of the exchanged instruments over the fair value of the original instruments and determined the effect of the exchange was nil. Management estimated the fair value of the warrants issued utilizing the Black-Scholes Option Pricing model with the following assumptions:

	December 31,
	2021
Expected term	15 days
Volatility		143.2	%
Risk-free interest rate		0.0	%
Dividend yield		0.00	%

During the year ended December 31, 2021, the Company entered into various agreements with holders of the Company’s $0.25 strike price warrants, pursuant to which each holder separately agreed that in the event the Company obtains financing of at least $4.0 million, 1,802,161 of common stock warrants with a strike price of $0.25 will be exchanged for 901,081 warrants with terms identical to the warrants granted in the financing and cash payments totaling approximately $90,000, which are due within ten (10) business days of closing of the new financing. In the event Company is not successful in obtaining financing greater than $4.0 million, the warrant’s terms remain unchanged and the common share warrants will expire on their original date. The warrants will have a one-year lockup restriction and a 10% blocker such that the warrant holders will be restricted from owning more than 10% of the total number of the Company’s outstanding common shares at any one point in time after completion of the financing.

During the year ended December 31, 2021, the Company entered into various agreements with holders of the Company’s $0.75 strike price warrants, pursuant to which each holder separately agreed that in the event the Company obtains financing of at least $4.0 million, 1,802,161 of common stock warrants with a strike price of $0.75 will be exchanged for 1,802,161 warrants with the same price but with terms identical to the new warrants granted in the financing. In the event Company is not successful in obtaining financing greater than $4.0 million, the warrant’s terms will remain unchanged and the common share warrants will expire on their original date. The new warrants will have a one-year lockup restriction and a 10% blocker such that the warrant holders will be restricted from owning more than 10% of the total number of the Company’s outstanding common shares at any one point in time after completion of the financing.

During the year ended December 31, 2021, the Company entered into an agreement with GPB Debt Holdings II LLC (“GPB”), pursuant to which GPB agreed that in the event the Company obtains financing of at least $4.0 million, 7,185,000 of common stock warrants with a strike price of $0.20 will be exchanged for 3,592,500 warrants with terms identical to the warrants granted in the financing and a cash payment of $350,000. In the event Company is not successful in obtaining financing greater than $4.0 million, the warrant’s terms remain unchanged and the common share warrants will expire on their original date. The new warrants, which will vest six months after the closing of a financing greater than $4.0 million, will have a 4.99% blocker such that the warrant holders will be restricted from owning more than 4.99% of the total number of the Company’s outstanding common shares at any one point in time after completion of the financing.

Other Warrant Transactions

During 2021, the Company issued 10% debenture unit investments in the amount of $1,130,000 and incurred fees due on these debentures of $86,400. The Company issued the finders 263,000 warrants for the Company’s common stock shares which expire on May 31, 2023 and an additional 150,000 warrants to purchase the Company’s common stock shares which expire on May 31, 2024. The investors received a total of 1,130,000 warrants for common stock shares, which expire on May 17, 2023.

During 2021, the Company issued equity investments in the amount of $2,114,000 and incurred fees due on these investments of $139,000. The Company also issued the finders 98,000 of the Company’s common stock shares and 643,700 warrants, which expire in the first half of 2024.

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 shares 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 made a payment of $750,000, as required by the exchange agreement with GPB, which canceled the previously issued warrants.

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 were 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 common stock warrants at a $0.25 strike price and expiring in three years, if the following conditions occur: 1,250,000 common stock warrants, 6 months after the close of the Series D Preferred Stock units, if the minimum common stock share price is a at least $0.50 based on a 30-day VWAP, with a two year term; 1,250,000 common stock warrants, 12 months after the close of the Series D Preferred Stock units, if the minimum common stock share price is at least $0.75 based on a 30-day VWAP, with a one and half year term; 1,250,000 common stock warrants, 18 months after the close of the Series D Preferred Stock units, if the minimum common stock share price is a minimum of $1.00 based on a 30-day VWAP, with a one year term; and 1,250,000 common stock warrants, 24 months after the close of the Series D Preferred Stock units, if the minimum common stock share price is a minimum of $1.25 based on a 30-day VWAP, with a one year term. The consultant agrees to a 10.0% blocker at any single point in time it cannot own 10.0% of the total common stock shares outstanding. The Company issued 1,250,000 common stock warrants during the year ended December 31, 2021, in accordance with the agreement. Refer to Note 7, “Commitments and Contingencies” for additional information. 

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STOCK OPTIONS

3 Months Ended

12 Months Ended

Mar. 31, 2022

Dec. 31, 2021

STOCK OPTIONS

STOCK OPTIONS

5. STOCK OPTIONS

The new Stock Plan (the “Plan”) allows for the issuance of incentive stock options, nonqualified stock options, and stock purchase rights. The exercise price of options was determined by the Company’s board of directors, but incentive stock options were granted at an exercise price equal to the fair market value of the Company’s common stock as of the grant date. Options historically granted have generally become exercisable over four years and expire ten years from the date of grant. The plan provides for stock options to be granted up to 10% of the outstanding common stock shares.

There was no stock option activity during the three months ended March 31, 2022. The following table summarizes the Company’s outstanding and exercisable stock options as of March 31, 2022:

	Number of Shares		Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Life	Aggregate Intrinsic Value of In-the-Money Options  (in thousands)
Options outstanding as of March 31, 2022		1,500,000	$	0.49	8.3 years	$	240
Options exercisable as of March 31, 2022		1,045,227	$	0.49	8.3 years	$	167

The aggregate intrinsic value is calculated as the difference between the Company’s closing stock price as of March 31, 2022 and the exercise price, multiplied by the number of options. As of March 31, 2022, there was $219,558 of unrecognized stock-based compensation expense. Such costs are expected to be recognized over a weighted average period of approximately 1.25 years. The weighted-average fair value of awards granted was nil and $0.47 during the three months ended March 31, 2022 and 2021, respectively.

The Company recognizes compensation expense for stock option awards on a straight-line basis over the applicable service period of the award. The service period is generally the vesting period. The Black-Scholes option pricing model and the following weighted-average assumptions were used to estimate the fair value of awards granted during the three months ended March 31, 2021:

	March 31,
	2021
Expected term (years)		10 years
Volatility		153.12	%
Risk-free interest rate		0.98	%
Dividend yield		0.00	%

5.   STOCK OPTIONS

The new Stock Plan (the “Plan”) allows for the issuance of incentive stock options, nonqualified stock options, and stock purchase rights. The exercise price of options was determined by the Company’s board of directors, but incentive stock options were granted at an exercise price equal to the fair market value of the Company’s common stock as of the grant date. Options historically granted have generally become exercisable over four years and expire ten years from the date of grant. The plan provides for stock options to be granted up to 10% of the outstanding common stock shares.

During the years ended December 31, 2021 and 2020, the Company recognized stock-based compensation expense of $226,717 and $309,905, respectively. The following table summarizes the Company’s stock option activity and related information for the year ended December 31, 2021:

	Number of Shares			Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Life	Aggregate Intrinsic Value of In-the-Money Options (in thousands)
Options outstanding as of January 1, 2021		1,800,000		$	0.49
Options granted		25,000		$	0.48
Options forfeited		(167,614	)	$	0.49
Options expired		(157,386	)	$	0.49
Options outstanding as of December 31, 2021		1,500,000		$	0.49	8.5 years	$	135
Options exercisable as of December 31, 2021		954,273		$	0.49	8.5 years	$	86

The aggregate intrinsic value is calculated as the difference between the Company’s closing stock price as of December 31, 2021 and the exercise price, multiplied by the number of options. As of December 31, 2021, there was $263,470 total unrecognized stock-based compensation expense. Such costs are expected to be recognized over a weighted average period of approximately 1.5 years. The weighted-average fair value of awards granted was $0.47 and $0.48 during the years December 31, 2021 and 2020, respectively.

The Company recognizes compensation expense for stock option awards on a straight-line basis over the applicable service period of the award. The service period is generally the vesting period. The following weighted-average assumptions were used to calculate stock-based compensation expense:

	December 31,			December 31,
	2021			2020
Expected term (years)	10 years			10 years
Volatility		153.12	%		153.12	%
Risk-free interest rate		0.98	%		0.98	%
Dividend yield		0.00	%		0.00	%

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LITIGATION AND CLAIMS

3 Months Ended

12 Months Ended

Mar. 31, 2022

Dec. 31, 2021

LITIGATION AND CLAIMS

LITIGATION AND CLAIMS

6. LITIGATION AND CLAIMS

From time to time, the Company may be involved in various legal proceedings and claims arising in the ordinary course of business. Management believes that the dispositions of these matters, individually or in the aggregate, are not expected to have a material adverse effect on the Company’s financial condition. However, depending on the amount and timing of such disposition, an unfavorable resolution of some or all of these matters could materially affect the future results of operations or cash flows in a particular year.

As of March 31, 2022, and December 31, 2021, there was no accrual recorded for any potential losses related to pending litigation.

6.   LITIGATION AND CLAIMS

From time to time, the Company may be involved in various legal proceedings and claims arising in the ordinary course of business. Management believes that the dispositions of these matters, individually or in the aggregate, are not expected to have a material adverse effect on the Company’s financial condition. However, depending on the amount and timing of such disposition, an unfavorable resolution of some or all of these matters could materially affect the future results of operations or cash flows in a particular year.

As of December 31, 2021 and 2020, there was no accrual recorded for any potential losses related to pending litigation.

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COMMITMENTS AND CONTINGENCIES

3 Months Ended

12 Months Ended

Mar. 31, 2022

Dec. 31, 2021

LITIGATION AND CLAIMS

COMMITMENTS AND CONTINGENCIES

7. COMMITMENTS AND CONTINGENCIES

Operating Leases

The below table presents total operating lease right-of-use assets and lease liabilities as of March 31, 2022:

	(in thousands)
	Three Months Ended March 31,
	2022
Operating lease right-of-use assets	$	355
Operating lease liabilities	$	377

The table below presents the maturities of operating lease liabilities as of March 31, 2022:

	(in thousands)
	Operating
	Leases
2022 (remaining)	$	82
2023		112
2024		115
2025		118
2026		50
Total future lease payments		477
Less: discount		(100	)
Total lease liabilities	$	377

The table below presents the weighted-average remaining lease term and discount rate used in the calculation of operating lease right-of-use assets and lease liabilities:

	Three Months Ended March 31,
	2022
Weighted average remaining lease term (years)		4.2
Weighted average discount rate		11.4	%

Related Party Contracts

On June 5, 2016, the Company entered into a license agreement with Shenghuo Medical, LLC pursuant to which the Company granted Shenghuo an exclusive license to manufacture, sell and distribute LuViva in Taiwan, Brunei Darussalam, Cambodia, Laos, Myanmar, Philippines, Singapore, Thailand, and Vietnam. Shenghuo was already the Company’s exclusive distributor in China, Macau and Hong Kong, and the license extended to manufacturing in those countries as well. Under the terms of the license agreement, once Shenghuo was capable of manufacturing LuViva in accordance with ISO 13485 for medical devices, Shenghuo would pay the Company a royalty equal to $2.00 or 20% of the distributor price (subject to a discount under certain circumstances), whichever is higher, per disposable distributed within Shenghuo’s exclusive territories. In connection with the license grant, Shenghuo was to underwrite the cost of securing approval of LuViva with Chinese Food and Drug Administration. At its option, Shenghuo also would provide up to $1.0 million in furtherance of the Company’s efforts to secure regulatory approval for LuViva from the U.S. Food and Drug Administration, in exchange for the right to receive payments equal to 2% of the Company’s future sales in the United States, up to an aggregate of $4.0 million. Pursuant to the license agreement, Shenghuo had the option to have a designee appointed to the Company’s board of directors (current director Richard Blumberg is the designee).

On September 6, 2016, the Company entered into a royalty agreement with one of its directors, John Imhoff, and another stockholder, Dolores Maloof, pursuant to which the Company sold to them a royalty of future sales of single-use cervical guides for LuViva. Under the terms of the royalty agreement, and for consideration of $50,000, the Company will pay them an aggregate perpetual royalty initially equal to $0.10, and from and after October 2, 2016, equal to $0.20, for each disposable that the Company sells (or that is sold by a third party pursuant to a licensing arrangement with the Company).

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. During the three months ended March 31, 2022, the Company recognized $79,444 of consulting expenses as a result of this agreement. Unrecognized consulting expense to be recognized under this agreement is nil as of March 31, 2022.

On March 10, 2021, the Company entered into a consulting agreement with Richard Blumberg. As a result of the consulting agreement Mr. Blumberg provided $350,000, which was recorded to subscription receivable, to the Company in exchange for the following: (1) on September 26, 2021, 900,000 3-year warrants with an exercise price of $0.30 and 400,000 common stock shares; (2) on March 26, 2022, 900,000 3-year warrants with an exercise price of $0.40 and 400,000 common stock shares; (3) on September 26, 2022, 900,000 3-year warrants with an exercise price of $0.50 and 400,000 common stock shares; and (4) on March 26, 2023, 900,000 3-year warrants with an exercise price of $0.60 and 400,000 common stock shares.

During the year ended December 31, 2021, the consulting agreement was amended to clarify that $350,000 is not intended to be debt and will not be required to be repaid in cash. Additionally, issuance of the warrants is now predicated on the Company receiving funding receipts of $1,000,000, whether from a financing, series of financing, or gross sales. The amended agreement clarified that the warrants issued to Mr. Blumberg are compensation for services, which involve obtaining financing. The Company will recognize expense for the services equal to the fair value of the warrants issued to Mr. Blumberg as the services are provided, which will coincide with the successful execution of a financing agreement over $1,000,000.

Other Commitments

On July 24, 2019, Shandong Yaohua Medical Instrument Corporation (“SMI”), agreed to modify its existing agreement. Under the terms of this modification, the Company agreed to grant (1) exclusive manufacturing rights, excepting the disposable cervical guides for the Republic of Turkey, and the final assembly rights for Hungary, and (2) exclusive distribution and sales for LuViva in jurisdictions, subject to the following terms and conditions. First, SMI shall complete the payment for parts, per the purchase order, for five additional LuViva devices. Second, in consideration for the $885,144 that the Company received, SMI will receive 12,147 common stock shares. Third, SMI shall honor all existing purchase orders it has executed to date with the Company, in order to maintain jurisdiction sales and distribution rights. If SMI needs to purchase cervical guides, then it will do so at a cost including labor, plus ten percent markup. The Company will provide 200 cervical guides at no cost for the clinical trials. Fourth, the Company and SMI will make best efforts to sell devices after CFDA approval. With an initial estimate of year one sales of 200 LuViva devices; year two sales of 500 LuViva devices; year three sales of 1,000 LuViva devices; and year four sales of 1,250 LuViva devices. Fifth, SMI shall pay for entire costs of securing approval of LuViva with the Chinese FDA. Sixth, SMI shall arrange, at its sole cost, for a manufacturer in China to build tooling to support manufacturing. In addition, SMI retains the right to manufacture for China, Hong Kong, Macau and Taiwan, where SMI has distribution and sales rights. For each single-use cervical guide sold by SMI in the jurisdictions, SMI shall transfer funds to escrow agent at a rate of $1.90 per device chip. If within 18 months of the license’s effective date, SMI fails to achieve commercialization of LuViva in China, SMI shall no longer have any rights to manufacture, distribute or sell LuViva. Commercialization is defined as: filing an application with the Chinese FDA for the approval of LuViva; any assembly or manufacture of the devices or disposables that begins in China; and purchase of at least 10 devices and disposables for clinical evaluations and regulatory use and or sales in the jurisdictions.

On August 12, 2021, the Company executed an amendment to its agreement with SMI, which established a payment schedule for the balance owed by SMI to the Company for outstanding purchase orders. The remaining balance owed for outstanding purchase orders was $23,445 as of March 31, 2022. Under the terms of the amended agreement, the parties agreed that if by October 30, 2022, SMI fails to achieve commercialization of LuViva in China, SMI shall no longer have any rights to manufacture, distribute or sell LuViva.

Contingencies

The current outbreak of the Coronavirus SARS-CoV-2, the pathogen responsible for COVID-19, which has already had an impact on financial markets, could result in additional repercussions to the Company’s operating business, including but not limited to, the sourcing of materials for product candidates, manufacture of supplies for preclinical and/or clinical studies, delays in clinical operations, which may include the availability or the continued availability of patients for trials due to such things as quarantines, conduct of patient monitoring and clinical trial data retrieval at investigational study sites.

The future impact of the outbreak is highly uncertain and cannot be predicted, and the Company cannot provide any assurance that the outbreak will not have a material adverse impact on the Company’s operations or future results or filings with regulatory health authorities. The extent of the impact to the Company, if any, will depend on future developments, including actions taken to contain the coronavirus.

The Russia-Ukraine conflict and the sanctions imposed in response to this crisis could result in repercussions to our operating business, including delays in obtaining regulatory approval to market our products in Russia. The future impact of the conflict is highly uncertain and cannot be predicted, and we cannot provide any assurance that the conflict will not have a material adverse impact on our operations or future results or filings with regulatory health authorities.

7.   COMMITMENTS AND CONTINGENCIES

Operating Leases

Our corporate offices, which also comprise our administrative, research and development, marketing and production facilities, are located on a 12,835 square foot leased property. Total operating lease cost recognized for this lease was $110,701 and $114,591 for the years ended December 31, 2021 and 2020, respectively. The below table presents total operating lease right-of-use assets and lease liabilities as of December 31, 2021:

	(in thousands)
	Year Ended December 31,
	2021
Operating lease right-of-use assets	$	372
Operating lease liabilities	$	392

The table below presents the maturities of operating lease liabilities as of December 31, 2021:

	(in thousands)
	Operating
	Leases
2022	$	108
2023		112
2024		115
2025		118
2026		50
Total future lease payments		503
Less: discount		(111	)
Total lease liabilities	$	392

The table below presents the weighted-average remaining lease term and discount rate used in the calculation of operating lease right-of-use assets and lease liabilities:

	Year Ended December 31,
	2021
Weighted average remaining lease term (years)		4.4
Weighted average discount rate		11.4	%

Related Party Contracts

On June 5, 2016, the Company entered into a license agreement with Shenghuo Medical, LLC pursuant to which the Company granted Shenghuo an exclusive license to manufacture, sell and distribute LuViva in Taiwan, Brunei Darussalam, Cambodia, Laos, Myanmar, Philippines, Singapore, Thailand, and Vietnam. Shenghuo was already the Company’s exclusive distributor in China, Macau and Hong Kong, and the license extended to manufacturing in those countries as well. Under the terms of the license agreement, once Shenghuo was capable of manufacturing LuViva in accordance with ISO 13485 for medical devices, Shenghuo would pay the Company a royalty equal to $2.00 or 20% of the distributor price (subject to a discount under certain circumstances), whichever is higher, per disposable distributed within Shenghuo’s exclusive territories. In connection with the license grant, Shenghuo was to underwrite the cost of securing approval of LuViva with Chinese Food and Drug Administration. At its option, Shenghuo also would provide up to $1.0 million in furtherance of the Company’s efforts to secure regulatory approval for LuViva from the U.S. Food and Drug Administration, in exchange for the right to receive payments equal to 2% of the Company’s future sales in the United States, up to an aggregate of $4.0 million. Pursuant to the license agreement, Shenghuo had the option to have a designee appointed to the Company’s board of directors (current director Richard Blumberg is the designee).

On September 6, 2016, the Company entered into a royalty agreement with one of its directors, John Imhoff, and another stockholder, Dolores Maloof, pursuant to which the Company sold to them a royalty of future sales of single-use cervical guides for LuViva. Under the terms of the royalty agreement, and for consideration of $50,000, the Company will pay them an aggregate perpetual royalty initially equal to $0.10, and from and after October 2, 2016, equal to $0.20, for each disposable that the Company sells (or that is sold by a third party pursuant to a licensing arrangement with the Company).

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. During the years December 31 2021, the Company recognized $556,111 of consulting expenses as a result of this agreement, 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 $79,444 as of December 31, 2021. 

On March 10, 2021, the Company entered into a consulting agreement with Richard Blumberg. As a result of the consulting agreement Mr. Blumberg provided cash of $350,000, which was recorded as a stock subscription payable, to the Company in exchange for the following: (1) on September 26, 2021, 900,000 3-year warrants with an exercise price of $0.30 and 400,000 common stock shares; (2) on March 26, 2022, 900,000 3-year warrants with an exercise price of $0.40 and 400,000 common stock shares; (3) on September 26, 2022, 900,000 3-year warrants with an exercise price of $0.50 and 400,000 common stock shares; and (4) on March 26, 2023, 900,000 3-year warrants with an exercise price of $0.60 and 400,000 common stock shares.

During the year ended December 31, 2021, the consulting agreement was amended to clarify that $350,000 is not intended to be debt and will not be required to be repaid in cash. Additionally, issuance of the warrants is now predicated on the Company receiving funding receipts of $1,000,000, whether from a financing, series of financing, or gross sales. The amended agreement clarified that the warrants issued to Mr. Blumberg are compensation for services, which involve obtaining financing. The Company will recognize expense for the services equal to the fair value of the warrants issued to Mr. Blumberg as the services are provided, which will coincide with the successful execution of a financing agreement over $1,000,000. The Company concluded that as of September 30,2021, there was no longer a liability due to Mr. Blumberg of $350,000. The liability was written off in the third quarter of 2021 and a gain of $350,000 was recognized in non-operating income.

Other Commitments

On July 24, 2019, Shandong Yaohua Medical Instrument Corporation (“SMI”), agreed to modify its existing agreement. Under the terms of this modification, the Company agreed to grant (1) exclusive manufacturing rights, excepting the disposable cervical guides for the Republic of Turkey, and the final assembly rights for Hungary, and (2) exclusive distribution and sales for LuViva in jurisdictions, subject to the following terms and conditions. First, SMI shall complete the payment for parts, per the purchase order, for five additional LuViva devices. Second, in consideration for the $885,144 that the Company received, SMI will receive 12,147 common stock shares. Third, SMI shall honor all existing purchase orders it has executed to date with the Company, in order to maintain jurisdiction sales and distribution rights. If SMI needs to purchase cervical guides then it will do so at a cost including labor, plus ten percent markup. The Company will provide 200 cervical guides at no cost for the clinical trials. Fourth, the Company and SMI will make best efforts to sell devices after CFDA approval. With an initial estimate of year one sales of 200 LuViva devices; year two sales of 500 LuViva devices; year three sales of 1,000 LuViva devices; and year four sales of 1,250 LuViva devices. Fifth, SMI shall pay for entire costs of securing approval of LuViva with the Chinese FDA. Sixth, SMI shall arrange, at its sole cost, for a manufacturer in China to build tooling to support manufacturing. In addition, SMI retains the right to manufacture for China, Hong Kong, Macau and Taiwan, where SMI has distribution and sales rights. For each single-use cervical guide sold by SMI in the jurisdictions, SMI shall transfer funds to escrow agent at a rate of $1.90 per device chip. If within 18 months of the license’s effective date, SMI fails to achieve commercialization of LuViva in China, SMI shall no longer have any rights to manufacture, distribute or sell LuViva. Commercialization is defined as: filing an application with the Chinese FDA for the approval of LuViva; any assembly or manufacture of the devices or disposables that begins in China; and purchase of at least 10 devices and disposables for clinical evaluations and regulatory use and or sales in the jurisdictions.

On August 12, 2021, the Company executed an amendment to its agreement with SMI, which established a payment schedule for the balance owed by SMI to the Company for outstanding purchase orders. During the year ended December 31, 2021, the Company received $353,635 from SMI on the aforementioned purchase order. The remaining balance owed for outstanding purchase orders was $177,000 as of December 31, 2021. Under the terms of the amended agreement, the parties agreed that if by October 30, 2022, SMI fails to achieve commercialization of LuViva in China, SMI shall no longer have any rights to manufacture, distribute or sell LuViva.

Contingencies

Based on the current outbreak of the Coronavirus SARS-CoV-2, the pathogen responsible for COVID-19, which has already had an impact on financial markets, there could be additional repercussions to the Company’s operating business, including but not limited to, the sourcing of materials for product candidates, manufacture of supplies for preclinical and/or clinical studies, delays in clinical operations, which may include the availability or the continued availability of patients for trials due to such things as quarantines, conduct of patient monitoring and clinical trial data retrieval at investigational study sites.

The future impact of the outbreak is highly uncertain and cannot be predicted, and the Company cannot provide any assurance that the outbreak will not have a material adverse impact on the Company’s operations or future results or filings with regulatory health authorities. The extent of the impact to the Company, if any, will depend on future developments, including actions taken to contain the coronavirus.

The conflict in Ukraine, which has already had an impact on financial markets, could result in additional repercussions in our operating business, including delays in obtaining regulatory approval to market our products in Russia. The future impact of the conflict is highly uncertain and cannot be predicted, and we cannot provide any assurance that the conflict will not have a material adverse impact on our operations or future results or filings with regulatory health authorities.

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NOTES PAYABLE

3 Months Ended

12 Months Ended

Mar. 31, 2022

Dec. 31, 2021

NOTES PAYABLE

NOTES PAYABLE

8. NOTES PAYABLE

Short Term Notes Payable

At March 31, 2022 and December 31, 2021, the Company maintained short term notes payable to related and non-related parties totaling approximately $43,253 and $87,615, respectively. These notes are short term, straight-line amortizing notes. The notes carry annual interest rates between 4.3% and 16%, or 18% in the event of default.

On July 4, 2021, the Company entered into a premium finance agreement to finance its insurance policies totaling $117,560. The note requires monthly payments of $11,968, including interest at 4.3% and matured in April 2022. As of March 31, 2022, the balance on that note was $11,968.

During 2019, the Company issued promissory notes to Mr. Cartwright totaling $45,829. The note was initially issued with 0% interest, however interest increased to 6.0% interest 90 days after the Company received $1,000,000 in financing proceeds. As of March 31, 2022, the balance on the notes was $31,285.

On December 21, 2016 and January 19, 2017, the Company issued promissory notes to Mr. Fowler, in the amounts of approximately $12,500 and $13,900. The notes were initially issued with 0% interest and then went into default with an interest rate of 18%. As part of the March 22, 2021 exchange agreement these notes were combined into one short term note payable of $26,400 and $18,718 in principal and interest of the two previous notes, respectively, for the total balance of $45,118. The aforementioned agreement brought the note current and will accrue interest at a rate of 6.0%. The note carries a monthly payment of $3,850. As of March 31, 2022, the note was paid in full.

The following table summarizes short-term notes payable, including related parties:

	Short-term notes payable, including related parties
	March 31, 2022		December 31, 2021
Dr. Cartwright	$	31	$	34
Mr. Fowler		-		6
Premium Finance (insurance)		12		48
Short-term notes payable	$	43	$	88

The short-term notes payable due to related parties was $31,285 at March 31, 2022 and $40,000 of the $88,000 balance at December 31, 2021.

8.   NOTES PAYABLE

Notes Payable in Default

At December 31, 2021 and 2020, the Company maintained notes payable to both related and non-related parties totaling approximately nil and $329,000, respectively. These notes are short term, straight-line amortizing notes. The notes carried annual interest rates between 0% and 10% and have default rates as high as 20%. As described in Note 4: “Stockholders’ Deficit,” certain notes payable in default outstanding had been exchanged for equity and cash as described in the note.

During the year ended December 31, 2021, the Company obtained a legal opinion as to how the applicable statute of limitations effects the status of the note payable due to Mr. Mermelstein and determined that the Company can no longer be required to repay the note as of December 31, 2021. As a result of the opinion, the note payable of $285,244 and accrued interest of $32,945 was written off during the third quarter of 2021.

During 2021, notes payable of $1,000 due to Dr. Cartwright were paid off and notes payable of $26,000 due to Mr. Fowler were brought current and not in default. The note payable to GPB was exchanged as described in Note 9, “Convertible Debt”.

The following table summarizes notes payable in default, including related parties (in thousands):

	Notes payable in default, including related parties
	December 31, 2021		December 31, 2020
Mr. Mermelstein	$	-	$	285
Dr. Cartwright		-		1
Mr. Fowler		-		26
GPB		-		17
Notes payable in default	$	-	$	329

The notes payable in default to related parties was $27,000 of the $329,000 balance as of December 31, 2020.

Short Term Notes Payable

At December 31, 2021 and 2020, the Company maintained short term notes payable to both related and non-related parties totaling $165,000 and $96,000, respectively. These notes are short term, straight-line amortizing notes. The notes carry annual interest rates between 4.3% and 6% (16% to 18% in the event of default).  

On July 4, 2021, the Company entered into a premium finance agreement to finance its insurance policies totaling $117,560. The note requires monthly payments of $11,968, including interest at 4.3% and matured in April 2022. As of December 31, 2021, the balance owed was $47,615.

On July 4, 2020, the Company entered into a premium finance agreement to finance its insurance policies totaling $109,000. The note requires monthly payments of $11,299, including interest at 4.968% and matured in April 2021. As of December 31, 2021, the balance was paid.

During 2019, the Company issued promissory notes to Dr. Cartwright and Dr. Faupel, in the amounts of approximately $41,000 and $5,000, respectively. The notes were initially issued with 0% interest, however interest increased to 6.0% interest 90 days after the Company received $1,000,000 in financing proceeds.

On December 21, 2016 and January 19, 2017, the Company issued promissory notes to Mr. Fowler, in the amounts of approximately $12,500 and $13,900. The notes were initially issued with 0% interest and then went into default with an interest rate of 18%. During the year ended December 31, 2021, the Company entered into an exchange agreement with Mr. Fowler, which combined the notes into one short term note payable of $26,400 and $18,718 in principal and interest of the two previous notes, respectively, for the total balance of $45,118. The agreement brought the note current and will accrue interest at a rate of 6.0%. The note carries a monthly payment of $3,850. As of December 31, 2021, the outstanding principal balance on the note was $5,759. At December 31, 2020 this note was recorded in the Notes payable in default section of the consolidated Balance Sheet.

The following table summarizes short-term notes payable, including related parties:

	Short-term notes payable, including related parties
	December 31, 2021		December 31, 2020
Dr. Cartwright	$	34	$	46
Dr. Faupel		-		5
Mr. Fowler		6		-
Premium Finance (insurance)		48		45
Short-term notes payable	$	88	$	96

The short-term notes payable due to related parties was $40,000 of the $88,000 balance at December 31, 2021 and $51,000 of the $96,000 balance at December 31, 2020.

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SHORT-TERM CONVERTIBLE DEBT

3 Months Ended

12 Months Ended

Mar. 31, 2022

Dec. 31, 2021

SHORT-TERM CONVERTIBLE DEBT

SHORT-TERM CONVERTIBLE DEBT

9. SHORT-TERM CONVERTIBLE DEBT

Short-term Convertible Notes Payable

Auctus

On December 17, 2019, the Company entered into a securities purchase agreement and convertible note with Auctus. The convertible note issued to Auctus will be for a total of $2.4 million. The first tranche of $700,000 was received in December 2019 and matured December 17, 2021 and accrued interest at a rate of ten percent (10%). The note may not have been prepaid in whole or in part except as otherwise explicitly allowed. Any amount of principal or interest on the note which was not paid when due shall bore interest at the rate of the lessor of 24% or the maximum permitted by law (the “default interest”). The variable conversion prices equaled the lesser of: (i) the lowest trading price on the issue date, and (ii) the variable conversion price. The variable conversion price was 95% multiplied by the market price (the market price means the average of the five lowest trading prices during the period beginning on the issue date and ending on the maturity date), minus $0.04 per share, provided however that in no event could the variable conversion price be less than $0.15. If an event of default under this note occurred and/or the note was not extinguished in its entirety prior to December 17, 2020 the $0.15 price floor no longer applied.

In connection with the first tranche of $700,000, the Company issued 7,500,000 warrants to purchase common stock at an exercise price of $0.20. The fair value of the warrants at the date of issuance was $745,972; $635,000 was allocated to the warrant liability and a loss of $110,972 was recorded at the date of issuance for the amount of the fair value in excess of the net proceeds received of $635,000. The $700,000 proceeds were received net of debt issuance costs of $65,000 (net proceeds of $635,000, after administrative and legal expenses Company received $570,000). The Company used $65,000 of the proceeds to make a partial payment of the $89,250 convertible promissory note issued on July 3, 2018 to Auctus. The Company made a $700,000 payment on June 1, 2021, which resulted in a prepayment penalty of $350,000 being assessed to the Company, which remained outstanding as of March 31, 2022. The Company recorded this prepayment penalty as interest expense. Interest will not be assessed on the prepayment penalty. As of March 31, 2022 and December 31, 2021, the outstanding amount of the note was nil.

On May 27, 2020, the Company received the second tranche in the amount of $400,000, from the December 17, 2019 securities purchase agreement and convertible note with Auctus. The net amount paid to the Company was $313,000 This second tranche is part of the convertible note issued to Auctus for a total of $2.4 million of which $700,000 has already been provided by Auctus. The note maturity date is May 27, 2022 and the note accrues interest at a rate of ten percent (10%). The note may not be prepaid in whole or in part except as otherwise explicitly allowed. Any amount of principal or interest on the note which is not paid when due shall bear interest at the rate of the lessor of 24% or the maximum permitted by law (the “default interest”). The variable conversion prices shall equal the lesser of: (i) the lowest trading price on the issue date, and (ii) the variable conversion price. The variable conversion price shall mean 95% multiplied by the market price (the market price means the average of the five lowest trading prices during the period beginning on the issue date and ending on the maturity date), minus $0.04 per share, provided however that in no event shall the variable conversion price be less than $0.15. If an event of default under this note occurs and/or the note is not extinguished in its entirety prior to December 17, 2020 the $0.15 price shall no longer apply. The last tranche of $1.3 million will be received within 60 days of the S-1 registration statement becoming effective. The conversion price of the notes will be at market value with a minimum conversion amount of $0.15. In addition, as part of this transaction the Company was required to pay a 2.0% fee to a registered broker-dealer. As of March 31, 2022 and December 31, 2021, $400,000 of principal remained outstanding and accrued interest totaled $74,778 and $64,778, respectively. Further, as of March 31, 2022 and December 31, 2020, the Company had unamortized debt issuance costs of $5,211 and $13,586. As of March 31, 2022 and December 31, 2021, the estimated fair value of the derivative liability for the bifurcated conversion option was $38,129 and $31,889, respectively.

Convertible Notes in Default

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 June 30, 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 matured 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 90^th 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 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, 2022 and December 31, 2021, the outstanding balance on the note was $161,184 (which includes a default penalty of $48,434. As of March 31, 2022 and December 31, 2021, accrued interest of $46,099 and $36,428 are included in accrued expenses on the accompanying consolidated balance sheet, respectively.

The following table summarizes the Short-term Convertible Notes Payable, including debt in default (in thousands):

	March 31, 2022			December 31, 2021
Auctus Tranche 2	$	400		$	400
Auctus prepayment penalty		350			350
Auctus (March 31, 2020 Note)		161			161
Debt discount and issuance costs to be amortizaed		(5	)		(14	)
Convertible notes payable - short-term	$	906		$	897

On June 2, 2021, we entered into an exchange agreement with Auctus, which was amended on February 1, 2022. Pursuant to this agreement, Auctus agreed to exchange an aggregate of $668,290 of outstanding notes (the “Notes”), including accrued interest, and the associated warrants issued in connection with the Notes (the warrants, for the purpose of the exchange, are valued at, in the aggregate, $1,681,707) into unregistered units of our common stock, warrants and prefunded warrants otherwise in the form and ratios issued in a proposed underwritten public offering on the Nasdaq Capital Markets (the “Nasdaq Offering”).

The exchange price will be on a $1 for $1 basis such that Auctus will receive $2,349,997 of units consisting of common stock, warrants and prefunded warrants. The units being issued in the exchange with Auctus are unregistered and are being issued pursuant to Section 4(a)(2) under the Securities Act of 1933, as amended. Additionally, the units and the common stock underlying the units will be subject to a lock up agreement with the underwriters until the earlier of 120 days after the Nasdaq Offering and the date that the daily volume weighted average price of the common stock exceeds 200% of the Nasdaq Offering price for at least five consecutive trading days. Further, the termination date of the June 2, 2021 agreement was extended to April 15, 2022. The $350,000 related to default penalties will be exchanged into $350,000 of securities offered in the Nasdaq Offering.

9.  CONVERTIBLE DEBT

Short-term Convertible Notes Payable

Auctus

On December 17, 2019, the Company entered into a securities purchase agreement and convertible note with Auctus. The convertible note issued to Auctus will be for a total of $2.4 million. The first tranche of $700,000 was received in December 2019 and matures December 17, 2021 and accrues interest at a rate of ten percent (10%). The note may not be prepaid in whole or in part except as otherwise explicitly allowed. Any amount of principal or interest on the note which is not paid when due shall bear interest at the rate of the lessor of 24% or the maximum permitted by law (the “default interest”). The variable conversion prices shall equal the lesser of: (i) the lowest trading price on the issue date, and (ii) the variable conversion price. The variable conversion price shall mean 95% multiplied by the market price (the market price means the average of the five lowest trading prices during the period beginning on the issue date and ending on the maturity date), minus $0.04 per share, provided however that in no event shall the variable conversion price be less than $0.15. If an event of default under this note occurs and/or the note is not extinguished in its entirety prior to December 17, 2020 the $0.15 price shall no longer apply.

In connection with the first tranche of $700,000, the Company issued 7,500,000 warrants to purchase common stock at an exercise price of $0.20. The fair value of the warrants at the date of issuance was $745,972 and was $635,000 allocated to the warrant liability and a loss of $110,972 was recorded at the date of issuance for the amount of the fair value in excess of the net proceeds received of $635,000. The $700,000 proceeds were received net of debt issuance costs of $65,000 (net proceeds of $635,000, after administrative and legal expenses Company received $570,000). The Company used $65,000 of the proceeds to make a partial payment of the $89,250 convertible promissory note issued on July 3, 2018 to Auctus. The Company made a $700,000 payment on June 1, 2021, which resulted in a prepayment penalty of $350,000 being assessed to the Company, which was outstanding as of December 31, 2021. The Company recorded this prepayment penalty as interest expense. Interest will not be assessed on the prepayment penalty. As of December 31, 2021 and 2020, nil and $700,000, respectively, remained outstanding. As of December 31, 2021, accrued interest was paid in full and at December 31, 2020, $73,889 remained outstanding. Further, as December 31, 2021 and 2020, the Company had unamortized debt issuance costs of nil and $31,146, respectively and an unamortized debt discount on warrants of nil and $179,623, respectively and providing a net balance of $350,000 and $489,231, respectively.

On May 27, 2020, the Company received the second tranche in the amount of $400,000, from the December 17, 2019 securities purchase agreement and convertible note with Auctus. The net amount paid to the Company was $313,000 This second tranche is part of the convertible note issued to Auctus for a total of $2.4 million of which $700,000 has already been provided by Auctus. The note matures on May 27, 2022 and incurs interest at a rate of ten percent (10%). The note may not be prepaid in whole or in part except as otherwise explicitly allowed. Any amount of principal or interest on the note which is not paid when due shall bear interest at the rate of the lessor of 24% or the maximum permitted by law (the “default interest”). The variable conversion price is equal to 75% of the average of the five (5) day volume weighted average price of the common stock immediately prior to the issue date of the note (provid\ded, however, that if the common stock is trading on a public market at a price greater than 0.50 per share on the issuance date, than 75% shall be replaced with 80%). If an event of default under this note occurs and/or the note is not extinguished in its entirety prior to December 17, 2020 the $0.15 price shall no longer apply. The last tranche of $1.3 million will be received within 60 days of the S-1 registration statement becoming effective. The conversion price of the notes will be at market value with a minimum conversion amount of $0.15. In addition, as part of this transaction the Company was required to pay a 2.0% fee to a registered broker-dealer. As of December 31, 2021 and 2020, $400,000 remained outstanding and accrued interest was $64,778 and $24,222, respectively. Further, as of December 31, 2021 and 2020, the Company had unamortized debt issuance costs of $13,586 and $47,086, providing a net balance of $451,192 and $377,136. As of December 31, 2021 the bifurcated derivative liability was $31,889.

Convertible Notes in Default

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. During the year ended December 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 matured on January 26, 2021 and accrues interest at the default rate of 24% per year. We may not prepay the note, in whole or in part. After the 90^th 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 converted into shares of the our common stock, at a conversion price equal to the lesser of: (i) the lowest Trading Price during the twenty-five (25) trading day period on the last trading prior to the issue date and (ii) the variable conversion price (55% multiplied by the market price, market price means the lowest trading price for the common stock during the twenty-five (25) trading day period ending on the latest complete trading day prior to the conversion date. Trading price is the lowest trade price on the trading market as reported. The note includes customary events of default provisions and a default interest rate of 24% per year. As of December 31, 2021 and 2020, $161,184 (which includes a default penalty of $48,434) and $112,750 remained outstanding. In addition, as of December 31, 2021 and 2020, unamortized debt issuance costs of nil and $5,100 and accrued interest was $36,428 and $10,260, respectively.

The following table summarizes the Short-term Convertible Notes Payable, including debt in default (in thousands):

	Short-term convertible notes payable , including debt in default
	December 31, 2021			December 31, 2020
Auctus Tranche 1		-			700
Auctus Tranche 2	$	400		$	400
Auctus prepayment penalty		350			-
Auctus (March 31, 2020 Note)		161			113
Debt discount and issuance costs to be amortized		(14	)		(262	)
Convertible notes payable - short-term	$	897		$	951

Troubled Debt Restructuring

During 2021, the prepayment penalty to Auctus was recorded as debt extinguished for Short-term Convertible Notes Payable. This prepayment penalty resulted in a loss of $350,000. In addition, the gain recognized for the extinguishment of the derivative liability due to the payoff of the $700,000 loan to Auctus of $84,000 was recorded. This debt extinguished met the criteria for troubled debt. The basic criteria are that the borrower is troubled, i.e., they are having financial difficulties, and a concession is granted by the creditor.

Senior Secured Promissory Note

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 $312,500 for a total principal balance of $1,837,500. In addition, GPB received warrants for 2,246 shares of the Company’s common stock. The Company allocated proceeds totaling $359,555 to the fair value of the warrants at issuance and recorded an additional discount on the debt. The warrants expired during the year ended December 31, 2021.

On January 16, 2020, we entered into an exchange agreement with GPB. Under the terms of this exchange agreement, we exchanged $3,360,811 of debt outstanding for the following: (1) cash payments of $1,500,000, (2) 7,185,000 warrants to purchase common stock, previously outstanding, would be exchanged for new warrants to purchase common stock shares at a strike price of $0.20 and (3) a certain amount of preferred stock shares for the remaining balance outstanding upon the final exchange date. During 2021, we made the final payments totaling $800,000 out of the total $1,500,000 and issued 2,236 shares of Series F-2 preferred stock in accordance with the terms of the agreement. In addition, 7,185,000 of common stock purchase warrants outstanding were exchanged for new warrants with a strike price of $0.20.

As of December 31, 2020, the balance due on the convertible debt was $1,709,414 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.

Other Convertible Debt

GHS

On 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 bore interest at a rate of 20% per year and the holder of the note may have required the Company to redeem or convert the note at 150% of the outstanding principal balance. As of 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. As of December 31, 2021, the note was paid in full.

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 bore interest at a rate of 20% per year and the holder of the note may have required the Company to redeem or convert the note at 150% of the outstanding principal balance. As of 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. As of December 31, 2021, the note was paid in full.

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). The note accrued interest at a rate of 10% per year until it matured on June 22, 2019. Beginning May 2019, the note was 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 bore interest at a rate of 20% per year and the holder of the note may have required the Company to redeem or convert the note at 150% of the outstanding principal balance. As of December 31, 2020, the balance due on this note was $103,285, including a default penalty of $35,285. Interest accrued on the note totaled $39,644 at December 31, 2020, respectively, and is included in accrued expenses on the accompanying consolidated balance sheet. As of December 31, 2021, the note was paid in full.

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), 500,000 shares of restricted common stock and 700,000 warrants to purchase common shares at a strike price of $0.15. The fair value of the common stock shares was $250,000 and the fair value of the warrants to purchase common shares was $196,818 (based on an estimated fair value of $0.281 as determined utilizing the Black-Scholes option pricing model). At December 31, 2020, a balance of $40,000 remained to be paid for these exchanged loans. As of December 31, 2021, the loans were paid in full.

The following table summarizes the convertible notes, including convertible debt in default (in thousands):

	Convertible notes payable, including debt in default
	December 31, 2021		December 31, 2020
GBP	$	-	$	1,709
GHS		-		181
Auctus		-		40
Convertible notes payable	$	-	$	1,930

Troubled Debt Restructuring

During 2021, the Company restructured debt with GPB resulting in the exchange of $1,709,414 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.

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LONG TERM DEBT

3 Months Ended

12 Months Ended

Mar. 31, 2022

Dec. 31, 2021

LONG TERM DEBT

LONG-TERM DEBT

10. LONG-TERM DEBT

Long-term Debt - Related Parties 

On July 14, 2018, the Company entered into an exchange agreement with Dr. Faupel, whereby Dr. Faupel agreed to exchange outstanding amounts due to him for loans, interest, bonus, salary and vacation pay in the amount of $660,895 for a $207,111 promissory note dated September 4, 2018. On July 20, 2018, the Company entered into an exchange agreement with Dr. Cartwright, whereby Dr. Cartwright agreed to exchange outstanding amounts due to him for loans, interest, bonus, salary and vacation pay in the amount of $1,621,499 for a $319,000 promissory note dated September 4, 2018 that incurs interest at a rate of 6% per annum.

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.

On February 19, 2021, the Company entered into new promissory notes replacing the original notes 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 6.0%. 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 6.0%. The modifications extended the maturity date on both of the notes.

On February 19, 2021, the Company exchanged $100,000 and $85,000 of long-term debt for Dr. Cartwright and Dr. Faupel in exchange for 100 and 85 shares of Series F2 Preferred Stock, respectively.

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 in prior years		(454	)
Amount exchanged for Series F-2 Preferred Stock		(85	)
Total interest accrued through December 31, 2021		39
Balance outstanding at December 31, 2021	$	161
Interest accrued through March 31, 2022		2
Balance outstanding at March 31, 2022	$	163

For Dr.Cartwright
Salary	$	337
Bonus		675
Loans to Company		528
Interest on loans		81
Total outstanding prior to exchange		1,621
Amount forgiven in prior years		(1,302	)
Amount exchanged for Series F-2 Preferred Stock		(100	)
Total interest accrued through December 31, 2021		62
Balance outstanding at December 31, 2021	$	281
Interest accrued through March 31, 2022		4
Balance outstanding at March 31, 2022	$	285

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 exchanged $50,000 of the amount owed of $546,214 for 50 share of Series F-2 Preferred Shares (convertible into 200,000 common stock shares), and a $150,000 unsecured note. The note accrues interest at the rate of 6% (18% in the event of default) beginning on March 22, 2022 and is payable in monthly installments of $3,580 for four years, with the first payment due on March 15, 2022. The effective interest rate of the note is 6.18%. During the three months ended March 31, 2022, Mr. Fowler forgave $6,232 of the outstanding balance and may forgive up to $253,429 of the remaining principal and accrued interest if the Company complies with the repayment plan described above. The reduction in the outstanding balance met the criteria for troubled debt. The basic criteria are that the borrower is troubled, i.e., they are having financial difficulties, and a concession is granted by the creditor. The outstanding principal amount owed on the note was $146,400 as of March 31, 2022, of which $26,586 is included in “Current portion of long-term debt, related parties” and the remainder of which is included in “Long-term debt, related parties” on the consolidated balance sheets.

Future debt obligations as shown below include: $284,867, $163,376, and $146,400 for a total of $594,643 for Dr. Cartwright, Dr. Faupel, and Mr. Fowler, respectively. Future debt obligations as of March 31, 2022 for debt owed to related parties is as follows (in thousands):

Year	Amount
2022	$	27
2023		485
2024		39
2025		41
2026		3
Thereafter		-
Total	$	595

Small Business Administration Loan

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, 2022 and December 31, 2021, the outstanding balance was $4,491 (this amount is presented in current portion of long-term debt) and $11,181, including $407 and $385 in accrued interest, respectively.

10% Senior Unsecured Convertible Debenture

On May 17, 2021, the Company issued 10% Senior Unsecured convertible debentures to investors, which mature on May 17, 2024 (the “Maturity Date”). The Company subscribed $1,130,000 of the $1,000 convertible debentures. The terms of the debentures are as follows: 1) the principal amount of some or all of the convertible debentures and accrued interest are convertible into common stock shares at the holder’s option, at a price of $0.50 per common stock share (the “conversion price”), subject to adjustment in certain events, at any time prior to maturity date; 2) upon successful uplist to a U.S. National Exchange, the note will automatically convert into the uplisting financing; 3) each debenture unit will have a right to 1,000 warrants for common stock shares, warrants have an exercise price of $0.80 and an expiration date of May 17, 2023; 4) if a Change of Control (as defined in the Convertible Debenture Certificate) occurs prior to the Maturity Date, unless the holder elects in writing to convert the Convertible Debentures into common shares, the Company will repay in cash upon the closing of such Change of Control all outstanding principal and accrued interest under each Convertible Debenture plus a Change of Control premium equal to an additional 3% of the outstanding principal sum under such Convertible Debenture. Prior to the closing of an Change of Control, in lieu of repayment as set forth in the preceding sentence, the holder has the right to elect in writing to convert, effective immediately prior to the effective date of such Change of Control, all outstanding principal and accrued Interest under the Convertible Debentures into common shares at the Conversion Price; 5) Subject to a holder’s option of electing conversion prior to the Redemption Date (as such term is defined below), on or after the date that is 24 months from the Closing Date if the daily volume weighted average trading price of the common shares is $1.50 per common share or more for each trading day over a 30 consecutive trading day period, the Company may, at any time (the “Redemption Date”), at its option, redeem all, or any portion of the Convertible Debentures for either: (i) a cash payment (in the form of a certified cheque or bank draft) that is equal to all outstanding principal and accrued interest under each Convertible Debenture up to the Redemption Date; or (ii) by issuing and delivering common shares to the holders of Convertible Debentures at a deemed price of US$0.50 per common share that is equal to all outstanding principal and accrued interest under each Convertible Debenture up to the Redemption Date, or any combination of (i) or (ii), upon not less than 30 days and not more than 60 days prior written notice in the manner provided in the Debenture Certificate, to the holder of Convertible Debentures.

At March 31, 2022 and December 31, 2021, the balance due on the 10% Senior Secured Convertible Debenture was $1,130,000 and total accrued interest was $28,250 and $73,326, respectively. The bond payable discount and unamortized debt issuance costs as of March 31, 2022 and December 31, 2021 are presented below (in thousands):

	March 31, 2022			December 31, 2021
10% Senior Unsecured Convertible Debentures	$	1,130		$	1,130
Debt Issuance costs to be amortized		(62	)		(69	)
Debt Discount		(216	)		(241	)
Long-term convertible debt	$	852		$	820

6% Unsecured Promissory Note

On July 9, 2020, we entered into an exchange agreement with Mr. Bill Wells (a former employee). In lieu of agreeing to dismiss approximately half of what was owed to him, or $220,000, Mr. Wells received the following: (i) cash payments of $ 20,000; (ii) an unsecured promissory note in the amount of $90,000 to be executed within 30 days of completing new financing(s) totaling at least $3.0 million, (iii) 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 (ii) 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, 2021, the Company closed a financing round that exceeded the $3.0 million threshold and issued an unsecured promissory note in the amount of $97,052 to Mr. Wells. The note, for which monthly installment payments of $5,000 are due, matures 18 months after the issuance date and incurs interest at a rate of 6.0% per annum. During the three months ended March 31, 2022, the Company made payments of $35,000 to Mr. Wells, which resulted in forgiveness of $35,000 of the remaining balance of accrued compensation. The reduction in the outstanding balance 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, 2022, the total amount owed to Mr. Wells (principal and accrued interest), was $65,299, which is included in “Current portion of long-term debt” on the consolidated balance sheet.

10.  LONG-TERM DEBT

Long-term Debt - Related Parties 

On July 14, 2018, the Company entered into an exchange agreement with Dr. Faupel, whereby Dr. Faupel agreed to exchange outstanding amounts due to him for loans, interest, bonus, salary and vacation pay in the amount of $660,895 for a $207,111 promissory note dated September 4, 2018. On July 20, 2018, the Company entered into an exchange agreement with Dr. Cartwright, whereby Dr. Cartwright agreed to exchange outstanding amounts due to him for loans, interest, bonus, salary and vacation pay in the amount of $1,621,499 for a $319,000 promissory note dated September 4, 2018 that incurs interest at a rate of 6% per annum.

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.

On February 19, 2021, the Company entered into new promissory notes replacing the original notes 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 6.0%. 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 6.0%. The modifications extended the maturity date on both of the notes.

On February 19, 2021, the Company exchanged $100,000 and $85,000 of long-term debt for Dr. Cartwright and Dr. Faupel in exchange for 100 and 85 shares of Series F-2 Preferred Stock, respectively.  

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-2 Preferred Stock		(85	)
Interest and salaries accrued through December 31, 2021		10
Balance outstanding at December 31, 2021	$	161

For Dr.Cartwright
Salary	$	337
Bonus		675
Loans to Company		528
Interest on loans		81
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-2 Preferred Stock		(100	)
Interest and salaries accrued through December 31, 2021		17
Balance outstanding at December 31, 2021	$	281

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). Mr. Fowler exchanged $50,000 of the amount owed of $546,214 for 50 shares of Series F-2 Preferred Shares (convertible into 200,000 shares of common stock) and a $150,000 unsecured note. The note accrues interest at the rate of 6.0% (18.0% in the event of default) beginning on March 1, 2022 and is payable in monthly installments of $3,600 for four years, with the first payment being due on March 15, 2022. The effective interest rate of the note is 6.18%. Mr. Fowler forgave $86,554 and may forgive up to $259,661 of debt if the Company complies with the repayment plan described above.

At the time of the exchange agreement with Mr. Fowler, the Company was in default to the creditor on two notes in the amounts of $12,500 and $13,900 dated December 21, 2016 and January 19, 2017, respectively. The March 22, 2021 exchange agreement modified the notes to current status, payable in full within one year from the date of the agreement, in monthly payments of at least $3,850. The notes accrue at an interest rate of 6% (18% in the event of default).

Future debt obligations as shown below include: $281,000, $161,000 and $150,000 for a total of $592,000 for Dr. Cartwright, Dr. Faupel, and Mr. Fowler, respectively. Future debt obligations at December 31, 2021 for debt owed to related parties is as follows:

Year	Amount
2022	$	30
2023		479
2024		39
2025		41
2026		3
Thereafter		-
Total	$	592

Troubled Debt Restructuring

The debt extinguished for Dr. Cartwright, Mr. Fowler and Dr. 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. During the year ended December 31, 2021, the Company recorded a gain of $86,554 for Mr. Fowler’s debt exchange.

Small Business Administration Loan

On May 4, 2020, the Company received a loan from the Small Business Administration (SBA) pursuant to the Paycheck Protection Program (PPP) as part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) in the amount of $50,184. The loan bears interest at a rate of 1.00%, and matures in 24 months, with the principal and interest payments being deferred until the date of forgiveness with interest accruing, then converting to monthly principal and interest payments, at the interest rate provided herein, for the remaining eighteen (18) months. Lender will apply each payment first to pay interest accrued to the day Lender received the payment, then to bring principal current, and will apply any remaining balance to reduce principal. Payments must be made on the same day as the date of this Note in the months they are due. Lender shall adjust payments at least annually as needed to amortize principal over the remaining term of the Note. Under the provisions of the PPP, the loan amounts will be forgiven as long as: the loan proceeds are used to cover payroll costs, and most mortgage interest, rent, and utility costs over a 24 week period after the loan is made; and employee and compensation levels are maintained. In addition, payroll costs are capped at $100,000 on an annualized basis for each employee. Not more than 40% of the forgiven amount may be for non-payroll costs. As of December 31, 2021 and 2020, the outstanding balance was $11,000 (this amount is recorded in current portion of long-term debt) and $50,477, including $385 and $293 in accrued interest, respectively. During the year ended December 31, 2021, the Company was notified that the application for loan forgiveness was approved in the amount of $23,742 in principal and $234 in interest.

10% Senior Unsecured Convertible Debenture

On May 17, 2021, the Company issued 10% Senior Unsecured convertible debentures to investors, which mature on May 17, 2024 (the “Maturity Date”). The Company subscribed $1,130,000 of the $1,000 convertible debentures. The terms of the debentures are as follows: 1) the principal amount of some or all of the convertible debentures and accrued interest are convertible into common stock shares at the holder’s option, at a price of $0.50 per common share (the “conversion price”), subject to adjustment in certain events, at any time prior to maturity date; 2) prior to successful uplist to a U.S. National Exchange, the Company may, at its election, convert the note at the conversion price, or in the event the Company undertakes a capital raise in connection with the uplisting, the holder may, at their election, exchange some or all of the debentures for securities issued in such capital raise on a $1.00 for $1.00 basis; 3) each debenture unit will have a right to 1,000 warrants for common stock shares, warrants have an exercise price of $0.80 and an expiration date of May 17, 2023; 4) if a Change of Control (as defined in the Convertible Debenture Certificate) occurs prior to the Maturity Date, unless the holder elects in writing to convert the Convertible Debentures into common shares, the Company will repay in cash upon the closing of such Change of Control all outstanding principal and accrued interest under each Convertible Debenture plus a Change of Control premium equal to an additional 3% of the outstanding principal sum under such Convertible Debenture. Prior to the closing of an Change of Control, in lieu of repayment as set forth in the preceding sentence, the holder has the right to elect in writing to convert, effective immediately prior to the effective date of such Change of Control, all outstanding principal and accrued Interest under the Convertible Debentures into common shares at the Conversion Price; 5) Subject to a holder's option of electing conversion prior to the Redemption Date (as such term is defined below), on or after the date that is 24 months from the Closing Date if the daily volume weighted average trading price of the common shares is $1.50 per common share or more for each trading day over a 30 consecutive trading day period, the Company may, at any time (the "Redemption Date"), at its option, redeem all, or any portion of the Convertible Debentures for either: (i) a cash payment (in the form of a certified cheque or bank draft) that is equal to all outstanding principal and accrued interest under each Convertible Debenture up to the Redemption Date; or (ii) by issuing and delivering common shares to the holders of Convertible Debentures at a deemed price of $0.50 per common share that is equal to all outstanding principal and accrued interest under each Convertible Debenture up to the Redemption Date, or any combination of (i) or (ii), upon not less than 30 days and not more than 60 days prior written notice in the manner provided in the Debenture Certificate, to the holder of Convertible Debentures.

At December 31, 2021, the balance due on the 10% Senior Secured Convertible Debenture was $1,130,000 and total interest accrued was $73,326. At December 31, 2021, the Company had also recorded a bond payable discount of $240,856 and unamortized debt issuance costs of $69,120, for a net balance of $819,024. Interest is payable at the rate of 10% compounded quarterly, payable semi-annually on July 1 and January 1, beginning on January 1, 2022, each conversion date and on the maturity date.

6% Unsecured Promissory Note

On July 9, 2020, we entered into an exchange agreement with Mr. Bill Wells (a former employee). In lieu of agreeing to dismiss approximately half of what was owed to him, or $220,000, Mr. Wells received the following: (i) cash payments of $20,000; (ii) an unsecured promissory note in the amount of $90,000 to be executed within 30 days of completing new financing(s) totaling at least $3.0 million, (iii) 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 (ii) 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, 2021, the Company closed a financing round that exceeded the $3.0 million threshold and issued an unsecured promissory note in the amount of $97,052 to Mr. Wells. The note, for which monthly installment payments of $5,000 are due, matures 18 months after the issuance date and incurs interest at a rate of 6.0% per annum. As of December 31, 2021, the total amount owed to Mr. Wells (principal and accrued interest), was $99,158, of which $77,087 was classified as short-term and is included in “Current portion of long-term debt” on the consolidated balance sheet. The remaining balance is classified as long-term and is included in “Long-term debt” on the consolidated balance sheet.

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INCOME (LOSS) PER COMMON SHARE

3 Months Ended

12 Months Ended

Mar. 31, 2022

Dec. 31, 2021

INCOME (LOSS) PER COMMON SHARE

INCOME (LOSS) PER COMMON SHARE

11. 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, Series F and Series F-2 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, except for per-share data):

	March 31,
	2022			2021
Net loss		(1,055	)		(572	)
Basic weighted average number of shares outstanding		20,683			13,172
Net loss per share (basic)		(0.05	)		(0.04	)
Diluted weighted average number of shares outstanding		20,683			13,172
Net loss per share (diluted)		(0.05	)		(0.04	)
Dilutive equity instruments (number of equivalent units):
Stock options		917			-
Preferred stock		15,572			17,994
Convertible debt		2,018			315
Warrants		13,609			17,400
Total Dilutive instruments		32,116			35,709

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 Restructurings - 2022

During the three months ended March 31, 2022, two of the Company’s creditors forgave $41,232 of debt. The reductions in the outstanding balances 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, 2022, the troubled debt restructurings in total would have decreased the net loss by $41,232, with no impact to net loss per share.

Troubled Debt Restructurings - 2021

During the three months ended March 31, 2021, the Company restructured several debt agreements that 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, 2022, the troubled debt restructurings in total would have decreased the net loss by $972,000, causing the per share calculation to change from .04 to .11 net loss per share.

11.  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 C-1, Series C-2, Series D, Series E, Series F and Series F-2 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, except for per-share data):

	December 31,
	2021			2020
Net loss		(2,431	)		(401	)
Basic weighted average number of shares outstanding		13,377			10,767
Net loss per share (basic)		(0.18	)		(0.04	)
Diluted weighted average number of shares outstanding		13,377			10,767
Net loss per share (diluted)		(0.18	)		(0.04	)
Dilutive equity instruments (number of equivalent units):
Stock options		1,867			-
Preferred stock		18,253			-
Convertible debt		964			62,095
Warrants		15,655			7,683
Total Dilutive instruments		36,739			69,778

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 and preferred stock 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 past due or in default on several of its loans, the debt is considered troubled debt. As of December 31, 2021, the troubled debt restructuring in total would have decreased the net loss by $85,000, causing the per share calculation to change from .18 to .19 net loss per share. This includes $94,392 of accounts payables forgiven during the year ended December 31, 2021 in accordance with an agreement executed on September 30, 2021.  

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INCOME TAXES

12 Months Ended

Dec. 31, 2021

INCOME TAXES

Income Taxes

12.  INCOME TAXES

The Company has incurred net operating losses ("NOLs") since inception. As of December 31, 2021, the company had NOL carryforwards available through 2038 of approximately $58.0 million to offset its future income tax liability. The company has recorded deferred tax assets but reserved against, due to uncertainties related to utilization of NOLs as well as calculation of effective tax rate. Utilization of existing NOL carryforwards may be limited in future years based on significant ownership changes. The company is in the process of analyzing their NOL and has not determined if the company has had any change of control issues that could limit the future use of NOL. NOL carryforwards that were generated after 2017 of approximately $9.9 million may only be used to offset 80% of taxable income and are carried forward indefinitely.

Components of deferred taxes are as follow at December 31 (in thousands):

The following is a summary of the items that caused recorded income taxes to differ from taxes computed using the statutory federal income tax rate for the years ended December 31:

	2021			2020
Statutory federal tax rate		21	%		21	%
State taxes, net of federal benefit		4	%		4	%
Nondeductible expenses		-			-
Valuation allowance		25	%		25	%
Effective tax rate		0	%		0	%

The Company applies the applicable authoritative guidance which prescribes a comprehensive model for the manner in which a company should recognize, measure, present and disclose in its financial statements all material uncertain tax positions that the Company has taken or expects to take on a tax return. As of December 31, 2021, the Company has no uncertain tax positions. There are no uncertain tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase or decrease within twelve months from December 31, 2021.

The Company files federal income tax returns and income tax returns in various state tax jurisdictions with varying statutes of limitations. The Company has filed its 2020 federal and state corporate tax returns. The last three tax years are subject to examination.

The provision for income taxes as of the dates indicated consisted of the following (in thousands) December 31:

	2021			2020
Current	$	-		$	-
Deferred		-			-
Deferred provision (credit)		(1,728	)		1,623
Change in valuation allowance		1,728			(1,623	)
Total provision for income taxes	$	-		$	-

In 2021 and 2020, our effective tax rate differed from the U.S. federal statutory rate due to the valuation allowance over our deferred tax assets.

	2021			2020
Deferred tax assets:
Warrant liability	$	-		$	617
Accrued executive compensation		288			519
Reserves and other		273			289
Stock options		134			132
Net operating loss carryforwards		16,985			17,851
		17,680			19,408
Valuation allowance		(17,680	)		(19,408	)
Net deferred tax assets	$	-		$	-

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SUBSEQUENT EVENTS

3 Months Ended

12 Months Ended

Mar. 31, 2022

Dec. 31, 2021

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

12. SUBSEQUENT EVENTS

Auctus Exchange Agreement

On April 14, 2022, we entered into an agreement with Auctus that extended the April 15, 2022 deadline to May 15, 2022. See Footnote 9 – “Short-Term Convertible Debt” for information on the exchange agreement.

On June 1, 2022, we entered into a third exchange agreement with Auctus. As of the date of the agreement, Auctus was owed $692,114 of Notes and accrued interest. Pursuant to this third agreement, as long as we complete the Nasdaq Offering prior to July 15, 2022, the total amount owed to Auctus will be payable in cash 13 months subsequent to the consummation of the Offering. The $350,000 prepayment penalty and warrants issued in connection with the Notes (for the purpose of the third exchange agreement, are valued at, in the aggregate, $2,031,710) will be exchanged into unregistered units of our common stock, warrants and prefunded warrants otherwise in the form and ratios issued in the Offering. The exchange price will be on a $1 for $1 basis such that Auctus will receive $2,031,710 of units consisting of common stock, warrants and prefunded warrants. The units being issued in the exchange with Auctus are unregistered and are being issued pursuant to Section 4(a)(2) under the Securities Act of 1933, as amended. Additionally, the units and the common stock underlying the units will be subject to a lock up agreement with the underwriters until the earlier of 120 days after the Nasdaq Offering and the date that the daily volume weighted average price of the common stock exceeds 200% of the Nasdaq Offering price for at least five consecutive trading days. In the event the Nasdaq Offering is not consummated by July 15, 2022, the third exchange agreement will be null and void.

Ellenoff Grossman & Schole LLP (“EGS”) Exchange Agreement

On June 6, 2022, we entered into an exchange agreement with EGS. Currently, we owe $304,879 to EGS, for legal services performed. Pursuant to the agreement, EGS will forgive $104,879 of the balance owed after we successfully complete a financing of at least $3,000,000 (the “Financing”), make a cash payment of $200,000 from the proceeds of the financing and (upon closing of the Financing), we will negotiate a one-year agreement for EGS to provide legal representation under a retained agreement with a monthly rate to be agreed upon by both parties. In the event the Financing does not occur by August 31, 2022, the Company agreed to make a partial payment of 50,000 to EGS in exchange for forgiveness, upon which $50,000 of the outstanding debt will be forgiven. Any remaining amounts will be due to EGS.

Executive Exchange Agreements

On June 22, 2022, we entered into exchange agreements with two of our executives. Pursuant to the agreements, $29,776 of related-party payables, $31,285 of short-term related-party debt and $8,939 of accrued expenses owed to executives will be converted into shares of common stock and/or warrants valued at $70,000, upon successful completion of a financing of at least $4,000,000.

Series D Exchange Agreements

Subsequent to March 31, 2022, the Company entered into various agreements with Series D Preferred shareholders, pursuant to which each holder separately agreed to exchange their Series D Preferred shares into the Company’s common shares (in accordance with their existing Series D Preferred Share Agreements). In addition, the holders agreed to exchange 650,000 common stock warrants with a strike price of $0.25 for 650,000 warrants with a strike price of $0.20, which were required to be immediately exercised. The Company received $130,000 from the holders for exercises of the aforementioned warrants.  

Common Stock Issuances

Subsequent to March 31, 2022, we issued 1,864,000 shares of common stock for the conversion of Series F-2 Preferred shares.

Subsequent to March 31, 2022, we issued 1,360,000 shares of common stock for the conversion of Series F Preferred shares.

Subsequent to March 31, 2022, we issued 320,000 shares of common stock for the conversion of Series E Preferred shares.

Subsequent to March 31, 2022, we issued 650,000 shares of common stock for warrant exercises.

Subsequent to March 31, 2022, we issued 975,000 shares of common stock for the conversion of Series D Preferred shares.

Subsequent to March 31, 2022, we issued 25,288 shares of common stock for Series D Preferred dividends.

Subsequent to March 31, 2022, we issued 50,230 shares of common stock for Series E Preferred dividends.

Subsequent to March 31, 2022, we issued 19,330 shares of common stock for Series F Preferred dividends.

Subsequent to March 31, 2022, we issued 3,213 shares of common stock for Series F-2 Preferred dividends.

13.  SUBSEQUENT EVENTS

Auctus Exchange Agreement

On June 2, 2021, we entered into an initial exchange agreement Auctus. On February 1, 2022, we entered into a second exchange agreement with Auctus. Pursuant to this second agreement, Auctus agreed to exchange an aggregate of $668,290 of outstanding notes (the "Notes"), including accrued interest, and the associated warrants issued in connection with the Notes (the warrants, for the purpose of the exchange, are valued at, in the aggregate, $1,681,707) into unregistered units of our common stock, warrants and prefunded warrants otherwise in the form and ratios issued in a proposed underwritten public offering on the Nasdaq Capital Markets (the “Nasdaq Offering”).

The exchange price will be on a $1 for $1 basis such that Auctus will receive $2,349,997 of units consisting of common stock, warrants and prefunded warrants.  The units being issued in the exchange with Auctus are unregistered and are being issued pursuant to Section 4(a)(2) under the Securities Act of 1933, as amended.  Additionally, the units and the common stock underlying the units will be subject to a lock up agreement with the underwriters until the earlier of 120 days after the Nasdaq Offering and the date that the daily volume weighted average price of the common stock exceeds 200% of the Nasdaq Offering price for at least five consecutive trading days. Further, the termination date of the June 2, 2021 was extended to April 15, 2022. The $350,000 related to default penalties will be exchanged into $350,000 of securities offered in the Nasdaq Offering.

Common Stock Issuances

Subsequent to December 31, 2021, we issued 4,477,923 shares of common stock for warrant exercises (see Note 4, “Warrant Exchanges - 2021”).

Subsequent to December 31, 2021, we issued 307,000 shares of common stock for the conversion of Series E Preferred shares.

Subsequent to December 31, 2021, we issued 625,686 shares of common stock for payment of a one-time 15% dividend to holders of our Series F and Series F-2 Preferred shares.

Subsequent to December 31, 2021, we issued 121,262 shares of common stock for payment of interest accrued on the 10% Senior Unsecured Convertible Debenture.

Subsequent to December 31, 2021, we issued 60,000 shares of common stock for the conversion of Series F Preferred shares.

Subsequent to December 31, 2021, we issued 23,109 shares of common stock for payment of Series D Preferred share dividends.

Subsequent to December 31, 2021, we issued 12,432 shares of common stock for payment of Series E Preferred share dividends.

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SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

12 Months Ended

Mar. 31, 2022

Dec. 31, 2021

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.

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 freestanding warrants.

Accounting Standards Update

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.

Accounting Standard Updates

FASB ASU 2021-04, “Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options” - Issued in May 2021, ASU No. 2021-04 provides guidance to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. The amendments in this ASU No. 2021-04 are effective for all entities for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years, with early adoption permitted, including interim periods within those fiscal years. We adopted ASU 2021-04 in the third quarter of 2021. Adoption of this standard had no material impact on our consolidated financial statements.

FASB ASU NO. 2020-06, “Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” - Issued in August 2020, ASU 2020-06 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 are classification 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 early adopted ASU No. 2020-06 under a modified retrospective basis on January 1, 2021. Adoption had no material impact on our consolidated financial statements.

FASB ASU NO. 2019-12, “Simplifying the Accounting for Income Taxes” - Issued in December 2019, 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. Adoption had no material impact on our 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.

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.

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.

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. As of March 31, 2022 and December 31, 2021, our inventories were as follows:

	(in thousands)
	March 31, 2022			December 31, 2021
Raw materials	$	1,254		$	1,255
Work-in-progress		69			69
Finished goods		32			32
Inventory reserve		(785	)		(785	)
Total inventory	$	570		$	571

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.

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. As of December 31, 2021 and 2020, our inventories were as follows:

	(in thousands)
	December 31,			December 31,
	2021			2020
Raw materials	$	1,255		$	1,276
Work-in-progress		69			80
Finished goods		32			7
Inventory reserve		(785	)		(758	)
Total inventory	$	571		$	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, 2022 and December 31, 2021:

	(in thousands)
	March 31, 2022			December 31, 2021
Equipment	$	1,049		$	1,048
Software		652			652
Furniture and fixtures		41			41
Leasehold improvements		12			12
Construction in progress		21			8
Subtotal		1,775			1,761
Less accumulated depreciation		(1,747	)		(1,747	)
Property, equipment and leasehold improvements, net	$	28		$	14

Depreciation expense related to property and equipment for the three months ended March 31, 2022 and 2021 was not material.

Property and Equipment

Property and equipment are recorded at cost. Depreciation is computed using the straight-line method over estimated useful lives of three to seven years. Leasehold improvements are amortized at the shorter of the useful life of the asset or the remaining lease term. Depreciation and amortization expense are included in general and administrative expense on the statement of operations. Expenditures for repairs and maintenance are expensed as incurred. Property and equipment are summarized as follows at December 31, 2021 and 2020:

	(in thousands)
	December 31,			December 31,
	2021			2020
Equipment	$	1,048		$	1,042
Software		652			652
Furniture and fixtures		41			41
Leasehold improvements		12			12
Construction in progress		8			-
Subtotal		1,761			1,747
Less accumulated depreciation		(1,747	)		(1,746	)
Property, equipment and leasehold improvements, net
	$	14		$	1

Depreciation expense related to property and equipment for the years ended December 31, 2021 and 2020 was not material.

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.

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 were not material for the three months ended March 31, 2022 and 2021.

Patent Costs

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 to approximately $14,800 and $17,000 for the years ended December 31, 2021 and 2020, respectively.

Leases

A lease provides the lessee the right to control the use of an identified asset for a period of time in exchange for consideration. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. The Company determines if an arrangement is a lease at inception. Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term.

Where an operating lease contains extension options that the Company is reasonably certain to exercise, the extension period is included in the calculation of the right-of-use assets and lease liabilities.

The discount rate used to determine the commencement date present value of lease payments is the interest rate implicit in the lease, or when that is not readily determinable, the Company utilizes its secured borrowing rate. Right-of-use assets include any lease payments required to be made prior to commencement and exclude lease incentives. Both right-of-use assets and lease liabilities exclude variable payments not based on an index or rate, which are treated as period costs. The Company’s lease agreements do not contain significant residual value guarantees, restrictions or covenants. See Note 7 - Commitments and Contingencies.

Leases

A lease provides the lessee the right to control the use of an identified asset for a period of time in exchange for consideration. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. The Company determines if an arrangement is a lease at inception. Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term.

Where an operating lease contains extension options that the Company is reasonably certain to exercise, the extension period is included in the calculation of the right-of-use assets and lease liabilities.

The discount rate used to determine the commencement date present value of lease payments is the interest rate implicit in the lease, or when that is not readily determinable, the Company utilizes its secured borrowing rate. Right-of-use assets include any lease payments required to be made prior to commencement and exclude lease incentives. Both right-of-use assets and lease liabilities exclude variable payments not based on an index or rate, which are treated as period costs. The Company’s lease agreements do not contain significant residual value guarantees, restrictions or covenants. See Note 7 - Commitments and Contingencies.

Accrued Liabilities

Accrued liabilities as of March 31, 2022 and December 31, 2021 are summarized as follows:

	(in thousands)
	March 31, 2022		December 31, 2021
Compensation	$	573	$	621
Professional fees		41		98
Stock Subscription Payable		-		351
Interest		232		261
Vacation		42		39
Preferred dividends		299		349
Other accrued expenses		41		49
Total	$	1,228	$	1,768

Accrued Liabilities

Accrued liabilities as of December 31, 2021 and 2020 are summarized as follows:

	(in thousands)
	December 31,		December 31,
	2021		2020
Compensation	$	621	$	1,094
Professional fees		98		83
Interest		261		1,517
Vacation		39		34
Preferred dividends		349		202
Stock subscription payable		351		-
Other accrued expenses		49		65
Total	$	1,768	$	2,995

Stock Subscription Payable

Cash received from investors for common stock shares that have not yet been issued is recorded as a liability, which is presented within Accrued Liabilities on the consolidated balance sheet.

Stock Subscription Payable

Cash received from investors for common stock shares that have not yet been issued is recorded as a liability, which is presented within Accrued Liabilities on the consolidated balance sheet.

Revenue Recognition

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 recognize material revenues during the three-month periods ended March 31, 2022 or 2021. The Company’s revenues do not require significant estimates or judgments. The Company is not party to contracts that include multiple performance obligations or material variable consideration.

Contract Balances

The Company defers payments received as revenue until earned based on the related contracts and applying ASC 606 as required. As of March 31, 2022 and December 31, 2021, the Company had $514,000 and $337,000 in deferred revenue, respectively.

Revenue Recognition

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 recognize material revenues during the years ended December 31, 2021 or 2020. The Company’s revenues do not require significant estimates or judgments. The Company is not party to contracts that include multiple performance obligations or material variable consideration.

Contract Balances

The Company defers payments received as revenue until earned based on the related contracts and applying ASC 606 as required. As of December 31 2021 and 2020, the Company had $337,000 and $42,000 of deferred revenue, respectively.

Significant Distributors

As of March 31, 2022, accounts receivable outstanding was $165,000, the outstanding amount was netted against a $126,000 allowance, leaving a balance of $39,000 which was from two distributors. As of December 31, 2021, accounts receivable outstanding was $172,000; the outstanding amount was netted against a $126,000 allowance, leaving a balance of $46,000, which was from two distributors.

Significant Distributors

As of December 31, 2021, accounts receivable outstanding was $172,000; the outstanding amount was netted against a $126,000 allowance, leaving a balance of $46,000 which was from two distributors. As of December 31, 2020, accounts receivable outstanding was $150,000, the outstanding amount was netted against a $126,000 allowance, leaving a balance of $24,000 which was from one distributor.

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.

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 provision for income taxes is determined in accordance with ASC 740, “Income Taxes”. The Company provides for income taxes based on enacted tax law and statutory tax rates at which items of income and expense are expected to be settled in our income tax return. Certain items of revenue and expense are reported for Federal income tax purposes in different periods than for financial reporting purposes, thereby resulting in deferred income taxes. Deferred taxes are also recognized for operating losses that are available to offset future taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

The Company has filed its 2021 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 March 31, 2022, the Company had approximately $61.6 million of net operating losses carryforward available. 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 Company recognizes uncertain tax positions based on a benefit recognition model. Provided that the tax position is deemed more likely than not of being sustained, the Company recognizes the largest amount of tax benefit that is greater than 50.0% likely of being ultimately realized upon settlement. The tax position is derecognized when it is no longer more likely than not of being sustained. The Company classifies income tax related interest and penalties as interest expense and selling, general and administrative expense, respectively, on the consolidated statements of operations.

Income Taxes

The provision for income taxes is determined in accordance with ASC 740, “Income Taxes”. The Company provides for income taxes based on enacted tax law and statutory tax rates at which items of income and expense are expected to be settled in our income tax return. Certain items of revenue and expense are reported for Federal income tax purposes in different periods than for financial reporting purposes, thereby resulting in deferred income taxes. Deferred taxes are also recognized for operating losses that are available to offset future taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected 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, 2021, the Company had approximately $61.6 million of net operating losses carryforward available. 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 Company recognizes uncertain tax positions based on a benefit recognition model. Provided that the tax position is deemed more likely than not of being sustained, the Company recognizes the largest amount of tax benefit that is greater than 50.0% likely of being ultimately realized upon settlement. The tax position is derecognized when it is no longer more likely than not of being sustained. The Company classifies income tax related interest and penalties as interest expense and selling, general and administrative expense, respectively, on the consolidated statements of operations.

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.

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 accounts for its stock-based awards in accordance with ASC Subtopic 718, “Compensation - Stock Compensation”, which requires fair value measurement on the grant date and recognition of compensation expense for all stock-based payment awards made to employees and directors. The Company determines the fair value of stock options using the Black-Scholes model. The fair value of restricted stock awards is based upon the quoted market price of the common shares on the date of grant. The fair value of stock-based awards is expensed over the requisite service periods of the awards. The Company accounts for forfeitures of stock-based awards as they occur.

The Black-Scholes option pricing model requires the input of certain assumptions that require the Company’s judgment, including the expected term and the expected stock price volatility of the underlying stock. The assumptions used in calculating the fair value of stock-based compensation represent management’s best estimates, but these estimates involve inherent uncertainties and the application of judgment. As a result, if factors change resulting in the use of different assumptions, stock-based compensation expense could be materially different in the future.

Stock Based Compensation

The Company accounts for its stock-based awards in accordance with ASC Subtopic 718, “Compensation - Stock Compensation”, which requires fair value measurement on the grant date and recognition of compensation expense for all stock-based payment awards made to employees and directors. The Company determines the fair value of stock options using the Black-Scholes model. The fair value of restricted stock awards is based upon the quoted market price of the common shares on the date of grant. The fair value of stock-based awards is expensed over the requisite service periods of the awards. The Company accounts for forfeitures of stock-based awards as they occur.

The Black-Scholes option pricing model requires the input of certain assumptions that require the Company’s judgment, including the expected term and the expected stock price volatility of the underlying stock. The assumptions used in calculating the fair value of stock-based compensation represent management’s best estimates, but these estimates involve inherent uncertainties and the application of judgment. As a result, if factors change resulting in the use of different assumptions, stock-based compensation expense could be materially different in the future.

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.

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.

Beneficial Conversion Features Of Convertible Securities

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 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.

During 2021, the Company adopted ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, 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, the new standard eliminates the liability and equity separation model for convertible instruments with a cash conversion feature. As a result of adoption of the standard, the Company will no longer separately present in equity an embedded conversion feature for such debt.

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SIGNIFICANT ACCOUNTING POLICIES (Tables)

3 Months Ended

12 Months Ended

Mar. 31, 2022

Dec. 31, 2021

SIGNIFICANT ACCOUNTING POLICIES

Inventory valuation

	(in thousands)
	March 31, 2022			December 31, 2021
Raw materials	$	1,254		$	1,255
Work-in-progress		69			69
Finished goods		32			32
Inventory reserve		(785	)		(785	)
Total inventory	$	570		$	571

	(in thousands)
	December 31,			December 31,
	2021			2020
Raw materials	$	1,255		$	1,276
Work-in-progress		69			80
Finished goods		32			7
Inventory reserve		(785	)		(758	)
Total inventory	$	571		$	605

Property and equipment

	(in thousands)
	March 31, 2022			December 31, 2021
Equipment	$	1,049		$	1,048
Software		652			652
Furniture and fixtures		41			41
Leasehold improvements		12			12
Construction in progress		21			8
Subtotal		1,775			1,761
Less accumulated depreciation		(1,747	)		(1,747	)
Property, equipment and leasehold improvements, net	$	28		$	14

	(in thousands)
	December 31,			December 31,
	2021			2020
Equipment	$	1,048		$	1,042
Software		652			652
Furniture and fixtures		41			41
Leasehold improvements		12			12
Construction in progress		8			-
Subtotal		1,761			1,747
Less accumulated depreciation		(1,747	)		(1,746	)
Property, equipment and leasehold improvements, net
	$	14		$	1

Accrued liabilities

	(in thousands)
	March 31, 2022		December 31, 2021
Compensation	$	573	$	621
Professional fees		41		98
Stock Subscription Payable		-		351
Interest		232		261
Vacation		42		39
Preferred dividends		299		349
Other accrued expenses		41		49
Total	$	1,228	$	1,768

	(in thousands)
	December 31,		December 31,
	2021		2020
Compensation	$	621	$	1,094
Professional fees		98		83
Interest		261		1,517
Vacation		39		34
Preferred dividends		349		202
Stock subscription payable		351		-
Other accrued expenses		49		65
Total	$	1,768	$	2,995

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

3 Months Ended

12 Months Ended

Mar. 31, 2022

Dec. 31, 2021

FAIR VALUE OF FINANCIAL INSTRUMENTS

Schedule of fair value for liabilities measured on a recurring basis

	Fair Value at March 31, 2022 (in thousands)
	Level 1		Level 2		Level 3			Total
Derivative liability/bifurcated conversion option in connection with Auctus $400,000 loan on December 17, 2019	$	-	$	-	$	(38	)	$	(38	)
Total short-term liabilities at fair value	$	-	$	-	$	(38	)	$	(38	)

	Fair Value at December 31, 2021 (in thousands)
	Level 1		Level 2		Level 3			Total
Derivative liability/bifurcated conversion option in connection with Auctus $400,000 loan on December 17, 2019		-		-		(32	)		(32	)
Total long-term liabilities at fair value	$	-	$	-	$	(32	)	$	(32	)

	Fair Value at December 31, 2021 (in thousands)
	Level 1		Level 2		Level 3			Total
Derivative liability/bifurcated conversion option in connection with Auctus $400,000 loan on December 17, 2019	$	-	$	-	$	(32	)	$	(32	)
Total long-term liabilities at fair value	$	-	$	-	$	(32	)	$	(32	)

	Fair Value at December 31, 2020 (in thousands)
	Level 1		Level 2		Level 3			Total
Warrants issued in connection with Senior Secured Debt	$		$		$	(2,203	)	$	(2,203	)
Derivative liability/bifurcated conversion option in connection with Auctus $400,000 loan on December 17, 2019		-		-		(25	)		(25	)
Total long-term liabilities at fair value	$	-	$	-	$	(2,228	)	$	(2,228	)

Summary of changes to Level 3 instruments

	(in thousands)
	Senior Secured Debt		Derivative			Total
Balance, December 31, 2021	$	-	$	(32	)	$	(32	)
Change in fair value during the period		-		(6	)		(6	)
Balance, March 31, 2022	$	-	$	(38	)	$	(38	)

	(in thousands)
	Senior Secured Debt			Derivative			Total
Balance, December 31, 2020	$	(2,203	)	$	(25	)	$	(2,228	)
Change in the terms of warrants previously recorded as a liability and now reclassified to equity		1,755			-			1,755
Change in value due to warrants expiring during the year		448			-			448
Extinguishment of derivative liability due to payoff of $700,000 loan to Auctus		-			84			84
Change in fair value during the year		-			(91	)		(91	)
Balance, December 31, 2021	$	-		$	(32	)	$	(32	)

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STOCKHOLDERS DEFICIT (Tables)

3 Months Ended

12 Months Ended

Mar. 31, 2022

Dec. 31, 2021

Stockholders' Deficit:

Common stock issued

	Number of Shares
Common stock warrants exercised		4,477,923
Issuance of common stock for payment of Series D preferred dividends		23,109
Issuance of common stock for payment of Series E preferred dividends		12,432
Issuance of common stock for payment of Series F preferred dividends		158,662
Issuance of common stock for payment of Series F-2 preferred dividends		95,535
Issuance of common stock for payment of interest		121,262
Issuance of common stock for Series F one-time 15% dividend		255,401
Issuance of common stock for Series F-2 one-time 15% dividend		368,505
Conversion of Series E preferred stock to common stock		3,070,000
Conversion of Series F preferred stock to common stock		60,000
Issued during the three months ended March 31, 2022		8,642,829
Summary table of common stock share transactions:
Balance at December 31, 2021		13,673,583
Issued in 2022		8,642,829
Balance at March 31, 2022		22,316,412

	Number of Shares
Conversion of debt into common shares - exchange agreements		7,957,013
Conversion of debt into common shares		175,000
Shares issued for manufacturing agreements		12,147
Shares issued for payment of Series D dividends		148,653
Shares issued to investors		1,526,000
Issued during the year ended December 31, 2020		9,818,813
Shares issued for payment of Series D dividends		109,039
Shares issued for payment of Series E dividends		288,262
Shares issued for payment of finder fee		98,000
Conversion of Series F Preferred shares into common stock		40,000
Issued during the year ended December 31, 2021		535,301
Summary table of common stock share transactions:
Outstanding at December 31, 2019		3,319,469
Issued in 2020		9,818,813
Outstanding at December 31, 2020		13,138,282
Issued in 2021		535,301
Outstanding at December 31, 2021		13,673,583

Outstanding warrants to purchase common stock

	Warrants (Underlying Shares)			Weighted-Average Exercise Price Per Share
Outstanding, December 31, 2021		27,669,634		$	0.29
Warrants exercised		(2,284,324	)	$	0.16
Outstanding, March 31, 2022		25,385,310		$	0.30

Debt Exchanges

	Total Debt and Accrued Interest		Total Debt		Total Accrued Interest		Common Stock Shares		Warrants (Exercise $0.15)		Warrants (Exercise $0.20)		Warrants (Exercise $0.25)		Warrants (Exercise $0.50)		Warrants (Exercise $0.75)
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		-		496,602		704,334		-		704,334
Mr. Blumberg		305,320		292,290		13,030		1,167,630		-		928,318		119,656		-		119,656
Mr. Case		179,291		150,000		29,291		896,456		-		896,456		-		-		-
Mr. Grimm		51,110		50,000		1,110		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		-		1,497,367		100,944		-		100,944
Ms. Rosenstock1		50,000		50,000		-		100,000		-		-		50,000		-		50,000
Mr. James2		2,286		2,000		286		7,745		-		5,291		1,227		-		1,227
Auctus		328,422		249,119		79,303		500,000		700,000		-		-				-
Mr. Clavijo		125,000		125,000		-		500,000		-		-		-		250,000		-
Mr. Wells4		220,000		220,000		-		-		-		-		-		-		-
	$	2,737,847	$	2,496,316	$	241,531		7,957,013		700,000		4,713,603		1,121,705		250,000		1,121,705

Shares Reserved For Warrants

	Warrants (Underlying Shares)			Weighted-Average Exercise Price Per Share
Outstanding, January 1, 2020		46,016,840		$	1.71
Warrants issued		11,270,013		$	0.34
Warrants cancelled/expired		(70	)	$	1,068,423
Warrants exchanged		(28,962,508	)	$	0.04
Outstanding, December 31, 2020		28,324,275		$	0.25
Warrants issued		7,982,223		$	0.30
Warrants cancelled/expired		(1,729,662	)	$	0.04
Warrants exchanged		(4,713,603	)	$	0.20
Warrants exercised		(2,193,599	)	$	0.16
Outstanding, December 31, 2021		27,669,634		$	0.29

Schedule Of Fair Value Warrants Issued Under Black-scholes Option Pricing Model

	December 31,
	2021
Expected term	15 days
Volatility		143.2	%
Risk-free interest rate		0.0	%
Dividend yield		0.00	%

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STOCK OPTIONS (Tables)

3 Months Ended

12 Months Ended

Mar. 31, 2022

Dec. 31, 2021

STOCK OPTIONS

Stock option activity

	Number of Shares		Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Life	Aggregate Intrinsic Value of In-the-Money Options  (in thousands)
Options outstanding as of March 31, 2022		1,500,000	$	0.49	8.3 years	$	240
Options exercisable as of March 31, 2022		1,045,227	$	0.49	8.3 years	$	167

	Number of Shares			Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Life	Aggregate Intrinsic Value of In-the-Money Options (in thousands)
Options outstanding as of January 1, 2021		1,800,000		$	0.49
Options granted		25,000		$	0.48
Options forfeited		(167,614	)	$	0.49
Options expired		(157,386	)	$	0.49
Options outstanding as of December 31, 2021		1,500,000		$	0.49	8.5 years	$	135
Options exercisable as of December 31, 2021		954,273		$	0.49	8.5 years	$	86

Stock options vested, unvested and granted

	March 31,
	2021
Expected term (years)		10 years
Volatility		153.12	%
Risk-free interest rate		0.98	%
Dividend yield		0.00	%

	December 31,			December 31,
	2021			2020
Expected term (years)	10 years			10 years
Volatility		153.12	%		153.12	%
Risk-free interest rate		0.98	%		0.98	%
Dividend yield		0.00	%		0.00	%

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COMMITMENTS AND CONTINGENCIES (Tables)

3 Months Ended

12 Months Ended

Mar. 31, 2022

Dec. 31, 2021

LITIGATION AND CLAIMS

Operating lease right-of-use assets and lease liabilities

	(in thousands)
	Three Months Ended March 31,
	2022
Operating lease right-of-use assets	$	355
Operating lease liabilities	$	377

	(in thousands)
	Operating
	Leases
2022 (remaining)	$	82
2023		112
2024		115
2025		118
2026		50
Total future lease payments		477
Less: discount		(100	)
Total lease liabilities	$	377

	(in thousands)
	Year Ended December 31,
	2021
Operating lease right-of-use assets	$	372
Operating lease liabilities	$	392

Weighted-average remaining lease term and discount rate used in the calculation of operating lease right-of-use assets and lease liabilities

	Three Months Ended March 31,
	2022
Weighted average remaining lease term (years)		4.2
Weighted average discount rate		11.4	%

	Year Ended December 31,
	2021
Weighted average remaining lease term (years)		4.4
Weighted average discount rate		11.4	%

Future Minimum Rental Payments Under Non-cancellable Operating Leases

	(in thousands)
	Operating
	Leases
2022	$	108
2023		112
2024		115
2025		118
2026		50
Total future lease payments		503
Less: discount		(111	)
Total lease liabilities	$	392

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NOTES PAYABLE (Tables)

3 Months Ended

12 Months Ended

Mar. 31, 2022

Dec. 31, 2021

NOTES PAYABLE

Short-term notes payable, including related parties

	Short-term notes payable, including related parties
	March 31, 2022		December 31, 2021
Dr. Cartwright	$	31	$	34
Mr. Fowler		-		6
Premium Finance (insurance)		12		48
Short-term notes payable	$	43	$	88

	Short-term notes payable, including related parties
	December 31, 2021		December 31, 2020
Dr. Cartwright	$	34	$	46
Dr. Faupel		-		5
Mr. Fowler		6		-
Premium Finance (insurance)		48		45
Short-term notes payable	$	88	$	96

Notes Payable In Default, Including Related Parties

	Notes payable in default, including related parties
	December 31, 2021		December 31, 2020
Mr. Mermelstein	$	-	$	285
Dr. Cartwright		-		1
Mr. Fowler		-		26
GPB		-		17
Notes payable in default	$	-	$	329

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SHORT-TERM CONVERTIBLE DEBT (Tables)

3 Months Ended

12 Months Ended

Mar. 31, 2022

Dec. 31, 2021

SHORT-TERM CONVERTIBLE DEBT

Schedule of short-term convertible notes payable

	March 31, 2022			December 31, 2021
Auctus Tranche 2	$	400		$	400
Auctus prepayment penalty		350			350
Auctus (March 31, 2020 Note)		161			161
Debt discount and issuance costs to be amortizaed		(5	)		(14	)
Convertible notes payable - short-term	$	906		$	897

	Short-term convertible notes payable , including debt in default
	December 31, 2021			December 31, 2020
Auctus Tranche 1		-			700
Auctus Tranche 2	$	400		$	400
Auctus prepayment penalty		350			-
Auctus (March 31, 2020 Note)		161			113
Debt discount and issuance costs to be amortized		(14	)		(262	)
Convertible notes payable - short-term	$	897		$	951

Convertible Notes In Default

	Convertible notes payable, including debt in default
	December 31, 2021		December 31, 2020
GBP	$	-	$	1,709
GHS		-		181
Auctus		-		40
Convertible notes payable	$	-	$	1,930

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LONG TERM DEBT (Tables)

3 Months Ended

12 Months Ended

Mar. 31, 2022

Dec. 31, 2021

LONG TERM DEBT

Long-term debt, related parties

For Dr. Faupel:
Salary	$	134
Bonus		20
Vacation		95
Interest on compensation		67
Loans to Company		196
Interest on loans		149
Total outstanding prior to exchange		661
Amount forgiven in prior years		(454	)
Amount exchanged for Series F-2 Preferred Stock		(85	)
Total interest accrued through December 31, 2021		39
Balance outstanding at December 31, 2021	$	161
Interest accrued through March 31, 2022		2
Balance outstanding at March 31, 2022	$	163

For Dr.Cartwright
Salary	$	337
Bonus		675
Loans to Company		528
Interest on loans		81
Total outstanding prior to exchange		1,621
Amount forgiven in prior years		(1,302	)
Amount exchanged for Series F-2 Preferred Stock		(100	)
Total interest accrued through December 31, 2021		62
Balance outstanding at December 31, 2021	$	281
Interest accrued through March 31, 2022		4
Balance outstanding at March 31, 2022	$	285

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-2 Preferred Stock		(85	)
Interest and salaries accrued through December 31, 2021		10
Balance outstanding at December 31, 2021	$	161

For Dr.Cartwright
Salary	$	337
Bonus		675
Loans to Company		528
Interest on loans		81
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-2 Preferred Stock		(100	)
Interest and salaries accrued through December 31, 2021		17
Balance outstanding at December 31, 2021	$	281

Long-term debt, related parties debt obligations

Year	Amount
2022	$	27
2023		485
2024		39
2025		41
2026		3
Thereafter		-
Total	$	595

Year	Amount
2022	$	30
2023		479
2024		39
2025		41
2026		3
Thereafter		-
Total	$	592

Bond payable discount and unamortized debt issuance costs

	March 31, 2022			December 31, 2021
10% Senior Unsecured Convertible Debentures	$	1,130		$	1,130
Debt Issuance costs to be amortized		(62	)		(69	)
Debt Discount		(216	)		(241	)
Long-term convertible debt	$	852		$	820

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INCOME (LOSS) PER COMMON SHARE (Tables)

3 Months Ended

12 Months Ended

Mar. 31, 2022

Dec. 31, 2021

INCOME (LOSS) PER COMMON SHARE

Earnings per share

	March 31,
	2022			2021
Net loss		(1,055	)		(572	)
Basic weighted average number of shares outstanding		20,683			13,172
Net loss per share (basic)		(0.05	)		(0.04	)
Diluted weighted average number of shares outstanding		20,683			13,172
Net loss per share (diluted)		(0.05	)		(0.04	)
Dilutive equity instruments (number of equivalent units):
Stock options		917			-
Preferred stock		15,572			17,994
Convertible debt		2,018			315
Warrants		13,609			17,400
Total Dilutive instruments		32,116			35,709

	December 31,
	2021			2020
Net loss		(2,431	)		(401	)
Basic weighted average number of shares outstanding		13,377			10,767
Net loss per share (basic)		(0.18	)		(0.04	)
Diluted weighted average number of shares outstanding		13,377			10,767
Net loss per share (diluted)		(0.18	)		(0.04	)
Dilutive equity instruments (number of equivalent units):
Stock options		1,867			-
Preferred stock		18,253			-
Convertible debt		964			62,095
Warrants		15,655			7,683
Total Dilutive instruments		36,739			69,778

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INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2021

INCOME TAXES

Components Of Deferred Taxes

	2021			2020
Deferred tax assets:
Warrant liability	$	-		$	617
Accrued executive compensation		288			519
Reserves and other		273			289
Stock options		134			132
Net operating loss carryforwards		16,985			17,851
		17,680			19,408
Valuation allowance		(17,680	)		(19,408	)
Net deferred tax assets	$	-		$	-

Income Taxes

	2021			2020
Statutory federal tax rate		21	%		21	%
State taxes, net of federal benefit		4	%		4	%
Nondeductible expenses		-			-
Valuation allowance		25	%		25	%
Effective tax rate		0	%		0	%

Provision For Income Taxes

	2021			2020
Current	$	-		$	-
Deferred		-			-
Deferred provision (credit)		(1,728	)		1,623
Change in valuation allowance		1,728			(1,623	)
Total provision for income taxes	$	-		$	-

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ORGANIZATION BACKGROUND AND BASIS OF PRESENTATION (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021	Jan. 16, 2020
Decrease in authorized common share			500,000,000
Accumulated deficit	$ (143,400)		$ 142,400
Working capital	(3,700)		(4,100)
Net loss including preferred dividend	1,100		2,400
Total stockholders' deficits	(5,000)		5,400
Proceeds from exercise of warrants	400
Accumulated Deficit	(143,400)		$ 142,400
Decrease In Authorized Common Share			500,000,000
Warrants exercisable for common stock outstanding				7,185,000
Proceeds from exercise of warrants	$ 365	$ 0
Warrants exercise price per share				$ 0.04
10% Convertible Debentures
Proceeds From Sale Of Stocks			$ 3,200
Warrants [Member]
Warrants exercisable for common stock outstanding			27,700,000
Proceeds from exercise of warrants			$ 5,100
Warrants [Member] | Minimum
Warrants exercise price per share	$ 0.15		$ 0.15
Warrants [Member] | Maximum
Warrants exercise price per share	$ 0.80		$ 0.80
Warrants [Member] | Exchange Agreement With GPB [Member]
Warrants exercisable for common stock outstanding	25,400,000
Proceeds from exercise of warrants	$ 4,700

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SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
SIGNIFICANT ACCOUNTING POLICIES
Raw materials	$ 1,254	$ 1,255	$ 1,276
Work in process	69	69	80
Finished goods	32	32	7
Inventory reserve	(785)	(785)	(758)
Total	$ 570	$ 571	$ 605

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SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($)	Mar. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Less accumulated depreciation and amortization	$ (1,747,000)	$ (1,747,000)	$ (1,746,000)
Property and equipment, net	28,000	14,000	1,000
Property And Equipment, Gross		1,761	1,747
Furniture and Fixtures
Property And Equipment, Gross	41,000	41,000	41,000
Leasehold Improvement
Property And Equipment, Gross	12,000	12,000	12,000
Construction in Progress
Property And Equipment, Gross	21,000	8,000	0
Equipment
Property And Equipment, Gross	1,049,000	1,048,000	1,042,000
Software
Property And Equipment, Gross	$ 652,000	$ 652,000	$ 652,000

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SIGNIFICANT ACCOUNTING POLICIES (Details 2) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
SIGNIFICANT ACCOUNTING POLICIES
Compensation	$ 573	$ 621	$ 1,094
Professional fees	41	98	83
Stock Subscription Payable	0	351	0
Interest	232	261	1,517
Vacation	42	39	34
Preferred dividends	299	349	202
Other accrued expenses	41	49	65
Total	$ 1,228	$ 1,768	$ 2,995

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SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Mar. 31, 2022	Dec. 31, 2017
SIGNIFICANT ACCOUNTING POLICIES
Accounts receivable outstanding	$ 172,000	$ 150,000	$ 165,000,000
Outstanding amount balance	46,000	24,000	39,000
Accounts receivable, net of allowance	126,000	126,000	126,000,000
Deferred revenue	337,000	42,000	514,000,000
Net operating loss carry forward	58,000,000.0	61,600,000	$ 61,600,000	$ 9,900,000
Patent Costs	$ 14,800	$ 17,000

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($)	Mar. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Derivative Liability	$ (38,000)	$ (32,000)	$ (2,228,000)
Fair Value, Inputs, Level 3 [Member]
Derivative Liability	(38,000)	(32,000)	(2,228,000)
Fair Value, Inputs, Level 2 [Member]
Derivative Liability	0	0	0
Fair Value, Inputs, Level 1 [Member]
Derivative Liability	0	0	0
Senior Secured Debt
Derivative Liability			(2,203,000)
Senior Secured Debt | Fair Value, Inputs, Level 3 [Member]
Derivative Liability			(2,203,000)
Auctus Loan
Derivative Liability	(38,000)	(32,000)	(25,000)
Auctus Loan | Fair Value, Inputs, Level 3 [Member]
Derivative Liability	(38,000)	(32,000)	(25,000)
Auctus Loan | Fair Value, Inputs, Level 2 [Member]
Derivative Liability	0	0	0
Auctus Loan | Fair Value, Inputs, Level 1 [Member]
Derivative Liability	$ 0	$ 0	$ 0

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 1) - Fair Value, Inputs, Level 3 [Member] - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Beginning Balance, Warrants	$ (32)	$ (2,228)
Change in fair value during the year	(6)	(91)
Ending Balance, Warrants	(38)	(32)
Change In The Terms Of Warrants Previously Recorded As A Liability And Now Reclassified To Equity		1,755
Change In Value Due To Warrants Expiring During The Year		448
Extinguishment Of Derivative Liability Due To Payoff Of $700,000 Loan To Auctus		84
Senior Secured Debt
Beginning Balance, Warrants	0	(2,203)
Change in fair value during the year	0	0
Ending Balance, Warrants	0	0
Change In The Terms Of Warrants Previously Recorded As A Liability And Now Reclassified To Equity		1,755
Change In Value Due To Warrants Expiring During The Year		448
Extinguishment Of Derivative Liability Due To Payoff Of $700,000 Loan To Auctus		0
Derivative
Beginning Balance, Warrants	(32)	(25)
Change in fair value during the year	(6)	(91)
Ending Balance, Warrants	$ (38)	(32)
Change In The Terms Of Warrants Previously Recorded As A Liability And Now Reclassified To Equity		0
Change In Value Due To Warrants Expiring During The Year		0
Extinguishment Of Derivative Liability Due To Payoff Of $700,000 Loan To Auctus		$ 84

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Mar. 31, 2022
Derivative Liability/bifurcated Conversion Option In Connection With Auctus Loan	$ 1,100,000
Extinguishment Of Derivative Liability Due To Payoff Of Loan To Auctus	700,000
Derivative Liability	400,000		$ 400,000
December 17, 2019 [Member]
Derivative Liability/bifurcated Conversion Option In Connection With Auctus Loan	400,000	$ 400,000
Fair Value, Inputs, Level 3 [Member]
Extinguishment Of Derivative Liability Due To Payoff Of Loan To Auctus	$ 700,000

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STOCKHOLDERS DEFICIT (Details) - shares	3 Months Ended	12 Months Ended
	Mar. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Stockholders' Deficit:
Common stock warrants exercised	4,477,923
Issuance of common stock for payment of Series D preferred dividends	23,109	109,039	148,653
Issuance of common stock for payment of Series E preferred dividends	12,432
Issuance of common stock for payment of Series F-2 preferred dividends	95,535
Issuance of common stock for payment of interest	121,262
Issuance of common stock for Series F one-time 15% dividend	255,401
Issuance of common stock for Series F-2 one-time 15% dividend	368,505
Conversion of Series E preferred stock to common stock	3,070,000
Conversion of Series F Preferred shares into common stock	60,000	40,000
Issued during the three months ended March 31, 2022	8,642,829	535,301	9,818,813
Share issued	8,642,829	535,301	9,818,813
Outstanding	22,316,412	13,673,583	13,138,282	3,319,469
Conversion Of Debt Into Common Shares - Exchange Agreements			7,957,013
Conversion Of Debt Into Common Shares			175,000
Shares Issued For Manufacturing Agreements			12,147
Shares Issued For Payment Of Series E Dividends		288,262
Shares Issued For Payment Of Finder Fee		98,000
Shares Issued To Investors			1,526,000

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STOCKHOLDERS DEFICIT (Details 1) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Total Debt And Accrued Interest		$ 2,737,847
Total Debt		2,496,316
Total Accrued Interest		$ 241,531
Common Stock Shares		7,957,013
Warrants (exercise $0.15)		700,000
Warrants outstanding, beginning	27,669,634	28,324,275	46,016,840
Warrants (exercise $0.20)		4,713,603
Warrants (exercise $0.25)		1,121,705
Warrants exercised	(2,284,324)	(2,193,599)
Warrants (exercise $0.50)		250,000
Warrants outstanding, ending	25,385,310	27,669,634	28,324,275
Warrants (exercise $0.75)		1,121,705
Weighted Average Exercise Price Per Share, beginning	$ 0.29	$ 0.25	$ 1.71
Weighted Average Exercise Price Per Share, Warrants exercised	0.16
Weighted Average Exercise Price Per Share, ending	$ 0.30	$ 0.29	$ 0.25
Mr. Mamula
Total Debt And Accrued Interest		$ 15,577
Total Debt		15,000
Total Accrued Interest		$ 577
Warrants (exercise $0.15)		0
Warrants (exercise $0.20)		77,885
Warrants (exercise $0.25)		0
Warrants (exercise $0.50)		0
Warrants (exercise $0.75)		0
Common Stock Shares		77,885
Mr. Clavijo
Total Debt And Accrued Interest		$ 125,000
Total Debt		125,000
Total Accrued Interest		$ 0
Warrants (exercise $0.15)		0
Warrants (exercise $0.20)		0
Warrants (exercise $0.25)		0
Warrants (exercise $0.50)		250,000
Warrants (exercise $0.75)		0
Common Stock Shares		500,000
Mr. Wells
Total Debt And Accrued Interest		$ 220,000
Total Debt		220,000
Total Accrued Interest		$ 0
Warrants (exercise $0.15)		0
Warrants (exercise $0.20)		0
Warrants (exercise $0.25)		0
Warrants (exercise $0.50)		0
Warrants (exercise $0.75)		0
Common Stock Shares		0
K2 Medical (Shenghuo)
Total Debt And Accrued Interest		$ 803,653
Total Debt		771,927
Total Accrued Interest		$ 31,726
Warrants (exercise $0.15)		0
Warrants (exercise $0.20)		496,602
Warrants (exercise $0.25)		704,334
Warrants (exercise $0.50)		0
Warrants (exercise $0.75)		704,334
Common Stock Shares		1,905,270
Auctus [Member]
Total Debt And Accrued Interest		$ 328,422
Total Debt		249,119
Total Accrued Interest		$ 79,303
Warrants (exercise $0.20)		0
Warrants (exercise $0.25)		0
Warrants (exercise $0.50)		0
Warrants (exercise $0.75)		0
Common Stock Shares		500,000
Warrants (exercise $0.15)		700,000
Aquarius
Total Debt And Accrued Interest		$ 145,544
Total Debt		107,500
Total Accrued Interest		$ 38,044
Warrants (exercise $0.15)		0
Warrants (exercise $0.20)		0
Warrants (exercise $0.25)		145,544
Warrants (exercise $0.50)		0
Warrants (exercise $0.75)		145,544
Common Stock Shares		291,088
Mr. Blumberg
Total Debt And Accrued Interest		$ 305,320
Total Debt		292,290
Total Accrued Interest		$ 13,030
Warrants (exercise $0.15)		0
Warrants (exercise $0.20)		928,318
Warrants (exercise $0.25)		119,656
Warrants (exercise $0.50)		0
Warrants (exercise $0.75)		119,656
Common Stock Shares		1,167,630
Mr. Case
Total Debt And Accrued Interest		$ 179,291
Total Debt		150,000
Total Accrued Interest		$ 29,291
Warrants (exercise $0.15)		0
Warrants (exercise $0.20)		896,456
Warrants (exercise $0.25)		0
Warrants (exercise $0.50)		0
Warrants (exercise $0.75)		0
Common Stock Shares		896,456
Mr. Grimm
Total Debt And Accrued Interest		$ 51,110
Total Debt		50,000
Total Accrued Interest		$ 1,110
Warrants (exercise $0.15)		0
Warrants (exercise $0.20)		255,548
Warrants (exercise $0.25)		0
Warrants (exercise $0.50)		0
Warrants (exercise $0.75)		0
Common Stock Shares		255,548
Mr. Gould
Total Debt And Accrued Interest		$ 111,227
Total Debt		100,000
Total Accrued Interest		$ 11,227
Warrants (exercise $0.15)		0
Warrants (exercise $0.20)		556,136
Warrants (exercise $0.25)		0
Warrants (exercise $0.50)		0
Warrants (exercise $0.75)		0
Common Stock Shares		556,136
Dr. Imhoff
Total Debt And Accrued Interest		$ 400,417
Total Debt		363,480
Total Accrued Interest		$ 36,937
Warrants (exercise $0.15)		0
Warrants (exercise $0.20)		1,497,367
Warrants (exercise $0.25)		100,944
Warrants (exercise $0.50)		0
Warrants (exercise $0.75)		100,944
Common Stock Shares		1,699,255
Ms. Rosenstock
Total Debt And Accrued Interest		$ 50,000
Total Debt		50,000
Total Accrued Interest		$ 0
Warrants (exercise $0.15)		0
Warrants (exercise $0.20)		0
Warrants (exercise $0.25)		50,000
Warrants (exercise $0.50)		0
Warrants (exercise $0.75)		50,000
Common Stock Shares		100,000
Mr. James
Total Debt And Accrued Interest		$ 2,286
Total Debt		2,000
Total Accrued Interest		$ 286
Warrants (exercise $0.15)		0
Warrants (exercise $0.25)		1,227
Warrants (exercise $0.50)		0
Warrants (exercise $0.75)		1,227
Common Stock Shares		7,745
Warrants (exercise $0.20)ab		5,291

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STOCKHOLDERS DEFICIT (Details 2) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Stockholders' Deficit:
Warrants outstanding, beginning	27,669,634	28,324,275	46,016,840
Warrants Issued		7,982,223	11,270,013
Warrants Cancelled/expired		(1,729,662)	(70)
Warrants Exchanged		$ (4,713,603)	$ (28,962,508)
Warrants exercised	(2,284,324)	(2,193,599)
Warrants outstanding, ending	25,385,310	27,669,634	28,324,275
Weighted Average Exercise Price Per Share, beginning	$ 0.29	$ 0.25	$ 1.71
Weighted Average Exercise Price Per Share, Warrants Issued		0.30	0.34
Weighted Average Exercise Price Per Share, Warrants Cancelled/expired		0.04	1,068,423
Weighted Average Exercise Price Per Share, Warrants Exchanged		0.20	0.04
Weighted Average Exercise Price Per Share, Warrants Exercised	0.49	0.16
Weighted Average Exercise Price Per Share, ending	$ 0.30	$ 0.29	$ 0.25

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STOCKHOLDERS DEFICIT (Details 3)	12 Months Ended
	Dec. 31, 2021
Stockholders' Deficit:
Expected Term	15 years
Volatility	143.20%
Risk-free Interest Rate	0.00%
Dividend Yield	0.00%

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STOCKHOLDERS DEFICIT (Details Narrative) - USD ($)							1 Months Ended		3 Months Ended		6 Months Ended	12 Months Ended
	Jul. 08, 2021	Jul. 09, 2020	Jun. 03, 2020	Jan. 08, 2020	Aug. 02, 2018	Sep. 10, 2014	Feb. 28, 2021	Jan. 31, 2021	Mar. 31, 2022	Mar. 31, 2021	Jun. 30, 2020	Dec. 31, 2021	Dec. 31, 2020	Jan. 08, 2021	Jan. 22, 2020	Jan. 16, 2020	Jul. 24, 2019
Cash Payment												$ 350,000
Warrants												3,592,500
Warrants Price Per Share												$ 0.20
Successful In Obtaining Financing Greater Than Amount												$ 4,000,000.0
Financing Amount												4,000,000.0
Warrants Closing Of Financing Greater Than Amount												$ 4,000,000.0
Warrant Holders Percentage Description												4.99% blocker such that the warrant holders will be restricted from owning more than 4.99% of the total number
Common Stock Warrants												7,185,000			1,250,000
Additional Warrants To Purchase Common Stock Shares												150,000			1,250,000
Additional Warrants To Purchase Common Stock Shares Expire Date												May 31, 2024
Warratns Issued												263,000			5,000,000
Issued Equity Investments												$ 2,114,000
Issued Common Stock Shares To Finders												98,000
Warrants To Purchase Shares Of Common Stock																35,937,500
Warrants To Purchase Shares Of Common Stock Exercise Price																$ 0.04
Issuance Of New Warrants To Purchase Shares Of Common Stock																7,185,000
Issuance Of New Warrants To Purchase Shares Of Common Stock Exercise Price																$ 0.20
Payment												$ 750,000
Finder Compensation In Percentage												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.
Raise Funds												$ 300,000
Fee Payment												$ 31,650
Warrants Issued To Finder												126,600
Common Stock, Shares Authorized									500,000,000			500,000,000
Common Stock, Share Price															$ 0.50
Additional Warrants To Purchase Common Stock Shares Price															$ 1.00
Additional Common Stock Warrants															1,250,000
Additional Common Stock Warrants Price Per Share															$ 1.25
Common Stock Shares Issued									22,316,412			13,673,583	13,138,282
Common Stock Shares Outstanding									22,316,412			13,673,583	13,138,282
Common Stock, Par Value									$ 0.001			$ 0.001	$ 0.001
Common Stock Issued During Period												535,301	9,818,813
Shares Exchange										13,180,417		13,607,609	13,138,282
Strike Price Of Warrants															$ 0.25
Warrants Holders Percentage Description												The consultant agrees to a 10.0% blocker at any single point in time it cannot own 10.0% of the total common stock shares outstanding. The Company issued 1,250,000 common stock warrants during the year ended December 31, 2021, in accordance with the agreement. Refer to Note 7, “Commitments and Contingencies” for additional information.
Common Stock issued									8,642,829			535,301	9,818,813
Preferred stock shares surrendered									3,262
Preferred Stock Shares Converts Into Common Stock									60,000			40,000
Common Stock Warrants									650,000			4,477,923
Debt												$ 2,496,316
Forgive Repayment Amount									$ 41,232			94,392
Principal Amount Of Promissory Note									39,000			46,000	$ 24,000
Gain Loss On Extinguishment Of Debt									41,000	$ 87,000		578,000	(296,000)
Convertible Debt Estimated Fair Value												$ 2,737,847
Common Stock Shares												7,957,013
GHS Investments, LLC [Member]
Principal Amount Of Promissory Note						$ 1,275,000							$ 50,454
Common Stock Shares													175,000
Purchase Price						570,000
Original Issue Discount						560,000
Debt Issuance Costs						$ 145,000
Lowest Daily Volume Average Price						75.00%
Investments
Warrants To Purchase Shares Of Common Stock												643,700
Issuance Of New Warrants To Purchase Shares Of Common Stock												1,130,000
Common Stock, Issued Public Shares												98,000
Total Investment Amount												$ 2,114,000
Equity Investments Fee												139,000
Proceeds From Debenture Unit Investments												1,130,000
Debenture Fee												$ 86,400
Debentures Convertible Into Common Stock Shares												2,260,000
2020 Exchange Agreements [Member]
Warrants To Purchase Shares Of Common Stock Exercise Price				$ 0.25
Gain Loss On Extinguishment Of Debt			$ 118,396	$ 1,183							$ 224,963
Convertible Debt			$ 328,422	2,064,366							$ 125,000
Convertible Debt Estimated Fair Value				$ 2,065,548
Warrants To Purchase Common Stock Shares			700,000	6,957,013							250,000
Exercise Price Of Warrants To Purchased Common Stock Share Issued, Two				$ 0.75
Exercise Price Of Warrants To Purchased Common Stock Share Issued, Three				$ 0.20
Debt				$ 29,000
Common Stock Shares			500,000								500,000
Fair Value Of The Common Stock Shares			$ 250,000								$ 250,000
Fair Value Of The Warrants			$ 196,818								$ 99,963
Estimated Fair Value Price			$ 0.281								$ 0.40
Fair Value			$ 446,818								$ 349,963
Mr. Bill Wells
Forgive Repayment Amount		$ 110,000							35,000			$ 40,000
Salary		220,000
Received Cash Payment		20,000							$ 35,000			20,000
Principal Amount Of Promissory Note		90,000										97,052
Total Amount To Be Receive		$ 3,000,000.0										$ 3,000,000.0
Common Share Stock Option		66,000
Shares Vested Per Month		3,667
Common Stock Exercise Price		$ 0.49
Promissory Note Interest Rate									6.0%			6.0%
Loan Maturity Term									P18Y			18 months
Gain Loss On Extinguishment Of Debt												$ 20,000
Ms. Rosenstock
Debt												50,000
Convertible Debt Estimated Fair Value												50,000
Ms. Rosenstock | 2020 Exchange Agreements [Member]
Forgive Repayment Amount												28,986
Shandong Yaohua Medical Instrument Corporation [Member]
Shares Exchange													12,147				12,147
Debt Exchanges - 2021
Debt														$ 1,500,000
Debt Final Payment														$ 75,000
Warrants Exchanges - 2021 - 1
Financing Amount												4,000,000.0
Warrants Closing Of Financing Greater Than Amount												$ 4,000,000.0
Common Stock Warrants												1,802,161
Payment												$ 90,000
Strike Price Of Warrants												$ 0.25
Warrants Holders Percentage Description												The warrants will have a one-year lockup restriction and a 10% blocker such that the warrant holders will be restricted from owning more than 10% of the total number of the Company’s outstanding common shares at any one point in time after completion of the financing.
Exchange Common Stock Warrants												901,081
Common Stock Warrants Strike Price Per Share												$ 0.25
Warrants Exchanges - 2021
Common Stock Warrants												4,477,923
Strike Price Of Warrants												$ 0.20
Exchange Common Stock Warrants												4,713,603
Common Stock Warrants Strike Price Per Share												$ 0.16
Exercise Of Warrants, Value												$ 351,000
Exercise Of Warrants, Shares												2,193,599
Warrants Exchanges - 2021 - 2
Financing Amount												$ 4,000,000.0
Warrants Closing Of Financing Greater Than Amount												$ 4,000,000.0
Common Stock Warrants												1,802,161
Strike Price Of Warrants												$ 0.75
Warrants Holders Percentage Description												The new warrants will have a one-year lockup restriction and a 10% blocker such that the warrant holders will be restricted from owning more than 10% of the total number of the Company’s outstanding common shares at any one point in time after completion of the financing.
Exchange Common Stock Warrants												1,802,161
Common Stock Warrants Strike Price Per Share												$ 0.75
Series C Convertible Preferred Shares
Preferred Stock Shares Designated									9,000			9,000
Conversion Price Per Share									$ 0.50			$ 0.50
Preferred Stock Shares Converts Into Common Stock									200			2,000
Liquidation Preference												$ 1,000
Preferred Stock Shares Issued									300			300.0	300
Total Convertible Of Common Stock Shares					6,524,500				572,000			572,000
Preferred Stock Shares Outstanding									300.0			300.0	300.0
Preferred Stock Shares Par Value									$ 0.001			$ 0.001	$ 0.001
Preferred stock, liquidation preference									$ 286,000			$ 286,000	$ 286,000
Convertible Of Common Stock Shares Description												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
Unpaid Accrued Dividends												$ 120,120
Preferred Stock Shares Authorized									9,000.0			9,000.0	9,000.0
Series C1 Convertible Preferred Shares
Shares Exchange									3,262
Preferred Stock Shares Designated									20,250			20,250
Conversion Price Per Share									$ 0.50			$ 0.50
Preferred Stock Shares Converts Into Common Stock									2,000			2,000
Preferred Stock Shares Issued									1,049			1,049	1,049
Total Convertible Of Common Stock Shares									2,098,500			2,098,500
Preferred Stock Shares Outstanding									1,049			1,049	1,049
Shares Outstanding													1,024,925
Series C2 Convertible Preferred Shares
Shares Exchange									3,262			3,262
Preferred stock shares surrendered									3,262
Conversion Price Per Share									$ 0.50			$ 0.50	$ 0.50
Preferred Stock Shares Converts Into Common Stock									2,000
Dividing The Stated Value									$ 10,000			$ 1.000
Total Convertible Of Common Stock Shares									6,524,500			2,000	2,000
Series F Convertible Preferred Shares
Preferred Stock Shares Converts Into Common Stock												40,000
Preferred Stock Shares Issued									1,400			1,400	0
Preferred Stock Shares Outstanding									1,400.0			1,400.0	0
Preferred Stock Shares Par Value									$ 0.001			$ 0.001	$ 0.001
Preferred stock, liquidation preference									$ 1,411,000			$ 1,426,000	$ 0
Preferred Stock Shares Authorized									1,500			1,500.0	1,500
Number Of Shares Converted												10
Series F-2 Convertible Preferred Shares
Preferred Stock Shares Designated									3,500			3,500
Conversion Price Per Share									$ 0.25
Preferred Stock Shares Converts Into Common Stock									4,000			4,000
Liquidation Preference									$ 3,237			$ 3,237
Increased Beneficial Ownership Percentage									9.99			9.99%
Preferred Stock Shares Issued									3,200			3,200	0
Common Stock Primary Trading Shares Exceed									1,000			1,000
Exceeds Percentage									200.00%			200.00%
Preferred Stock Shares Outstanding									3,200.0			3,200.0	0
Preferred Stock Shares Par Value									$ 0.001			$ 0.001	$ 0.001
Conversion Beneficial Ownership Limitation									4.99%			4.99%
Maturity Period									5 years
Preferred Stock Shares Authorized												92,500,000	5,000
Preferred Stock Shares Outstanding												2,559
Preferred Stock Shares Issued												3,237
Shares Issued												678
Convertible Preferred Stock Description 1												Each share of Series F-2 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-2 Certificate of Designation (the “Series F-2 Conversion Price”). The conversion of Series F-2 Preferred is subject to a 4.99% beneficial ownership limitation, which may be increased to 9.99% at the election of the holders of the Series F-2 Preferred. If the average of the VWAPs (as defined in the Series F-2 Certificate of Designation) for any consecutive 5 trading day period (“Measurement Period”) exceeds 200% of the then Series F-2 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-2 Preferred, for cash in an amount equal to aggregate Stated Value then outstanding plus accrued but unpaid dividends. As of December 31, 2021, the Company had not issued shares as payment of Series F-2 Preferred Stock dividends. As of December 31, 2021, the Company had accrued dividends of $94,907.
Preferred Stock Shares Received									678,000			678,000
Outstanding Debt												$ 2,559,000
Final Payment				750,000								750,000
Exchange Agreement Payment				$ 1,500,000
Dividends Paid Amount												94,907
Accrued dividend amount									$ 91,592
Issuance of common stock for payment pf annual series									95,535
Additional stock issued during period for payment of non recurring dividend									368,505
Preferred stock, liquidation preference									$ 3,237,000			$ 3,237,000	$ 0
Preferred Stock Shares Authorized									5,000.0			3,500.0	3,500.0
Series G Convertible Preferred Shares
Preferred Stock Shares Issued									0			0	0
Preferred Stock Shares Outstanding									0			0	0
Preferred Stock Shares Par Value									$ 0.001			$ 0.001	$ 0.001
Preferred Stock Shares Received												153,000
Preferred stock, liquidation preference									$ 0			$ 0	$ 0
Preferred Stock Shares Authorized									1,000,000			1,000,000	1,000,000
Convertible Preferred Stock Description												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.
Preferred Stock Shares Issued												0	0
Investment Net									$ 114,597			$ 114,597
Preferred Stock Redeemed									91,000			91,000
Series G Convertible Preferred Shares | Power Up Lending Group Ltd [Member]
Total Investment Amount									$ 75,000			$ 75,000
Investment Net							$ 53,500	$ 78,500	$ 53,500			53,500
Preferred Stock Redeemed									91,000
Additional Series G Preferred Stock Shares, Amount							50,000	75,000
Additional Tranches Of Financing								925,000	$ 925,000			$ 925,000
Financing Cost							$ 925,000	$ 925,000
Discount Rate									19.00%			19.00%
Discounted Rate							19.00%	19.00%
Redemption Of February 2021 Investment, Amount	$ 78,094
Difference Of Interest Expense	$ 28,094								$ 39,597			$ 39,597
Conversion Beneficial Ownership Limitation							4.99%	4.99%
Increased Election Holders							9.99%	9.99%
Cumulative Dividends Rate							8.00%	8.00%
Corresponding Percentage Description							Day 1-60, 105%; Day 61-90, 110%; Day 91-120, 115%; and Day 121-180, 122%.	Day 1-60, 105%; Day 61-90, 110%; Day 91-120, 115%; and Day 121-180, 122%.
Additional Series G Preferred Stock Shares							62,000
Net Proceeds									125,000			125,000
Outstanding Amount									$ 50,000			$ 50,000
Series D Preferred Shares
Shares Exchange												109,039	1,526,000
Common Stock, Issued Public Shares									1,526,000			1,526,000
Preferred Stock Shares Designated									6,000			1,436,000
Conversion Price Per Share									$ 0.25			$ 0.25
Preferred Stock Shares Converts Into Common Stock									763			763
Liquidation Preference									$ 763			$ 763
Beneficial Ownership Percentage									4.99			4.99%
Increased Beneficial Ownership Percentage									9.99			9.99
Preferred Stock Shares Issued									763,000			763,000
Common Stock Warrants 1									1,526,000			1,526,000
Warrant Exercise Price Per Share									0.25			0.25
Common Stock Warrants									1,526,000			1,526,000
Common Stock Warrants Exercise Price 1									$ 0.75			$ 0.75
Conversion Of Investor Shares									763			763
Preferred Stock Dividends Accrued									$ 14,306			$ 14,306
Common Stock Primary Trading Shares Exceed									1,000			1,000
Exceeds Percentage									200.00%			200.00%
Series E Preferred Shares
Preferred Stock Shares Designated									5,000			5,000
Conversion Price Per Share									$ 0.25			$ 0.25
Liquidation Preference									$ 968			$ 1,736
Common Stock Primary Trading Shares Exceed									1,000			1,000
Exceeds Percentage									200.00%			200.00%
Preferred Stock Shares Par Value									$ 0.001			$ 0.001
Preferred Stock Stated Value									$ 1,000			$ 1,000
Common Stock Shares Issued For Preferred Stock Dividends									12,432			288,262
Accrued Dividends									$ 71,099			$ 54,521
Increased Election Holder									9.99%			9.99%
Conversion Beneficial Ownership Limitation									4.99%			4.99%
Maturity Period									5 years			5 years
Issuance of common stock for conversion of Series E Convertible Preferred Stock									3,070,000
Series F Preferred Shares
Preferred Stock Shares Designated									1,500			1,500
Conversion Price Per Share									$ 0.25			$ 0.25
Preferred Stock Shares Converts Into Common Stock									4,000			4,000
Liquidation Preference									$ 1,411			$ 1,436
Preferred Stock Shares Issued									1,411			1,426
Common Stock Primary Trading Shares Exceed									1,000			1,000
Exceeds Percentage									200.00%			200.00%
Preferred Stock Shares Outstanding												1,426
Increased Election Holder									9.99%			9.99%
Conversion Beneficial Ownership Limitation									4.99%			4.99%
Maturity Period									5 years			5 years
Accrued dividend amount									$ 1,998			$ 65,718
Issuance of common stock for payment pf annual series									158,662
Additional stock issued during period for payment of non recurring dividend									255,401
Number Of Shares Converted Into Common Stock									15			10
Shares Converted Into Common Stock									60,000			40,000
Cumulative Dividend Rate									6.00%			6.00%
Accredited Investors									$ 1,436,000			$ 1,436,000
Preferred stock shares outstanding									1,436
Series F and Series F-2 Preferred Shares
Preferred Stock Shares Converts Into Common Stock												4,000
Preferred Stock [Member]
Preferred Stock Shares Par Value									$ 0.001			$ 0.001
Preferred Stock Shares Authorized									500,000,000			500,000,000

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STOCK OPTIONS (Details) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
STOCK OPTIONS
Outstanding at ending of year	1,500,000	1,500,000
Number of shares exercisable	1,045,227	954,273
Options outstanding weighted average exercise price, ending	$ 0.49
Options exercisable weighted average exercise price	$ 0.49	$ 0.16
Weighted average remaining contractual life outstanding	8 years 3 months 18 days	8 years 6 months
Weighted average remaining contractual life exercisable	8 years 3 months 18 days	8 years 6 months
Agrregate intrensic value outstanding	$ 240	$ 135
Agrregate intrensic value exercisable	$ 167	$ 86
Outstanding At Beginning Of Year		1,800,000
Options Granted		25,000
Options Forfeited		(167,614)
Options Expired		(157,386)
Options Outstanding Weighted Average Exercise Price, Beginning	$ 0.49	$ 0.49
Options Granted Weighted Average Exercise Price		0.48
Options Forfeited Weighted Average Exercise Price		0.49
Options Expired Weighted Average Exercise Price		0.49
Options Outstanding Weighted Average Exercise Price, Ending		0.49
Weighted Average Exercise Price Per Share Exercisable		$ 0.49

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STOCK OPTIONS (Details 1)	3 Months Ended	12 Months Ended
	Mar. 31, 2021	Dec. 31, 2021	Dec. 31, 2020
STOCK OPTIONS
Expected term (years)	10 years	10 years	10 years
Volatility	153.12%	153.12%	153.12%
Risk-free interest rate	0.98%	0.98%	0.98%
Dividend yield	0.00%	0.00%	0.00%

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STOCK OPTION (Details Narrative) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021	Dec. 31, 2020
STOCK OPTIONS
Weighted average period	1 year 3 months		1 year 6 months
Unrecognized stock-based compensation expense	$ 219,558		$ 263,470
Weighted-average fair value of awards granted	$ 0	$ 0.47	$ 0.47	$ 0.48
Stock options granted outstanding common stock shares percentage	10.00%		10.00%
Options granted expiration term	ten years		ten years
Options granted exercisable term	four years		four years
Weighted Average Period	1 year 3 months		1 year 6 months
Stock-based Compensation Expense			$ 226,717	$ 309,905

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COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
LITIGATION AND CLAIMS
Operating Lease Right-of-use Assets	$ 355	$ 372	$ 453
Total Lease Liabilities	$ 377	$ 392

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COMMITMENTS AND CONTINGENCIES (Details 1) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
LITIGATION AND CLAIMS
2022 (remaining)	$ 82	$ 108
2023	112	112
2024	115	115
2025	118	118
2026	50	50
Total future lease payments	477	503
Less: discount	(100)	(111)
Total Lease Liabilities	$ 377	$ 392

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COMMITMENTS AND CONTINGENCIES (Details 2)	3 Months Ended	12 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
LITIGATION AND CLAIMS
Weighted average remaining lease term (years)	4 years 2 months 12 days	4 years 4 months 24 days
Weighted average discount rate	11.40%	11.40%

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COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($)				1 Months Ended			3 Months Ended		12 Months Ended
	Mar. 10, 2021	Sep. 06, 2016	Jun. 05, 2016	Jan. 22, 2022	Jan. 22, 2020	Dec. 31, 2009	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021	Dec. 31, 2020	Sep. 30, 2021	Jul. 24, 2019
Financing agreement amount							$ 1,000,000		$ 1,000,000
Area Of Operating Leases						12,835
Escrow Agent Rate Per Share												$ 1.90
Consideration Received												$ 885,144
Operating Lease Cost									$ 110,701	$ 114,591
Royalty Percent			20
Licences			$ 1,000,000.0
Warrants					5,000,000
Warrants Broken Into Four Tranches					1,250,000
Strike Price					$ 0.25
Net Loss Increased					$ 318,000
Sales			$ 4,000,000.0
Shares exchange								13,180,417	13,607,609	13,138,282
Netl Loss							(507,000)	$ (517,000)	$ (2,070,000)	$ (279,000)
Accumulated Deficit							(143,400,000)		142,400,000
Shenghuo Medical, LLC [Member]
Payment Receive Descriptions			the right to receive payments equal to 2% of the Company’s future sales in the United States, up to an aggregate of $4.0 million.
Shandong Yaohua Medical Instrument Corporation [Member]
Balance due for outstanding purchase order							23,445		177,000
Shares exchange										12,147		12,147
Consulting Agreement [Member] | Mr. Blumberg
Related party liability written off								$ 350,000			$ 350,000
Terms Of Amendment To Agreement	the consulting agreement was amended to clarify that $350,000 is not intended to be debt and will not be required to be repaid in cash. Additionally, issuance of the warrants is now predicated on the Company receiving funding receipts of $1,000,000,
Gain On Writing Off The Liability	$ 350,000
Description Of Exchange Of Subscription	(1) on September 26, 2021, 900,000 3-year warrants with an exercise price of $0.30 and 400,000 common stock shares; (2) on March 26, 2022, 900,000 3-year warrants with an exercise price of $0.40 and 400,000 common stock shares; (3) on September 26, 2022, 900,000 3-year warrants with an exercise price of $0.50 and 400,000 common stock shares; and (4) on March 26, 2023, 900,000 3-year warrants with an exercise price of $0.60 and 400,000 common stock shares.
Subscription Receivable	$ 350,000
Promotional Agreement [Member]
Consulting expenses							79,444		556,111
Fair vaue of warrants				$ 715,000	$ 715,000
Unrecognized consulting expense							$ 0		$ 79,444
Netl Loss										$ 719,000,000
Accumulated Deficit										$ 140,200,000
Royalty Agreement [Member]
Royalty Paid Description		royalty initially equal to $0.10, and from and after October 2, 2016, equal to $0.20, for each disposable
Royalty Consideration		$ 50,000

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NOTES PAYABLE (Details) - USD ($)	Mar. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Notes payable in default, including related parties	$ 43,000	$ 0	$ 329,000
GPB
Notes payable in default, including related parties		0	17,000
Premium Finance insurance
Notes payable in default, including related parties	12,000		48,000
Dr. Cartwright
Notes payable in default, including related parties	31,000	0	1,000
Mr. Fowler
Notes payable in default, including related parties	$ 0	0	26,000
Mr. Mermelstein
Notes payable in default, including related parties		$ 0	$ 285,000

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NOTES PAYABLE (Details 1) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Short-term Notes Payable, Including Related Parties	$ 88	$ 96
Dr. Cartwright
Short-term Notes Payable, Including Related Parties	34	46
Mr. Fowler
Short-term Notes Payable, Including Related Parties	6	0
Dr. Faupel
Short-term Notes Payable, Including Related Parties	0	5
Premium Finance (Insurance)
Short-term Notes Payable, Including Related Parties	$ 48	$ 45

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NOTES PAYABLE (Details Narrative) - USD ($)			3 Months Ended	12 Months Ended
	Jul. 04, 2021	Jul. 04, 2020	Mar. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019	Sep. 30, 2021	Mar. 22, 2021	Feb. 19, 2021	Jan. 19, 2017	Dec. 21, 2016
Short-term notes payable			$ 43,253	$ 165,000	$ 96,000
Annual interest rate description			The notes carry annual interest rates between 4.3% and 16%, or 18% in the event of default.	The notes carry annual interest rates between 4.3% and 6% (16% to 18% in the event of default).
Short-term Notes Payable			$ 43,253	$ 165,000	96,000
Notes Payable				$ 27,000	329,000		$ 285,244
Annual Interest Rate Description				The notes carried annual interest rates between 0% and 10% and have default rates as high as 20%.
Short-term Notes Payable, Including Related Parties				$ 88,000	96,000
Notes Payable In Default, Including Related Parties Others				0	329,000
Outstanding Principal Balance			39,000	46,000	24,000
Accrued Interest			1,228,000	1,768,000	2,995,000		$ 32,945
Promissory Notes Issued				$ 323,000	0
Short-term Debt [Member]
Annual Interest Rate Description				The notes carried annual interest rates between 0% and 10% and have default rates as high as 20%.
Short-term Notes Payable, Including Related Parties				$ 40,000	51,000
Dr. Cartwright
Annual Interest Rate Description						The notes were initially issued with 0% interest, however interest increased to 6.0% interest
Notes Payable In Default, Including Related Parties Others					1,000,000
Outstanding Principal Balance				1,621,000					$ 1,621,000
Line of credit, balance			11,968
Promissory Notes Issued				100,000		$ 41,000
Financing Proceeds Received By Company						$ 1,000,000
Mr. Fowler
Annual Interest Rate Description						The notes were initially issued with 0% interest and then went into default with an interest rate of 18%.
Notes Payable In Default, Including Related Parties Others					$ 26,000,000
Outstanding Principal Balance			146,400	12,601						$ 13,900	$ 12,500
Mr. Fowler | Long-Term Debt - Related Parties
Outstanding Principal Balance			26,400					$ 26,400
Dr. Faupel
Annual Interest Rate Description						The notes were initially issued with 0% interest, however interest increased to 6.0% interest
Outstanding Principal Balance				661,000					$ 661,000
Promissory Notes Issued				85,000		$ 5,000
Financing Proceeds Received By Company						$ 1,000,000
March 22, 2021 exchange agreement [Member] | Mr. Fowler
Annual Interest Rate Description						The agreement brought the note current and will accrue interest at a rate of 6.0%.
Accrued Interest			18,718	18,718
Monthly payment of insurance			3,850	3,850
Short term promissory note			45,118	45,118
Short term promissory note, principal			26,400	26,400
Premium Finance Agreement [Member]
Monthly payment of insurance	$ 11,968	$ 11,299
Line of credit, balance			$ 11,968	$ 47,615
Line Of Credit Facility, Maximum Borrowing Capacity	$ 117,560	$ 109,000
Interest And Maturity Date Description	interest at 4.3% and matured in April 2022	interest at 4.968% and matured in April 2021

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SHORTTERM CONVERTIBLE DEBT (Details) - USD ($)	Mar. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	May 27, 2020	May 22, 2020
Debt Discount And Issuance Costs To Be Amortized	$ 5,211	$ (14,000)	$ (262,000)
Convertible Notes Payable - Short Term		897,000	951,000
Convertible notes payable		0	1,930,000
Convertible Notes Payable - Short Term	161,000	161,000	0
Total Convertible Notes Payable
Convertible notes payable	906,000		897,000
Auctus March 31 2020 Note [Member]
Convertible Notes Payable - Short Term		161,000	113,000
Auctus Member
Convertible notes payable	161,000		161,000
Convertible Notes Payable - Short Term					$ 328,422
Auctus Prepayment Penalty
Convertible notes payable	350,000		350,000
Convertible Notes Payable - Short Term		350,000	0
Auctus Tranche 1 [Member]
Convertible Notes Payable - Short Term		0	700,000
AuctusTranche 2 [Member]
Convertible notes payable	400,000		400,000
Convertible Notes Payable - Short Term		$ 400,000	400,000	$ 400,000
Debt Discount and Issuance Costs to be Amortized
Convertible notes payable	$ 5		$ 14

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SHORTTERM CONVERTIBLE DEBT (Details 1) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Convertible Notes In Default	$ 0	$ 1,930
Auctus [Member]
Convertible Notes In Default	0	40
GPB
Convertible Notes In Default	0	1,709
GHS [Member]
Convertible Notes In Default	$ 0	$ 181

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SHORTTERM CONVERTIBLE DEBT (Details Narrative) - USD ($)			1 Months Ended										3 Months Ended	12 Months Ended
	Apr. 03, 2020	Feb. 12, 2016	Jun. 30, 2021	May 27, 2020	May 22, 2020	Mar. 31, 2020	Jan. 16, 2020	Dec. 17, 2019	Jun. 22, 2018	May 17, 2018	May 17, 2017	May 28, 2016	Mar. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	Jan. 22, 2020	Dec. 31, 2019	May 19, 2017	Dec. 07, 2016
Accrued interest													$ 74,778	$ 64,778
Outstanding remaining principal amount													400,000	400,000
Fair value of derivative liability													38,129	31,889
Unamortized debt issuance costs													5,211	(14,000)	$ (262,000)
Exercise price							$ 0.04
Warrants issued																5,000,000
Proceeds from warrant issued													400,000
Debt Issuance Costs														86,000	0
Outstanding Principal Balance													39,000	46,000	24,000
Convertable Note													161,000	161,000	0
Derivative Liabilities													(38,000)	(32,000)	(2,228,000)
Strike Price																$ 0.25
Accured Interest													232,000	261,000	1,517,000
First Tranche [Member]
Convertible note received								$ 700,000
Interest rate of lessor								24.00%
Description of variable conversion prices								The variable conversion prices equaled the lesser of: (i) the lowest trading price on the issue date, and (ii) the variable conversion price. The variable conversion price was 95% multiplied by the market price (the market price means the average of the five lowest trading prices during the period beginning on the issue date and ending on the maturity date), minus $0.04 per share, provided however that in no event could the variable conversion price be less than $0.15. If an event of default under this note occurred and/or the note was not extinguished in its entirety prior to December 17, 2020 the $0.15 price floor no longer applied
Rate of interest								10.00%
Fair value of warrants								$ 745,972
Warrants issued																	7,500,000
Warrant liability								$ 635,000
Exercise price								$ 0.20
Proceeds from warrant issued								$ 635,000
Debt issuance cost								65,000
Administrative and legal expenses								570,000
Payment to convertible promissory note								89,250
Prepayment penalty			$ 700,000					$ 350,000					350,000				$ 700,000
unamortized debt discount on warrants, balance													350,000
Matured date								Dec. 17, 2021
Second Tranche [Member]
Total Convertible note issued				$ 2,400,000.0
Convertible note received				400,000
Net payment amount				$ 313,000
Interest rate of lessor				24.00%
Description of variable conversion prices				The variable conversion prices shall equal the lesser of: (i) the lowest trading price on the issue date, and (ii) the variable conversion price. The variable conversion price shall mean 95% multiplied by the market price (the market price means the average of the five lowest trading prices during the period beginning on the issue date and ending on the maturity date), minus $0.04 per share, provided however that in no event shall the variable conversion price be less than $0.15. If an event of default under this note occurs and/or the note is not extinguished in its entirety prior to December 17, 2020 the $0.15 price shall no longer apply. The last tranche of $1.3 million will be received within 60 days of the S-1 registration statement becoming effective. The conversion price of the notes will be at market value with a minimum conversion amount of $0.15. In addition, as part of this transaction the Company was required to pay a 2.0% fee to a registered broker-dealer.
Rate of interest				10.00%
Note maturity date				May 27, 2022
Auctus Fund, LLC [Member]
Accrued interest													46,099	36,428
Outstanding remaining principal amount													161,184	161,184
Total Convertible note issued								$ 2,400,000.0
Exchange of aggregate outstanding notes													668,290
Unregistered units of our common stock													1,681,707
Default penalty													$ 48,434
Notes issued			250,000
Net proceeds			$ 100,000
Exercise price			$ 0.16
Accrues interest rate			12.00%
Description of conversion price						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.							The exchange price will be on a $1 for $1 basis such that Auctus will receive $2,349,997 of units consisting of common stock
Aggregate principal amount						$ 112,750
Convertible promissory note						12.00%
Troubled Debt Restructuring [Member]
Prepayment penalty								$ 350,000					$ 350,000	350,000
Convertible Debt Restructured														1,709,414
Convertable Note														700,000
Derivative Liabilities														$ 84,000
Senior Secured Promissory Note
Original Issue Discount		$ 287,500
Debt Issuance Costs		121,000,000
Interest Accrued															1,233,637
Issuance Of Debt		1,437,500										$ 87,500
Proceeds From Debt		$ 1,029,000										$ 1,525,000
Outstanding Principal Balance																			$ 1,837,500
Warrants Recieve		2,246
Convertible Debt															1,709,414
GPB
Exercise price														$ 0.20
Series F-2 Preferred Stock Issued Upon Conversion Of Debt														2,236
GPB | Senior Secured Promissory Note
Issuance Of Debt		$ 312,500
Exchange Agreement Description							we exchanged $3,360,811 of debt outstanding for the following: (1) cash payments of $1,500,000, (2) 7,185,000 warrants to purchase common stock, previously outstanding, would be exchanged for new warrants to purchase common stock shares at a strike price of $0.20 and (3) a certain amount of preferred stock shares for the remaining balance outstanding upon the final exchange date. During 2021, we made the final payments totaling $800,000 out of the total $1,500,000 and issued 2,236 shares of Series F-2 preferred stock in accordance with the terms of the agreement
GHS [Member]
Net proceeds									$ 68,000		$ 66,000
Original Issue Discount									6,000	$ 750								$ 6,000
Convertible Promissory Note									60,000	9,250				$ 50,000				$ 60,000
Debt Issuance Costs									$ 2,000	1,000
Proceeds From Debt										$ 7,500
Conversion Rate									70.00%	70.00%	60.00%
Bearing Interest Rate									20.00%	20.00%								20.00%
Interesr Rate									10.00%	8.00%	8.00%
Percent Of Outstanding Principal Balance									150.00%	150.00%								150.00%
Interestr Rate Decrease								60.00%	60.00%
GHS [Member] | June 22, 2018 [Member]
Original Issue Discount														2,000
Convertible Promissory Note														68,000
GHS [Member] | May 19 2017 [Member]
Default penalty															37,926
Convertable Note															63,520
Accured Interest															17,816
GHS [Member] | May 17 2018 [Member]
Default penalty															4,937
Convertable Note															14,187
Accured Interest															5,006
GHS [Member] | June 22 2018 [Member]
Default penalty															35,285
Convertable Note															103,285
Accured Interest															39,644
Auctus March 31 2020 Note [Member]
Convertable Note														161,000	$ 113,000
Auctus Member
Default penalty					$ 160,000									48,434
Exercise price															$ 0.16
Convertible Promissory Note								$ 2,400,000
Convertable Note					328,422
Conversion Rate						55.00%		95.00%
Bearing Interest Rate								24.00%
Lowest Trading Price								$ 0.04
Conversion Price								$ 0.15
Monthly Penalty Payment					$ 20,000
Restricted Common Stock					500,000
Warrant To Purchase Common Stock					700,000
Strike Price					$ 0.15
Last Tranche Of Covertiable Note								$ 1,300,000
Issuance And Sale Of Securities	$ 100,000					$ 112,750
Interesr Rate						12.00%
Common Stock Warrant Issued															250,000
Warrant Term															5 years
Percent Of Common Stock Outstanding						4.99%
Unamortized Debt Issuance Costs														0	$ 5,100
Accured Interest														36,428	10,260
Auctus Member | Note 2
Convertable Note					$ 89,250
Auctus Member | Note 3
Convertable Note					65,000
Auctus Member | Note 1
Convertable Note					150,000
Auctus Member | May 22, 2020 [Member]
Fair Value Of Common Stock					250,000
Fair Value Of Warrant To Purchase Common Stock					$ 196,818
Eastmated Fair Value					$ 0.281
Outstanding Balance Of Exchanged Loans					$ 40,000
Auctus Tranche 1 [Member]
Exercise price								$ 0.20
Proceeds from warrant issued								$ 635,000
Payment to convertible promissory note								89,250
Convertible Promissory Note								700,000						350,000	489,231
Debt Issuance Costs								$ 65,000
Convertable Note														0	700,000
Warrant To Purchase Common Stock								7,500,000
Interesr Rate								10.00%
Unamortized Debt Issuance Costs														0	31,146
Accured Interest														0	73,889
Maturity Date								Dec. 17, 2021
Fair Value Of Warrant								$ 745,972
Amount Allocated To The Warrant Liability								635,000
Fair Value Adjustment Of Warrants								(110,972)
Proceeds Recevied After Administrative And Legal Expenses								570,000
Prepayment Penlity								$ 350,000
Unamortized Debt Issuance Costs On Warrant														0	179,623
AuctusTranche 2 [Member]
Convertible Promissory Note														451,192	377,136
Convertable Note				$ 400,000										400,000	400,000
Derivative Liabilities														31,889
Conversion Price								$ 0.15
Interesr Rate				10.00%
Unamortized Debt Issuance Costs														13,586	47,086
Accured Interest														$ 64,778	$ 24,222
Maturity Date				May 27, 2022
Amount Paid To Company				$ 313,000
Variable Conversion Price				75.00%
Public Market Price				$ 0.50
Replaced Variable Conversion Price				80.00%
Broker Fees				2.00%

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LONG TERM DEBT (Details) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019	Feb. 19, 2021
Bonus	$ 573,000	$ 621,000	$ 1,094,000
Vacation	42,000	39,000	34,000
Outstanding Principal Balance	39,000	46,000	24,000
Amount Forgiven	(41,232)	(94,392)
Exchange For Series F-2 Preferred Stock		323,000	0
Dr. Cartwright
Salary		337,000			$ 337,000
Bonus		675,000			675,000
Loans to Company		528,000			528,000
Interest on loans		81,000			81,000
Outstanding Principal Balance		1,621,000			1,621,000
Total interest accrued through December 31, 2021		62,000			45,000
Interest accrued through March 31, 2022	4
Balance outstanding, end of period	285,000	281,000	364,000		281,000
Amount Forgiven		(1,302,000)
Exchange For Series F-2 Preferred Stock		100,000		$ 41,000
Interest Accrued		17,000
Dr. Faupel
Salary		134,000			134,000
Bonus		20,000			20,000
Vacation		95,000			95,000
Interest on compensation		67,000			67,000
Loans to Company		196,000			196,000
Interest on loans		149,000			149,000
Outstanding Principal Balance		661,000			661,000
Total interest accrued through December 31, 2021		39,000			29,000
Interest accrued through March 31, 2022	2
Balance outstanding, end of period	$ 163,000	161,000	$ 236,000		$ 161,000
Amount Forgiven		(454,000)
Exchange For Series F-2 Preferred Stock		85,000		$ 5,000
Interest Accrued		$ 10,000

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LONG TERM DEBT (Details 1) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Total	$ 852	$ 820	$ 23
Long-Term Debt - Related Parties | Mr. Fowler
2022	27	30
2023	485	479
2024	39	39
2025	41	41
2026	3	3
Thereafter	0	0
Total	$ 595	$ 592

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LONG TERM DEBT (Details 2) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
LONG TERM DEBT
10% Senior Unsecured Convertible Debentures	$ 1,130	$ 1,130
Debt Issuance costs to be amortized	(62)	(69)
Debt Discount	(216)	(241)
Long-term convertible debt	$ 852	$ 820

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LONG TERM DEBT (Details Narrative) - USD ($)			1 Months Ended			3 Months Ended		12 Months Ended
	Jul. 09, 2020	May 04, 2020	May 17, 2021	Mar. 22, 2021	Feb. 19, 2021	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2018	Sep. 04, 2018	Jan. 19, 2017	Dec. 21, 2016
Debt Issuance Costs								$ 86,000	$ 0
Outstanding Principal Balance						$ 39,000		46,000	24,000
Gain For Extinguishment Of Debt						41,000	$ 87,000	578,000	(296,000)
Current Portion Of Long-term Debt						67,000		88,000	28,000
Long-term Debt-related Parties								59,200
Debt forgiveness amount						41,232		94,392
Accrued Interest						232,000		261,000	1,517,000
Paycheck Protection Program
Outstanding Principal Balance						4,491,000
Current Portion Of Long-term Debt								11,000	50,477
Debt forgiveness amount								23,742
Accrued Interest						407		385	293
Payroll costs						100,000		100,000
Proceeds From Loan		$ 50,184
Loan Interest Rate		1.00
Loan Maturity Term		24 months
Debt Interest Forgiveness Amount								234
10% Senior Unsecured Convertible Debenture
Debt Issuance Costs								819,024
Accrued Interest						28,250		73,326	293
Convertible Debentures Right Description			each debenture unit will have a right to 1,000 warrants for common stock shares, warrants have an exercise price of $0.80 and an expiration date of May 17, 2023
Change Of Control Premium Percentage			3
Deemed Price			$ 0.50
Convertible Debentures			$ 1,000					1,130,000
Bond Payable Discount								240,856
Unamortized Debt Issuance Costs								69,120
Debt Maturity Date			May 17, 2024
Proceeds From Convertible Debenture			$ 1,130,000
Conversion Price			$ 0.50
Mr. Bill Wells
Outstanding Principal Balance	$ 90,000							97,052
Gain For Extinguishment Of Debt								20,000
Current Portion Of Long-term Debt						65,299		77,087
Debt forgiveness amount	$ 110,000					$ 35,000		$ 40,000
Promissory Note Interest Rate						6.0%		6.0%
Loan Maturity Term						P18Y		18 months
Exercise price	$ 0.49
Received cash payment	$ 20,000					$ 35,000		$ 20,000
Monthly payment due	$ 3,667							5,000
Common Share Stock Option	66,000
Salary	$ 220,000
Total Amount To Be Receive	$ 3,000,000.0							3,000,000.0
Shares Vested Per Month	3,667
Common Stock Exercise Price	$ 0.49
Principal And Accrued Interest								99,158
Dr. Cartwright
Outstanding Principal Balance					$ 1,621,000			1,621,000
Gain For Extinguishment Of Debt										$ 840,000
Long-term Debt-related Parties								281,000
Due to related party											$ 1,621,000
Future debt obligations						284,867
Debt forgiveness amount								1,302,000
Promissory Note Interest Rate					6.0%
Debt Instrument Converted Amount					$ 85,000
Series F-2 Preferred Stock Issued Upon Conversion Of Debt					100
Salary					$ 337,000			337,000
Principal Amount Of Promissory Note					$ 267,085				1,621,000
Loans, Interest, Bonus, Salary And Vacation Paid Amount											$ 1,621,499
Interest Rate Per Annum											6.00%
Issuance Of Promissory Note In Exchange Of Related Party Debt											$ 319,000
Capital Contribution										432,000
Promissory Note Maturity Date					February 18, 2023
Mr. Fowler
Outstanding Principal Balance						146,400		12,601				$ 13,900	$ 12,500
Long-term Debt-related Parties						26,586		150,000
Due to related party				$ 546,214		6,232
Future debt obligations						146,400
Debt forgiveness amount						253,429,000
Accrued Interest				133,590
Due To Related Party, Amount				$ 546,214
Promissory Note Interest Rate Description				The note accrues interest at the rate of 6.0% (18.0% in the event of default) beginning on March 1, 2022 and is payable in monthly installments of $3,600 for four years,
Accrued Interest Rate Description				The notes accrue at an interest rate of 6% (18% in the event of default).
Promissory Note Interest Rate				6.0
Debt Instrument Converted Amount				$ 50,000
Series F-2 Preferred Stock Issued Upon Conversion Of Debt				50
Promissory Note Default Interest Rate				18
Promissory Note Monthly Installment				$ 3,600
Preferred Shares Converted Into Common Stock				200,000
Effective Interest Rate				6.18
Deferred Salary				$ 412,624
Unsecured Note Issued Upon Conversion Of Debt				150,000
Mr. Fowler | Maximum | Debt Exchanges - 2021
Debt forgiveness amount				259,661
Mr. Fowler | Long-Term Debt - Related Parties
Outstanding Principal Balance				26,400		26,400
Debt forgiveness amount				86,554
Accrued Interest				$ 18,718
Dr. Faupel
Outstanding Principal Balance					$ 661,000			661,000
Gain For Extinguishment Of Debt										199,000
Long-term Debt-related Parties								161,000
Due to related party											660,895
Future debt obligations						$ 163,376
Debt forgiveness amount								454,000
Promissory Note Interest Rate					6.0%
Debt Instrument Converted Amount					$ 100,000
Series F-2 Preferred Stock Issued Upon Conversion Of Debt					85
Salary					$ 134,000			$ 134,000
Principal Amount Of Promissory Note					$ 153,178				$ 661,000				$ 3,850
Issuance Of Promissory Note In Exchange Of Related Party Debt											$ 207,111
Capital Contribution										$ 235,000
Promissory Note Maturity Date					February 18, 2023
Dr. Faupel and Mr. Cartwright [Member] | July 24, 2019 [Member]
Simple Interest Rate								6.0

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INCOME (LOSS) PER COMMON SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021	Dec. 31, 2020
Basic weighted average number of shares outstanding	20,683	13,172	13,377	10,767
Net loss per share (basic)	$ (0.05)	$ (0.04)	$ (0.18)	$ (0.04)
Diluted weighted average number of shares outstanding	20,683	13,172	13,377	10,767
Net loss per share (diluted)	$ (0.05)	$ (0.04)	$ (0.18)	$ (0.04)
Net Loss	$ (1,055)	$ (572)	$ (2,431)	$ (401)
Dilutive Equity Instruments (number Of Equivalent Units):
Dilutive Equity Instruments (number Of Equivalent Units)			36,739	69,778
Convertible Debt [Member]
Dilutive Equity Instruments (number Of Equivalent Units):
Dilutive Equity Instruments (number Of Equivalent Units)	2,018	315	964	62,095
Preferred Stock [Member]
Dilutive Equity Instruments (number Of Equivalent Units):
Dilutive Equity Instruments (number Of Equivalent Units)	15,572	17,994	18,253	0
Stock Option [Member]
Dilutive Equity Instruments (number Of Equivalent Units):
Dilutive Equity Instruments (number Of Equivalent Units)	917		1,867	0
Warrants [Member]
Dilutive Equity Instruments (number Of Equivalent Units):
Dilutive Equity Instruments (number Of Equivalent Units)	13,609	17,400	15,655	7,683

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INCOME (LOSS) PER COMMON SHARE (Details Narrative) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021
INCOME (LOSS) PER COMMON SHARE
Decrease in net loss	$ 41,232	$ 972,000	$ 85,000
Account payable forgivness amount	$ 41,232		$ 94,392
Troubled debt restructuring description		the troubled debt restructurings in total would have decreased the net loss by $972,000, causing the per share calculation to change from .04 to .11 net loss per share.	the troubled debt restructuring in total would have decreased the net loss by $85,000, causing the per share calculation to change from .18 to .19 net loss per share.

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INCOME TAXES (Details)	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
INCOME TAXES
Statutory Federal Tax Rate	21.00%	21.00%
State Taxes, Net Of Federal Benefit	4.00%	4.00%
Nondeductible Expenses	0.00%	0.00%
Valuation Allowance	25.00%	25.00%
Effective Rate	0.00%	0.00%

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INCOME TAXES (Details 1) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021	Dec. 31, 2020
INCOME TAXES
Current			$ 0	$ 0
Deferred			0	0
Deferred Provision (credit)			(1,728)	1,623
Change In Valuation Allowance			1,728	(1,623)
Total Provision For Income Taxes	$ 0	$ 0	$ 0	$ 0

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INCOME TAXES (Details 2) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Deferred Tax Assets:
Warrant Liability	$ 0	$ 617
Accrued Executive Compensation	288	519
Reserves And Other	273	289
Stock Options	134	132
Net Operating Loss Carryforwards	16,985	17,851
Gross Deferred Tax Assets	17,680	19,408
Valuation Allowance	(17,680)	(19,408)
Net Deferred Tax Assets	$ 0	$ 0

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INCOME TAXES (Details Narrative) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2021	Mar. 31, 2022	Dec. 31, 2020	Dec. 31, 2017
INCOME TAXES
Nol Carryforwards	$ 58.0	$ 61.6	$ 61.6	$ 9.9
Offset Taxable Income Percentage	80.00%

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SUBSEQUENT EVENTS (Details Narrative) - USD ($)					3 Months Ended	12 Months Ended
	Jun. 22, 2022	Jun. 06, 2022	Jun. 01, 2022	Jun. 02, 2021	Mar. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Common stock warrants					$ 70,000
Common stock warrants					650,000	4,477,923
Common Stock Share Issued					22,316,000	13,673,000	13,138,000
Share Issued For Conversion					60,000	40,000
Ellen Of Grossman And Schole LLP [Member]
Financing		$ 3,000,000
Legal services		304,879
Balance of owing amount		104,879
Cash payment from proceeds of the financing		200,000
Partial payments for exchange of forgiveness		50,000
Outstanding debt		$ 50,000
10% Senior Unsecured Convertible Debenture
Common Stock Share Issued					3,213	121,262
Dividend Percentage						10.00%
Seried D Exchange Agreements
Amount Received Of Common Stock, Warrants And Prefunded Warrants					$ 130,000
Aggregate outstanding common stock warrants					650,000
Common stock warrants Strike price					$ 0.25
Warrants shares					650,000
Warants strike price					$ 0.20
Executive Exchange Agreements [Member] | Subsequent Event [Member]
Common stock warrants					$ 4,000,000
Related-party payables	$ 29,776
Short-term related-party debt	31,285
Accrued expenses	$ 8,939
Auctus | 2020 Exchange Agreements
Aggregate Outstanding Notes Exchange Value				$ 668,290
Exchange Price Basis				The exchange price will be on a $1 for $1 basis
Warrant Exchange Value				$ 1,681,707
Amount Received Of Common Stock, Warrants And Prefunded Warrants				2,349,997
Default Penalties				$ 350,000
Weighted Average Price Of Common Stock Exceeds Percentage Rate				200.00%
Securities				$ 350,000
Auctus One [Member] | 2020 Exchange Agreements
Aggregate Outstanding Notes Exchange Value			$ 692,114
Exchange Price Basis			The exchange price will be on a $1 for $1 basis
Warrant Exchange Value			$ 2,031,710
Amount Received Of Common Stock, Warrants And Prefunded Warrants			2,031,710
Default Penalties			$ 350,000
Weighted Average Price Of Common Stock Exceeds Percentage Rate			200.00%
Series D Preferred Shares
Common stock warrants					1,526,000	1,526,000
Common Stock Share Issued					975,000,000
Share Issued For Conversion					763	763
Series E Preferred shares
Common Stock Share Issued					320,000
Share Issued For Conversion						307,000
Series F and Series F-2 Preferred shares
Common Stock Share Issued						625,686
Dividend Percentage						15.00%
Series F Preferred shares
Common Stock Share Issued					1,360,000
Share Issued For Conversion						60,000
Series D Preferred share dividends
Common Stock Share Issued					25,288	23,109
Series E Preferred share dividends
Common Stock Share Issued					50,230	12,432
Series F-2 Preferred shares
Common Stock Share Issued					1,864,000
Series F Preferred share dividends
Common Stock Share Issued					19,330