On January 6, 2020 Guided Therapeutics, Inc. (Pink Sheets: GTHP), the maker of a rapid and painless cervical cancer detection test based on its patented biophotonic technology, reported the closing of two separate investments: The first, a Convertible Note issued to Auctus Fund, LLC for $2.4 Million, occurs in three tranches (Press release, Guided Therapeutics, JAN 6, 2020, View Source [SID1234552746]). The first tranche of $700,000 has been received, while the second tranche of $400,000 is contingent upon filing an S-1 registration statement while the last tranche of $1,300,000 is due within 60 days of the S-1 becoming active. Conversion prices of the tranches are based on market price and have a floor of 15 cents per share. Auctus also will receive three year warrants, a portion exercisable at twenty cents and a portion at twenty-five cents. A second financing of $742,000 also closed and is a unit offering consisting of two common shares and preferred shares convertible into three common shares per dollar invested, with four warrants, half exercisable at twenty-five cents and half at seventy-five cents per share. Investors include Company Board Members and other qualified institutional and individual investors.
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As a condition of these investments, the Company also needed to achieve significant debt reduction and capitalization restructuring which eliminated variable price convertible debt without floor pricing similar to the new investments. To these ends, the Company has executed agreements to pay off a significant portion of its debt and exchange variable pricing instruments for a combination of cash, common shares and warrants at fixed exercise pricing. The net effect of these transactions, after the last tranche of the Auctus investment is received, is a reduction of debt by over $7 million. Over the past year, including the transactions reported in this announcement, the Company’s debt has been reduced by over $10 million.
"The nearly $3.2 million in near term financing will allow the company to expand international sales and restart its FDA approval process, while at the same time significantly reduces debt and exposure to excessive dilution", said CEO Gene Cartwright. "The net effect has been to place the company on much firmer footing as it eyes new regulatory approvals and sales orders from China, Russia, the Middle East and the EU in 2020."