SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. ____)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] | Preliminary Proxy Statement |
[ ] | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
[ ] | Definitive Proxy Statement |
[ ] | Definitive Additional Materials |
[ ] | Soliciting Material Pursuant to §240.14a-12 |
Guided Therapeutics, Inc.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] | No fee required. | |
[ ] | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | |
1) | Title of each class of securities to which transaction applies: |
2) | Aggregate number of securities to which transaction applies: |
3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): |
4) | Proposed maximum aggregate value of transaction: | |
5) | Total fee paid: | |
[ ] | Fee paid previously with preliminary materials. | |
[ ] | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
1) | Amount Previously Paid: |
2) | Form, Schedule or Registration Statement No.: |
3) | Filing Party: | |
4) | Date Filed: |
GUIDED THERAPEUTICS, INC.
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NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 15, 2015
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TO THE STOCKHOLDERS:
Notice is hereby given that a special meeting of stockholders of Guided Therapeutics, Inc., a Delaware corporation (the “Company”), will be held on Tuesday, September 15, 2015 at 10:00 a.m., local time, at the office of Guided Therapeutics, Inc., located at 5835 Peachtree Corners East, Suite D, Norcross, Georgia 30392, for the following purposes:
1. | To approve an amendment to the Company’s certificate of incorporation to increase the number of authorized shares of common stock to a total of 500,000,000 shares; and |
2. | To approve the adjournment of the special meeting, if necessary or appropriate in the discretion of the chairman of the special meeting, to solicit additional proxies if there are not sufficient votes at the time of the special meeting to approve the first proposal. |
These matters are more fully described in the proxy statement accompanying this notice.
Only stockholders of record at the close of business on July 24, 2015 are entitled to notice of and to vote at the special meeting.
All stockholders are cordially invited to attend the meeting in person. However, to assure your representation at the meeting, you are urged to sign and return the enclosed proxy as promptly as possible in the postage-prepaid envelope enclosed for that purpose. Any stockholder attending the meeting may vote in person even if the stockholder has returned a proxy.
Important Notice Regarding the Availability
of Proxy Materials for the Stockholder Meeting to be The proxy statement and our 2014 annual report are available at http://www.edocumentview.com/GTHP |
By Order of the Board of Directors | |
Gene S. Cartwright, Ph.D. | |
President and Chief Executive Officer, Director | |
Norcross, Georgia | |
July 30, 2015 |
GUIDED THERAPEUTICS, INC.
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PROXY STATEMENT
SPECIAL MEETING OF STOCKHOLDERS
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INFORMATION CONCERNING SOLICITATION AND VOTING
General
We are soliciting proxies for use at a special meeting of stockholders, to be held Tuesday, September 15, 2015 at 10:00 a.m., local time, or at any adjournment of the special meeting, for the purposes listed in this proxy statement and in the accompanying Notice of Special Meeting of Stockholders. We are holding the special meeting at our corporate headquarters, located at 5835 Peachtree Corners East, Suite D, Norcross, Georgia 30392. Our office telephone number is (770) 242-8723.
We are first sending this proxy statement and the accompanying form of proxy to our stockholders on or about July 30, 2015.
Record Date and Voting Securities
Holders of record of our common stock and Series B convertible preferred stock (on an as-converted basis) at the close of business on July 24, 2015, which is referred to as the record date, are entitled to notice of and to vote at the special meeting. Each holder of common stock is entitled to one vote for each share of common stock held as of the record date. In addition, holders of Series B convertible preferred stock, which votes on an as-converted-to-common-stock basis together with the holders of the common stock as a single class, are entitled to an aggregate of 12,214,252 votes as of the record date. As of the record date, we had 113,672,124 shares of our common stock issued and outstanding and held of record by 374 registered stockholders and 1,277 shares of Series B convertible preferred stock issued and outstanding and held of record by 7 registered stockholders.
Revocability of Proxies
You may revoke your proxy given pursuant to this solicitation at any time before its use by delivering to our corporate secretary a written notice of revocation or a duly executed proxy bearing a later date, or by attending the special meeting and voting in person.
Solicitation
We will pay the cost of soliciting proxies. In addition, we may reimburse brokerage firms and other persons representing beneficial owners of shares for their reasonable expenses in forwarding solicitation material to those beneficial owners. Our officers, directors and employees may also solicit proxies, without additional compensation, personally or by telephone or facsimile.
Quorum; Abstentions and Broker Non-Votes
The inspector of elections will tabulate the votes cast by proxy or in person at the special meeting. Our stock transfer agent may serve as inspector, or may assist the inspector. The inspector will also determine whether or not a quorum is present. Under Delaware law, a majority of shares entitled to vote, present in person or represented by proxy, shall constitute a quorum at a meeting of stockholders. Broker non-votes and abstentions are counted as present for purposes of establishing a quorum. A broker non-vote occurs when a broker holding shares for a beneficial owner does not vote on a particular proposal because the broker does not have discretionary voting power with respect to that item and has not received voting instructions from the beneficial owner.
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Broker non-votes and abstentions will have the same effect as a vote against the amendment to our certificate of incorporation (Proposal 1), but will have no effect on Proposal 2.
Proxies that are properly executed and returned will be voted at the special meeting in accordance with the instructions on the proxy. Any properly executed proxy on which there are no instructions indicated about a specified proposal will be voted as follows:
- | FOR the amendment to our certificate of incorporation to increase the number of authorized shares of our common stock to a total of 500,000,000 shares; and |
- | FOR the adjournment of the special meeting, if necessary or appropriate in the discretion of the chairman of the special meeting, to solicit additional proxies if there are not sufficient votes at the time of the special meeting to approve the first proposal. |
No business other than that listed in this proxy statement may properly come before the special meeting.
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SHARE OWNERSHIP OF DIRECTORS, OFFICERS AND CERTAIN BENEFICIAL OWNERS
The following table lists information regarding the beneficial ownership of our common stock as of July 10, 2015 by (i) each person whom we know to beneficially own more than 5% of the outstanding shares of our common stock, (ii) each director, (iii) each person named in the summary compensation table, and (iv) all directors and executive officers as a group. Unless otherwise indicated, the address of each person listed is 5835 Peachtree Corners East, Suite D. Norcross, Georgia 30092.
Name and Address of Beneficial Owner |
Amount and Nature of Beneficial Ownership (1) |
Percent of | |||
5% Stockholders | |||||
Magna Equities II, LLC (3) | 14,130,425 | 8.35 | % | ||
5 Hanover Square | |||||
New York, NY 10004 | |||||
David B. Musket / ProMed Partners, LP (4) | 9,879,860 | 5.88 | % | ||
180 Beacon Street, Suite 17A | |||||
Boston, MA 02116 | |||||
Management | |||||
John E. Imhoff, Director (5) | 19,740,744 | 11.76 | % | ||
Ronald Hart, Director (6) | 2,393,458 | 1.46 | % | ||
Michael C. James, Chairman / Keukenoff Equity Fund, LLP (7) | 1,650,860 | 1.01 | % | ||
Linda Rosenstock, Director (8) | 1,012,174 | * | |||
Jonathan Niloff, Director (9) | 1,082,383 | * | |||
Gene Cartwright, Director, President and CEO (10) | 2,475,854 | 1.52 | % | ||
Mark L. Faupel, Consultant (11) | 3,179,661 | 1.92 | % | ||
Richard L. Fowler, SVP (12) | 668,543 | * | |||
All directors and executive officers as a group (7 persons) | 29,024,016 | 13.40 | % | ||
(*) |
Less than 1%. |
(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 113,250,481 shares of common stock outstanding as of July 10, 2015. |
(3) | Consists of 7,700,504 shares of common stock and warrants to purchase 6,429,921 shares of common stock. |
(4) | Consists of 138,683 shares of common stock, 3,825,921 shares issuable upon conversion of 400 shares of Series B preferred stock and 4,165,436 shares issuable upon exercise of warrants, each held by Mr. Musket, and 21,949 shares of common stock, 478,240 shares issuable upon conversion of 50 shares of Series B preferred stock and 1,249,631 shares issuable upon exercise of warrants, each held by ProMed Partners, LP. Mr. Musket is the managing member of ProMed Asset Management. LLC, general partner of ProMed Partners, LP, and disclaims beneficial ownership of shares owned by ProMed Partners, LP except to the extent of his pecuniary interest therein. |
(5) | Consists of 9,771,287 directly held shares, 4,782,401 shares issuable upon conversion of 500 shares of Series B preferred stock, 4,283,306 shares issuable upon exercise of warrants, and 903,750 shares issuable upon exercise of options. |
(6) | Consists of 691,066 directly held shares, 239,120 shares issuable upon conversion of 25 shares of Series B preferred stock, 208,272 shares issuable upon exercise of warrants and 1,255,000 shares issuable upon exercise of options. |
(7) | Consists of 707,620 direct shares, 235,740 shares issuable upon exercise of warrants, and 707,500 shares issuable upon exercise of options, all held by Michael James; and 235,740 shares issuable upon exercise of warrants held by Keukenoff Equity Fund, LP, Michael James, managing partner. |
(8) | Consists of 287,174 directly held shares and 725,000 shares issuable upon exercise of options. |
(9) | Consists of 339,466 directly held shares and 742,917 shares issuable upon exercise of options. |
(10) | Consists of 2,235,739 directly held shares, 235,740 shares issuable upon exercise of warrants, and 4,375 shares issuable upon exercise of options. |
(11) | Consists of 646,382 directly held shares, 222,222 shares issuable upon exercise of warrants, and 2,311,057 shares issuable upon exercise of options. |
(12) | Consists of 98,115 directly held shares and 570,428 shares issuable upon exercise of options. |
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PROPOSAL NO. 1
APPROVAL OF AN AMENDMENT TO OUR CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK TO A TOTAL OF 500,000,000 SHARES
Proposed Amendment
The board has adopted, and is recommending to the stockholders for approval, an amendment to our certificate of incorporation to increase the number of authorized shares of our common stock by 255,000,000, to a total of 500,000,000 shares (the “Charter Amendment”). We are seeking approval of the Charter Amendment to ensure that a sufficient number of shares of our common stock are available for issuance upon conversion of, or payment of dividends on, our Series C preferred stock and upon exercise of warrants issued to holders of our Series C preferred stock, as well as for possible future financings. If the Charter Amendment is approved by the required vote of stockholders, paragraph one of Article IV of our certificate of incorporation would be deleted and replaced with the following:
“The Corporation is authorized to issue two classes of shares of stock to be designated, respectively, Common Stock, $0.001 par value, and Preferred Stock, $0.001 par value. The total number of shares that the Corporation is authorized to issue is 505,000,000 shares. The number of shares of Common Stock authorized is 500,000,000. The number of shares of Preferred Stock authorized is 5,000,000.”
Background and Reasons for the Charter Amendment
On June 29, 2015, we entered into a securities purchase agreement with certain accredited investors (including four holders of our Series B convertible preferred stock) for the issuance and sale of an aggregate of 6,737 shares of our Series C convertible preferred stock and five-year warrants exercisable to purchase an aggregate of approximately 106.4 million shares of our common stock at an initial exercise price of $0.095 per share, subject to certain customary adjustments and anti-dilution provisions. In this proxy statement, we refer to the transactions contemplated by the agreement as the “Series C Transaction.” At the initial closing of the Series C Transaction on June 30, 2015, we issued to one of the investors 3,334 shares of Series C preferred stock and a warrant exercisable for 52,642,105 shares of common stock. On July 10, 2015, the remaining holders of our Series B preferred stock not already party to the agreement and a holder of a promissory note we previously issued were joined as parties to the agreement, and will purchase an aggregate additional 432 shares of Series C preferred stock and receive additional warrants to purchase an aggregate of 6,821,053 shares of our common stock, all on the same terms as the original parties to the agreement, at the second closing of the Series C Transaction. At the second closing, investors holding shares of Series B preferred stock or the promissory note we previously issued will be entitled to exchange those shares or the outstanding promissory note, in lieu of making a cash payment, on a dollar-for-dollar basis, on the same terms as each other investor. For the reasons described below, the second closing is contingent upon, among other things, effectiveness of the Charter Amendment.
Shares of the Series C preferred stock are convertible into our 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. The initial conversion price automatically adjusts down to 80% of the then-current market price on each of the following dates: (1) five trading days after the effectiveness of a resale registration statement we were required to file after the initial closing, (2) 20 trading days after both the effectiveness of the registration statement and the effectiveness of a second resale registration statement we must file in connection with the second closing, (3) 15 trading days after any reverse stock split of our common stock, and (4) five trading days after any conversions of our outstanding convertible debt. The conversion price is subject to further adjustment under certain circumstances to protect the holders of Series C preferred stock from dilution as a result of certain issuances of common stock at a price per share less than the then-effective conversion price.
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From the original issue date until 42 months thereafter, the holders of Series C preferred stock are entitled to receive quarterly cumulative dividends at a rate per share (as a percentage of stated value per share) of 12% per year per share payable quarterly in shares of our common stock (subject to certain conditions) or, at our option, in cash. In addition, upon the conversion of the Series C preferred stock (other than a mandatory conversion by us) during the such period, we must pay the converting holder a “make-whole payment” in cash or, at our option (subject to certain conditions), shares of our common stock with respect to the converted shares of Series C preferred stock in an amount equal to $420 per $1,000 of stated value, less the amount of any dividends already paid on such shares of Series C preferred stock. To the extent we choose to pay any dividends or make-whole payments in shares of our common stock, such shares will be valued at 80% of then-current market price.
The warrants issued or to be issued to each of the investors in the Series C Transaction are or will be exercisable at any time for the purchase of up to that number of shares of our common stock equal to 150% of the number of shares of common stock initially issuable upon conversion of the shares of Series C preferred stock purchased by the investor, at an exercise price of $0.095 per share, subject to certain adjustments and anti-dilution provisions.
If the investors immediately convert all of the shares of Series C preferred stock they have or will receive at the current conversion price (and receive in shares of common stock the full make-whole payment on the converted shares) and immediately exercise all of the warrants they have or will receive at the current exercise price, we would be required to issue approximately 188,684,211 shares of our common stock. However, we are currently only authorized to issue a maximum of 245,000,000 shares of our common stock. As of the record date (and giving effect to the exchange of all outstanding shares of Series B preferred stock for Series C preferred stock), there were 113,672,124 shares of common stock outstanding, 2,404,542 shares reserved for issuance upon conversion of our outstanding convertible notes, 42,801,000 shares reserved for issuance upon the exercise of outstanding warrants to purchase common stock (other than the outstanding warrant issued at the initial closing), and 10,955,541 shares reserved for issuance upon exercise of outstanding options awarded under our 1995 Stock Plan. Thus we require at least 113,517,418 additional authorized shares to meet our current obligations to the holders of our Series C preferred stock. The primary purpose of the Charter Amendment is to authorize sufficient shares of our common stock to meet these obligations. Without the Charter Amendment, we will not have sufficient shares to issue upon full conversion of the Series C preferred stock and full exercise of the accompanying warrants. The second closing of the Series C Transaction, in which we expect to receive $1.5 million in gross cash proceeds, is contingent upon the effectiveness of the Charter Amendment. Pursuant to the terms of the agreement, we are required to hold this special meeting and seek stockholder approval of the Charter Amendment.
Because the Charter Amendment provides for a total of 255,000,000 additional authorized shares, even after meeting our obligations to the holders of our Series C preferred stock we will have remaining authorized but unissued shares of common stock that we will be able to use for general corporate purposes, including for possible future financings or for possible future equity-based compensation awards. Our board believes that the availability of such authorized but unissued shares will give us flexibility to respond efficiently to future business and financing needs and other opportunities. Except as described above and elsewhere in this proxy statement, however, we have no plans, understandings, commitments, agreements or undertakings concerning the issuance of additional authorized shares.
Effects of Increase in Authorized Common Stock on Rights of Stockholders
The Charter Amendment will not have any immediate effect on the rights of our stockholders. Although the additional authorized shares of common stock will not change the voting rights, dividend rights, liquidation rights or any other stockholder rights, our board will have the authority to issue additional shares of common stock without requiring future stockholder approval of such issuances, including upon conversion of the Series C preferred stock and exercise of the accompanying warrants, except as may be required by applicable law or the rules of any stock exchange on which our securities may be listed in the future. The issuance of additional shares of common stock will decrease the relative percentage equity ownership of our common stockholders, thereby diluting the voting power of their common stock, and, depending on the price at which the additional shares are issued, may also be dilutive to the earnings per share of their common stock.
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Although our board recommends authorization of additional shares of common stock for the reasons stated herein, and not in consideration of any possible anti-takeover effect, such additional authorized but unissued shares of common stock could be used by incumbent management to make it more difficult for, and thereby discourage, any attempt to acquire control of us, even though our stockholders may deem such an acquisition desirable. For example, the shares could be privately placed with a purchaser who might support our board in opposing a hostile takeover bid. The issuance of new shares could also be used to dilute the stock ownership and voting power of a third party seeking to remove directors from our board, replace incumbent directors, accomplish certain business combinations or alter, amend or repeal portions of our certificate of incorporation.
The proposed amendment, if adopted by the required vote of stockholders, will become effective upon its acceptance by the Delaware Secretary of State.
Interests of Certain Persons
Two of our directors, Ronald W. Hart and John E. Imhoff are participating in the Series C Transaction. At the second closing, they will exchange their shares of Series B preferred stock, in lieu of making a cash payment, on a dollar-for-dollar basis, on the same terms as each other investor in the Series C Transaction. Dr. Hart currently holds 25 shares of Series B preferred stock, convertible into 239,120 shares of common stock. He will receive 33 shares of Series C preferred stock, initially convertible into 347,368 shares of common stock (assuming the current conversion price has not changed), and a warrant to purchase an additional 521,053 shares of common stock at an exercise price of $0.095 per share. Dr. Imhoff currently holds 500 shares of Series B preferred stock, convertible into 4,782,401 shares of common stock. He will receive 667 shares of Series C preferred stock, initially convertible into 7,021,053 shares of common stock (assuming the current conversion price has not changed), and a warrant to purchase an additional 10,531,579 shares of common stock at an exercise price of $0.095 per share.
Vote Required
Under Delaware law, the approval of a majority of the outstanding stock entitled to vote thereon is required to amend a certificate of incorporation to effect a change in the number of shares of the authorized capital stock of a corporation.
Recommendation
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THE AMENDMENT TO OUR CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK TO A TOTAL OF 500,000,000 SHARES.
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PROPOSAL NO. 2:
APPROVAL OF the adjournment of the special meeting, if necessary or appropriate in the discretion of the chairman of the special meeting, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the Charter Amendment.
General
This proposal, if adopted, authorizes the chairman of the special meeting to adjourn the special meeting to another time or place, if necessary or appropriate in the discretion of the chairman of the special meeting, to permit further solicitation of proxies to obtain additional votes in favor of the Charter Amendment.
If, at the special meeting, the number of shares of common stock present or represented and voting in favor of the proposal to approve the Charter Amendment is insufficient to approve such proposal, we intend to move to adjourn the special meeting in order to enable the board to solicit additional proxies for approval of such proposal. We are asking our stockholders to approve this adjournment if necessary or appropriate in the discretion of the chairman of the special meeting.
Vote Required
The affirmative vote of a majority of the votes present and entitled to vote is required for approval of this proposal.
Recommendation
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" APPROVAL OF the adjournment of the special meeting, if necessary or appropriate in the discretion of the chairman of the special meeting, to solicit additional proxies if there are not sufficient votes at the time of the special meeting to approve the Charter Amendment.
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DESCRIPTION OF SECURITIES
We are authorized to issue 250 million shares of stock, in two classes: 245 million shares of common stock, par value $.001 per share, and 5 million shares of preferred stock, including 3,000 shares of Series B convertible preferred stock, par value $.001 per share and 7,200 shares of Series C convertible preferred stock, par value $.001 per share. As of June 30, 2015, there were 113,672,124 shares of common stock outstanding, which were held of record by 374 stockholders, 1,277 shares of Series B preferred stock outstanding, which were held of record by 7 stockholders, and 3,334 shares of Series C preferred stock outstanding, which was held of record by 1 stockholder.
Common Stock
The holders of common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders. Subject to preferences that may be applicable to any outstanding preferred stock, holders of common stock are entitled to receive ratably such dividends as may be declared by the board out of funds legally available therefor and in liquidation proceedings. Holders of common stock have no preemptive or subscription rights and there are no redemption rights with respect to such shares.
Preferred Stock
Our board is authorized, without further stockholder action, to issue preferred stock in one or more series and to fix the voting rights, liquidation preferences, dividend rights, repurchase rights, conversion rights, redemption rights and terms, including sinking fund provisions, and certain other rights and preferences, of the preferred stock.
Although there is no current intention to do so, our board may, without stockholder approval, issue additional shares of preferred stock or shares of another class or series of preferred stock with voting and conversion rights that could adversely affect the voting power or dividend rights of the holders of common stock and may have the effect of delaying, deferring or preventing a change in control.
Series B Convertible Preferred Stock
On May 23, 2013, we issued and sold 2,527 shares of Series B preferred stock at a price (and, subject to adjustment for stock splits, stock dividends or other similar occurrences, initial stated value) per share of $1,000.
Dividends. The holders of Series B preferred stock are entitled to receive quarterly, at the end of each calendar quarter, out of funds legally available therefor, dividends per share at the per annum rate of ten percent of the stated value, prior and in preference to any declaration or payment of any dividend on any stock ranking junior to the Series B preferred stock. Such dividends are cumulative and are compounded annually, and accrue whether or not declared by our board of directors. At our election, dividends on the Series B preferred stock may be paid by the issuance and delivery of whole shares of common stock having an aggregate current market price at the time of issuance equal to the amount of dividends so paid, as long as such shares of common stock are registered for resale under an effective registration statement or such shares are then eligible to be sold without restriction under Rule 144 of the Securities Act. The shares of any class of our capital stock ranking equal to the Series B preferred stock as to dividends and the distribution of assets upon liquidation are referred to in this prospectus as pari passu stock. If any dividend becomes due and payable to the holders of Series B preferred stock and there is also due and payable a dividend to the holders of pari passu stock, and we have insufficient funds to make payment in full to all such holders of such respective dividends, then such funds as are available will be distributed among the holders, ratably in proportion to the full amounts to which they would otherwise respectively be entitled.
Conversion. Each share of Series B preferred stock is convertible into the number of shares of common stock equal to the quotient obtained by dividing (i) the sum of the stated value plus all declared or accrued but unpaid dividends on such shares of Series B preferred stock, by (ii) the conversion price per share. The per share conversion price as of June 30, 2015 was $0.10455. The conversion price is subject to adjustment under certain circumstances to protect the holders of Series B preferred stock from dilution relative to certain issuances of common stock, or securities convertible into or exercisable for shares of common stock. Subject to certain exceptions, if we issue shares of common stock, or such other securities, at a price per share less than the then-effective conversion price, the conversion price will be adjusted to equal such lower per share consideration. Effective June 19, 2015, we amended the Series B designations to provide that our board of directors may designate an issuance of our common stock (or security exercisable for or convertible into common stock) as an excepted issuance that, as a result of such designation, would be exempt from the lower price issuance anti-dilution provisions of the Series B preferred stock.
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The Series B preferred stock is convertible at any time, at the option of the holder. In addition, on any automatic conversion date,each share of Series B preferred stock then outstanding automatically will be converted into common stock at the then effective conversion rate. An automatic conversion date, subject to certain additional limitations and requirements, will occur upon the earlier of (a) the date that is the 30th day after the later of our receipt of an approvable letter from the FDA for LuViva and the date on which the common stock achieves an average closing price for 20 consecutive trading days of at least $0.98 with an average daily trading volume during such 20 consecutive trading days of at least 25,000 shares, (b) the date on which the common stock achieves an average closing price for 20 consecutive trading days of at least $1.16 with an average daily trading volume during such 20 consecutive trading days of at least 25,000 shares, or (c) the date after May 23, 2015 on which the common stock achieves an average closing price for 20 consecutive trading days of at least $0.82 with an average daily trading volume during such 20 consecutive trading days of at least 25,000 shares.
Voting. Each holder of a share of Series B preferred stock is entitled to the number of votes equal to the number of shares of common stock into which such share of Series B preferred stock would be convertible under the circumstances described above on the record date for the vote or consent of stockholders, and will otherwise have voting rights and powers equal to the voting rights and powers of the common stock.
Holders of the Series B preferred stock have the right to vote on those matters which, under the General Corporation Law of the State of Delaware, voting by classes of stock is required and, so long as at least 917 shares (such number subject to adjustment) of Series B preferred stock are outstanding, we may not, without the consent (given by vote in person or by proxy at a meeting called for the purpose, or by written consent) of the holders of a majority of the shares of Series B preferred stock then outstanding:
Further, and in addition to the approval rights described above, we may not, without the consent of the holders of all of the shares of Series B preferred stock then outstanding, adversely amend or repeal any provision of, or add any provision to, the preferences, rights, privileges or powers of the Series B preferred stock, in respect of:
In addition, prior to the date that is the 30th day after the later of our receipt of an approvable letter from the FDA for LuViva and the date on which the common stock achieves an average closing price for 20 consecutive trading days of at least $0.98 with an average daily trading volume during such 20 consecutive trading days of at least 25,000 shares, we may not, without the consent of the holders of 66 2/3% of the shares of Series B preferred stock then outstanding, incur or cause any of our subsidiaries to incur indebtedness for borrowed money, or guarantee indebtedness for borrowed money, that is (i) secured by our intellectual property; or (ii) in excess of $2,000,000.
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Redemption. Subject to certain conditions, we have the right to redeem, to the fullest extent permitted by law, all or any portion of the outstanding Series B preferred stock at the then-current redemption price, at any time after May 23, 2015. The redemption price per share of Series B preferred stock will be equal to the liquidation amount, including unpaid dividends up to and including the date of redemption.
Liquidation. In the event of our voluntary or involuntary liquidation, dissolution or winding up, referred to in this prospectus as a liquidation, or a sale or merger (as described below), the holders of the outstanding shares of Series B preferred stock, at their election, will be entitled to receive in exchange for and in redemption of each share of their Series B preferred stock, prior and in preference to the holders of stock ranking junior to the Series B preferred stock, (x) in the case of a liquidation, from any funds legally available for distribution to stockholders, and (y) in the case of a sale or merger, from the net proceeds therefrom, an amount equal to the greater of (i) the stated value per share, plus the aggregate amount of all declared or accrued, but unpaid, dividends per share, or (ii) the amounts to which such holders would have been entitled if the shares were converted to shares of common stock immediately before the liquidation, or sale or merger as the case may be.
For purpose of the Series B preferred stock, a sale or merger includes, subject to exclusion by the vote of holders of Series B preferred stock constituting at least 66 2/3% of the total number of shares of such series outstanding, voting separately as a class, (a) our merger, reorganization, or consolidation into or with another corporation in which our stockholders immediately preceding such transaction own less than 50% of the voting securities of the surviving corporation, or (b) the sale, transfer, or lease (other than a transfer or lease by pledge or mortgage to a bona fide lender) of all or substantially all of our assets to any entity 50% or more of the voting securities of which are not beneficially owned by the beneficial owners of our voting securities prior to such transaction.
Series C Convertible Preferred Stock
On June 29, 2015, we entered into a securities purchase agreement with certain accredited investors for the issuance and sale of an aggregate of 6,737 shares of our Series C preferred stock, at a purchase price of $750 per share and an initial stated value per share of $1,000, subject to adjustment for stock splits, stock dividends or other similar occurrences. On July 10, 2015, the remaining holders of our Series B preferred stock not already party to the agreement and a holder of a promissory note we previously issued were joined as parties, and will purchase an additional 432 shares of Series C preferred stock on the same terms as the original parties to the agreement.
Dividends. From the original issue date until 42 months thereafter, the holders of Series C preferred stock are entitled to receive quarterly cumulative dividends at a rate per share (as a percentage of stated value per share) of 12% per year per share payable quarterly on each January 1, April 1, July 1 and October 1 during such period (beginning October 1, 2015) in shares of our common stock (subject to certain conditions) or, at our option, in cash. In addition, upon the conversion of the Series C preferred stock (other than a forced conversion, described below) during the such period, we must pay the converting holder a make-whole payment in cash or, at our option (subject to certain conditions), shares of our common stock with respect to the converted shares of Series C preferred stock in an amount equal to $420 per $1,000 of stated value, less the amount of any dividends already paid on such shares of Series C preferred stock. To the extent we choose to pay any dividends or make-whole payments in shares of our common stock, such shares will be valued at 80% of then-current market price (calculated as the average daily volume weighted average price of our common stock for the five consecutive trading days prior to payment). After the dividend payment period, holders of Series C preferred stock are only entitled to receive dividends on an as-if-converted basis) with holder of our common stock (other than dividends paid in additional shares of common stock).
Voting. Except as otherwise proved by law or in the Series C designations, the Series C preferred stock has no voting rights. We may not, without the consent of the holders of a majority of the shares of Series C preferred stock then outstanding, alter or change adversely the powers, preferences or rights given to the Series C preferred stock or alter or amend the Series C designations, create any class of stock with a liquidation preference equal or senior to the Series C preferred stock, amend our charter in any manner that adversely affects any rights of the holders of Series C preferred stock, increase the number of authorized shares of Series C preferred stock, or enter into any agreement with respect to any of the foregoing.
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Liquidation. In the event of our liquidation, dissolution or winding-up, whether voluntary or involuntary, the holders of our Series C preferred stock will be entitled to receive out of our assets an amount equal to the stated value of their shares, plus any other fees, liquidated damages or dividends then due and owing on their shares, before any distribution or payment to the holders of any junior securities.
Conversion. The Series C preferred stock is convertible at any time, at the option of the holder. In addition, if the market price of our common stock for each trading day for 20 of any 30 consecutive trading-day period exceeds 250% of the highest conversion price in effect during such period, we may force each holder to convert all or part of such holder’s shares into shares of common stock.
Each share of Series C preferred stock is convertible into the number of shares of common stock equal to the quotient obtained by dividing (i) the sum of the stated value plus all accrued but unpaid dividends on such share, by (ii) the per share conversion price. The initial per share conversion price was $0.095, but it will automatically adjust downward to 80% of the then-current market price on each of the following dates: (1) five trading days after the effectiveness of this registration statement, (2) 20 trading days after the effectiveness of this registration statement and the registration statement to be filed in connection with the second issuance of Series C preferred stock, (3) 15 trading days after any reverse stock split of our common stock, and (5) five trading days after any conversions of our outstanding convertible debt. The conversion price is subject to further adjustment under certain circumstances to protect the holders of Series C preferred stock from dilution relative to certain issuances of common stock, or securities convertible into or exercisable for shares of common stock. Subject to certain exceptions, if we issue shares of common stock, or such other securities, at a price per share less than the then-effective conversion price, the conversion price will be adjusted to equal such lower per share consideration.
Secured Promissory Note
We have issued and outstanding a secured promissory note that, as amended, provides the holder the right to convert up to $450,000 in outstanding balance into shares of our common stock, which limit will increase by $75,000 monthly beginning August 2015, at a conversion price per share equal to the lower of (1) $0.25 and (2) 75% of the lowest daily volume weighted average price per share of our common stock during the five business days prior to conversion. If the conversion price at the time of any conversion request would be lower than $0.15 per share, we have the option of delivering the conversion amount in cash in lieu of shares of our common stock.
Options and Warrants
As of June 30, 2015, we have issued options to purchase a total of 10,955,541 shares of our common stock pursuant to various equity incentive plans, at a weighted average exercise price of $0.45 per share. Recommendations for option grants under our equity incentive plans are made by the compensation committee of our board, subject to ratification by the full board. The compensation committee may issue options with varying vesting schedules, but all options granted pursuant to our equity incentive plans must be exercised within ten years from the date of grant.
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We have issued warrants to purchase our common stock from time to time in connection with certain financing arrangements and for other purposes. As of June 30, 2015, there are warrants exercisable for an aggregate of 95,443,105 shares of common stock outstanding, as follows:
Warrants (Underlying Shares) |
Exercise Price Per Share |
Expiration Date | ||
6,790 | (1) | $1.0100 | September 10, 2015 | |
439,883 | (2) | $0.6800 | March 31, 2016 | |
285,186 | (3) | $1.0500 | November 20, 2016 | |
1,858,089 | (4) | $0.10455 | May 23, 2018 | |
17,644,027 | (4) | $0.0900 | May 23, 2018 | |
200,000 | (5) | $0.5000 | April 23, 2019 | |
561,798 | (5) | $0.4500 | May 22, 2019 | |
184,211 | (6) | $0.3800 | September 10, 2019 | |
325,521 | (7) | $0.4601 | September 27, 2019 | |
755,344 | (8) | $0.2812 | December 2, 2019 | |
8,392,707 | (9) | $0.09000 | December 2, 2020 | |
8,392,707 | (9) | $0.1100 | December 2, 2020 | |
2,000,000 | (10) | $0.2550 | March 30, 2018 | |
1,754,737 | (11) | $0.1188 | June 30, 2020 | |
52,642,105 | (12) | $0.095 | June 30, 2020 | |
(1) | Issued as part of a September 2010 private placement. | |||
(2) | Issued in February 2014 as part of a buy-back of a minority interest in Interscan in December 2012. | |||
(3) | Issued as part of a November 2011 private placement. | |||
(4) | Issued in June 2015 in exchange for warrants originally issued as part of a May 2013 private placement. | |||
(5) | Issued to a placement agent in conjunction with an April 2014 private placement. | |||
(6) | Issued to a placement agent in conjunction with a September 2014 private placement. | |||
(7) | Issued as part of a September 2014 Regulation S offering. | |||
(8) | Issued to a placement agent in conjunction with a 2014 public offering. | |||
(9) | Issued in June 2015 in exchange for warrants originally issued as part of a 2014 public offering. | |||
(10) | Issued as part of a March 2015 private placement. | |||
(11) | Issued to a placement agent in conjunction with a June 2015 private placement. | |||
(12) | Issued as part of a June 2015 private placement. | |||
All outstanding warrant agreements provide for anti-dilution adjustments in the event of certain mergers, consolidations, reorganizations, recapitalizations, stock dividends, stock splits or other changes in our corporate structure. The warrants identified in note (4) to the table and having an exercise price of $0.0900 per share, as well as the warrants identified in note (12) to the table also contain anti-dilution adjustments in the event that we issue shares of our common stock, or securities exercisable for or convertible into shares of our common stock, at prices below the exercise prices of such warrants.
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The warrants identified note in (4) to the table and having an exercise price of $0.0900 per share are subject to a mandatory exercise provision. Subject to certain limitations, we may require exercise of these warrants at any time following (a) the date that is the 30th day after the later of our receipt of an approvable letter from the FDA for LuViva and the date on which the common stock achieves an average market price for 20 consecutive trading days of at least $1.30 with an average daily trading volume during such 20 consecutive trading days of at least 25,000 shares, or (b) the date on which the average market price of the common stock for 20 consecutive trading days immediately prior to the date we deliver a notice demanding exercise is at least $1.62 and the average daily trading volume of the common stock exceeds 25,000 shares for such 20 consecutive trading days. If these warrants are not timely exercised upon demand, they will expire. Upon the occurrence of certain events, we also may be required to repurchase these warrants, as well as the other warrants identified in note (4) to the table.
The warrants identified in note (7) to the table are also subject to a mandatory exercise provision. This provision permits us, subject to certain limitations, to require the exercise of such warrants should the average trading price of our common stock over any 30 consecutive day trading period exceed $0.9216. The warrants identified in note (9) to the table are also subject to a mandatory exercise provision. In the event that the trading price of our common stock is at least two times the initial warrant exercise price for any 20-day trading period, we will have the right to require the immediate exercise of 50% of the then-outstanding warrants. Further, in the event that the trading price of our common stock is at least 2.5 times the initial warrant exercise price for any 20-day trading period, we will have the right to require the immediate exercise of 50% of the then-outstanding warrants. Any warrants not exercised within the prescribed time periods will be canceled to the extent of the number of shares subject to mandatory exercise.
* * * * *
THE BOARD OF DIRECTORS |
Dated: July , 2015
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
GUIDED THERAPEUTICS, INC.
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 15, 2015
The undersigned stockholder of GUIDED THERAPEUTICS, INC., a Delaware corporation (the “Company”), acknowledges receipt of the notice of special meeting of stockholders and proxy statement for the Special Meeting of Stockholders, and hereby appoints Gene S. Cartwright, Ph.D. and William Wells and each of them, proxies and attorneys-in-fact, with full power to each of substitution, on behalf and in the name of the undersigned, to represent the undersigned at the special meeting to be held on Tuesday, September 15, 2015 at 10:00 a.m. local time, at the office of Guided Therapeutics, Inc., 5835 Peachtree Corners East, Suite D, Norcross, Georgia 30392 and at any adjournment or adjournments of the special meeting, and to vote all shares of common stock which the undersigned would be entitled to vote if then and there personally present, on the matters set forth below:
1. | APPROVAL OF AN AMENDMENT TO THE COMPANY’S CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK TO A TOTAL OF 500,000,000 SHARES: |
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. | APPROVAL OF THE ADJOURNMENT OF THE SPECIAL MEETING, IF NECESSARY OR APPROPRIATE IN THE DISCRETION OF THE CHAIRMAN OF THE SPECIAL MEETING, TO SOLICIT ADDITIONAL PROXIES IF THERE ARE NOT SUFFICIENT VOTES AT THE TIME OF THE SPECIAL MEETING TO APPROVE PROPOSAL 1: |
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED, WILL BE VOTED FOR PROPOSAL 1 AND FOR PROPOSAL 2.
Dated: ______________, 2015 | ||
____________________________ | ||
Signature | ||
____________________________ | ||
Signature |
(This proxy should be marked, dated and signed by the stockholder(s) exactly as his or her name appears on this proxy, and returned promptly in the enclosed envelope. Persons signing in a fiduciary capacity should so indicate. If shares are held by joint tenants or as community property, both should sign.)