Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

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

FORWARD-LOOKING STATEMENTS

In addition to historical information, this Quarterly Report on Form 10-Q may contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act), which provides a "safe harbor" for forward-looking statements made by us. All statements, other than statements of historical facts, including statements concerning our plans, objectives, goals, beliefs, business strategies, future events, business conditions, results of operations, financial position, business outlook, business trends, and other information, may be forward-looking statements. Words such as "might," "will," "may," "should," "estimates," "expects," "continues," "contemplates," "anticipates," "projects," "plans," "potential," "predicts," "intends," "believes," "forecasts," "future," and variations of such words or similar expressions are intended to identify forward-looking statements. The forward-looking statements are not historical facts, and are based upon our current expectations, beliefs, estimates and projections, and various assumptions, many of which, by their nature, are inherently uncertain and beyond our control. Our expectations, beliefs, estimates, and projections are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that management's expectations, beliefs, estimates, and projections will occur or can be achieved and actual results may vary materially from what is expressed in or indicated by the forward-looking statements.

These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or anticipated results, including those that may be set forth under "Risk Factors" below and elsewhere in this report, as well as in our annual report on Form 10-K for the year ended December 31, 2024 and this quarterly report on Form 10-Q. Examples of these uncertainties and risks include, but are not limited to:

	·	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 impact of the conflict between Russia and Ukraine on economic conditions in general and on our business operations;
	·	the need to fully develop the marketing, distribution, customer service and technical support and other functions critical to the success of our product lines;
	·	results related with the termination of the license agreement with SMI and potential partnership agreement with other parties;
	·	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.

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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 filing and are subject to risks and uncertainties. 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.

Forward-looking statements speak only as of the date the statements are made. We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information except to the extent required by applicable securities laws. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect thereto or with respect to other forward-looking statements.

The following discussion should be read in conjunction with our financial statements and notes thereto included elsewhere in this report.

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 provides a less invasive and painless alternative to conventional tests for cervical cancer screening and detection. Additionally, LuViva improves 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.

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 in 1992 as SpectRx, Inc. and, as of September 30, 2025, we have an accumulated deficit of approximately $155.8 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.

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Our product revenues to date have been limited. Our historical and expected future revenue has been and will be derived from sales of LuViva devices and disposables.

Current Demand for LuViva

Based on written agreements and ongoing discussions with SMI and its Chinese partners, we currently hold and expect to generate additional purchase orders which we expect to result in actual sales of approximately $1.0 million within the next twelve months. 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, in part because demand for LuViva is contingent upon Chinese regulatory approval which has not yet been achieved. 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 number of sales. Accordingly, we have not identified any particular trends with regard to sales of our products. In order to increase demand for LuViva, we are focused on three primary markets: the United States, China and Europe. In addition, we have recently received sales orders from Turkey and Indonesia, for which we have received the necessary regulatory approvals and are preparing to fulfill. These orders are expected to result in approximately $200,000 in revenue for 2025. When combined with sales to our Chinese partner, these constitute what we view as the current demand for our products.

In the United States, the Company is actively pursuing FDA approval by conducting a clinical trial involving approximately 400 study participants, with the exact number depending in part on the numbers of women in the study both with and without cervical disease. The study protocol was drafted with input from FDA and physicians at the clinical centers that are participating in the study. In 2023, FDA completed its review of the protocol and had no further recommendations or questions. Also in 2023, four clinical sites agreed to participate in the study and all four of the study sites were fully IRB approved. The protocol was also approved by an independent, nationally recognized institutional review board. All four sites have received LuViva devices and were trained in their use. All four sites have undergone multiple clinical study monitoring visits by the Company's clinical study monitors. Clinical study monitoring visits are required by FDA to ensure that the study is being conducted under FDA guidelines and in compliance with the study protocol.

On August 13, 2025 the Company announced that it had surpassed the minimum number of enrolled subjects, both for each individual site and for the entire study. Based on this achievement, data analysis has begun. The initial analysis will focus on determining the number of study subjects with and without significant cervical disease to ensure that adequate numbers of both have been enrolled and tested. While this is occurring, study site close-out and monitoring visits are being scheduled. Below is a summary of the status of the study:

	1.	As of November 1, 2025, approximately 460 patients have been enrolled and tested, which is above the target minimum number needed to file the application with the FDA. Analysis of these data indicate that enough women both with and without cervical disease have been enrolled and tested.
	2.	There have not been any adverse events reported related to the use of LuViva.
	3.	All four monitored clinical study sites adhered to the study protocol and have completed the necessary case report forms according to FDA standards.
	4.	Two of the four clinical sites have completed close-out monitoring visits. Study supplies and LuViva devices have been retrieved from these sites. The remaining two sites are expected to complete their close out monitoring visits in November, 2025.

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We expect the study and data analysis to be completed in 2025. However, there can be no assurance that the study will progress and be completed within the expected timeframe, or ever.

Regarding international sales efforts, our focus has been on achieving regulatory approval to sell LuViva in China. Our Chinese partner, SMI, filed the application with NMPA for approval of LuViva as a Class 3 medical device in China on October 16, 2024. The results for the 449 women tested by LuViva were better than required by NMPA with a sensitivity of 83% and a specificity of 54%. There were no adverse events reported during the use of LuViva in the study, adding further evidence as to the safety of the technology. The NMPA application was accepted as complete and is under review. SMI has informed us that a mandatory inspection of their manufacturing site has delayed until of 2026, which is consistent with NMPA approval in the first half of 2026, although there can be no assurance that NMPA approval will occur within the projected time frame, or ever.

As of August 1, 2025, SMI was in contractual default due to late payments totaling $200,000 and failure to provide certain data to the Company as set forth in its agreements with the Company.

As of October 31, 2025, SMI had not cured the defaults and had not achieved NMPA approval, resulting in SMI's loss of rights to sell and market LuViva in China. Guided Therapeutics is currently in discussions with a new partner that works with SMI to assume the responsibilities formerly under the purview of SMI. In addition, during the nine months ended September 30, 2025, we entered into a supply agreement with Hangzhou Dongye Medical Technology Company, Ltd. ("HDMT"), the exclusive provider of gynecology products for 42 hospitals in China, for the purchase of 35 LuViva devices totaling $700,000. As of September 30, 2025, we have received $100,000 in payments and shipped three devices, resulting in the recognition of $60,000 in revenue for the quarter ended September 30, 2025.

Based on regulatory approval of LuViva in Russia granted on August 11, 2025, our distribution partner, Newmars Medical Technologies ("Newmars"), is shifting its emphasis from smaller East European countries to the larger Russian market,

In Turkey, we have been in contact with three different medical groups representing over 60 individual hospitals and clinics. We have entered contract discussions for supplying LuViva to the Turkish Ministry of Health ("MOH"). The current plan involves a collaboration with MOH to conduct a clinical study in Turkey to support the use of LuViva for primary screening of cervical cancer as a replacement for the Pap test under the public health system. The MOH has informed us that this would potentially involve up to 20 million tests annually in Turkey paid for by the Turkish national healthcare system. The clinical study is expected to involve about 800 patients, take less than six months to complete and will be funded by the MOH. As of October 31, 2025, MOH had approved the study and budget, including paying for LuViva devices and single use Cervical Guides. Funds are expected to be released in 2025 and the study concluded in the first half of 2026.

In Indonesia, our contracted distributors are in discussions with the local government hospital system of Sulawesi, one of the nation's most populous islands. During the fourth quarter of 2024, we received an order and full payment for four devices from Indonesia. We have delayed shipment pending final payment for shipping and additional services requested by the customer. We expect to ship these devices in the fourth quarter of this year.

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 is now recognized when control over the goods or services is transferred to the customer. 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 the 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 the Black-Scholes or binomial lattice valuation models.

Allowance for Credit Losses: Trade receivables are recorded net of allowances for chargebacks, cash discounts for prompt payment and credit losses. The Company estimates an allowance for expected credit losses by considering factors such as historical experience, credit quality, the age of the accounts receivable balances, and current economic conditions that may affect a customer's ability to pay. The corresponding expense for the credit loss allowance is reflected in selling, general and administrative expenses. The allowance for credit losses was immaterial as of September 30, 2025 and December 31, 2024.

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.

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RESULTS OF OPERATIONS

COMPARISON OF THE THREE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024

Sales Revenue and Cost of Goods Sold: Revenue from the sale of LuViva devices and disposables was $60,000 for the three months ended September 30, 2025, compared to none in the prior-year period. The current period revenue was derived from the shipment of three instrumentation packages to Hangzhou Dongye Medical Technology Company, Ltd. ("HDMT"). Cost of goods sold totaled $25,288, of which $22,693 related to the devices shipped to HDMT, with the remainder attributable to inventory adjustments. As of September 30, 2025, we have a deferred revenue balance of $689,318 which will be recognized as revenue upon shipment of devices pending NMPA approval.

Research and Development Expenses: Research and development expenses were $135,549 and $111,298 during the three months ended September 30, 2025 and 2024, respectively. The increase of $24,251, or 21.8%, was primarily due to $24,240 in additional sponsored research costs related to clinical trials.

Sales and Marketing Expenses: Sales and marketing expenses were $22,500 and $75,850 during the three months ended September 30, 2025 and 2024, respectively. The decrease of $53,350, or 70.3%, was primarily due to reductions of $39,929 in salaries and benefits, $9,474 in allocated rent expense, and $4,439 in travel expenses.

General and Administrative Expense: General and administrative expenses were $361,898 and $374,190 during the three months ended September 30, 2025 and 2024, respectively. The decrease of $12,292, or 3.3%, was primarily driven by a decrease of $23,917 for consulting and professional fees, a decrease of $10,658 for taxes and a decrease of $7,481 for stock option expense. These increases were offset by an increase of $21,211 in salaries & benefits, $7,207 of additional rent expense allocated to general use purposes and a $1,346 increase in other miscellaneous expenses.

Interest Expense: Interest expense was $129,304 and $107,500 during the three months ended September 30, 2025 and 2024, respectively. The increase of $21,804, or 20.3%, was primarily due to a higher level of outstanding debt.

Change in fair value of derivative liability: The change in the fair value of our derivative liabilities resulted in a loss of $37,033 and $585 during the three months ended September 30, 2025 and 2024, respectively. The increase in the derivative liability was primarily attributable to accrued interest, which increased the amount subject to conversion features accounted for as derivative liabilities.

Gain from Forgiveness of Debt: The gain from forgiveness of debt of $15,118 and $16,145 during the three months ended September 30, 2025 and 2024, respectively, was materially consistent period over period and was due to forgiveness of debt from our creditors.

Loss from Extinguishment of Debt: During the three months ended September 30, 2025, we recognized a loss on extinguishment of debt of $106,200 related to exchanges of debt for common stock and warrants.

Preferred Stock Dividends: Preferred stock dividend expense was $42,837 for the three months ended September 30, 2025, compared to $38,194 in the prior-year period, and was materially consistent between periods.

Net Loss Attributable to Common Stockholders: Net loss attributable to common stockholders was $785,445 and $692,417 during the three months ended September 30, 2025 and 2024, respectively. The change reflects the factors discussed above.

There was no income tax benefit recorded for the three months ended September 30, 2025 or 2024, due to recurring net operating losses.

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RESULTS OF OPERATIONS

COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024

Sales Revenue and Cost of Goods Sold: Revenues from the sale of LuViva devices and disposables for the nine months ended September 30, 2025 were $177,462, compared to $5,720 for the nine months ended September 30, 2024. Revenue in the current period was attributed to the shipment of six instrumentation packages and 49,031 RFID chips to our customers in China. Cost of goods sold was $63,500 during the nine months ended September 30, 2025, of which $60,911 related to the devices and RFID chips shipped to China, with the remainder attributable to inventory adjustments. As of September 30, 2025, we have a deferred revenue balance of $689,318 which will be recognized as revenue upon shipment of devices pending NMPA approval.

Research and Development Expenses: Research and development expenses were $342,359 and $386,417 during the nine months ended September 30, 2025 and 2024, respectively. The decrease of $44,058, or 11.4%, was primarily due to a $29,614 decrease in sponsored research costs, a $10,432 decrease in clinical travel expenses and a decrease of $5,394 in engineering staff salaries.

Sales and Marketing Expenses: Sales and marketing expenses were $146,011 and $217,653 during the nine months ended September 30, 2025 and 2024, respectively. The decrease of $71,642, or 32.9% was primarily due to reductions of $49,503 in salaries & benefits, $15,312 in rent expense (due to a decline in allocated rent expense and a decline in ancillary charges from the landlord), and $7,577 in travel expenses.

General and Administrative Expense: General and administrative expenses were $1,286,930 and $974,406 during the nine months ended September 30, 2025 and 2024, respectively. The increase of $312,524, or 32.1%, was primarily driven by an increase of $300,672 in payroll & benefits (including payroll taxes), which was primarily due to a one-time charge of $270,389 for warrants included in a board-approved compensation package for Dr. Faupel during the current period. Additionally, the Company recognized $20,009 of additional expense for stock options in the current period versus the prior and $4,464 of additional credit loss expense. These increases were offset by a decrease of $15,658 in taxes.

Interest Expense: Interest expense was $432,752 and $246,990 during the nine months ended September 30, 2025 and 2024, respectively. The increase of $185,762, or 75.2%, was due to an increase in debt in the current period versus the prior.

Change in Fair Value of Derivative Liability: The change in the fair value of our derivative liabilities resulted in a gain of $46,227 during the nine months ended September 30, 2025 versus a loss of $7,935 during the nine months ended September 30, 2024. The change in the fair value was attributed to changes in our forecasted stock price. In addition, a greater number of derivative liabilities were recorded in the current year due to additional bifurcated conversion features associated with new debt issuances.

Gain from Extinguishment of Debt: The gain from forgiveness of debt of $46,136 and $49,205 during the nine months ended September 30, 2025 and 2024, respectively, was materially consistent period over period and was due to forgiveness of debt from our creditors.

Loss from Extinguishment of Debt: During the nine months ended September 30, 2025, we recognized a loss on extinguishment of debt of $138,148 related to exchanges of debt for common stock and warrants.

Other Income: Other income was $161,087 and $12,372 during the nine months ended September 30, 2025 and 2024, respectively. During the nine months ended September 30, 2025, we reached an agreement with SMI to apply their payment of $180,000 towards reimbursement of certain expenses incurred during the years ended December 31, 2024 and 2023. As a result of this agreement, we recognized $180,000 of deferred revenue in other income during the current period. Additionally, we recorded other income of $52,400 in the current period to account for funds received from the Internal Revenue Service related to refundable payroll tax credits under the Employee Retention Credit program. This income was offset by a $84,000 loss recorded for the write-off of a long-term asset in the current period. Other income in the prior year period primarily reflected an adjustment to a previously recorded liability.

Preferred Stock Dividends: Expense related to preferred stock dividends of $125,875 and $126,030 for the nine months ended September 30, 2025 and 2024, respectively, was materially consistent over the two periods.

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Net Loss Attributable to Common Stockholders: Net loss attributable to common stockholders was $2,103,663 and $1,890,970 during the nine months ended September 30, 2025 and 2024, respectively. The change reflects the factors discussed above.

There was no income tax benefit recorded for the nine months ended September 30, 2025 or 2024, due to recurring net operating losses.

LIQUIDITY AND CAPITAL RESOURCES

Going Concern Considerations

We have incurred significant losses since our inception. At September 30, 2025, the Company had negative working capital of approximately $5.7 million, accumulated deficit of $155.8 million, and incurred a net loss including preferred dividends of $2.1 million for the nine months then ended. Stockholders' deficit totaled approximately $5.7 million at September 30, 2025, primarily due to recurring net losses from operations.

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.

Liquidity

Over the next 12 months we expect our burn rate to increase as we increase headcount, especially for meeting manufacturing demand. In addition, although we have significant inventory, we will need to order additional parts and services for production. Finally, we expect to spend another $425 thousand to complete and file our FDA study. Thus, we estimate that approximately $2.3 million will be needed to fund the business over the next 12 months. However, other than completing and filing the US FDA study results, additional expenditures for manufacturing production will be needed only if significant product is ordered and paid for in advance by customers, which is our current policy.

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 September 30, 2025, we had cash of approximately $87 thousand and negative working capital of $5.7 million. Our outstanding debt obligations include a combination of short- and long-term promissory notes, insurance premium financing, and several convertible notes with varying maturities, interest rates, and terms.

Subsequent to September 30, 2025, the Company received approximately $200,000 in proceeds from an ongoing private placement offering of units consisting of one share of common stock, one three-year warrant exercisable at $0.26 per share, and one four-year warrant exercisable at $0.52 per share, sold at a price of $0.19 per unit. The Company expects to complete the issuance of the related securities during the fourth quarter of 2025, and intends to use the proceeds for general working capital and corporate purposes.

Promissory Notes

As of September 30, 2025, we have a long-term note issued to a former employee with a remaining principal balance of $53,162, of which $24,000 is classified as short-term. This note accrues interest at 6% per annum and matures on May 5, 2028. Scheduled monthly payments of $2,000 are being made in accordance with the agreement.

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Convertible Debt:

Our convertible debt obligations as of September 30, 2025 include the following:

	·	A $1.13 million 10% Senior Unsecured Convertible Debenture, which matured on May 17, 2024, is currently in default and accruing interest at the default rate of 18%. Total accrued interest on this note was $51,980 as of September 30, 2025. The balance is classified as short-term convertible debt in default.
	·	Two convertible notes with Diagonal Lending LLC totaling $198,519 in principal, presented net of $31,382 in unamortized discounts and issuance costs. These notes carry embedded conversion features that have been bifurcated and recorded as derivative liabilities. The notes, which accrue interest at an effective rate of approximately 18.1%, have initial lump-sum payments followed by monthly payments due through the first quarter of 2026. As of September 30, 2025, $11,308 of interest has accrued on the notes.
	·	A convertible note issued to Flynn D. Case Living Trust, amended in December 2024, has an outstanding balance of $125,000 and is presented net of $49,470 of unamortized debt discounts. A payment of $75,000 is due on December 4, 2025, while the remaining balance of $50,000 and all accrued interest is due on June 4, 2026. The note includes multiple embedded conversion options with variable pricing terms, which have been bifurcated and accounted for as derivative liabilities. As of September 30, 2025, $3,858 of interest has accrued on the note.
	·	A $107,800 unsecured convertible promissory note issued on August 27, 2025 to Labrys Fund II, L.P., an unaffiliated institutional investor, was issued at a purchase price of $98,000, reflecting an original issue discount of $9,800, and bears total interest of $10,780. The note matures on August 27, 2026 and may not be prepaid except as provided in its terms. In the event of default or a missed amortization payment, the holder may convert the outstanding balance, including accrued interest, into common stock at a conversion price equal to 75% of the average of the two lowest closing prices over the ten trading days preceding conversion. The embedded conversion features were bifurcated and recorded as derivative liabilities, which are remeasured at each reporting date. A payment of $59,290 is due on February 27, 2026, followed by monthly payments of $9,882 through maturity. As of September 30, 2025, the full balance remained outstanding. The note is presented net of unamortized discounts of $22,607.
	·	A convertible note held by Auctus Fund LLC had an outstanding balance of $15,000 as of September 30, 2025. The note has accrued interest of $117,550 and is classified as short-term debt.
	·	A $75,000 convertible promissory note issued on May 2, 2025 to an unaffiliated third party accrues interest at 12% per annum and matures on May 2, 2026. On the maturity date, the Company may elect to convert the outstanding balance into common shares at $0.20 per share. The note was issued with 75,000 warrants exercisable at $0.20 per share, expiring on May 1, 2028. As of September 30, 2025, the note had $4,146 in unamortized discount and $3,723 in accrued interest.
	·	A $10,000 convertible promissory note issued on May 22, 2025 to an unaffiliated third party accrues interest at 12% per annum and matures on May 22, 2026. On the maturity date, the Company may elect to convert the outstanding balance into common shares at $0.20 per share. The note was issued with 10,000 warrants exercisable at $0.20 per share, expiring on May 21, 2028. As of September 30, 2025, the note had $727 in unamortized discount and $219 in accrued interest.

These convertible instruments, especially those with variable conversion pricing or embedded features, may result in significant dilution to existing stockholders if converted to equity. Additionally, several of the notes include default provisions or change of control clauses that may accelerate repayment obligations or increase total amounts due.

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Related Party Debt

As of September 30, 2025, we also had multiple outstanding obligations to related parties, including current and former directors and executives:

	·	On September 25, 2025, the Company issued a $160,000 contingently convertible promissory note to Dr. John Imhoff. The note bears interest at 10% per annum and matures on February 28, 2027. Beginning November 30, 2025, the Company is required to make monthly payments of $10,000 plus accrued interest. If any payment is missed, the holder may elect to convert the unpaid balance, including accrued interest, into common stock at $0.07 per share when the 10-day VWAP is below $0.50, or $0.14 per share when the 10-day VWAP is $0.50 or higher. The Company may prepay the note at any time with the holder's consent. As of September 30, 2025, no payments or conversions had occurred, and the full $160,000 principal remained outstanding.
	·	Dr. Mark Faupel and Dr. Gene Cartwright hold promissory notes originally issued in 2018 and most recently amended in 2023 and 2025. On August 27, 2025, the Company entered into an agreement with Dr. Faupel to exchange $25,000 of note principal for 138,889 shares of common stock and 138,889 warrants to purchase up to 138,889 shares of common stock. The warrants, which were immediately exercisable upon issuance, expire four years following the issuance date and have an exercise price of $0.25 per share. During the nine months ended September 30, 2025, the Company recorded a loss on extinguishment of debt of $50,697 for the exchange agreement, equal to the excess of fair value of the common stock and warrants over the value of the debt. As of September 30, 2025, Dr. Cartwright's $312,816 note was overdue, while Dr. Faupel's $170,471 note will mature on February 18, 2026.
	·	A note issued to Richard Fowler in 2021 had a remaining principal balance of $13,011 as of September 30, 2025. The note carries a 6% interest rate and is being repaid in monthly installments. Mr. Fowler has forgiven portions of the deferred compensation related to this note, which was accounted for as a troubled debt restructuring.

Summary of our Cash Flows

Net cash used in operating activities was $776,689 for the nine months ended September 30, 2025, compared to $786,783 in the prior-year period, and remained relatively consistent year over year. The change reflects a higher net loss of $213,848 and unfavorable working capital changes of $216,859, offset by higher non-cash adjustments, including increases in stock-based compensation ($219,267), loss on extinguishment of debt ($138,148), and amortization of debt discounts and issuance costs ($117,108). These increases were partially offset by a $46,227 gain from the change in fair value of derivative liabilities compared to a $7,935 loss in the prior period.

For the nine months ended September 30, 2025, $1,797 of cash used for investing activities was for the purchase of computer equipment.

Net cash provided by financing activities was $477,832 in the nine months ended September 30, 2025, compared to $390,100 in the prior-year period. The increase of $87,732 was due to $235,900 of additional proceeds from the issuance of notes payable, offset by an increase in debt payments of $74,519, a decrease in proceeds from issuances of equity instruments of $40,499 and an increase in debt issuance costs of $33,150.

As a result, our total cash decreased by $300,654 during the nine months ended September 30, 2025, compared to a $396,683 decrease during the same period in 2024.

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.

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