On January 22, 2017, the Guided Therapeutics, Inc. entered into a license agreement with Shandong Yaohua Medical Instrument Corporation (SMI") pursuant to which the Company granted SMI an exclusive global license to manufacture the Company's LuViva Advanced Cervical Cancer device and related disposables (subject to a carve-out for manufacture in Turkey) and exclusive distribution rights in the Peoples Republic of China, Macau, Hong Kong and Taiwan. In exchange for the license, SMI will pay a $1.0 million licensing fee, payable in five installments through October 2017, as well as a royalty on each disposable sold in the territories. SMI will also underwrite the cost of securing approval of LuViva with the Chinese Food and Drug Administration. During 2017, SMI must purchase no fewer than ten devices (with up to two devices pushed to 2018 if there is a delay in obtaining Chinese FDA approval). In the three years following Chinese FDA approval, SMI must purchase a minimum of 3,500 devices (500 in the first year, 1,000 in the second, and 2,000 in the third). As manufacturer of the devices and disposables, SMI will be obligated to sell each to the Company at costs no higher than the Company's current costs. In order to facilitate the SMI agreement, immediately prior to its execution the Company entered into an agreement with Shenghuo Medical, LLC, regarding the Company's previous license to Shenghuo, originally granted in June 2016, to manufacture, sell and distribute the LuViva in Asia. Under the terms of the new agreement, Shenghuo agreed to relinquish its manufacturing license and its distribution rights in SMI's territories, and to waive its rights under the original Shenghuo agreement, all for as long as SMI performs under the SMI agreement. As consideration, the Company has agreed to split with Shenghuo the licensing fees and net royalties from SMI that the Company will receive under the SMI agreement.