GelTech Solutions, Inc. (OTCMKTS:GLTC) Cools Off
GelTech Solutions, Inc. (OTCMKTS:GLTC) made a rather impressive run a few weeks ago when it managed to climb from its 52-week low of just $0.20 all the way to a 52-week high of $0.88 in a matter of less than a month. That is quite an achievement, you have to agree, but once you delve a bit deeper, you might be a bit perplexed by it.
On May 8, just as the ticker was gaining momentum, GLTC published the 10-Q covering the first calendar quarter of 2015. And it doesn’t look good:
- cash: $77 thousand
- current assets: $1.3 million
- current liabilities: $401 thousand
- quarterly revenues: $100 thousand
- quarterly net loss: $1.6 million
While GLTC do deserve a pat on the back for keeping the current portion of the debt at bay, the rest of the balance sheet is nothing to write home about. The biggest problems, however, can be found in the income statement.
GLTC is by no means a new company. The people running it have been in the business for more than 20 years according to the 10-Q, but despite this, profitability is still nothing more than a distant dream. What’s more, the revenues for the first three months of 2015 are 18% down from the ones logged during the corresponding period of 2014, and the drop on a quarter-over-quarter basis is even more scary – 35%.
All in all, the 10-Q wasn’t much of an enticement to jump in. Yet, people were doing just that during the second half of April and the beginning of May. Why?
Because GLTC came up with quite a lot of good news during this period. First, they said that their FireIce fire suppressant solution has been used in numerous wildfires in Minnesota. Then, the company CEO, Peter Cordani, appeared on a TV show called Innovation Nation. Later, the Fire Department of Hollister, Massachusetts said that they will test the FireIce, and the national agency responsible for putting out wildfires in Pennsylvania announced that they are already using it and that they’re happy with the way it performs. The latest press release came out last week and it informed us that Charlotte Motor Speedway has added FireIce to its arsenal of fire suppressant tools.
As you can see, plenty to get excited about, and in light of the news, the push in the right direction GLTC experienced is not really that illogical. The problem is, the ticker has already shown us that once the announcements disappear, it tends to become somewhat reluctant to move in the right direction.
As a result, GLTC has registered only two green sessions since May 20’s announcement from Charlotte Motor Speedway. Yesterday, it lost 4% and it closed the day at $0.71 on a dollar volume of just under $200 thousand.
You have to be ready to put up with this sort of hesitation if you want to become a long-term shareholder. Some investors, however, will probably deem it too risky and that’s where another problem might appear.
Between July 1, 2014 and March 31, 2015, the company sold a total of 6,492,771 shares at an average price of about $0.35 per share during various private placements. GLTC‘s President and principal shareholder, Michael Reger, took part in those placements and he acquired a portion of the newly printed shares. His actions suggest that he is determined to stay with the company for the long haul, and even if he decides to sell, he’ll need to file Form 4’s with the SEC.
The majority of the shares, however, were bought by some unnamed accredited investors. The profit opportunity for them is quite substantial at the moment and they might decide to take advantage of it at any time. If they do it, they’ll put a lot of pressure on the price.