Guided Therapeutics Inc (OTCBB:GTHP) Gets Cut In Half

On Wednesday the stock of Guided Therapeutics Inc (OTCBB:GTHP) suddenly soared up the chart and closed the trading day with a massive gain of 133% at $0.0431 per share. The amazing performance wasn’t supported by anything, though, and yesterday, in a single session, the ticker wiped all of its gains. When the closing bell put an end to the trading GTHP were sitting at $0.0198 for a mind-boggling loss of more than 54%. Not to mention that the devastating crash took place on a record volume of 7.39 million shares.

At first glance the negative sentiment that was displayed by the market may seem rather strange. After all, just a couple of weeks ago GTHP submitted their financial report for the first quarter of the year announcing record results – on a year-over-year basis the reported revenues had increased by 106%. Not to mention that the company actually finished the quarter with a positive bottom line.

Opening the report, however, reveals that GTHP‘s financial state is still as grim as ever – as of March 31, 2016, the company had:

• $56 thousand cash
• $2.05 million total current assets
• $6 million total liabilities
• $262 thousand revenue
• $130 thousand net income

The limited cash reserves and the working capital deficit of several millions make getting excited about the achievements of the company rather difficult. Earlier this year GTHP stated that they expect to receive between $3 million and $5 million in orders for the full 2016. This means that in the next three quarters they will have to ramp up their revenue generation even more if they want to get even close to these numbers.

The red flags are far from over, though. On February 24 GTHP implemented a 1-for-100 reverse split and as of March 7 they had an O/S of just 3.15 million shares. That is no longer the case. The quarterly report revealed that as of May 17 there were now nearly 30 million outstanding shares. 18.4 million of them were issued between April 27 and May 3 as part of several deals with the holders of Series C preferred shares to exchange them for Series C1 preferred shares. Even more shares may seen the light of day through the conversion of notes.

GTHP is a risky stock that must be approached with caution. Take the various red flags into account and adjust your trades accordingly.