Guided Therapeutics Inc (OTCBB:GTHP) Is Stuck
Guided Therapeutics Inc (OTCBB:GTHP) announced on September 15 that the FDA have agreed to meet up with some of the company officials and discuss the filing of an amended premarket approval application for the LuViva Advanced Cervical scan. The previous applications didn’t go through, but GTHP seem confident that with this one, they will finally be able to get the devices approved for sale in the US.
On September 30, just two weeks later, the company came up with some more news. They said that they have been able to ship four LuViva units to the Turkish Ministry of Health. This is just a part of a $14 million purchase order which comprises of twenty-five units as well as quite a lot of disposable cervical guides, and it should be completed before the end of the year.
In other words, the company issued not one, but two promising press releases in an extremely short period of time. Despite this, investors don’t seem particularly impressed. GTHP hasn’t really been the hottest penny stock over the last three weeks and the performance is hardly encouraging. Yesterday, for example, it logged a dollar volume of more than $130 thousand, but although it closed the session a few percent in the green at $0.055, it did it after hitting an all-time low of $0.037 per share.
All in all, investors appear to be quite reluctant to jump in and that, especially in light of the news, seems a bit unusual. Time to see what’s worrying them.
The truth is, while the news sounds exciting enough, the financial statements tell a different story. Here, for example, is what the latest 10-Q looks like:
- cash: $2 million
- current assets: $3.3 million
- current liabilities: $4.8 million
- quarterly revenues: $103 thousand
- quarterly net loss: $1.7 million
The revenues have experienced significant drops both on a year-over-year and on a quarter-over-quarter basis. People are hoping that the big purchase order from Turkey will take care of this, but even if it does, there’s still the matter of making a profit. As always guarantees are nowhere to be found.
And the lack of profit is leading to some other issues like a less-than-perfect balance sheet and dilution. The latter should be given some extra thought before an investment is made.
The number of issued and outstanding shares grew from less than 97 million at the end of last year all the way to 113 million on July 31. Sadly, quite a lot more shares have been printed since then and it’s now sitting at more than 143 million.
The lack of cash is putting pressure on the management team and last month, they decided to give themselves some wiggling room by pushing the authorized cap up to 500 million. They quickly realized that this might not be enough, though, and just over two weeks later, they asked the shareholders for approval to bring it further up to 1 billion. A reverse split is also contemplated.
The management team said that the goal of all this is to move the ticker to one of the national exchanges, but only time can tell if GTHP really has what it takes to get there. For now, due diligence and careful risk assessment before putting any money on the line is essential.
