Guided Therapeutics Inc. (OTCBB:GTHP)’s Recovery Didn’t Last
tags: GTHP
Guided Therapeutics Inc. (OTCBB:GTHP) dropped 28.99% down the charts yesterday, losing most of the ground it had managed to recover in the two previous sessions.
A burst of activity on Monday that continued to push the ticker up on Tuesday gave investors a fleeting hope that GTHP might actually manage to crawl out of double zero land once more. Unfortunately, it was not to be – and is it really any wonder that GTHP crashed right back down in no time at all?
After all, we’re talking about a company that performed a reverse split at the end of February in order to bring its shares outstanding down to a manageable 3.15 million. So far – so good, increasing liquidity in such a manner can be beneficial for investor value on occasion – but not when the company in question then proceeds to issue 26 million shares in the three months that follow.
Toxic dilution seems to be the biggest bane of investor value for GTHP, with most of the company’s debt converting at a 25% or 30% discount of the “average price of the common stock during the five days prior to conversion”.
That’s a horrendous weight to put on investor value, so it is no wonder that GTHP has crumbled under its weight. As far as its latest financial report can show, the company’s financial foundations were not all that strong to begin with:
- Cash – $56 thousand
- total current assets – $2.05 million
- total current liabilities – $6 million
- quarterly revenue – $262 thousand
- quarterly net income – $130 thousand
These numbers look thoroughly mediocre, and once you take into account the fact that the positive bottom line was only achieved thanks to a $1.4 million change in the fair value of warrants, the situation becomes even more grim.
This is why it should be no surprise to see that GTHP is having trouble retaining any gain it could make – the company has very little that is positive about it, and its shortcomings are legion.
Investors should take both of those facts into consideration when eying GTHP stock.
