Quality Stocks Crank Up the Volume with The Guitammer Company (OTC:GTMM)

We all love music. We all have our tastes in it and we are ready to defend our favorite bands and artists till the very end. Even your favorite tunes, however, can be ruined by lousy speakers that distort the sound and generally mess up the whole experience. The Guitammer Company (OTC:GTMM) have the product to battle the misery of headache-inducing, distorting excuses for hi-fi systems.

They actually have a line of products. It’s called ButtKicker and GTMM deserve a pat on their backs for their marketing efforts. The technology can be implemented virtually everywhere – in the theater, at home, in your car and even at huge events like concerts. The gizmos are actually enhancing the experience by increasing the lower-end sounds without the need for excessive volume – in other words your hear more bass without the widows shattering. This is great news, and after we read through quite a lot of reviews on the Internet we found that the general public loves the technology.

Having looked through their financial statement, we can also confirm that GTMM have found a market for their clever gadgets and, more importantly, their revenues seem to be increasing year-over-year. On the whole, we can say that GTMM is a real company with real people working for it and a clever piece of technology that seems to be genuinely interesting. As you probably know, these are all characteristics that a lot of penny stock companies lack. Before you go jumping in, however, we would like to discuss a few details.

We’ll start with GTMM‘s financial situation. The latest report that they filed with the SEC is the annual one for the fiscal 2012 and while we’re impressed with the revenues, things aren’t as optimistic when it comes to the rest of the financials. Here’s a summary of all the important figures:

• cash: $79 thousand
• current assets: $861 thousand
• current liabilities: $2.4 million
• yearly revenue: $2.1 million
• yearly net loss: $1 million
• accumulated deficit: $7.9 million

It would seem that, while people are buying GTMM‘s low-frequency audio transducers, the cost of putting the things together outweighs the income generated by the sales. This means that they need to finance their operations through issuance of notes and shares. They also can’t afford to pay the salaries to their managers which means that they have given them millions of stock options and warrants, most of which can be exercised at prices much lower than the current one.

That, on its own, is quite a concern but when you have in mind that GTMM are being pumped, things look even more disturbing. While paid promoters usually aim at companies that have little or no operations, virtually no revenue and huge losses, we have seen them create artificial hype around genuine companies that have real products and sales. Two examples of such ventures are Vista International Technologies, Inc. (PINK:VVIT) and Enova Systems, Inc. (PINK:ENVS). While both companies are quite serious about their business, they both crashed as soon as the hype from the emails stopped.

Which is why, despite the fact that GTMM looks like an interesting investment option, you should still weigh the risks carefully before you place your money on them. We would also love to see some net income in their next quarterly statement.