Guardian 8 Holdings (OTCMKTS:GRDH) Jump Up The Chart

The last time we wrote about the stock of Guardian 8 Holdings (OTCMKTS:GRDH) was back at the start of September when it made a massive move up the chart and even posted its 52-week high of $0.94. Such price ranges proved to be short-lived though and the stock began sliding back down almost immediately. GRDH not only wiped their price gains but continued sliding even lower and less than three months later registered a new 52-week low of $0.3601.

Now the stock is bouncing off of those record lows and for the past two weeks has been displaying an impressive recovery. Yesterday it surged by another 24% and returned to $0.62 per share. Investors shifted 315 thousand shares which is over 10 times higher than the average daily volume for the stock. Despite the positive outcome the session as a whole was not that encouraging. For most of the trading day GRDH remained flat with barely any interest from the market.

Guardian 8 are the developer and manufacturer of the Pro V2, an enhanced non-lethal response device but so far investors don’t seem to consider them as an appealing choice for investment. On December 4 GRDH issued their latest PR but it remained completely unnoticed and on that day the traded volume was exactly 2000 shares. To be fair the press release didn’t contain any material information and offered little more than fluff.

The financials of the company are another serious reason for concerns. GRDH finished the third quarter of the year with the following results:

• $1.8 million cash
• $3.7 million total current assets
• $396 thousand total current liabilities
• $20 thousand revenues
• $1.7 million net loss

Compared to the same period last year revenues decreased by $2 thousand while the cost of sales more than doubled. Even the sizable cash position becomes less impressive if you consider the fact that earlier this year GRDH acquired $7 million through the sale of convertible debentures but they have already burned through most of that sum. In turn these debentures are due on November 30, 2015, unless they get converted into common stock at a conversion price of $0.50. If the company doesn’t ramp up its revenue generation significantly it may have to once again rely on its common stock in order to raise the necessary capital. 

The limited revenues, the massive net loss and the high chance of further dilution of the common stock are enough of a reason for investors to be reluctant to put their money in the stock. Even if you believe in the potential of GRDH’s device you should still do extensive due diligence before committing to any trades involving the stock.