Guided Therapeutics Inc (OTCBB:GTHP) Crashes

tags: GTHP

The stock of Guided Therapeutics Inc (OTCBB:GTHP) is starting to form a pattern – two sessions of sizable gains followed immediately by a severe drop. Yesterday the company crashed hard wiping over 34% of its value and falling to a close at $0.0058 per share. As we warned you in our previous article the heightened volatility of the ticker could continue for quite a while.

On one hand GTHP are reporting record revenues and are expanding their business selling more and more LuViva Advanced Cervical Scans and single-use disposable cervical guides. Unfortunately, this has not been enough to offset the multitude of red flags that hang above the company.

Let’s start with the 1-for-100 reverse split that GTHP performed back in February after which the company was left with around 3.1 million outstanding shares. In the following months, however, the dilution that hit investors was nothing short of abysmal. In order to convince the holders of 1,912 Series C preferred shares to exchange them for 4,312 preferred C1 shares GTHP had to issue over 18 million common shares.

A couple of months after that as part of a warrant exchange another 13.5 million shares had to be issued. Not to mention that the new warrants could be exercised for a total of 173 million shares. On July 1 thanks to a S-1 filing investors learned that GTHP plans to raise $5 million through the sale of 5,000 Series D preferred convertible shares. The filing also revealed that GTHP‘s outstanding shares were now sitting just below 68 million.

Despite the recent stock split the company is already planning a new one – during the August 4 annual meeting of the stockholders a vote will be held on a reverse split ranging between 1-for-10 and 1-for-400. If approved GTHP will have the right to perform the split at any time in the next three years.

The more opportunistic traders who set their positions just right could be able to take some quick gains thanks to the sharp swings of the stock. The risks shouldn’t be underestimated, though, and caution must be exercised.

In early trading today GTHP is moving back up currently trading 12% in the green at $0.0065.

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