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Great Basin Scientific Inc (NASDAQ:GBSN) Finally Bounces

Great Basin Scientific Inc (NASDAQ:GBSN) Finally Bounces
Written by
Alex Carlson
Published on
April 18, 2016
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InsidrFinancial

It's really hard to find a company on the NASDAQ that has done more to destroy shareholder value than Great Basin Scientific Inc (NASDAQ:GBSN). First, the company did a 1-for-60 reverse split in December. Then, last month, the company did a 1-for-35 reverse split. We said back in March that the best bet for the company was a sale. We wish this would have happened as it would have saved a lot of heartache and grief.While we can't reverse the past, all we can do is look to the future and see what's next. The good news is that GBSN is making progress in its business. Last week, the company announced that first quarter revenues were $731,422, an increase of 59.4% over the first quarter of 2015. The company also reported that its customer base of revenue generating customers grew to 222 as of March 31, 2016, an increase of 119.8% over first quarter last year. We expect GBSN to continue posting revenue growth going forward as future results will include its two recent FDA approvals. On the company earnings call, CEO Ryan Ashton said:

"And this growth came with only two FDA cleared products. I’ll talk more about the launch plans for our Shiga toxin direct test and our Staph ID/R blood culture panel in a moment. But with those tests now FDA cleared we expect to see even greater acceleration of our revenue growth in the second half of 2016 and into 2017."

The target market for Great Basin is the 4,900 hospitals in the US with under 400 beds. These hospitals are either still not using molecular testing or using labor-intensive molecular systems inferior to the Great Basin platform. This is a big opportunity for GBSN. Going forward, the company's strategy is to build a great menu, add customers then add more menus and add more customers. The company expects to add between 115 and 140 new customers in 2016 and end the year with between 300 and 325 customers.What attracted shareholders to the company is the science behind Great Basin. Its recent FDA approvals are a big deal. The problems with GBSN have always been toxic financings, dilution, reverse splits, short sellers, and a clueless board of directors. Shares were hit earlier this month when GBSN completed the exchange of all Series E Warrants for 650,160 shares of common stock. According to the company, it reduced the dilution by 60% considering the total number of exercisable shares was 1.68M, which could have potentially increased to 3.36M shares at a future date under the anti-dilution provision.The latest concern is that GBSN received a Staff Determination Letter from Nasdaq saying it hasn't yet regained compliance for listing. GBSN will get a hearing where the company can present a two-pronged plan for regaining compliance: raising its market cap above $35M for 10 straight business days, and achieving positive stockholders' equity of $2.5M. Unfortunately, we don't see how the company will be able to achieve either one.GBSN has proven to be one of the worst investments we have ever seen. The CEO and the board of directors have destroyed shareholder value in such a short time that it's almost unprecedented. The only advice we can give is what we said earlier this month, "GBSN has proven to be a trader and a microcap runner and faller instead of an investment. We urge our subscribers and readers to trade accordingly." We expect the company to be delisted from NASDAQ. We don't see how the company can make up the shortfalls. We will be updating Insider Financial as soon as we know more. Sign up for our free newsletter today and get our next hot stock pick. The best way to make up for losses is by cutting your losers and finding a new winner!Disclosure: We have no position in GBSN and have not been compensated for this article.

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