continued and LTUS lost the next 13% on the market. What is wrong with the stock and will the downtrend continue?The strangest thing here is that LTUS is rushing down despite the fact that the company has just reported its improved financial results. On March 28, Lotus Pharmaceuticals announced that its revenues for the 2010 fiscal year increased by 28.7%, as well as its gross profit and the company’s team was optimistic about its future development.
Though, it looks like this news was not strong enough to pump up LTUS stock price and it kept falling down. Most probably, due to the other results in the company’s 10-K. According to the report, as of December 31, 2010 the current liabilities of LTUS were approximately 50% higher than its current assets and the operating expenses have increased more than twice. Besides, research and development expenses jumped by 100% as compared to $0 in December, 2009. At the same time, cash and cash equivalents of Lotus totaled only $900, which can hardly cover the huge amount of liabilities.[BANNER]
The company’s team expects its total revenue and profitability to be flat or slightly down in fiscal 2011. Apart from this statement, they claim that the company’s current revenues may not be adequate to execute its business plan.
Moreover, in case the product candidates don’t gain market acceptance, Lotus may face even higher losses in future. Thus, if the company fails to fund its capital requirements, this would have a material adverse effect on its business, financial condition and results of operations.
