Investment Thesis
Data443 is in severe financial distress with negative stockholders' equity of -$13.5M, indicating liabilities exceed assets. The company is burning cash with negative free cash flow of -$76.4K despite minimal capex, and operating losses of -$932.7K on just $3.5M in revenue demonstrate unprofitable operations at scale. Critical liquidity crisis with current ratio of 0.01x and only $49.1K in cash against $18.8M in liabilities makes immediate solvency a pressing concern.
Strengths
- Gross margin of 72.7% indicates strong unit economics on revenue generated
- Positive operating cash flow of $109.1K suggests some underlying cash generation despite net losses
- Operating in software services sector with potential for scalability
Risks
- Negative stockholders' equity of -$13.5M indicates technical insolvency and potential bankruptcy risk
- Critically low liquidity with current ratio of 0.01x and only $49.1K cash versus $18.8M liabilities
- Negative free cash flow and inability to fund operations or debt service from cash generation
- Operating losses consuming 26.7% of revenue with negative net margin of -45.7%
- Long-term debt of $4.5M represents significant leverage burden for distressed company
- Zero insider purchases in last 90 days suggests management lacks confidence
Key Metrics to Watch
- Quarterly revenue trends and ability to achieve profitability at operating level
- Cash position depletion rate and timeline to potential liquidity exhaustion
- Debt restructuring negotiations or refinancing outcomes with creditors
- Operating expense control and path to positive operating cash flow generation
Financial Metrics
Revenue
3.5M
Net Income
-1.6M
EPS (Diluted)
$0.00
Free Cash Flow
-76.4K
Total Assets
5.3M
Cash
49.1K
Profitability Ratios
Gross Margin
72.7%
Operating Margin
-26.7%
Net Margin
-45.7%
ROE
N/A
ROA
-30.2%
FCF Margin
-2.2%
Balance Sheet & Liquidity
Current Ratio
0.01x
Quick Ratio
0.01x
Debt/Equity
N/A
Debt/Assets
354.8%
Interest Coverage
-1.37x
Long-term Debt
4.5M
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-03-20T07:46:14.554166 |
Data as of: 2025-09-30 |
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