Investment Thesis
Cardiff Lexington exhibits severe financial distress with negative stockholders' equity of -$2.5M, negative operating cash flow of -$1.7M, and a net loss of -$5.5M despite 39.5% revenue growth. The company is technically insolvent with liabilities exceeding assets and critically low liquidity (0.87x current ratio), indicating imminent financial crisis.
Strengths
- Strong revenue growth of 39.5% YoY demonstrates operational demand
- Solid gross margin of 62.5% indicates reasonable pricing power and cost control at gross profit level
- Adequate interest coverage ratio of 10.2x suggests current debt servicing capacity
Risks
- Negative stockholders' equity of -$2.5M indicates technical insolvency and equity wipeout risk
- Severe negative operating cash flow of -$1.7M despite positive gross profit signals fundamental operational cash generation problems
- Critical liquidity crisis with only $318.5K cash against $26.0M total liabilities and 0.87x current ratio below 1.0x threshold
- Net loss of -$5.5M and negative net margin of -47.7% despite gross profitability suggests SG&A and operating expenses are unsustainable
- High long-term debt of $18.6M relative to total assets of $29.1M creates significant leverage risk
Key Metrics to Watch
- Quarterly operating cash flow trends - must turn positive to indicate viability
- Path to profitability and net income stabilization
- Stockholders' equity recovery and debt reduction initiatives
Financial Metrics
Revenue
11.5M
Net Income
-5.5M
EPS (Diluted)
$-0.01
Free Cash Flow
-1.7M
Total Assets
29.1M
Cash
318.5K
Profitability Ratios
Gross Margin
62.5%
Operating Margin
9.5%
Net Margin
-47.7%
ROE
N/A
ROA
-18.9%
FCF Margin
-14.9%
Balance Sheet & Liquidity
Current Ratio
0.87x
Quick Ratio
0.87x
Debt/Equity
N/A
Debt/Assets
89.4%
Interest Coverage
10.24x
Long-term Debt
18.6M
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: 2026-03-22T02:44:11.433865 |
Data as of: 2025-12-31 |
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