Investment Thesis
Creative Realities exhibits severe operational distress with deepening losses despite 12.5% revenue growth, indicating fundamental business model challenges that growth alone cannot offset. The company faces an acute financial crisis with current ratio of 0.73x, only $1.8M cash against $47.5M long-term debt, and negative operating cash flow of -$1.7M, creating material solvency risk.
Strengths
- Revenue growth of 12.5% YoY demonstrates market traction and customer demand
- Gross margin of 34.2% shows underlying business unit profitability at product level
- Recent insider activity with 6 Form 4 filings in 90 days
Risks
- Operating losses of -$6.2M on $16.3M revenue (-38% operating margin) indicate unsustainable cost structure
- Critical liquidity crisis with current ratio of 0.73x and quick ratio of 0.55x, indicating inability to cover short-term liabilities
- Excessive leverage with debt/equity ratio of 3.63x, minimal equity cushion of $13.1M against $97.1M total liabilities
- Negative operating cash flow of -$1.7M reveals operational cash burn despite positive top line
- Severely depleted cash position of $1.8M insufficient to service $47.5M long-term debt and operating obligations
- Negative interest coverage of -9.4x demonstrates inability to service debt from operating income
Key Metrics to Watch
- Operating cash flow trajectory - current -$1.7M is unsustainable
- Current ratio and cash position - critical solvency indicators
- Operating margin improvement - must meaningfully reduce operating expense ratio
- Debt reduction progress or refinancing activities - capital structure is unviable
Financial Metrics
Revenue
16.3M
Net Income
-7.5M
EPS (Diluted)
$-0.60
Free Cash Flow
-1.9M
Total Assets
138.2M
Cash
1.8M
Profitability Ratios
Gross Margin
34.2%
Operating Margin
-38.0%
Net Margin
-45.6%
ROE
-57.1%
ROA
-5.4%
FCF Margin
-11.7%
Balance Sheet & Liquidity
Current Ratio
0.73x
Quick Ratio
0.55x
Debt/Equity
3.63x
Debt/Assets
70.2%
Interest Coverage
-9.36x
Long-term Debt
47.5M
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: 2026-05-17T07:32:48.623200 |
Data as of: 2026-03-31 |
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