Investment Thesis
Frequency Holdings exhibits severe financial distress with negative stockholders' equity of -$6.0M, indicating liabilities exceed assets by a significant margin. The company has a critically weak balance sheet with only $30.2K in cash against $5.7M in liabilities, combined with substantial operating losses (-$4.5M) and negative free cash flow (-$440.3K), raising serious going concern questions.
Strengths
- High gross margin of 73.8% suggests underlying product/service value
- Revenue growth of 8.2% YoY demonstrates some market traction
- Positive net income of $9.5M (though likely driven by one-time gains rather than operations)
Risks
- Negative stockholders' equity of -$6.0M represents technical insolvency
- Extremely poor liquidity with current ratio of 0.02x and only $30.2K cash vs $5.7M liabilities
- Persistent operating losses (-$4.5M) and negative operating cash flow (-$386.4K) indicate unsustainable business model
- Negative free cash flow of -$440.3K with 27.8% negative FCF margin
- Long-term debt of $1.8M with minimal cash and negative equity to service obligations
- Highly distorted profitability metrics (598.9% net margin, 9267.6% ROA) suggest accounting anomalies rather than operational strength
Key Metrics to Watch
- Stockholders' equity trend and path to positive equity
- Operating cash flow and ability to achieve cash flow positive status
- Cash balance and runway given current burn rate
- Debt covenant compliance and refinancing risk
Financial Metrics
Revenue
1.6M
Net Income
9.5M
EPS (Diluted)
$0.00
Free Cash Flow
-440.3K
Total Assets
102.3K
Cash
30.2K
Profitability Ratios
Gross Margin
73.8%
Operating Margin
-282.8%
Net Margin
598.9%
ROE
N/A
ROA
9,267.6%
FCF Margin
-27.8%
Balance Sheet & Liquidity
Current Ratio
0.02x
Quick Ratio
0.02x
Debt/Equity
N/A
Debt/Assets
5,581.7%
Interest Coverage
-5.97x
Long-term Debt
1.8M
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: 2026-03-25T07:12:10.338791 |
Data as of: 2025-09-30 |
Powered by Claude AI