Investment Thesis
NightFood is in severe financial distress with a critical liquidity crisis (0.08x current ratio) and only $347K cash against $4M+ annual cash burn. Despite impressive 542% revenue growth from a tiny $3M base, the company loses $2.69 per dollar of sales with deeply negative operating cash flow, creating imminent solvency risk without immediate capital infusion or dramatic operational turnaround.
Strengths
- Strong revenue growth of 542% year-over-year demonstrates market traction
- Reasonable equity base of $86.4M relative to liabilities provides structural cushion
- Moderate debt-to-equity ratio of 0.22x indicates manageable leverage levels
Risks
- Critical liquidity crisis: current ratio of 0.08x means company cannot cover short-term obligations
- Severe operating losses with -268.6% net margin and -191.5% operating margin
- Negative free cash flow of -$4.0M annually with only $347K cash on hand creates immediate solvency risk
- Negative interest coverage of -13.9x indicates inability to service debt from operations
- Cash burn rate unsustainable: company will exhaust remaining cash within months at current trajectory
Key Metrics to Watch
- Monthly cash burn rate and remaining cash runway
- Path to gross profit and operating profitability
- Quarterly revenue trends and gross margin evolution
- Capital raise activities and debt covenant compliance
Financial Metrics
Revenue
3.0M
Net Income
-8.0M
EPS (Diluted)
$-0.05
Free Cash Flow
-4.0M
Total Assets
129.6M
Cash
347.3K
Profitability Ratios
Gross Margin
N/A
Operating Margin
-191.5%
Net Margin
-268.6%
ROE
-9.2%
ROA
-6.2%
FCF Margin
-134.2%
Balance Sheet & Liquidity
Current Ratio
0.08x
Quick Ratio
0.06x
Debt/Equity
0.22x
Debt/Assets
33.4%
Interest Coverage
-13.93x
Long-term Debt
19.0M
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: 2026-04-13T05:51:23.314106 |
Data as of: 2025-12-31 |
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