Investment Thesis
Right On Brands faces severe financial distress with negative stockholders' equity (-$806.2K), critically inadequate liquidity (current ratio 0.17x), and persistent operating losses (-$51.3K operating cash flow). The company is technically insolvent on a book value basis with liabilities ($1.0M) nearly 5x total assets ($211.8K), creating acute restructuring or bankruptcy risk.
Strengths
- Gross margin of 54.8% demonstrates underlying product profitability potential
- Low capital requirements (only $6K capex) suggest asset-light business model
- Minimal absolute debt load relative to larger companies, though unsustainable at current scale
Risks
- Negative stockholders' equity of -$806.2K indicates technical insolvency on balance sheet
- Critical liquidity crisis with current ratio of 0.17x signals inability to meet near-term obligations
- Operating cash flow of -$51.3K demonstrates cash burn from core business operations
- Zero revenue growth combined with -$391.9K net loss indicates structural business deterioration
- Negative interest coverage (-2.8x) shows inability to service debt from operations
- Imminent bankruptcy or restructuring risk given unsustainable financial position
Key Metrics to Watch
- Return to positive stockholders' equity - critical solvency indicator
- Operating cash flow trajectory - must turn positive to demonstrate operational viability
- Cash balance depletion rate - current $59.4K provides limited runway
- Revenue growth and path to profitability - current burn rate unsustainable
Financial Metrics
Revenue
1.1M
Net Income
-391.9K
EPS (Diluted)
$0.00
Free Cash Flow
-57.3K
Total Assets
211.8K
Cash
59.4K
Profitability Ratios
Gross Margin
54.8%
Operating Margin
-6.9%
Net Margin
-36.4%
ROE
N/A
ROA
-185.1%
FCF Margin
-5.3%
Balance Sheet & Liquidity
Current Ratio
0.17x
Quick Ratio
0.07x
Debt/Equity
N/A
Debt/Assets
480.7%
Interest Coverage
-2.75x
Long-term Debt
310.9K
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: 2026-04-15T04:21:21.518539 |
Data as of: 2023-12-31 |
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