Investment Thesis
DNA X is in severe financial distress with negative stockholders equity (-$983K), indicating technical insolvency despite positive net income. The company is burning cash with negative operating cash flow (-$3.5M) and lacks adequate liquidity (current ratio 0.76x), suggesting inability to service debt or fund operations beyond the near term. The disconnect between positive net income ($6.3M) and negative operating cash flow indicates poor earnings quality, likely driven by non-operating gains rather than sustainable business performance.
Strengths
- Revenue growth of 14.5% year-over-year demonstrates top-line traction
- Maintains positive net income of $6.3M despite operational challenges
- Modest cash position of $1.2M provides limited runway
Risks
- Negative stockholders equity of -$983K indicates technical insolvency with liabilities exceeding assets
- Current ratio of 0.76x reflects critical liquidity crisis - unable to cover short-term obligations
- Negative operating cash flow of -$3.5M and free cash flow of -$3.7M show the company is burning cash unsustainably
- Operating margin of -8.2% reveals core business is unprofitable despite positive net income
- Large disconnect between GAAP net income and operating cash flow signals poor earnings quality and accounting anomalies
- Zero insider Form 4 filings in last 90 days indicates lack of insider confidence
- Interest coverage ratio of -27.6x shows inability to service debt from operations
Key Metrics to Watch
- Operating cash flow trajectory and path to profitability
- Stockholders equity recovery and refinancing capability
- Liquidity position and covenant compliance on $1.1M long-term debt
- Operating margin improvement and sustainability of revenue growth
Financial Metrics
Revenue
44.1M
Net Income
6.3M
EPS (Diluted)
$5.01
Free Cash Flow
-3.7M
Total Assets
4.8M
Cash
1.2M
Profitability Ratios
Gross Margin
25.0%
Operating Margin
-8.2%
Net Margin
14.4%
ROE
N/A
ROA
131.0%
FCF Margin
-8.3%
Balance Sheet & Liquidity
Current Ratio
0.76x
Quick Ratio
-1.78x
Debt/Equity
N/A
Debt/Assets
101.7%
Interest Coverage
-27.62x
Long-term Debt
1.1M
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: 2026-05-21T07:13:43.201853 |
Data as of: 2026-03-31 |
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