Investment Thesis
SCWorx is operationally insolvent with a -$4.4M net loss on $2.9M revenue and -$1.5M operating cash burn, representing -154.4% net margin and -33.3% operating margin. Revenue is contracting (-3.7% YoY) while losses accelerate, indicating fundamental business model failure. Despite adequate liquidity providing ~12 months of runway, the company lacks profitability pathway and shows no insider confidence.
Strengths
- Strong liquidity position with 2.72x current ratio and $1.6M cash buffer
- Zero debt burden eliminates refinancing and default risks
- Positive 32% gross margin indicates core product/service retains some unit economics
Risks
- Massive operating losses (-$33.3% margin) indicate fundamental, systemic business model failure
- Negative operating cash flow of -$1.5M with ~12 month cash runway before insolvency
- Shrinking revenue (-3.7% YoY) combined with expanding losses suggests accelerating deterioration
- Severe shareholder value destruction with -62.1% ROE and -56.3% ROA
- Zero insider Form 4 filings in 90 days indicates complete lack of management confidence
- Net margin of -154.4% indicates losses exceed revenue (unfunded losses from other sources)
Key Metrics to Watch
- Operating cash flow trajectory (currently -$1.5M; monitor cash depletion rate)
- Revenue stabilization (currently declining -3.7% YoY; assess if bottom reached)
- Path to operating profitability (operating margin currently -33.3%; requires structural improvement)
- Cash runway depletion and likelihood of dilutive financing or restructuring events
Financial Metrics
Revenue
2.9M
Net Income
-4.4M
EPS (Diluted)
$-0.61
Free Cash Flow
-1.5M
Total Assets
7.9M
Cash
1.6M
Profitability Ratios
Gross Margin
32.0%
Operating Margin
-33.3%
Net Margin
-154.4%
ROE
-62.1%
ROA
-56.3%
FCF Margin
-53.7%
Balance Sheet & Liquidity
Current Ratio
2.72x
Quick Ratio
2.66x
Debt/Equity
0.00x
Debt/Assets
9.4%
Interest Coverage
-161.62x
Long-term Debt
N/A
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: 2026-04-19T08:21:25.027265 |
Data as of: 2025-12-31 |
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