New major risk - Negative shareholders equity2 May 2024 07:07
The company has negative equity.
Total equity: -UK£385k
This is considered a major risk. Being in negative equity means that the company's liabilities exceed its assets, meaning it owes more to creditors than it has in owned assets. While this doesn't mean the company is about to collapse, in the long-term, this is unsustainable. The company may have issues meeting financial obligations, is at risk of becoming insolvent and may have difficulty raising capital, especially more debt, if needed.
Currently, the following risks have been identified for the company:
Major Risks
Less than 1 year of cash runway based on free cash flow trend (-UK£727k free cash flow).
Share price has been highly volatile over the past 3 months (31% average weekly change).
Negative equity (-UK£385k).
Earnings have declined by 39% per year over the past 5 years.
Revenue is less than US$1m (UK£341k revenue, or US$426k).
Market cap is less than US$10m (UK£923.5k market cap, or US$1.15m).
Minor Risk
Shareholders have been diluted in the past year (21% increase in shares outstanding).