How to check if the company you like is going bankrupt! (NXXT, BURU, etc)

AI Summary

Author explains a simple current-assets-vs-current-liabilities bankruptcy check and lists five penny stocks with balance sheets that likely force massive dilution within 6-12 months.

BURU — AVOID Nuburu has only $6.8m cash against $42 million in debt/payables due this year and no way to pay beyond dilution. The author expects massive shareholder dilution within 6-12 months as the company tries to stay afloat, and he doubts it will work.

BURU: $6.8m cash with $42 million in debt/payables due this year and no way to pay beyond dilution

NRXP — AVOID NRx Pharmaceuticals has about $7m cash and $30.6m debt/payables due this year and no way to pay beyond dilution. It already diluted investors to pay down debt and still has a very large current-liability balance. The author expects further dilution within 6-12 months and doubts it will keep the company afloat.

NRXP: $7m cash and $30.6 million debt/payables due this year and no way to pay beyond dilution

OTLK — AVOID Outlook Therapeutics has $11m cash and receivables against $46m in current debt/payables due this year and no meaningful revenue. The author expects dilution as the company attempts to stay afloat, likely within 6-12 months.

OTLK: $11m cash and receivables vs $46 million in current debt/payables due this year. No revenue to speak of. Dilution likely.

Unpriced research observations (excluded from Calls and Returns):

NXXT — AVOID The author views Next Technology Holding as having only $650k cash against $35 million in debt/payables due this year, with no way to pay beyond dilution. He expects the company to massively dilute shareholders within 6-12 months while trying to stay afloat and doubts the effort will work. resolved_entity_name_mismatch

NXXT: $650k cash with $35 million debt/payables due this year and no way to pay beyond dilution

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Comments 17

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Inspired by another recent post and the Big List of Stupid Balance Sheets (included at the end)  

Disclaimer: This is going to be a very simplistic explanation. Not gonna bother with an AI write-up  

Terms to know:  

Current assets: These are cash, cash equivalents, and assets that are expected to turn into cash within a year (accounts receivables, etc)  

Current liabilities: Your debts and other things you owe (payables, accruals) WITHIN 12 months.  

When someone recommends you a stock, you want to do the absolute bare minimum and make sure that the balance sheet isn't completely stupid. To do this, you will do the following:  

1) Go to stock analysis.com, Yahoo finance, etc, or look up government filings to find the Balance sheet among the businesses' financial statements  

2) Check out their current assets. Pay very special attention to cash/cash equivalents.  

3) Check out their current liabilities.   

4) If current liabilities are substantially higher than cash/current assets(to put it nicely), then it's likely time to look elsewhere. This is a major red flag. It means that the business will either have to take on massive debt, or, more likely, will dilute you very soon. In many cases, they are quite literally waiting for a pump in order to sell.  

Here are some examples of commonly posted/pumped stocks will horrendous balance sheets. I anticipate every single one of these companies will massively dilute shareholders within the next 6-12 months in an attempt to stay afloat. I doubt it'll work.  

- NXXT: $650k cash with $35 million debt/payables due this year and no way to pay beyond dilution 

- BURU: $6.8m cash with $42 million in debt/payables  due this year and no way to pay beyond dilution  

- NRXP: *$7m cash and *$30.6 million debt/payables due this year and no way to pay beyond dilution  

- OTLK: $11m cash and receivables vs $46 million in current debt/payables due this year. No revenue to speak of. Dilution likely. 

- MNTS: $670k in cash with a whopping $17.3 million in debt/payables due this year.  

*NRXP recently diluted investors to pay off its debt balance. A very large current liabilities balance still remains.

Ideas

u/No_Cell6708 Reddit r/pennystocks

Cash-poor balance sheet likely forces dilutive financing.

Nuburu has only $6.8m cash against $42 million in debt/payables due this year and no way to pay beyond dilution. The author expects massive shareholder dilution within 6-12 months as the company tries to stay afloat, and he doubts it will work.

u/No_Cell6708 Reddit r/pennystocks

Cash-poor balance sheet likely forces further dilutive financing.

NRx Pharmaceuticals has about $7m cash and $30.6m debt/payables due this year and no way to pay beyond dilution. It already diluted investors to pay down debt and still has a very large current-liability balance. The author expects further dilution within 6-12 months and doubts it will keep the company afloat.

u/No_Cell6708 Reddit r/pennystocks

Cash-poor balance sheet likely forces dilutive financing.

Outlook Therapeutics has $11m cash and receivables against $46m in current debt/payables due this year and no meaningful revenue. The author expects dilution as the company attempts to stay afloat, likely within 6-12 months.

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Ideas

More from Reddit — r/pennystocks