Cheer Holding, Inc. — financial distress indicators
Financial-health summary
Cheer Holding, Inc.'s reported numbers place it in the 'Watch' financial-health band (distress score 35/100). The main indicators are market-implied default probability >20%, share price down >80% from 52-week high and massive shareholder dilution. Independently, the Ohlson accounting model puts its 1-year failure probability at 1% and the market-implied (Merton) default probability is 79.1%. In its favour: cash on hand covers all debt (net-cash balance sheet).
Stress by dimension
Share price — last 12 months
Indicators behind the score
Each red flag shows the evidence from the company’s own filings and the financial or legal principle behind it. Points add to the 0–100 score.
Merton distance-to-default -0.81 σ → PD 79%.
Structural (Merton/KMV) model: equity is a call option on assets; low distance-to-default means assets are close to the default point.
Price is -99% from its 52-week high.
Equity markets price distress early; collapses of this size usually reflect fear of wipe-out in a restructuring.
Share count up +2178% in a year.
Survival financing: repeated equity raises at depressed prices.
Revenue vs net income
Cash generation
Debt vs cash vs equity
✅ Mitigating factors
- Cash on hand covers all debt (net-cash balance sheet).
- Operating cash flow is positive over the latest 12 months.
- Comfortable interest coverage (282.7×).
- Strong current ratio (11.53).
- High insider/promoter ownership (111%) aligns management with survival.
📰 Recent news scan
- Chorus Aviation Inc. (TSE:CHR) Stock Has Consensus Price Target of C$32.39 - MarketBeatGoogle News · 2026-09-30
- Cheer Holding Inc. (CHR) Climbs 4.89% to $1.61 as Stock Tests Upper Resistance Zone - Vanna Flow - siam.inGoogle News · 2026-09-17
- Chorus Aviation (TSX:CHR) Stock Premium Faces Profitability Reality Check - Simply Wall StreetGoogle News · 2026-08-05
- Why I Think SpaceX Stock Could Get Cut in Half by Christmas - The Motley FoolGoogle News · 2026-07-28
- How The Chorus Aviation (TSX:CHR) Narrative Is Shifting With New Valuation Targets And Buybacks - Yahoo FinanceGoogle News · 2026-05-25
⚖️ U.S. legal pathway — Title 11, U.S. Code
Which chapter would apply?
- Chapter 11 — reorganisation. Management usually stays in control as debtor-in-possession; the automatic stay (§362) halts collection; a plan must meet the best-interests test (§1129(a)(7)) and the absolute priority rule (§1129(b)) — creditors are paid before shareholders, who are frequently wiped out.
- Chapter 7 — liquidation. A trustee sells assets and distributes proceeds by statutory priority (§§507, 726).
- Subchapter V (“Chapter 5”) is a fast track for small-business debtors under a statutory debt cap, but SEC-reporting companies are excluded (§101(51D)) — so it rarely applies to listed companies.
What typically triggers a filing
- Payment default or covenant breach lenders will not waive; a debt maturity that cannot be refinanced.
- Auditor going-concern doubt (ASC 205-40 / PCAOB AS 2415) — often itself a default trigger in loan agreements.
- Creditors can force a case with an involuntary petition (§303) if debts are not paid as they come due.
- Delisting after sustained sub-$1 prices or equity deficits cuts off equity funding.
Transactions shortly before filing can be clawed back (preferences — 90 days, §547; fraudulent transfers — 2 years, §548).
Frequently asked questions
What do Cheer Holding, Inc.'s financial-health indicators show?
As of 2026-10-08, Cheer Holding, Inc.'s public financial data places it in the 'Watch' band with a distress score of 35/100, driven by market-implied default probability >20%, share price down >80% from 52-week high and massive shareholder dilution. This is a statistical screen of reported numbers — it does not mean the company is insolvent, has defaulted or will enter insolvency proceedings.
What is Cheer Holding, Inc.'s financial distress score?
35/100 ('Watch'). Ohlson O-score -4.91 (model 1-year failure probability 1%). Merton distance-to-default -0.81 σ (model default probability 79.1%).
What works in Cheer Holding, Inc.'s favour?
Cash on hand covers all debt (net-cash balance sheet). Operating cash flow is positive over the latest 12 months. Comfortable interest coverage (282.7×). Strong current ratio (11.53). High insider/promoter ownership (111%) aligns management with survival.
How are shareholders treated if a company enters insolvency?
In a Chapter 11 reorganisation the absolute priority rule pays secured lenders, then unsecured creditors, before shareholders — so existing shares are usually cancelled or heavily diluted. In Chapter 7 the company is liquidated and shareholders rarely recover anything.
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Methodology
Score = capped sum of rule-based red flags across seven dimensions (liquidity, solvency, profitability, cash flow, sales trend, market signal, news). Ohlson O-score (1980) gives an accounting-based 1-year failure probability; Merton distance-to-default (Bharath & Shumway 2008) gives a market-implied probability. Financial institutions use a capital-based rule set. Recalculated every trading day from the latest filings, prices and news.