Csquare, Inc. — financial distress indicators
Financial-health summary
Csquare, Inc.'s reported numbers place it in the 'Weak' financial-health band (distress score 68/100). The main indicators are liabilities exceed assets (negative equity), operating profit does not cover interest and very high leverage. Independently, the Ohlson accounting model puts its 1-year failure probability at 70% and the market-implied (Merton) default probability is 10.0%. In its favour: operating cash flow is positive over the latest 12 months.
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.
Total liabilities are 1.03× total assets.
Balance-sheet insolvency test: debts exceeding the fair value of assets is the statutory definition of 'insolvent' in 11 U.S.C. §101(32).
Interest coverage (EBIT / interest) is 0.42×.
When EBIT < interest, debt service is funded from cash reserves or new borrowing — the classic precursor to payment default and covenant breach.
Total debt is 15.2× EBITDA.
Debt above ~6× EBITDA is deep sub-investment-grade territory; refinancing becomes difficult when rates or earnings move against the company.
O-score 0.84 → model probability 70%.
Ohlson (1980) logit model of 1-year corporate failure; O > 0 (p > 50%) is the original failure cut-off.
Recurring net losses.
Repeated losses are a core input in both Ohlson and Altman failure models.
Merton distance-to-default 1.28 σ → PD 10.0%.
Investment-grade issuers typically have 1-year PD well below 1%.
0 severe and 1 moderate distress-related headlines in the last 6 months.
Headlines are corroborating evidence only; they are weighted lightly and never drive a flag alone.
Revenue vs net income
Cash generation
Debt vs cash vs equity
✅ Mitigating factors
- Operating cash flow is positive over the latest 12 months.
- Strong current ratio (2.14).
📰 Recent news scan
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⚖️ 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 Csquare, Inc.'s financial-health indicators show?
As of 2026-10-08, Csquare, Inc.'s public financial data places it in the 'Weak' band with a distress score of 68/100, driven by liabilities exceed assets (negative equity), operating profit does not cover interest and very high leverage. 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 Csquare, Inc.'s financial distress score?
68/100 ('Weak'). Ohlson O-score 0.84 (model 1-year failure probability 70%). Merton distance-to-default 1.28 σ (model default probability 10.0%).
What works in Csquare, Inc.'s favour?
Operating cash flow is positive over the latest 12 months. Strong current ratio (2.14).
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.
Other IT & Software companies with distress indicators
- Cyabra, Inc. (CYAB)Very weak 100/100
- Exyn Technologies, Inc. (EXYN)Very weak 100/100
- The OLB Group, Inc. (OLB)Very weak 100/100
- Roadzen, Inc. (RDZN)Very weak 100/100
- Rekor Systems, Inc. (REKR)Very weak 100/100
- Veea Inc. (VEEA)Very weak 100/100
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.