Datasea Intelligent Technology Ltd. — financial distress indicators
Financial-health summary
Datasea Intelligent Technology Ltd.'s reported numbers place it in the 'Very weak' financial-health band (distress score 79/100). The main indicators are market-implied default probability >20%, severe working-capital shortfall and losses in each of the last 3 years. Independently, the Ohlson accounting model puts its 1-year failure probability at 98% and the market-implied (Merton) default probability is 42.1%. 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.
Merton distance-to-default 0.20 σ → PD 42%.
Structural (Merton/KMV) model: equity is a call option on assets; low distance-to-default means assets are close to the default point.
Current ratio is 0.60 (current assets cover 60% of near-term obligations).
Cash-flow insolvency test: inability to pay debts as they fall due is the trigger for both U.S. involuntary petitions and Indian IBC default.
Net income negative in 3 of 3 fiscal years.
Persistent losses erode equity and the capacity to absorb shocks.
Debt is 46% of assets while EBITDA is not positive.
With no operating earnings, repayment depends entirely on asset sales or fresh capital.
Operating cash flow negative in 3 of the last 3 years.
A business that cannot fund itself from operations depends on external capital to survive.
O-score 3.81 → model probability 98%.
Ohlson (1980) logit model of 1-year corporate failure; O > 0 (p > 50%) is the original failure cut-off.
Share count up +126% in a year.
Survival financing: repeated equity raises at depressed prices.
Last price $0.62.
Below the $1 minimum-bid listing standard (Nasdaq Rule 5550(a)(2) / NYSE 802.01C); sustained breach leads to delisting and loss of capital-market access.
Price is -70% from its 52-week high.
For financial firms a share-price run often precedes a deposit or funding run (confidence channel).
Revenue vs net income
Cash generation
Debt vs cash vs equity
✅ Mitigating factors
- Operating cash flow is positive over the latest 12 months.
- Revenue still growing (+199% YoY).
📰 Recent news scan
- Datasea Reports Fiscal Year 2026 Results with Gross Profit Up 70.1% and Gross Margin Increased to 10.2% Despite Lower RevenueYahoo Finance · 2026-10-05
- Datasea Begins Commercial Deployment of AI Agent Services Under Five Agreements With Up to $89.4 Million in Potential Annualized VolumeYahoo Finance · 2026-09-17
- Datasea's AI Agent Digital Marketing Services Enter Scaled Commercial Deployment, with Five Agreements Representing Potential Annualized Service Volume of Up to Approximately US$89.4 Million (RMB600 Million)Yahoo Finance · 2026-09-17
- Datasea Expands into AI Elderly Care Robotics Through Strategic Cooperation with Linghang IntelligentYahoo Finance · 2026-09-16
- Datasea Expands into China's Trillion-RMB Silver Economy Through Strategic Cooperation in AI Elderly Care RobotsYahoo Finance · 2026-09-16
- Datasea Inc. (NASDAQ: DTSS) Advances International Commercialization of Acoustic + AI Wellness Care Robots and Prepares U.S. Launch of Acoustic Disinfection ProductsYahoo Finance · 2026-04-15
⚖️ 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 Datasea Intelligent Technology Ltd.'s financial-health indicators show?
As of 2026-10-08, Datasea Intelligent Technology Ltd.'s public financial data places it in the 'Very weak' band with a distress score of 79/100, driven by market-implied default probability >20%, severe working-capital shortfall and losses in each of the last 3 years. 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 Datasea Intelligent Technology Ltd.'s financial distress score?
79/100 ('Very weak'). Ohlson O-score 3.81 (model 1-year failure probability 98%). Merton distance-to-default 0.2 σ (model default probability 42.1%).
What works in Datasea Intelligent Technology Ltd.'s favour?
Operating cash flow is positive over the latest 12 months. Revenue still growing (+199% YoY).
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.