System1, Inc. — financial distress indicators
Financial-health summary
System1, Inc.'s reported numbers place it in the 'Weak' financial-health band (distress score 67/100). The main indicators are liabilities exceed assets (negative equity), losses in each of the last 3 years and operations consume cash. In its favour: high insider/promoter ownership (68%) aligns management with survival.
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 1.18× 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).
Net income negative in 3 of 3 fiscal years.
Persistent losses erode equity and the capacity to absorb shocks.
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.
Cash covers ~22 months of free-cash-flow burn.
Funding needs within two years make the company dependent on capital-market access.
Revenue changed -23% year over year.
Falling sales reduce cash available for debt service.
Price is -72% from its 52-week high.
For financial firms a share-price run often precedes a deposit or funding run (confidence channel).
Revenue declined every year for three years.
Structural, not cyclical, decline.
Revenue vs net income
Cash generation
Debt vs cash vs equity
✅ Mitigating factors
- High insider/promoter ownership (68%) aligns management with survival.
📰 Recent news scan
- Insider Buyers Lose US$17k As System1 Sheds US$3.0m - Simply Wall StreetGoogle News · 2026-10-07
- MapQuest usage runs roughly 50 times normal after it keeps familiar lake and gulf names - Stock TitanGoogle News · 2026-08-31
- $SST stock is up 33% today. Here's what we see in our data. - Quiver QuantitativeGoogle News · 2026-08-14
- SST Forecast — Price Target — Prediction for 2027 - TradingViewGoogle News · 2026-08-09
- System1 (NYSE:SST) Gains After Debt Cut and Narrower Loss Despite Revenue Miss - ChartMillGoogle News · 2026-08-05
- Why Is System1 (SST) Stock Down 33% After Hours Today? - Yahoo FinanceGoogle News · 2026-05-12
⚖️ 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 System1, Inc.'s financial-health indicators show?
As of 2026-10-08, System1, Inc.'s public financial data places it in the 'Weak' band with a distress score of 67/100, driven by liabilities exceed assets (negative equity), losses in each of the last 3 years and operations consume cash. 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 System1, Inc.'s financial distress score?
67/100 ('Weak').
What works in System1, Inc.'s favour?
High insider/promoter ownership (68%) 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.
Other Industrials & Capital Goods companies with distress indicators
- ADSE (ADSE)Very weak 100/100
- Nuburu, Inc. (BURU)Very weak 100/100
- Liberty Defense Holdings, Ltd. (DETX)Very weak 100/100
- GreenPower Motor Company Inc. (GP)Very weak 100/100
- Hydrofarm Holdings Group, Inc. (HYFM)Very weak 100/100
- Nexus Advanced Technologies Inc. (NXAT)Very weak 100/100
All Industrials & Capital Goods companies with distress indicators →
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.