ZBAO — financial distress indicators
Financial-health summary
ZBAO's reported numbers place it in the 'Very weak' financial-health band (distress score 84/100). The main indicators are operating profit does not cover interest, market-implied default probability >20% and operations consume cash. Independently, the Ohlson accounting model puts its 1-year failure probability at 97% and the market-implied (Merton) default probability is 96.5%. In its favour: revenue still growing (+51% yoy).
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.
Interest coverage (EBIT / interest) is -16.20×.
When EBIT < interest, debt service is funded from cash reserves or new borrowing — the classic precursor to payment default and covenant breach.
Merton distance-to-default -1.81 σ → PD 96%.
Structural (Merton/KMV) model: equity is a call option on assets; low distance-to-default means assets are close to the default point.
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.
Price is -95% from its 52-week high.
Equity markets price distress early; collapses of this size usually reflect fear of wipe-out in a restructuring.
O-score 3.53 → model probability 97%.
Ohlson (1980) logit model of 1-year corporate failure; O > 0 (p > 50%) is the original failure cut-off.
Current ratio is 0.86.
Short-term obligations exceed short-term resources — the company relies on rolling over credit.
Cash covers ~16 months of free-cash-flow burn.
Funding needs within two years make the company dependent on capital-market access.
Recurring net losses.
Repeated losses are a core input in both Ohlson and Altman failure models.
Last price $0.06.
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.
Revenue vs net income
Cash generation
Debt vs cash vs equity
✅ Mitigating factors
- Revenue still growing (+51% YoY).
📰 Recent news scan
- Zhibao Technology Inc. Announces Reverse Share SplitYahoo Finance · 2026-10-08
- Zhibao Technology Signs NEXSYS Acquisition Agreement for Planned AI Computing Infrastructure BusinessYahoo Finance · 2026-09-28
- Zhibao Technology Signs Definitive Agreement to Acquire NEXSYS TECH for Planned AI Computing Infrastructure BusinessYahoo Finance · 2026-09-28
- Zhibao Technology Signs Non-Binding LOI to Acquire On-Chain Trading Platform MeVXYahoo Finance · 2026-09-23
- Zhibao Technology Inc. Subsidiary Zhibao Labuan Re's Board Approves Strategic Capital Injection and Operational Funding ExplorationYahoo Finance · 2026-09-22
- Zhibao Technology Inc. Subsidiary Zhibao Labuan Re Accelerates Reinsurance Business Expansion Across Hong Kong and Southeast AsiaYahoo Finance · 2026-09-18
⚖️ 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 ZBAO's financial-health indicators show?
As of 2026-10-08, ZBAO's public financial data places it in the 'Very weak' band with a distress score of 84/100, driven by operating profit does not cover interest, market-implied default probability >20% 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 ZBAO's financial distress score?
84/100 ('Very weak'). Ohlson O-score 3.53 (model 1-year failure probability 97%). Merton distance-to-default -1.81 σ (model default probability 96.5%).
What works in ZBAO's favour?
Revenue still growing (+51% 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 Unclassified companies with distress indicators
- CNEY (CNEY)Very weak 100/100
- EPOW (EPOW)Very weak 100/100
- GIBO (GIBO)Very weak 100/100
- GNS (GNS)Very weak 100/100
- HKPD (HKPD)Very weak 100/100
- HUBC (HUBC)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.