EPS of $0.00 increased by 45.8% from previous year
Gross margin of 51.0%
Net income of -46.43K
"N/A" -
Caro Holdings Inc (CAHO) QQ1 2025 Results — Weak liquidity, high leverage and modest top-line progress in a shell-company construct
Executive Summary
Caro Holdings Inc delivered a Q1 2025 report characterized by a small top-line in USD terms and a substantial cash burn driven by heavy operating costs and interest/other expenses. Revenue stood at USD 18.8 million (approximate, reported in thousands), with gross profit of USD 9.6 million and a gross margin of about 51%. However, the company posted an operating loss of USD 22.8 million and a net loss of USD 46.4 million for the quarter, translating into an EPS of -0.0013. EBITDA was negative at USD 12.6 million, underscoring the drag from non-operating costs and high interest expense. The balance sheet reveals pronounced liquidity and solvency concerns: total assets about USD 459.3 million versus total liabilities of USD 970.5 million, yielding negative shareholders’ equity of USD 511.2 million. Current liabilities exceed current assets by a wide margin, producing a current ratio of 0.23 and a cash balance of USD 5.8 million at period-end. Cash flow from operations was negative USD 34.6 million, with modest capital expenditure (USD 2k) and net financing activity contributing USD 20 million of cash inflow, culminating in a net cash decrease of USD 14.98 million during the quarter. These dynamics suggest limited near-term upside absent meaningful debt restructuring, asset monetization, or corporate actions such as strategic mergers or a backdoor listing. Management commentary (where available) is not included in the provided data, limiting the ability to anchor qualitative guidance; as such, the investment thesis remains highly conditional on structural changes that could alter liquidity, leverage, and capital allocation trajectories.
Key Performance Indicators
Revenue
18.82K
QoQ: 33 501.79% | YoY:N/A
Gross Profit
9.60K
51.03% margin
QoQ: 204.86% | YoY:N/A
Operating Income
-22.83K
QoQ: 57.32% | YoY:79.65%
Net Income
-46.43K
QoQ: 51.39% | YoY:68.25%
EPS
0.00
QoQ: 50.00% | YoY:45.83%
Revenue Trend
Margin Analysis
Key Insights
Cash and cash equivalents: USD 5,815k
Net cash provided by/used in operating activities: USD -34,587k
Net cash used for investing activities: not disclosed; capex: USD -2k
Net cash provided by/used in financing activities: USD 20,000k
Liquidity and cash flow:
- Cash and cash equivalents: USD 5,815k
- Net cash provided by/used in operating activities: USD -34,587k
- Net cash used for investing activities: not disclosed; capex: USD -2k
- Net cash provided by/used in financing activities: USD 20,000k
- Net change in cash: USD -14,979k
- Current ratio: 0.23; Quick ratio: 0.23; Cash ratio: 0.006
Leverage and solvency:
- Total debt: USD 797,566k; Net debt: USD 791,751k
- Total liabilities: USD 970,522k; Total assets: USD 459,313k; Shareholders’ equity: USD -511,209k
- Debt to capitalization: 2.79x; Debt to equity: negative (industry reporting shows a negative equity base)
Profitability indicators:
- EBITDA margin: -66.8%; Operating margin: -12.13%; Pretax margin: -24.67%; Net margin: -24.67%
- Return on assets (ROA): -10.1%; Return on equity (ROE): 9.08% (note: ROE is a function of negative equity; interpret with caution)
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
18.82K
N/A
33 501.79%
Gross Profit
9.60K
N/A
204.86%
Operating Income
-22.83K
79.65%
57.32%
Net Income
-46.43K
68.25%
51.39%
EPS
0.00
45.83%
50.00%
Key Financial Ratios
currentRatio
0.23
grossProfitMargin
51%
operatingProfitMargin
-121.3%
netProfitMargin
-247%
returnOnAssets
-10.1%
returnOnEquity
9.08%
debtEquityRatio
-1.56
operatingCashFlowPerShare
$-0
freeCashFlowPerShare
$-0
priceToBookRatio
-71.41
priceEarningsRatio
-196.57
Net Income vs. Revenue
Expense Breakdown
Management Commentary
No earnings call transcript data provided in the supplied dataset. Consequently, key management themes, strategic rationale, or forward-looking commentary could not be synthesized from the transcript.
N/A
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N/A
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Forward Guidance
No formal guidance is presented in the supplied data. Given the current liquidity strain, negative equity, and outsized interest and other non-operating costs, the near-term outlook is highly dependent on strategic actions (debt restructuring, asset monetization, or corporate actions such as a merger/backdoor listing) to improve liquidity and recalibrate the balance sheet. Investors should monitor developments around debt maturity timelines, potential capital injections, and any announcements related to corporate actions, restructurings, or strategic pivots that could meaningfully alter cash burn and leverage trajectories.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
CAHO Focus
51.03%
-1.21%
9.08%
-196.57%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
CAHO presents a highly conditional investment case. The quarter shows modest revenue with a heavy cost base and outsized interest/other expenses, culminating in a substantial net loss and negative equity. Absent material balance-sheet remediation or a strategic corporate action that meaningfully unlocks liquidity and reduces leverage, the stock remains an elevated-risk, high-volatility proposition typical of shell-company candidates. For investors with a high tolerance for reset scenarios, a potential backdoor listing or asset monetization could provide a catalyst, but this is speculative without concrete guidance or announced actions. Continuous monitoring of debt maturities, potential financing transactions, and any strategic announcements is essential to reassess the risk-reward profile.
Key Investment Factors
Growth Potential
Limited near-term growth given the small revenue base and weak profitability within a shell-company construct. Any meaningful upside hinges on corporate actions (e.g., reverse merger, asset monetization, or business restructuring) that could unlock value or provide a path to sustainable cash flow.
Profitability Risk
Major liquidity risk evidenced by current ratio 0.23 and cash of USD 5.8 million. Substantial net debt (USD 791.8 million) and negative shareholders’ equity raise solvency concerns. Dependence on external financing and potential impairment risk of intangible assets (USD 239,572k). No disclosed guidance increases uncertainty about future capital strategy. No peers reported, limiting benchmark comparisons.
Financial Position
Negative equity, high leverage, and significant interest burden drive a fragile financial position. Cash burn from operations and heavy operating cost base undermine near-term resilience. The balance sheet includes sizeable intangible assets and potential impairment risk if business plans do not materialize.
SWOT Analysis
Strengths
Small but positive gross margin on revenue of USD 18.8 million (approx.) suggests underlying pricing and cost of goods sold control in the core activity.
Presence of intangible assets (USD 239,572k) may offer strategic options for monetization or restructuring, subject to market conditions and legal approvals.
Overhead absorption in G&A appears contained relative to gross profit in the period (USD 32.4 million vs. USD 9.6 million gross profit), indicating a potential lever to optimize cost structure.
Weaknesses
Negative shareholders’ equity of USD -511.2 million and total liabilities of USD 970.5 million indicate a fragile balance sheet and high insolvency risk if cash flows do not improve.
Cash burn, with operating cash flow of USD -34.6 million and a very weak liquidity position (cash USD 5.8 million; current/quick ratio ~0.23).
Dependence on external financing and significant interest expense (USD 24.6 million) distort profitability and solvency metrics.
No disclosed revenue growth driver or clear strategic plan in the supplied data; governance and business model require urgent evaluation.
Opportunities
Strategic restructuring or merger activity (e.g., backdoor listing) could unlock liquidity and leverage, transforming a shell-structured business into a value-creating vehicle.
Monetization or impairment review of intangible assets could re-base the balance sheet and enable more attainable leverage targets.
If management pursues a sharply leaner cost structure and focuses on a narrow, defendable line of business, there may be a path to breakeven cash flow with targeted capital allocation.
Threats
Sustained cash burn and the risk of liquidity shortfalls could lead to delisting or forced restructuring in the OTC market.
Macro and sector-specific risk for shell companies, including regulatory scrutiny and dilution risk from potential financing rounds.
Asset impairment risk if the business plan fails to materialize and intangible assets are written down, further eroding equity.