Failing Stocks

[robertbanking]

Hello everyone, hope you had a great start to the week and are keeping positive.

I kindly wondered how normally stocks would publish that they have a concern or are struggling. For instance a penny stock (small cap stock) that does not make any money and is having trouble raising money from investors? Would they usually announce this through press releases initially, rather than the stock just suddenly being suspended please? Further a stock that is losing money rapidly and feels they will not be able to continue trading? I please wondered how this would work normally, any advice anyone could give it would mean alot to mean.

Thank you very much indeed for your kindness. Take care and all the very best.

 

[Craton]

A public company has regulatory and listing compliance/rules to adhere to so most announcements need to be made abiding by those processes.

Seem though that you're asking about solvency.

Solvency is the ability of a company to meet its long-term debts and other financial obligations. Solvency is one measure of a company's financial health, since it demonstrates a company's ability to manage operations into the foreseeable future. Investors can use ratios to analyze a company's solvency.

Any company bleeding money and/or is insolvent would be put into the hands of the administrators.

 

[Austwide]

If you go through the quarterly report financials, there is a section 8 (in standard formatted reports) the states how many quarters their can carry on at their current rate. It really only gives an idea.

8. Estimated cash available for future operating activities $A’000
8.1 Net cash from / (used in) operating activities (item 1.9) (4,288)
8.2 (Payments for exploration & evaluation classified as investing activities) (item 2.1(d)) (9,033)
8.3 Total relevant outgoings (item 8.1 + item 8.2) (13,321)
8.4 Cash and cash equivalents at quarter end (item 4.6) 149,022
8.5 Unused finance facilities available at quarter end (item 7.5) -
8.6 Total available funding (item 8.4 + item 8.5) 149,022
8.7 Estimated quarters of funding available (item 8.6 divided by item 8.3) 11.19 Note: if the entity has reported positive relevant outgoings (ie a net cash inflow) in item 8.3, answer item 8.7 as “N/A”. Otherwise, a figure for the estimated quarters of funding available must be included in item 8.7.
8.8 If item 8.7 is less than 2 quarters, please provide answers to the following questions:
8.8.1 Does the entity expect that it will continue to have the current level of net operating cash flows for the time being and, if not, why not?

Lost the format but it may help