ORKT Forensic Analysis

🚀 Executive Summary

Analysis Date: 2025-12-09

ORKT presents a compelling SHORT opportunity. This busted IPO is a classic case of a company with a collapsing business model, demonstrated by a -33.6% YoY revenue decline to $3.0M in FY2024. The financial situation is critical, with an unsustainable operating cash burn of -$7.3M against a post-IPO cash balance of only $6.0M, signaling an imminent and highly dilutive financing event, as foreshadowed by a recent convertible note term sheet.

---

🔴 Recent Material Events (8-K Analysis)

While no specific 8-K filings were provided, the 20-F details several critical events post-IPO:

• •IPO & Price Collapse (July 2024): The company went public at $4.75 per share, raising approximately $15M in gross proceeds. The stock has since collapsed by over 50% to its current price of $2.33, reflecting a complete loss of market confidence.
• •Dilutive Share Issuance (Oct 2024): Issued 200,000 Class A shares to Maxim Partners LLC for "advisory services," an immediate act of dilution for public shareholders.
• •Strategic Investment (Oct 2024): Deployed S$1.0M (approx. $0.73M) of IPO proceeds for a minority 3.23% stake in cybersecurity firm Evvo Labs Pte. Ltd.
• •🔴 Impending Financing (Feb 2025): The company signed a term sheet for a Convertible Note with Ayrton Capital LLC. This is a major red flag, indicating that the IPO cash is insufficient to sustain operations and that a highly dilutive financing is on the horizon.

---

📉 Insider Trading Activity

No recent Form 4 filings indicating open-market buys or sells by insiders were available. The lack of insider buying, especially after a >50% price drop post-IPO, is a significant bearish signal.

The ownership structure is a major governance concern. Founders Goh Kian Hwa and Lung Lay Hua control 94.7% of the voting power through super-voting Class B shares, leaving public shareholders with virtually no influence over corporate actions, including dilutive financings.

---

📰 Current News & Market Context

The most critical news is the February 2025 term sheet for a convertible note. This signals severe financial distress and an urgent need for capital. Such financing structures are often toxic to existing equity holders, typically involving deep discounts and warrant coverage that lead to a death spiral of dilution.

The company operates in the highly competitive No-Code/Low-Code space against giants like Microsoft, Mendix, and Outsystems. ORKT is a micro-cap player that appears to be losing significant ground.

---

🏢 Business Model Analysis

ORKT operates a dual business model:

1. •No-Code Platform (eMOBIQ®): A Platform-as-a-Service (PaaS) for developing mobile applications, targeting SMEs in Singapore.
2. •Packaged Software Solutions: Reselling and implementing Microsoft Dynamics ERP and providing related professional services.

Revenue is split between recurring subscriptions/support and non-recurring professional services. The sharp decline in both segments suggests the business model is failing to gain traction or retain customers in a competitive market.

---

💰 Financial Health

The company's financial health is in critical condition. The FY2024 results reveal a business in rapid decline.

• •🔴 Cash Burn: The company burned $7.3M from operations on just $3.0M of revenue. This is an existential threat.
• •⚠️ Balance Sheet: As of Dec 31, 2024, the company held $6.0M in cash. At the current burn rate, this provides a runway of less than 12 months, making the upcoming convertible note financing a certainty.

---

밸 Valuation Analysis

• •Market Cap: $54.4M (23.36M shares @ $2.33)
• •Enterprise Value: $48.8M (Market Cap - $6.0M Cash + $0.4M Debt)

Despite the catastrophic performance, the market ascribes nearly $50M of value to the operating business, which is currently destroying value at an alarming rate. The valuation appears propped up solely by the remaining cash on the balance sheet.

Reverse DCF

A reverse DCF shows the market is pricing in a revenue growth rate of -35.7%, which aligns with the recent trajectory. However, the key insight is that the current valuation fails to adequately price in the imminent and severe dilution required to keep the company solvent. The stock is a melting ice cube, and its value should trend towards cash-per-share minus future burn and liabilities.

---

🤺 Competitive Position

ORKT is a niche, micro-cap player in a crowded and competitive market. It faces insurmountable competition from well-funded, established platforms like Microsoft Power Apps, Outsystems, and Mendix. Its declining revenue and shrinking gross margins strongly suggest it has no pricing power and is losing market share.

---

👔 Management Quality

• •Execution: Management has failed to deliver on the growth story sold at the IPO. The massive increase in S&M spending alongside a revenue collapse points to poor execution and strategy.
• •Capital Allocation: The decision to seek dilutive financing less than a year after the IPO is a major failure in capital management.
• •Alignment: With 95% voting control, management is entrenched. Their interests are not aligned with public, minority shareholders who will bear the brunt of the upcoming dilution.

---

🚨 Risk Factors (For the Short Thesis)

• •Short Squeeze Risk (Low): The stock has low volume and a small float, which could lead to volatility. However, the fundamental story is so poor that a sustained squeeze is unlikely.
• •Buyout Risk (Very Low): Given the poor performance and dual-class structure, an acquisition at a premium to the current price is highly improbable.
• •Turnaround Risk (Low): A dramatic pivot and cost-cutting could stabilize the company, but the current trajectory shows no signs of this.

---

🕵️ Forensic Accounting Flags

• •🔴 Revenue vs. Cash Flow Divergence: Massive negative operating cash flow (-$7.3M) relative to revenue ($3.0M) is a primary indicator of a failing business model.
• •🔴 Inefficient Spending: Sales & Marketing expenses increased by 38% while revenue plummeted -33.6%. This indicates capital is being destroyed, not invested.
• •⚠️ Massive G&A Expense: FY2024 G&A of $6.2M (driven by IPO costs) was more than 2x revenue. While partly non-recurring, it highlights a high fixed cost base that will be difficult to support with declining revenue.

---

📉 Short Thesis

ORKT is a fundamentally broken business on a clear path to significant shareholder value destruction. The short thesis is based on three pillars:

1. •Collapsing Fundamentals: Revenue is in freefall (-33.6% YoY) and gross margins have been crushed (from 47% to 26%), indicating a failed business model with no competitive moat or pricing power.
2. •Unsustainable Cash Burn: The company is burning over $7M annually on just $3M of revenue. With only $6M of cash remaining, its runway is less than a year, making survival without external capital impossible.
3. •Imminent & Severe Dilution: The announced convertible note term sheet is the primary catalyst. This financing will be done from a position of extreme weakness and will likely be highly toxic to common equity, leading to a spiral of dilution and a significantly lower share price.

---

🗓️ Catalysts & Timeline

• •Near-Term (1-3 Months): Announcement of the definitive terms of the convertible note financing. The punitive terms will likely re-rate the stock lower.
• •Mid-Term (3-6 Months): Q1/Q2 2026 earnings reports confirming continued high cash burn and revenue decline.
• •Long-Term (6-12 Months): Further financing rounds, potential delisting notice from Nasdaq for failing to meet minimum bid price or market cap requirements.

---

🎯 Price Targets

---

結論 Investment Recommendation

SHORT with High Conviction (8/10)

This is a high-conviction short. The combination of a busted IPO narrative, catastrophic financial performance, and a clear, near-term catalyst in the form of dilutive financing creates a highly asymmetric risk/reward profile to the downside.

---

📜 One-Liner Thesis

A busted IPO with a collapsing business model, unsustainable cash burn, and imminent dilutive financing, making it a compelling short candidate.