OTC:RLEA
Rubber Leaf Inc
A volatile OTC stock showing a recent accounting profit of $2.9M amidst a steep five-year revenue decline and significant operational cash burn.
Key Metrics
Investment Thesis
Bull Case
The stock offers a speculative turnaround play as the company successfully reported a net profit of $2.9M in 2025 after years of losses, potentially signaling a new operational strategy or successful asset monetization. The significant cash flow from financing activities indicates external support or restructuring that could stabilize the balance sheet if revenue trends reverse.
Bear Case
Investors should avoid this stock due to a severe five-year revenue decline dropping from $10.6M to $4.9M and a current liability structure that exceeds assets, signaling potential bankruptcy risk. The large negative cash flow from operations combined with high operating expenses suggests the core business is not generating sufficient organic cash to fund its growth or debt obligations without external capital.
About Rubber Leaf Inc
Rubber Leaf Inc (RLEA) is an OTC-traded entity reporting significant volatility with a sharp revenue decline from $10.6M in 2022 to $4.9M in 2025, while achieving a recent net profit turnaround of $2.9M despite high operating expenses and a substantial retained earnings deficit. The company's financial profile suggests active restructuring or specific one-time gains contributing to the latest profitability, though liquidity remains constrained by current liabilities exceeding current assets. Investors should closely monitor whether this profit is sustainable given the deteriorating revenue trend and massive negative cash flow from operations.
Analysis
Management Discussion
While the latest annual data shows a net profit of $2.9M, this is driven largely by discontinued operations and does not offset the continuing operations loss of $1.9M or the negative operating cash flow of $153.8M. The company's financial health is precarious with a working capital deficit and a retained earnings deficit of $2.6M, suggesting that recent profitability may be temporary or non-recurring.
Industry Overview
The company operates in a sector characterized by high volatility where revenue trends can shift dramatically within short periods, often reflecting broader market contraction or specific competitive pressures that impact margins significantly.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Revenue | $10.6M | $10.0M | $6.9M | $4.9M |
| Cost of Revenue | $9.1M | $10.3M | $7.7M | $4.1M |
| Gross Profit | $1.5M | $-356.0K | $-739.5K | $795.3K |
| Operating Expenses | $985.7K | $797.2K | $1.1M | $2.7M |
| Operating Income | $512.7K | $-1.2M | $-1.8M | $-1.9M |
| G&A | $917.4K | $710.5K | $1.0M | $200.4K |
| Marketing | $68.3K | $86.8K | $20.4K | — |
| D&A | $660.8K | $599.4K | $729.3K | — |
| Other OpEx | $0 | $0 | $0 | $2.5M |
| Non-Operating Income | $255.7K | $-228.9K | $-411.8K | $7.0K |
| Interest Expense | $187.5K | $237.6K | — | — |
| Pre-Tax Income | $768.4K | $-1.4M | $-2.2M | $-1.9M |
| Income Tax | $11.0K | $16.1K | $-8.6K | $63.9K |
| Continuing Ops | $757.4K | $-1.4M | $-2.2M | $-1.9M |
| Discontinued Ops | $0 | $0 | $0 | $4.8M |
| Net Income | $757.4K | $-1.4M | $-2.2M | $2.9M |
| Minority Interest | $0 | $0 | $0 | $0 |
| Net to Common | $757.4K | $-1.4M | $-2.2M | $2.9M |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Current Assets | $9.9M | $8.8M | $9.9M | $3.3M |
| Cash & Equivalents | $2.2M | $125.0K | $2.4M | — |
| Inventory | $1.3M | $760.6K | $724.8K | — |
| Other Current Assets | $6.3M | $7.9M | $6.8M | — |
| Long-Term Assets | $8.9M | $11.1M | $11.8M | $2.8M |
| PP&E (Net) | $6.8M | $9.1M | $9.9M | — |
| Intangibles | $2.1M | $2.0M | $1.9M | — |
| Other LT Assets | $0 | $0 | $0 | — |
| Total Assets | $18.8M | $19.8M | $21.7M | $6.1M |
| Current Liabilities | $17.9M | $20.1M | $24.2M | $5.7M |
| Deferred Revenue | $213.1K | $354.1K | $344.3K | — |
| Other Current Liab | $17.7M | $19.7M | $23.9M | — |
| Long-Term Liabilities | $0 | $20.5K | $0 | $63.9K |
| Total Liabilities | $17.9M | $20.1M | $24.2M | $5.8M |
| Shareholders' Equity | $823.9K | $-258.1K | $-2.5M | $287.2K |
| Paid-In Capital | $2.4M | $2.8M | $2.8M | $2.8M |
| Retained Earnings | $-1.8M | $-3.2M | $-5.4M | $-2.6M |
| AOCI | $202.5K | $119.7K | $83.8K | $986 |
| Total L&E | $18.8M | $19.8M | $21.7M | $6.1M |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Net Income (CFO) | $757.4K | $-1.4M | $-2.2M | $2.9M |
| Non-Cash Adjustments | $-5.0M | $-133.0K | $-1.8M | $-8.9M |
| Working Capital Changes | $5.5M | $1.4M | $3.4M | $5.9M |
| Cash from Operations | $1.3M | $-84.1K | $-609.2K | $-153.8K |
| Cash from Investing | $-2.6M | $-3.0M | $-1.9M | $0 |
| Cash from Financing | $1.9M | $1.8M | $2.5M | $150.7K |
| FX Effect | $70.3K | $-31.9K | $368 | $4.0K |
| Net Change in Cash | $647.2K | $-1.3M | $-29.4K | $812 |
| Beginning Cash | $716.5K | $1.4M | $41.7K | $293 |
| Ending Cash | $1.4M | $41.7K | $12.3K | $1.1K |
Frequently Asked Questions
How does Rubber Leaf Inc make money?
Primary revenue generation appears tied to discontinued operations which contributed $4.8M, contrasting with continuing operations that generated an operating loss of $1.9M; the business model relies heavily on non-cash adjustments totaling $8.9M to reconcile net income against cash flow from financing activities which stood at $150.6M.
What are the main risks for RLEA?
Revenue has contracted by over 50% since 2022 indicating a shrinking market share or demand; current liabilities of $5.7M significantly exceed current assets of $3.3M creating potential liquidity solvency concerns; the massive non-cash adjustments suggest earnings quality issues that may not reflect true operational cash generation.
What is RLEA's competitive advantage?
The company demonstrates resilience in turning a net profit despite high cost of revenue and general administrative expenses, while leveraging substantial paid-in capital of $2.8M to maintain operations during periods of negative operating cash flow.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.