As investors, we really need to spend time with the little things. Earnings reports are great, but if that's the only time we pay attention to what's going on, we're likely to be a bit late on important news.

Take last week's short Securities and Exchange Commission filing from Lexar (NASDAQ:LEXR), for instance. At first glance, an expansion of a credit facility may not seem like such a big deal. After all, every decent company needs to be able to tap credit from time to time, right? Well, in Lexar's case, it's looking like it is being expanded for all the wrong reasons.

Borrowing to fund growth? Good, possibly. Borrowing to fund a smart acquisition? Good, perhaps. Borrowing to pay off higher-rate debt? Also good, maybe.

Borrowing to fund operations that are proving to be consistently unprofitable? Ummm. gonna have to go with bad. This is what Lexar started doing last October, to the tune of $40 million. Even worse, the firm actually defaulted -- technically, a waiver was granted -- on the loan covenants.

That's why the more recent filing looks so ominous. Lexar's new agreement allows it to borrow $80 million, another $40 million on top of the $40 million it now owes. The uses for the borrowings? To fund operations. That's bad. But it is, of course, par for the course for Lexar, which is running in the red as the result of a brutal price struggle with its larger, profitable peer, SanDisk (NASDAQ:SNDK). Talk about getting the wrong end of Ray Kroc's old firehose trick.

I always get plenty of whiny email when I get bearish on Lexar. Let's take a frank look at the situation. Yes, I own shares of SanDisk, but if Lexar looked like it would be turning around any time soon, I'd buy it, too. This isn't a Ford vs. Chevy truck showdown here -- though it would be funny to see digital cameras accessorized with flash RAM versions of those "Calvin whizzing" stickers.

The sad fact is that the company is far too good at losing money. (Fun research project for you: How many years has Lexar actually turned a profit?)

If Lexar fans really want to put their hopes in a revenue restatement, a lawsuit, or a much hoped-for buyout offer from Eastman Kodak (NYSE:EK), I wish them good luck. We at the Fool prefer it when common-stock holders make money. But we call it like we see it, and from my seat, the additional debt exposure, coupled with continuing red ink, makes the firm look like an even better short candidate.

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Seth Jayson worries for Lexar's profitability ever time he sees those pallet-loads of flash memory at Sam's Club. At the time of publication, he had shares of SanDisk, but no position in any other firm mentioned. View his stock holdings and Fool profile here. Fool rules are here.