Persistent Net LossesOngoing net losses erode retained equity and constrain reinvestment capacity. Persistent unprofitability makes the business dependent on external funding, limits strategic flexibility, and heightens execution risk if revenue growth or margin improvements fail to materialize into sustainable operating profits.
Negative Operating And Free Cash FlowNegative operating and free cash flow indicate the core business does not generate sufficient cash to fund operations or growth. Reliance on financing to bridge cash needs raises liquidity and refinancing risk, undermining the company’s ability to invest in projects or weather cyclical downturns.
Weakened Equity And High LeverageA declining equity base and high leverage increase bankruptcy and refinancing risk while limiting strategic options. Heavy leverage can magnify downturns, raise interest costs, and restrict the company’s ability to pursue M&A or capex, making capital structure remediation a priority for long-term stability.