Negative Operating & Free Cash FlowConsistent negative operating and free cash flows constrain the company's ability to self-fund inventory, marketing, and IP protection. Over months this forces external financing or cuts to growth investments, raising execution risk and limiting strategic flexibility.
Elevated LeverageHigh leverage increases financial risk and reduces resilience to revenue shocks or margin pressure. Debt servicing obligations can crowd out investment in product development and distribution, and limit the company's ability to pursue opportunistic M&A or expand licensing programs.
Thin Net Profitability & Low ROEVery low net margins and weak ROE indicate limited conversion of sales into shareholder returns. Structurally thin profitability reduces the buffer for cyclical downturns and makes it harder to fund growth internally, increasing reliance on operational improvements or external capital.