Negative EquityNegative shareholders' equity is a durable solvency red flag: it signals cumulative losses have eroded the capital base, restricting access to traditional financing, raising counterparty concerns, and increasing the likelihood of dilutive recapitalization or asset disposals to restore balance-sheet health.
Weak And Negative MarginsPersistently low gross margin and deep operating losses indicate structural profitability issues such as weak pricing power, high cost structure, or unfavorable product mix. Without sustained margin recovery, revenue growth alone won’t translate into viable, long-term earnings.
Sustained Cash BurnConsecutive years of negative operating and free cash flow create ongoing funding pressure, forcing dependence on external financing or asset sales. This persistent cash burn constrains reinvestment, R&D, and commercial scaling absent a durable shift to positive operations.