Persistent Negative Cash FlowConsistent negative operating and free cash flow across reporting periods indicates the business cannot self-fund operations and will structurally rely on external financing or equity issuance. Over months this undermines financial flexibility, increases dilution risk, and constrains investment in growth or product development.
Declining Equity / Eroding Net WorthMeaningful declines in equity over multiple years reflect cumulative losses that erode the company's capital buffer. This weakens balance-sheet resilience, reduces capacity to absorb shocks, and makes the company more likely to require recapitalization, which can dilute shareholders or trigger governance and strategic shifts.
Minimal And Irregular RevenueVery low and inconsistent revenue undermines the business model's validation: without stable top-line traction, margins remain meaningless and scaling is uncertain. Over a multi-month horizon this raises execution risk, limits leverage benefits, and makes profitability contingent on achieving sustained, material revenue growth.