Revenue Decline & Deep LossesA steep revenue drop and large negative net margin materially weaken the company’s ability to fund operations internally. Over several months this compresses operational scale, undermines negotiating leverage with suppliers and clients, and makes it harder to rebuild profitable growth without structural fixes.
Persistent Negative Cash FlowConsistently negative operating and free cash flow forces reliance on external funding or balance-sheet resources. This is a durable constraint: it increases dilution or refinancing risk, limits reinvestment in sales/engineering, and can impair the company’s ability to execute strategic initiatives over the next 2–6 months.
Eroding Equity / Weak ROEDeclining equity and deeply negative ROE reduce the company’s capital buffer, weakening resilience to further shocks. Even with low debt, a shrinking equity base constrains future borrowing capacity, increases financing costs, and raises the prospect of dilutive capital raises during the next several quarters.