Negative Operating & Free Cash FlowRecent TTM cash burn undermines financial flexibility: negative operating and free cash flow constrain the firm’s ability to fund working capital, capex, dividends, or service new debt from internal resources, increasing reliance on external financing during expansion.
Volatile Profitability And Thin MarginsEarnings have swung from strong margins in FY2022 to losses in FY2024–FY2025, with only a slim TTM net margin. This inconsistency limits retained earnings, raises execution risk for scaling operations, and reduces cushion against input-cost shocks in apparel manufacturing.
Significant Near-term Capex And Bank FinancingThe $3.4M acquisition plus ~$5M renovation commitment and the $2.8M loan increase near-term cash outflows and leverage needs. Given current negative cash flow, these obligations could strain liquidity or require additional external funding if ramp-up or margin gains lag expectations.