Shrinking RevenueA persistent top-line contraction erodes scale and undermines the revenue base needed to leverage fixed costs. Declining sales make it harder to restore gross margins and profitability, increase churn risks with customers, and lengthen the timeline to sustainable cash generation absent clear new market traction.
Negative Gross Profit And MarginsNegative gross profit signals the core product economics are not covering direct costs, a structural barrier to long-term profitability. Even with SG&A cuts, negative unit economics limit scalability and require either pricing/product changes or material revenue mix improvements to restore sustainable margins.
Stressed Balance Sheet And Negative EquityNegative equity and a very small asset base constrain financing options and raise solvency concerns. The balance-sheet stress increases refinancing and dilution risk, limits ability to fund growth or absorb shocks, and reduces strategic flexibility for product investment or sales scaling over the medium term.