One in Six Nasdaq Companies Doubts It Can Last a Year

In its quarterly report for the three months to June 30, Summit Therapeutics (SMMT $14.50 -6.27%) wrote: "These conditions raise substantial doubt about the Company's ability to continue as a going concern." Summit is worth $11.6 billion, the largest company in our data to write that sentence, and two months after the report AstraZeneca agreed to buy $2.0 billion of its convertible preferred stock. Most companies that write it don't have an AstraZeneca.

A going-concern warning is the most direct thing a company can tell investors about its own survival: management has looked at its cash, its debts and its plans, and can't conclude it will be able to pay its bills for the next 12 months. We read the latest quarterly report of 4,899 US companies that filed one between July 1 and October 26, 2026, which covers nearly every listed company, and recorded which ones carry the warning.

On Nasdaq, it's one company in six.

What the warning means

US accounting rules require management to check every quarter whether conditions "raise substantial doubt about an entity's ability to continue as a going concern within one year after the date that the financial statements are issued". If they do, the company has to say so in its notes. If management's plans, such as a committed financing, are probable enough to remove the doubt, the company says that instead: 107 of the operating companies in our data described conditions that raised doubt and then said their plans had alleviated it. We don't count those as warnings.

The warning is a statement about funding, not a bankruptcy forecast. A drug developer with a year of cash and three years of trials ahead will carry it until it raises more money, and many do raise it. But it means the company itself, not an outside critic, is telling shareholders that its survival depends on money it doesn't have yet.

Where the stock trades

Most of the Nasdaq gap is size. The median Nasdaq company in our data is worth $412 million and the median NYSE company $3.3 billion, and small companies are far more likely to warn. But size doesn't explain all of it. Among companies worth $50 million to $300 million, 16.0% of Nasdaq companies carry the warning against 6.7% on the NYSE, and under $50 million it's 54.4% against 35.6%.

Size

The median exchange-listed company with the warning is worth about $16 million. Market values use each company's shares outstanding and its October 26 closing price; we left OTC companies out of this table because many trade too rarely for a reliable price.

Industry

Drug developers make up a quarter of all the warnings on their own. The pattern is the one the rules are built for: years of trials, no product revenue, and a cash balance that covers less than the next 12 months of spending. Mining explorers and early-stage medical device companies look similar. Banks and real estate companies sit at the bottom.

The biggest companies with the warning

A high market value and a going-concern warning can sit side by side because they measure different things. Kodiak had $125.9 million of cash and cash equivalents on June 30 and said that "may not be sufficient" for the next 12 months; its market value reflects what investors think its drugs are worth if it can fund them. Verastem had $136.4 million of cash, cash equivalents and investments and reached the same conclusion. Evolution Metals reported $5.3 million of cash against a $78.8 million working capital deficit. Uranium Royalty tied its warning to repaying a bridge loan.

These reports were filed over the summer, and several of these companies have moved since. AstraZeneca agreed on September 28 to buy $2.0 billion of Summit's convertible preferred stock. Kodiak said the same day that both drugs in its Phase 3 DAYBREAK study met their primary endpoints, and it filed a shelf registration on October 20. Verastem sold stock in an October 14 offering for about $234.7 million in net proceeds (its market value above includes those shares). Evolution Metals agreed on September 17 to sell up to $30.9 million of convertible debentures to a Yorkville fund. Their next quarterly reports will show which warnings remain.

Once it appears, it rarely leaves

To see what happens next, we took the 780 operating companies that warned in a 10-Q filed between January and May 2026 and followed them to October 26.

Of the 671 that filed another 10-Q we could read, 632 (94%) still carry the warning. Only 39 dropped it. Another 46 filed an annual report instead, because their fiscal year ended in between. And 59 haven't filed a quarterly or annual report at all since June 1: 15 filed only a notice that their report would be late, 11 filed a Form 15 to deregister, and the rest filed nothing beyond the odd 8-K or ownership form.

Five months is short. But the direction is clear: a company that starts warning tends to keep warning, and about one in thirteen stopped reporting within months.

Below $1

Nasdaq requires a minimum bid price of $1, and a stock that stays under it for 30 consecutive business days gets a deficiency notice. Among Nasdaq companies with the warning and an October price, 138 of 381 (36.2%) closed below $1 on their latest October trading day. Among Nasdaq companies without it, 93 of 1,886 did (4.9%). On the NYSE and NYSE American, it was 27 of 56 with the warning (48.2%) against 1.9% without.

Low prices and the warning feed each other. A company short of cash sells shares at a discount, the price falls, and raising the next round gets harder. A reverse split is the usual way back above $1.

Blank-check companies

Special purpose acquisition companies, SEC industry code 6770, are a case of their own. A SPAC has a deadline to complete a merger or return the money in its trust account, and its working capital outside the trust is usually small, so most of them carry the warning whenever the deadline falls within a year. 207 of the 301 SPACs in our data carry it. That says little about the risk to shareholders, whose money mostly sits in the trust, so we keep SPACs out of every other number in this study.

How to check a company

1. Search the latest 10-Q or 10-K for "substantial doubt". The warning sits in the notes to the financial statements, usually in the first or second note, and again in the liquidity section of management's discussion.
2. Read the next sentence. "Management's plans alleviate the substantial doubt" means no warning. "Has not been alleviated" means a warning.
3. Ignore conditional risk factors. "If we are unable to raise additional capital when needed, that could raise substantial doubt" is a risk factor, not a conclusion. Damora Therapeutics, worth $1.3 billion, uses exactly that sentence while saying its cash funds operations into the second half of 2029.
4. Compare cash with the burn. The warning usually comes with the numbers behind it: cash on hand, the quarterly operating loss, debt coming due.

Our Going-Concern Flags page (GOING-CONCERN) lists the companies with a current warning, each linked to the filing. With the Equibles MCP server connected to Claude or ChatGPT, a prompt like "Using Equibles, check whether Verastem's latest 10-Q includes a going-concern warning, quote the sentence and give its cash at quarter end" returns the warning with its source.

How we built this

• Reports: every 10-Q filed with the SEC between January 1 and October 26, 2026 by a company in our database, read for going-concern language. For each company we took the latest 10-Q filed from July 1 on, which for most companies covers the quarter to June 30. That's 4,899 of the 5,431 companies that filed a 10-Q on EDGAR in that window; 501 of the 532 we don't cover have no ticker in the SEC's exchange file, such as debt-only issuers and non-traded funds.
• Warning: the report states that substantial doubt exists about the company's own ability to continue as a going concern, and doesn't say it was alleviated. We excluded 42 reports where the doubt was conditional ("could raise substantial doubt"), concerned someone else (a REIT describing a tenant), or couldn't be confirmed from the extracted text. We read a random sample of 42 of the remaining warnings and all 42 stated the doubt plainly, and we checked the largest companies in the filings themselves. In the other direction, none of 20 randomly chosen reports that discuss going concern without a warning, and none of 11 reports where we found no going-concern language, stated the doubt when we read them in full.
• Where the stock trades: the exchange in the SEC's company ticker file, which groups NYSE American with the NYSE.
• Industry: each company's SEC industry code (SIC), grouped into the categories in the table. Blank-check companies are SIC 6770.
• Market value: shares outstanding times the October 26 closing price.
• What happened next: the 780 operating companies that warned in a 10-Q filed from January to May 2026, followed through their later 10-Qs in our data and the EDGAR filing index (10-K, NT 10-Q, NT 10-K and Form 15 filings) to October 26.

Limitations

• A going-concern warning reflects management's judgment at one point in time. A financing closed after the report can remove the doubt before the next one is filed.
• We read 10-Qs, not auditor opinions. An auditor's going-concern paragraph appears in the annual report, and the two don't always match.
• The follow-up covers five months. It shows how persistent the warning is, not how many companies eventually fail.
• Market values for thinly traded stocks can be unreliable, which is why the size table uses exchange-listed companies only.

Conclusion

One in six Nasdaq operating companies says in its own quarterly report that it may not be able to fund itself for the next 12 months, against one in thirty on the NYSE. The warning is concentrated in small companies, drug developers and stocks trading under $1, and once it appears it almost never goes away within the year. For anyone buying small caps, the sentence "substantial doubt about the Company's ability to continue as a going concern" is worth searching for before anything else in the filing.

Sources

• Summit Therapeutics: 10-Q for the quarter ended June 30, 2026 (0001599298-26-000068); AstraZeneca securities purchase agreement, 8-K filed September 29, 2026 (0001193125-26-405776).
• Kodiak Sciences: 10-Q for the quarter ended June 30, 2026 (0001193125-26-349251); DAYBREAK results, 8-K filed September 28, 2026 (0001193125-26-403481); shelf registration, Form S-3ASR filed October 20, 2026 (0001193125-26-426854).
• Uranium Royalty: 10-Q for the quarter ended July 31, 2026 (0001193125-26-390681).
• Verastem: 10-Q for the quarter ended June 30, 2026 (0001104659-26-092007); underwritten offering, 8-K filed October 14, 2026 (0001104659-26-115880).
• Evolution Metals & Technologies: 10-Q for the quarter ended June 30, 2026 (0001213900-26-090427); convertible debentures, 8-K filed September 18, 2026 (0001213900-26-101116).
• Damora Therapeutics: 10-Q for the quarter ended June 30, 2026 (0001193125-26-342307).
• SEC company ticker and exchange file (company_tickers_exchange.json) and EDGAR full-index form files for the second, third and fourth quarters of 2026.
• FASB Accounting Standards Codification Subtopic 205-40, Presentation of Financial Statements: Going Concern.

This study describes public filings. It is not investment advice.