Guardian Australia has just two years to prove itself commercially viable before a multi-million--dollar loan is called in, as mounting losses push the business into negative equity. 
The loss-making local digital operation of British newspaper The Guardian, which was set up with $1 of capital, is facing a 2018 deadline to repay multi-million-dollar borrowings as it burns cash at a fast rate.
Documents obtaine-d by The Australian reveal a horror story of decline since the website's launch in   May 2013.
Debts outstrip equity, with borrowings of $23.9 million, and cash on the balance sheet of just $3.2m in the 12 months ended   June 30, down from $7.4m in the prior corresponding period.
Guardian Australia had negative equity of $19.9m, according to the latest financial accounts.
A statement to The Australian on behalf of Guardian Australia managing director Ian McClelland said the business was "on track with our five-year plan to build a financially sustainable business in Australia".
The founding investment was made possible by Australian businessman Graeme Wood, creator of travel website Wotif.
Mr Wood does not hold any equity in the entity Guardian Australia and is said to have an arm's length relationship after fin-ancing the launch with unsecured bor-rowings expected to mature no earlier than 2018.
Mr Wood has never disclosed the size of the loan, which is -included in Guardian Media Group's non-current external borrowings and interest of $10.7m.
While Mr Wood could roll the loan over at maturity, he pulled -investment in The Global Mail, a not-for-profit news website, at the start of last year after investing -between $15m and $20m.
Guardian Australia's fiscal losses blew out to $14m, up from $6m in the prior period, despite a 64 per cent rise in sales to $6.2m.Like other unprofitable free news websites including Huffington Post and BuzzFeed, Guardian Australia has become a casualty in the race for cheap digital traffic as vast audiences produce limited revenues because of ever decreasing digital advertising rates.