As at the Company’s liquidity is comprised of in cash on hand and of funds available to borrow under the PNC Revolving Credit facility. The Company funds its operations by regularly utilizing its PNC Facilities (refer to Note ). The Company manages its capital requirements through budgeting and forecasting processes while monitoring for compliance with bank covenants under the PNC Facilities. Funds available under the PNC Revolving Credit Facility are managed on a weekly basis based on the cash flow requirements of the various operating segments. Cash flows generated from operations are immediately applied towards paying down the PNC Revolving Credit Facility, which has a maximum limit of of which of funds were available to borrow under the PNC Revolving Credit facility as at which was limited by certain borrowing base restrictions under the PNC Facilities.

 

The Company has experienced significant reductions in revenue throughout and the months of when compared to prior periods, which impacts its cash flows from operations. The Company incurred a net loss in of and a net loss in the months of of Revenues have declined due to the loss of customers that represented a large concentration of the Company’s business. The Company believes this loss of customers is largely due to competitive pressures from larger organizations. This decline in revenues has directly impacted the Company’s gross profit and its ability to generate cash flows from operations. During the quarter, the Company recorded million of bad debt expense, due to the further credit deterioration of a specific customer.

 

Given our results of operations in this challenging business environment, in accordance with ASC - management is required to consider whether these conditions give rise to substantial doubt about the Company’s ability to meet its obligations within year from the financial statement issuance date, and if so, whether management’s plans to negate these conditions will alleviate this substantial doubt.

 

In order to address the Company’s liquidity, on the Board of Directors of the Company approved a corporate restructuring plan (the “Restructuring Plan”) for its manufacturing facilities and corporate level operations, which includes the closure of the Suzhou, China facility (“Suzhou Facility”) and a reduction in its labor force. The Restructuring Plan is expected to deliver annualized cost savings during the remainder of and thereafter. The Restructuring Plan, including the wind down and closure of the Suzhou Facility was initiated in the quarter of and is expected to be substantially complete by the end of the quarter of   Also, effective the Company entered into the Twelfth Amendment to the PNC Facilities, which amended its financial covenant requirement for the quarter ending and adjusted these financial covenant requirements and conditions for future periods as well (refer to note ). The Company is in compliance with the financial covenants included in the PNC Facilities as at The Company anticipates that it will continue to be in compliance with the amended financial covenants in the PNC Facilities.