As at the Company’s liquidity is comprised of in cash on hand and of funds available to borrow under the PNC Revolving Credit and Long-Term Debt Facilities (“PNC Facilities”). 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 subject to restriction based on certain borrowing base conditions.

 

The Company has experienced significant reductions in revenue in and the quarter 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 quarter 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.

 

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.

 

Subsequent to the quarter ended the Company has formally approved a revised forecast and budget which outlines a plan to manage its cost structure, liquidity and working capital. Integral to this revised forecast, the Company has entered into the Twelfth Amendment to its PNC Facilities dated as of with PNC, which is described in Note The Company believes its revised cost structure will enable it to generate positive cash flows from operations in the near term, in addition to maintaining sufficient availability under the PNC Revolving Credit Facility.

Other actions to address the Company’s liquidity include:

 

 

 

In accordance with ASC - the Company believes that the actions described above are probable of occurring. Specifically, management believes that the revised forecast and budget can be effectively implemented and that, when combined with the Twelfth Amendment to its PNC Facilities and the Restructuring Plan, it is probable that these actions will mitigate any substantial doubt raised by our historical operating results and satisfy our estimated liquidity needs, for at least but not limited to, the next months from the issuance of these financial statements.