3.           GOING CONCERN

The accompanying consolidated financial statements have been prepared on a basis that assumes that the Company will continue as a going concern and that contemplates the continuity of operations, the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. Accordingly, the accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts of liabilities that might result from the outcome of this uncertainty.

As of June 30, 2021, the Company had cash and cash equivalents, net of restricted cash of $3.8 million, net accounts receivable of $7.3 million, total current assets, net of restricted cash of $14.4 million and total current liabilities of $22.8 million. For the six month period ended June 30, 2021, the Company had a net loss of $7.7 million and cash used in operating activities was $6.8 million. As of August 5, 2021 we had approximately $3.8 million of cash on hand, net of restricted cash.

The Company has and may continue to delay, scale-back, or eliminate certain of its activities and other aspects of its operations until such time as the Company is successful in securing additional funding. The Company is exploring various dilutive and non-dilutive sources of funding, including equity and debt financings, strategic alliances, business development and other sources. 

The delisting from Nasdaq of our common stock which is now quoted for trading on OTCQX and the Company’s resulting inability to use Form S-3 for offerings by it may each have an adverse impact on our ability to raise additional capital. The quotation of our common stock on OTCQX may provide significantly less liquidity than when our stock was listed on Nasdaq and we may experience greater difficulty in raising capital through the public or private sale of equity securities. In addition, the Company’s announcement on April 22, 2021 that it is considering strategic, financial and operational alternatives may have an impact on our ability to raise additional capital. The future success of the Company is dependent upon its ability to obtain additional funding. There can be no assurance, however, that the Company will be successful in obtaining such funding in sufficient amounts, on terms acceptable to the Company, or at all. As of the date of this Report, the Company currently anticipates that current cash and cash equivalents will be sufficient to meet its anticipated operating cash requirements through the end of the third quarter of 2021. However, the Company’s secured promissory notes totaling $7.5 million are due August 31, 2021 and the Company does not currently have the cash balance necessary to repay the notes. The Company intends to address this deficiency by seeking an additional extension of the maturity date which may not be forthcoming and/or utilizing the debt or equity markets to raise sufficient funds to repay the notes. These factors raise substantial doubt about the Company’s ability to continue as a going concern.