Cuda24 Sep 2021 20:29
Financial Position
For the three and six months ended June 30, 2021, the Company reported net losses of approximately $5.2 million and $8.3 million, respectively, and cash flows from operating activities of approximately $0.05 million and $0.1 million, respectively, compared to net losses of $5.4 million and $4.5 million, respectively, and cash flows from operating activities of $0.4 million and $1.3 million respectively, for the three and six months ended June 30, 2020. At June 30, 2021, the Company had a working capital deficiency of approximately $74.4 million including outstanding credit facilities, convertible debenture, and a promissory note, compared to a working capital deficiency of approximately $59.1 million at June 30, 2020.
The Company has determined that it was not in compliance with the operational and financial covenants, and the repayment schedule of the Senior Facility during the three months ended June 30, 2021, which represents an event of default. When the Company is not in compliance with the covenants of the Senior Facility, this constitutes an event of default under the Subordinated Facilities and the promissory note. An event of default enables each of the lenders to demand immediate payment of all amounts owing for which the Company is incapable of making such payments. As such, a material uncertainty exists that casts significant doubt on the Company's ability to continue as a going concern.
The Company continues to be in discussions with each of its lenders to attempt to remedy the events of default, as well as the ultimate settlement of finance charges and fees. There can be no guarantee that the Company will be successful in any negotiation, or settlement with the lenders either with respect to the rectification of each of the events of default, or with respect to an ultimate settlement of finance changes and fees. Further strategic alternatives will be required to continue as a going concern.
At June 30, 2021, the Company had credit facilities with an outstanding balance of approximately $67.1 million including all unpaid interest and financing fees. On August 23, 2021, the Company received a limited waiver from the Senior Facility lender. The Senior Facility lender waived the principal and interest repayments required to June 30, 2021, and the ability to apply the default interest rate of 19% per annum up to June 30, 2021. The Senior Facility lender has not waived the operational and financial covenant breaches at June 30, 2021. The Company also had a convertible debenture with an outstanding balance of approximately $1.8 million including accrued interest. The terms of the convertible debenture is still subject to regulatory approval.
The Company and the Senior Facility lender have agreed to engage a sales advisor by August 9, 2021 to pursue a sales process, including the opening of an online data room by August 27, 2021. Additionally, the Company shall execute one or more non-binding letters of int
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