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Our business, financial condition, results of operations, and cash flows may be impacted by a number of factors, many of which are beyond our control, including those set forth in our 2023 Form 10-K, the occurrence of any one of which could have a material adverse effect on our actual results.
−Removed: Except as set forth below, there have been no material changes to the risk factors previously disclosed in our 2023 Form 10-K.
+Added: Except as set forth below, there have been no material changes to the risk factors previously disclosed in our 2023 Form 10-K and Quarterly Report on Form 10-Q for the quarter ended March 31, 2024.
The risk factors below supplement or update the risk factors in our 2023 Form 10-K.
−Removed: We are currently listed on The Nasdaq Capital Market (" Nasdaq " ).
−Removed: If we are unable to maintain listing of our securities on Nasdaq or any stock exchange, our stock price could be adversely affected and the liquidity of our stock and our ability to obtain financing could be impaired and it may be more difficult for our stockholders to sell their securities.
−Removed: Although our common stock is currently listed on Nasdaq, we may not be able to continue to meet the exchange's minimum listing requirements or those of any other national exchange.
−Removed: The Listing Rules of Nasdaq require listing issuers to comply with certain standards in order to remain listed on its exchange.
−Removed: For example, while we currently meet the required listing standards of Nasdaq, if, in the future, the closing bid price for our common stock falls below $1.00 per share for 30 consecutive business days, we will not be in compliance with the $1.00 minimum bid price requirement for continued listing on Nasdaq under Rule 5550(a)(2) of the Nasdaq Listing Rules.
−Removed: We can provide no assurance that the trading price of our common stock will not fall below $1.00 per share for a period of 30 consecutive trading days or that if it does, we will be able to regain compliance with the minimum bid price requirement, even if we maintain compliance with the other listing requirements.
−Removed: If, for any reason, we should fail to maintain compliance with the listing standards of Nasdaq, Nasdaq should delist our securities from trading on its exchange and we are unable to obtain listing on another national securities exchange, a reduction in some or all of the following may occur, each of which could have a material adverse effect on our shareholders:
−Removed: the liquidity of our common stock;
−Removed: the market price of our common stock;
−Removed: our ability to obtain financing for the continuation of our operations;
−Removed: the number of investors that will consider investing in our common stock;
−Removed: the number of market makers in our common stock;
−Removed: the availability of information concerning the trading prices and volume of our common stock;
−Removed: the number of broker-dealers willing to execute trades in shares of our common stock.
There is substantial doubt about our ability to continue as a going concern
−Removed: On April 2, 2024, the Company entered into the SLR Credit Agreement.
−Removed: The SLR Credit Agreement requires the Company to maintain and comply with certain financial covenants and the borrowings under the SLR Revolver are limited to a borrowing base which fluctuates as regularly as weekly based on the Company's eligible accounts receivable.
−Removed: As a result of a decline in financial performance of the Company's owned and operated digital media properties in April 2024, the Company's accounts receivable were insufficient to support the borrowing base needed to fund operations through the end of the second quarter of 2024.
−Removed: As a result, the Company raised $10 million in gross proceeds from the Private Placement and updated its projections to reflect the continued decline in its operating results.
−Removed: While the revised projections indicate that the Company will be in compliance with all financial covenants under the SLR Credit Agreement for each of the quarters in the twelve months following the issuance date of this Quarterly Report on Form 10-Q, if these projections are not met, the Company will not be in compliance with such covenants.
−Removed: As of the date of this Quarterly Report on Form 10-Q, the Company's results have been trending below its forecast.
−Removed: The Company's decline in operating results could lead to declines in the borrowing base, which could lead to the Company's inability to draw on the SLR Revolver in order to fund its operations as well as, potentially, require repayment of a portion of its current borrowings under the SLR Credit Facility.
−Removed: While management believes the proceeds from the Private Placement and other cost reduction measures such as divesting business units will be adequate to cover a decline in the borrowing base under the SLR Revolver and fund its current operations, there is no guarantee that the Company's plans will be successfully executed or have the expected benefits.
−Removed: Furthermore, if an event of default under the SLR Credit Agreement were to occur and the maturity date thereunder accelerated, the Company likely would not have sufficient funds to repay the SLR Term Loan and the SLR Revolver.
−Removed: As there can be no assurance that the Company will be able to effectively implement its plans within one year after the date of this Quarterly Report on Form 10-Q, management concluded that there is substantial doubt about the Company's ability to continue as a going concern through such one - year period.
−Removed: If the Company's current plans are not successful, it may need to consider other strategic alternatives, including restructuring or refinancing its debt, seeking additional equity or debt financing, reducing or delaying our business activities and strategic initiatives, selling assets, and other strategic transactions and/or other measures.
−Removed: If the Company seeks additional financing to fund its operations and there remains substantial doubt about the Company's ability to continue as a going concern, financing sources may be unwilling to provide such funding to the Company on commercially reasonable terms, or at all.
−Removed: Furthermore, the perception that the Company may not be able to continue as a going concern may cause publishers, vendors, advertisers and other clients (current and potential) to review their business relationships and terms with the Company.
−Removed: Uncertainty regarding the Company's ability to continue as a going concern could also have a material and adverse impact on the price of the Company's common stock, which could negatively impact its ability to obtain stock-based financing or enter into strategic transactions.
−Removed: Unregistered Sales of Equity Securities and Use of Proceeds.
−Removed: Defaults Upon Senior Securities.
+Added: We have experienced a continued decline in our operating results, driven primarily by the continued impact of the imposed regulatory requirements on our owned and operated digital media properties.
+Added: The SLR Credit Agreement requires us to maintain and comply with certain financial covenants.
+Added: Moreover, the borrowings under the SLR Revolver under the SLR Credit Agreement are limited to a borrowing base that fluctuates as regularly as weekly based on our eligible accounts receivable.
+Added: As a result of the continued decline in financial performance of our owned and operated digital media properties throughout the second quarter of 2024, our accounts receivable were insufficient to support the borrowing base needed to fund operations through the end of the second quarter of 2024.
+Added: We therefore raised equity capital in May 2024, further updated our projections to reflect the continued decline in our operating results, and entered into the First Amendment with SLR on May 15, 2024.
+Added: As of June 30, 2024, we were not in compliance with our financial covenants under the SLR Credit Agreement, which we had to report by July 31, 2024, and which would have resulted in an event of default.
+Added: However, we entered into two letter agreements pursuant to which SLR extended the deadline for delivery of the compliance certificate required for the fiscal month ended June 30, 2024, and the related notice of event of default, to August 21, 2024.
+Added: On August 19, 2024, we entered into the Second Amendment to the SLR Credit Agreement, which, among other things, required that we raise $2.0 million in additional capital.
+Added: To raise the capital, we entered into convertible subordinated notes r aising an aggregate of $2.1 million .
+Added: In addition, among other things, the Second Amendment waived non-compliance with the financial covenant as of June 30, 2024, modified the financial covenant through December 31, 2025, ended the requirement to engage a financial advisor, and increased the interest rate margin from 5.25% to 5.75%.
+Added: While based on current projections, we expect to be in compliance with the new financial covenants for each of the quarters in the twelve months following the issuance date of this Quarterly Report on Form 10-Q, if during any fiscal quarter, we do not comply with any of our financial covenants, such non-compliance would result in an event of default that would give SLR the right to accelerate maturities.
+Added: In such case, we likely would not have sufficient funds to repay the SLR Term Loan and the SLR Revolver.
+Added: In addition, while we believe the proceeds from the sale of the Convertible Notes will provide sufficient liquidity for any anticipated cash needs, there is no assurance that our available cash plus borrowing base will be sufficient to fund operations over the next twelve months.
+Added: Further, if needed, we will consider implementing other cost saving measures, but there is no guarantee that the plans will be successfully executed or have the expected benefits.
+Added: As a result, management concluded that there is substantial doubt about our ability to continue as a going concern for one year after the date of this Quarterly Report on Form 10-Q.
+Added: If our current plans are not successful, we may need to consider other strategic alternatives, including restructuring or refinancing our debt, seeking additional equity or debt financing, reducing or delaying our business activities and strategic initiatives, selling assets, and other strategic transactions and/or other measures.
+Added: We have relied upon financing provided by our officers, directors and largest stockholders, and such holders may be unwilling or unable to continue providing financing should additional financing be required.
+Added: Other financing sources may be unwilling to provide such funding to us on commercially reasonable terms, or at all.
+Added: If we seek additional financing to fund our operations and there remains substantial doubt about our ability to continue as a going concern, we may find it especially difficult to raise funds on commercially reasonable terms, or at all.
+Added: Furthermore, the perception that we may not be able to continue as a going concern may cause publishers, vendors, advertisers and other clients (current and potential) to review their business relationships and terms with us.
+Added: Uncertainty regarding our ability to continue as a going concern could also have a material and adverse impact on the price of our common stock, which could negatively impact our ability to obtain stock-based financing or enter into strategic transactions.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.