National CineMedia, Inc. 10-Q

Item 1A. Risk Factors Excluding the risk factor outlined below, there have been no material changes from risk factors as previously disclosed in our annual report on Form 10-K filed with the SEC on March 8, 2021 for the fiscal year ended December 31, 2020. We may be unsuccessful in obtaining a waiver under our Credit Agreement prior to a default thereunder. The failure to obtain such a waiver or conclude another alternative the Company is pursuing could lead to an event of default, which gives rise to substantial doubt about our ability to continue as a going concern. Although management believes the Company can meet its operating obligations as they become due, the Company does not expect to meet its financial covenants under its Senior Secured Credit Facility within one year following the date that the accompanying financial statements are issued. If these financial covenants are not met or the Company’s independent auditors issue a qualified audit opinion relating to the Company’s fiscal year 2021 annual audit because the Company does not expect to meet these financial covenants, a majority of the lenders of the Senior Secured Credit Facility are permitted under the Credit Agreement to accelerate the debt which could also result in a cross-default under NCM LLC’s senior notes. Considering current liquidity sources, the Company would not be able to repay the Company’s total outstanding debt balance. In light of this, the Company is actively pursuing a number of options including amending its Senior Secured Credit Facility to extend a waiver of these financial covenants and obtaining additional financing either through a loan from third party lenders or NCM, Inc. Notwithstanding management’s expectation that the Company will be able to conclude one of the alternatives prior to an event of default, there can be no assurance that the Company will be successful in a timely manner, or on acceptable terms, if at all. The failure to conclude one of these alternatives such that there is no longer a projected financial covenant default could lead to an event of default, which would have a material adverse effect on our financial condition, which gives rise to substantial doubt about our ability to continue as a going concern. If we are unable to continue as a going concern, 36 we may have to liquidate our assets and may receive less than the value at which those assets are carried on our financial statements and it is likely that investors will lose all or a part of their investment.