|12 Months Ended|
Dec. 31, 2018
The Company’s consolidated financial statements have been prepared on a going concern basis, which assumes that it will be able to meet its obligations and continue its operations during the twelve month period following the issuance of this Annual Report on Form 10-K for the year ended December 31, 2018 (this “Form 10-K”). These financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.
For the past several years, the Company has incurred both net losses and negative cash flows from operations. In response, management undertook, and during 2018 completed, a series of multi-year liquidity initiatives, which included:
The MidCap Facility generally provides adequate liquidity for our working capital needs. However, there are, due to certain borrowing base eligibility limitations and exclusions within the MidCap Facility, instances where we would not have sufficient availability under the MidCap Facility to meet our growth working capital requirements. The borrowing base eligibility limitations and exclusions that have the most impact on our availability under the MidCap facility are customer concentration limits, exclusion of receivables from our joint ventures, and exclusion of receivables related to projects on which there is an underlying surety bond.
In early 2019, the Company identified a large, second quarter 2019 customer project which, for approximately a six week timeframe, has very significant working capital requirements. Additionally, the project has an underlying payment and performance surety bond making the resulting receivables unavailable for borrowing under the MidCap Facility. The combination of those two factors, if not addressed, would have resulted in the Company having inadequate cash to continue operations. On March 29, 2019, the Company negotiated a contract amendment with the customer which provides for the payment of our weekly invoices prior to the related payroll disbursements and a consent letter with the lender which increases our borrowing availability by increasing the concentration limit on a major customer’s receivables during the second quarter. The Company believes the combination of these two measures adequately addresses its near-term liquidity concerns.
As a result, management has concluded that as of the date of this report, management’s plan has alleviated the substantial doubt regarding the Company’s ability to continue as a going concern for the twelve-month period following the issuance of these consolidated financial statements. However, our liquidity will be periodically, and for certain intervals, significantly constrained due to the working capital requirements that will be needed to execute our plans to grow the business.
The entire disclosure when there are conditions arise about liquidity. Includes, but is not limited to, principal conditions or events that raised concern, management's evaluation of the significance of those conditions or events in relation to the ability to meet its obligations, and management's plans that alleviated or are intended to mitigate the conditions or events.
No definition available.