|9 Months Ended|
Sep. 30, 2018
|Organization, Consolidation and Presentation of Financial Statements [Abstract]|
At September 30, 2018, our cash position and history of losses required management to assess our ability to continue operating as a going concern, according to FASB ASC 205-40, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The Company does not have sufficient cash at September 30, 2018 to fund normal operations beyond the next three months from the date of this report. In addition, the Company was in violation of certain financial and other covenants under its debt agreements at July 31, 2018, August 31, 2018, and September 30, 2018 and currently expects to be in violation as of October 31, 2018 and November 30, 2018. In August 2018, the Company received waivers of its covenant violations for July and August 2018 from its senior lenders, and on November 19, 2018, the Company received waivers of its past and anticipated covenant violations for September, October and November 2018. The Company's ability to continue as a going concern is dependent on the Company’s ability to close the Merger and Private Placement (see Merger Agreement commentary in Management’s Discussion & Analysis section further below), modify its existing debt, raise additional equity or debt capital or spin-off non-core assets to raise additional cash. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
Net cash used in operating activities was $11.4 million and $10.2 million for the nine months ended September 30, 2018 and 2017, respectively, and the Company had unrestricted cash and cash equivalents of $1.2 million at September 30, 2018, a reduction from $9.5 million at December 31, 2017. The Company has negative working capital at September 30, 2018 of $15.2 million.
The Company currently requires a significant amount of additional capital to fund operations and pay its accounts payable, and its ability to continue as a going concern is dependent upon its ability to raise such additional capital and achieve profitability. The Company is currently working toward closing the Merger and Private Placement, with a target of closing in the first quarter of 2019. If the Company is not successful in closing the Merger and Private Place and is not able to raise such additional capital on a timely basis or on favorable terms, the Company may need to scale back or, in extreme cases, discontinue its operations or liquidate its assets.
The consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.
The entire disclosure when substantial doubt is raised about the ability to continue as a going concern. Includes, but is not limited to, principal conditions or events that raised substantial doubt about the ability to continue as a going 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 that raise substantial doubt about the ability to continue as a going concern.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef