Note 3 – Liquidity and Financial Condition

Under ASC 205-40, Presentation of Financial Statements—Going Concern, the Company has the responsibility to evaluate whether conditions and/or events raise substantial doubt about its ability to meet its future financial obligations as they become due within one year after the date that the financial statements are issued. As required by ASC 205-40, this evaluation shall initially not take into consideration the potential mitigating effects of plans that have not been fully implemented as of the date the financial statements are issued. Management has assessed the Company’s ability to continue as a going concern in accordance with the requirement of ASC 205-40.

As reflected in the condensed consolidated financial statements, the Company had approximately $1.3 million in cash at September 30, 2022. In addition, the Company had cash used in operating activities of $0.4 million for the nine months ended September 30, 2022, had working capital of $2.2 million and an accumulated deficit of $68.1 million at September 30, 2022, and had a net loss in the amount of approximately $0.9 million for the nine months ended September 30, 2022. At September 30, 2022, all existing secured and unsecured debt held by its principal lender, excluding the profit share liability, in the principal amount of approximately $12.9 million was scheduled to mature on October 31, 2022.

The accompanying condensed consolidated financial statements as of September 30, 2022 have been prepared assuming the Company will continue as a going concern. On October 28, 2022, the Company’s principal lender agreed to extend the maturity date of all of its existing secured and unsecured debt in the principal amount of approximately $12.9 million from October 31, 2022 to August 25, 2025. As a result, such liabilities have been reclassified as long-term liabilities in the accompanying condensed consolidated financial statements as of September 30, 2022. Based upon such extension of the maturity date of such secured and unsecured debt, the Company’s current cash position and the Company’s recent revenue growth, management believes substantial doubt regarding the Company’s ability to continue as a going concern has been mitigated. The Company believes it will have sufficient working capital to fund operations for at least the next twelve months from the date of issuance of these financial statements.