/raid1/www/Hosts/bankrupt/TCR_Public/240529.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Wednesday, May 29, 2024, Vol. 28, No. 149
Headlines
ACORDA THERAPEUTICS: Widens Net Loss to $27.4MM in Q1 2024
AEC PARENT: Moody's Affirms 'B3' CFR & Alters Outlook to Negative
AIR INDUSTRIES: Incurs $706K Net Loss in First Quarter
ALPHABOW ENERGY: Seeks Sale Process Under CCAA Proceedings
AMERICANN INC: Incurs $166,000 Net Loss in Fiscal 2nd Quarter
AMERICANN INC: Incurs $166K Net Loss in Second Quarter
APPTECH PAYMENTS: Posts $3MM Net Loss in Q1 2024
ARCUTIS BIOTHERAPEUTICS: Narrows Net Loss to $35.4MM in Q1 2024
ASENSUS SURGICAL: Posts $22.5MM Net Loss in Q1 2024
ASPIRA WOMEN'S: All Four Proposals Passed at Annual Meeting
ASTRO ONE: Moody's Withdraws 'Ca' CFR Following Debt Restructuring
AYTU BIOPHARMA: Incurs $2.89 Million Net Loss in Third Quarter
BERGIO INTERNATIONAL: Narrows Net Loss to $358,144 in Q1 2024
BETTER CHOICE: Receives Noncompliance Letter From NYSE Regulation
BIA WEST: Voluntary Chapter 11 Case Summary
BIOLARGO INC: Posts $775,000 Net Loss in Q1 2024
BLUM HOLDINGS: Swings to $3MM Net Loss in Q1 2024
BRIGHT MOUNTAIN: Incurs $4.77 Million Net Loss in First Quarter
BRIGHT MOUNTAIN: Posts $4.8MM Net Loss in Q1 2024
C-BOND SYSTEMS: Incurs $317K Net Loss in First Quarter
C-BOND SYSTEMS: Narrows Net Loss to $317,158 in Q1 2024
CANNMART LABS: Lifeist Wellness Unit Launches BIA Proceedings
CAPSTONE COMPANY: Posts $262,260 Net Loss in Q1 2024
CARDIFF LEXINGTON: Inks Securities Exchange Agreement with Leonite
CAREVIEW COMMUNICATIONS: Reports $1MM Net Loss in Q1 2024
CEMTREX INC: Incurs $1.57 Million Net Loss in Second Quarter
CEMTREX INC: Reports $1.6MM Net Loss in Q2 2024
CHARGING ROBOTICS: Incurs $198K Net Loss in First Quarter
CITIUS PHARMACEUTICALS: Narrows Net Loss to $8.5MM in Fiscal Q2
CLARKSON ROAD: Seeks CCAA Protection to Sell Assets
CONGRUEX GROUP: Moody's Lowers CFR & Sr. Secured Term Loan to Caa1
CORETEC GROUP: Posts $524,220 Net Loss in Q1 2024
CORRELATE ENERGY: Incurs $4.48 Million Net Loss in First Quarter
CREDIT ACCEPTANCE: Moody's Affirms Ba3 CFR, Outlook Remains Stable
CYTTA CORP: Incurs $989K Net Loss in Second Quarter
DALRADA FINANCIAL: Incurs $2.91 Million Net Loss in Third Quarter
DALRADA FINANCIAL: Norrows Net Loss to $2.9MM in Q2 2024
DARE BIOSCIENCE: Narrows Net Loss to $6.8MM in Q1 2024
DELCATH SYSTEMS: Incurs $11.11 Million Net Loss in First Quarter
DELCATH SYSTEMS: Reports $11.1MM Net Loss in Q1 2024
DERMTECH INC: Incurs $20MM Net Loss in Q1 2024
DIAMONDHEAD CASINO: Incurs $471K Net Loss in First Quarter
EVOKE PHARMA: Audit Committee Finds Accounting Error in Financials
EVOKE PHARMA: Incurs $1.58 Million Net Loss in First Quarter
EVOKE PHARMA: Posts $1.6MM Net Loss in Q1 2024
EVOKE PHARMA: To Restate 2023 Financials Due to Note Payable Error
GAUCHO GROUP: Incurs $2.73 Million Net Loss in First Quarter
GUARDIAN US: Moody's Affirms 'B2' CFR & Alters Outlook to Negative
GUIDED THERAPEUTICS: Posts $402,000 Net Loss in Q1 2024
GULF TILE: Voluntary Chapter 11 Case Summary
GULFSLOPE ENERGY: Delays Q1 Form 10-Q Over Working Capital Issues
HEARTLAND DENTAL: Moody's Lowers Sr. Secured Rating to 'B3'
INSPIREMD INC: Incurs $7.03 Million Net Loss in First Quarter
INVO BIOSCIENCE: Incurs $1.60 Million Net Loss in First Quarter
KCIBT HOLDINGS: Moody's Downgrades PDR to D-PD on Deal Amendments
KROLL MIDCO: Moody's Affirms 'B3' CFR, Outlook Remains Stable
LIONS GATE 1: Fitch Assigns 'B-' LongTerm IDR, Outlook Stable
MADISON 33: Secured Party Sets June 4 Auction
MERCON COFFEE: Hearing Today on Sale of Assets to StoneX
MOBIVITY HOLDINGS: Incurs $2.25 Million Net Loss in First Quarter
MONDORIVOLI LLC: Voluntary Chapter 11 Case Summary
MOTUS GROUP: Fitch Affirms 'B-' LongTerm IDR, Outlook Stable
MOTUS GROUP: Moody's Affirms 'B3' CFR & Cuts 1st Lien Loans to 'B3'
NEMAURA MEDICAL: Shareholders Approve Reverse Common Stock Split
NEPA STORAGE: Secured Party Sets 100% Stock Sale on June 14
NEPHROS INC: All Four Proposals Passed at Annual Meeting
ONDAS HOLDINGS: Falls Short of Nasdaq Minimum Bid Price Requirement
ORGANON & CO: Moody's Ups Rating on Secured 1st Lien Notes to Ba1
PORTSMOUTH SQUARE: All Four Proposals Passed at Annual Meeting
PRECIPIO INC: Reports $2.1MM Net Loss in Q1 2024
PROFESSIONAL DIVERSITY: Receives Noncompliance Notice From Nasdaq
QBS PARENT: Moody's Raises CFR to Caa1 & Alters Outlook to Stable
RENOVARO INC: Amends Bylaws to Update Company Name, Officer Titles
SCORPIUS HOLDINGS: Gets Nasdaq Notice Over Non-Filing of Form 10-Q
SMITH MICRO: Grosses $4.1MM in Stock Offering, Private Placement
SOLARIS MIDSTREAM: Moody's Alters Outlook on 'B2' CFR to Positive
STAFFING 360: Delays Filing of Q1 2024 Report
SVB FINANCIAL: Hearing Today on Sale of SVB Capital Biz
SVB FINANCIAL: May 29 SVB Capital Business Sale Set
TABOOLA INC: Moody's Ups CFR & Sr. Secured First Lien Debt to 'Ba3'
TED BAKER: Gets Court's CCAA Initial Stay Order; A&M as Monitor
TPT GLOBAL: Delays Filing of First Quarter 2024 Form 10-Q
TREES CORP: Incurs $1.39 Million Net Loss in First Quarter
TREES CORP: Posts $1.4MM Net Loss in Q1 2024
VERITAS FARMS: Delays Filing of Q1 2024 Quarterly Report
WENDY'S COMPANY: Moody's Affirms 'B3' CFR, Outlook Remains Stable
WESTERN REGIONAL: Case Summary & Five Unsecured Creditors
WESTLAKE 555: Ohio Office Building Up for Auction on June 6
[] California Commercial Agriculture Up for Sale
[] New York Commercial Complex Up for Auction on July 9
*********
ACORDA THERAPEUTICS: Widens Net Loss to $27.4MM in Q1 2024
----------------------------------------------------------
Acorda Therapeutics Inc. filed with the U.S. Securities and
Exchange Commission its Quarterly Report on Form 10-Q reporting a
net loss of $27.4 million for the three months ended March 31,
2024, compared to a net loss of $16.8 million for the three months
ended March 31, 2023.
As of March 31, 2024, the Company has $81.6 million in total
assets, $267.3 million in total liabilities, and a total
stockholders' deficit of $185.7 million.
The Company is presently undergoing Chapter 11 proceedings in
Delaware. The Company currently believes that its existing cash and
cash equivalents are not sufficient to cover its cash flow
requirements.
The commencement of the Chapter 11 Proceedings constituted an event
of default under the Indenture governing the 2024 Notes, which in
turn resulted in the 2024 Notes becoming immediately due and
payable, along with accrued and unpaid interest. At March 31, 2024,
the principal balance outstanding under the 2024 Notes was $207
million. Additionally, for the duration of the Chapter 11
Proceedings, the Company's operations and its ability to develop
and execute its business plan, financial condition, liquidity and
continuation as a going concern will be subject to a high degree of
risk and uncertainty associated with the Chapter 11 Proceedings.
During the Chapter 11 Proceedings, the Company expects its
financial results to continue to be volatile as restructuring
activities and expenses impact our consolidated financial
statements. As a result, its historical financial performance is
likely not indicative of its financial performance after the filing
of the Chapter 11 Proceedings. If a plan of reorganization is
approved and implemented, the Company's existing capital structure
may be fundamentally altered.
Associated with the Chapter 11 Proceedings, the Company plans to
lower its operating budget and further reduce the scale of our
operations, in addition to funding ongoing operations, the Company
has incurred and expects to incur significant professional fees and
other costs in connection with and throughout the Chapter 11
Proceedings.
If Acorda emerges from Chapter 11, the amounts reported in its
consolidated financial statements may materially change relative to
its historical consolidated financial statements. In connection
with the Chapter 11 Proceedings, it is also possible that
additional restructuring and related charges may be identified and
recorded in future periods. Such charges could be material to the
Company's consolidated financial position, liquidity and results of
operations.
A full-text copy of the Company's Form 10-Q is available at
https://tinyurl.com/27wbhysp
About Acorda Therapeutics, Inc.
Acorda Therapeutics Inc. is a biopharmaceutical company that has
developed breakthrough products, therapies, and biotechnology to
restore function and improve the lives of people with neurological
disorders. INBRIJA is approved for intermittent treatment of OFF
episodes in adults with Parkinson's disease treated with
carbidopa/levodopa.
Acorda Therapeutics Inc. and its affiliates sought relief under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Lead Case
No. 24-22284) on April 1, 2024. In the petition signed by Michael
A. Gesser, as chief financial officer, the Debtor disclosed total
assets as of Dec. 31, 2023, of $108,525,000 and total debt as of
Dec. 31, 2023, of $266,204,000.
The Honorable Bankruptcy Judge David S. Jones handles the case.
The Debtor tapped Baker McKenzie as legal counsel; Togut, Segal &
Segal LLP as conflicts counsel; Ernst & Young as financial advisor;
and Ducera Partners and Leerink Partners as investment bankers.
Kroll Restructuring Administration is the claims agent.
Merz is being advised by Freshfields Bruckhaus Deringer US LLP as
legal counsel, Morgan Stanley as investment banker, and Deloitte as
financial and tax advisors. Senior Convertible Noteholders are
being advised by King & Spalding as legal counsel and Perella
Weinberg Partners as investment banker.
The U.S. Trustee for Region 2 appointed an official committee to
represent unsecured creditors in the Debtors' Chapter 11 cases.
AEC PARENT: Moody's Affirms 'B3' CFR & Alters Outlook to Negative
-----------------------------------------------------------------
Moody's Ratings affirmed the ratings of AEC Parent Holdings, Inc.
("Advancing Eyecare") including the B3 corporate family rating,
B3-PD probability of default rating, and B3 ratings on the senior
secured bank credit facilities. Moody's changed the outlook to
negative from stable.
The change in outlook to negative reflects headwinds to the
company's revenues and earnings as optometrists and
ophthalmologists have delayed equipment purchases due to high
interest rates and macro uncertainty. Leverage was at 7.3x as of
year-end 2023, with Moody's forecasting only a modest decline to
7.1x by year-end 2024. Moreover, Advancing Eyecare has limited
liquidity which could pressure the company should revenues and
earnings take longer to recover than currently anticipated by
management.
The affirmation of the B3 CFR reflects Moody's forecasts that
credit metrics will improve beginning in 2025 with debt/EBITDA
decreasing to the mid 6.0x times range. The forecast is contingent
on a stabilization of the optometry and ophthalmology end-markets
driving a resumption in spending growth in doctors purchasing new
equipment. Additionally, Advancing Eyecare will benefit from
cost-cutting measures and lower labor cost inflation from elevated
levels in 2023. Advancing Eyecare's liquidity is adequate, with
modest cash balances but expectations of free cash flow generation
in the 12-18 months.
RATINGS RATIONALE
Advancing Eyecare's B3 Corporate Family Rating (CFR) broadly
reflects its high financial leverage of 7.3 times for the twelve
months ended December 31, 2023, on a Moody's-adjusted basis and
limited interest coverage. The rating is also constrained by the
company's modest, albeit growing absolute scale, and financial
policy risks related to its private equity ownership. Advancing
Eyecare benefits from its leading position among providers of
ophthalmic products and services, with a diversified customer base.
Advancing Eyecare's ratings are further supported by favorable
long-term trends in the ophthalmic sector that underpin Moody's
expectation for organic growth in the low single-digits range.
Advancing Eyecare has an adequate liquidity profile with cash
balance of $5 million, with $10 million available under its $40
million revolving credit facility due 2027 as of March 31, 2024.
Liquidity is supported by Moody's expectation of modest positive
free cash flow over the next 12 to 18 months.
The negative outlook reflects Moody's expectation that leverage
will remain high and only decline slightly during the forecast
period. The negative outlook also reflects the uncertainty around
the pace of recovery in sales of high dollar optometry and
ophthalmology equipment as well as limited liquidity absent
improvements in revenues and profit margin.
AEC Parent's CIS-4 score indicates that the rating is lower than it
would have been if ESG risk exposures did not exist. The company
has significant exposure to environmental risks (E-4) reflecting
its exposure to carbon transition risks as a distributor which
relies on trucking intensive third party logistics. The company
faces governance risk exposure (G-4) reflecting aggressive
financial policies under private equity ownership as reflected by
high debt levels and the potential for debt-funded acquisitions to
drive growth.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be downgraded if the operational performance
deteriorates or liquidity weakens, or the company fails to generate
positive free cash flow. Inability to manage its growth, or if
company pursues aggressive financial policies, such that financial
leverage is sustained above 7.0 times, could also put downward
pressure on the company's ratings.
The ratings could be upgraded if the company increases its absolute
size, delivering sustained revenue and earnings growth. Moderation
of financial policies, partially evidenced by debt/EBITDA sustained
below 5.5 times, along with sustained good liquidity and positive
cash flows could also support an upgrade.
The principal methodology used in these ratings was Distribution
and Supply Chain Services published in February 2023.
Headquartered in Jacksonville, Florida, AEC Parent Holdings, Inc.
("Advancing Eyecare") is a national provider of ophthalmic products
and service solutions in the eyecare marketplace, with presence in
Canada and Mexico. The company generated pro forma revenues of
approximately $247 million for the twelve months ended December 31,
2023. Advancing Eyecare is a portfolio company of private equity
firm Cornell Capital.
AIR INDUSTRIES: Incurs $706K Net Loss in First Quarter
------------------------------------------------------
Air Industries Group filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q reporting a net loss
of $706,000 on $14.06 million of net sales for the three months
ended March 31, 2024, compared to a net loss of $618,000 on $12.55
million of net sales for the three months ended March 31, 2023.
As of March 31, 2024, the Company had $50.26 million in total
assets, $35.72 million in total liabilities, and $14.55 million in
total stockholders' equity.
Air Industries said, "Although the Company has begun discussions to
obtain a waiver of the requirement to meet the Fixed Coverage
Charge Ratio at March 31, 2024, it is reasonably possible that it
will not be granted. Even if such waiver is granted, the Company
may fail to achieve the Fixed Charge Coverage Ratio in the future
or otherwise fail to meet covenants in the Current Credit Facility.
Therefore, the Company classified the term loan that expires on
December 30, 2025 in the amount of $4,814,000 and $5,045,000 as
current as of March 31, 2024 and December 31, 2023, respectively,
in accordance with the guidance in Accounting Standards
Codification ("ASC") 470-10-45, "Debt – Other Presentation
Matters", related to the classification of callable debt. The
Company is required to maintain a collection account with its
lender into which substantially all cash receipts are remitted. If
it were to default under the Current Credit Facility, the Company's
lender could choose to increase the rate of interest or refuse to
make loans under the revolving portion of the Current Credit
Facility and keep the funds remitted to the collection account. If
the lender were to raise the rate of interest, it would adversely
impact the Company's operating results. If the lender were to
cease making new loans under the revolving facility, the Company
would lack the funds to continue operations. The rights granted to
the lender under the Current Credit Facility combined with the
reasonable possibility that the Company might fail to meet
covenants in the future raise substantial doubt about its ability
to continue as a going concern for the one year commencing as of
the date of filing these interim condensed consolidated financial
statements."
Management Comments
"Fiscal 2024 is off to a good start. The strong order and
opportunity flow we experienced during the fourth quarter of last
year continues and remains strong. We achieved bookings of $12.95
million and our backlog increased to $99.3 million," said Lou
Melluzzo, CEO of Air Industries Group. "We remain laser focused on
several large opportunities we expect to close. I remain confident
that fiscal 2024 will be a year of growth."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1009891/000121390024043567/ea0205845-10q_airindust.htm
About Air Industries Group
Air Industries Group (NYSE American: AIRI) is an integrated
manufacturer of precision assemblies and components for leading
aerospace and defense prime contractors and original equipment
manufacturers. The Company is a Tier 1 supplier to aircraft
Original Equipment Manufacturers, a Tier 2 subcontractor to major
Tier 1 manufacturers, and a Prime Contractor to the U.S. Department
of Defense, and is highly regarded for its expertise in designing
and manufacturing parts and assemblies that are vital for flight
safety and performance.
Saddle Brook, New Jersey-based Marcum LLP, the Company's auditor
since 2008, issued a "going concern" qualification in its report
dated April 15, 2024, citing that for the period ending March 31,
2024, the Company was not in compliance with the financial
covenants required under the terms of its current credit facility,
and it is reasonably possible that the Company will not receive a
waiver and may fail to meet these financial covenants in future
periods. The Company is required to maintain a collection account
with its lender into which substantially all of the Company's cash
receipts are remitted. If the Company's lender were to cease
lending and keep the funds remitted to the collection account, the
Company would lack the funds to continue its operations. Failure
to receive a waiver or meet the financial covenants in future
periods raise substantial doubt about the Company's ability to
continue as a going concern.
ALPHABOW ENERGY: Seeks Sale Process Under CCAA Proceedings
----------------------------------------------------------
AlphaBow Energy Ltd. commenced restructuring proceedings by filing
a Notice of Intention to Make a Proposal ("NOI") pursuant to
Section 50.4(1) the Bankruptcy and Insolvency Act (Canada), and KSV
Restructuring Inc. ("KSV") was appointed as Proposal Trustee.
On April 26, 2024, the Company sought to terminate the NOI
Proceedings and sought protection under the Companies' Creditors
Arrangement Act ("CCAA"). Pursuant to an initial order ("Initial
Order") granted by the Court of King's Bench of Alberta ("Court")
which ordered and declared, amongst other things, that: (i)
Alphabow is company to which the CCAA applies; (ii) continuation of
the NOI Proceedings under the CCAA; (iii) a stay of proceedings
against the Company; and (iv) the termination of the NOI
Proceedings. Pursuant to the Initial Order, KSV was appointed as
the Court-appointed monitor ("Monitor"). Further on April 26,
2024, the Court issued an amended and restated initial order
("Amended and Restated Initial Order").
The purpose of the CCAA Proceeding is: (i) for the Company to
remain in a formal process for the benefit of its creditors and
stakeholders; and (ii) undertake a Court-supervised sale and
investment solicitation process ("SISP") to enter into a sale or
other strategic transaction in respect of the Company and its
assets.
Pursuant to the Amended and Restated Initial Order, a stay of
proceedings remains in place until July 31, 2024 ("Stay of
Proceedings"). The Court may extend the Stay of Proceedings from
time to time.
According to court documents, while pre-existing issues and the
pandemic delayed its efforts, by early 2023, AlphaBow was pursuing
opportunities to generate additional revenue that would enable it
to satisfy its arrears to certain municipalities and landowners.
AlphaBow's options had been limited as a result of an Alberta
Energy Regulator (AER) Order, issued in July 2022, which restricted
its ability to obtain additional well and facility licenses and
declared that AlphaBow posed an unreasonable risk.
AlphaBow holds licenses issued by the AER to operate 3,785 wells,
4,038 pipelines and 321 facilities across Alberta. In November
2020, AlphaBow was purchased by its current shareholders who saw an
opportunity to take a struggling gas-weighted energy company and
turn it around by focusing on clean energy development and carbon
capture.
In 2023, the AER commenced further regulatory action against
AlphaBow. The AER issued a Reasonable Care and Measures Order on
March 30, 2023, requesting over $15 million in security, and
ordered AlphaBow to suspend operations on its Licensed Assets
pursuant to a Suspension Order issued on June 5, 2023. As a
result, AlphaBow was shut-in from production which significantly
restricted AlphaBow's cash flows. On Sept. 6, 2023, the AER
transferred care and custody of AlphaBow's regulated sites to the
Orphan Well Association.
AlphaBow sought regulatory appeals of the AER's Orders which were
heard in November 2023 and a decision on the appeals was issued by
the AER on Feb. 28, 2024, which upheld the prior decisions as
reasonable. Since then, AlphaBow has been in discussions with the
AER regarding a plan to address outstanding obligations under the
AER Orders, however no agreement has been reached.
AlphaBow meets the statutory requirements to be eligible for relief
under the CCAA, as AlphaBow is insolvent and owes more than
$5,000,000 to its creditors.
AlphaBow requires the stability of the CCAA proceeding to prepare
and present a sales and investment solicitation process ("SISP"),
and to re-structure, as necessary. The CCAA proceeding will
support AlphaBow in operationalizing its commitment to addressing
its environmental liabilities in a manner that will maximize
recovery for its creditors.
If you have any questions after speaking with your contact at
AlphaBow or wish to be added to the service list in these
proceedings, please contact Maha Shah from the Proposal Trustee's
office at mshah@ksvadvisory.com or visit the Proposal Trustee's
website at https://www.ksvadvisory.com/experience/case/AlphaBow.
A copy of the materials filed in the restructuring proceedings are
available on the Monitor’s website at
https://www.ksvadvisory.com/experience/case/alphabow.
The Monitor can be reached at:
KSV Advisory Inc.
Attn: Andrew Basi
Ross Graham
324-8th Avenue SW, Suite 1165
Calgary, AB
Tel: +1 587287 2670
Fax: +1 416 932 6266
Email: abasi@ksvadvisory.com
rgraham@ksvadvisory.com
Counsel for the Company:
BENNETT JONES LLP
Attention: Keely Cameron
Sarah Aaron
Barristers and Solicitors
4500 Bankers Hall East
855 - 2 Street SW
Calgary, Alberta T2P 4K7
Tel: 403-298-3324/3177
Fax: 403-265-7219
AlphaBow is a privately-owned company in the business of
sustainable acquisition, development and production of oil and
natural gas in Alberta. AlphaBow is incorporated and registered
pursuant to the laws of the Province of Alberta, with headquarters
located in Calgary, Alberta.
AMERICANN INC: Incurs $166,000 Net Loss in Fiscal 2nd Quarter
-------------------------------------------------------------
Americann, Inc. filed with the U.S. Securities and Exchange
Commission its Quarterly Report on Form 10-Q reporting a net loss
of $166,091 for the three months ended March 31, 2024, compared to
a net income of $86,622 for the same period in 2023.
For the six months ended March 31, 2024 and 2023, the Company
reported a net loss of $338,090 and net income of $109,367,
respectively.
During the three months ended March 31, 2024 and 2023, the Company
generated $453,655 and $748,406 in revenue, respectively. During
the six months ended March 31, 2024 and 2023, it generated $929,284
and $1,483,172 in revenue, respectively.
The Company had an accumulated deficit of $20,191,534 and
$19,853,444 at March 31, 2024 and September 30, 2023, respectively.
These matters, among others, raise substantial doubt about the
Company's ability to continue as a going concern. While the Company
is attempting to increase operations and generate additional
revenues, the Company's cash position may not be significant enough
to support the Company's daily operations. Management may raise
additional funds through the sale of its securities or borrowings
from third parties.
Management believes that the actions presently being taken to
further implement its business plan and generate additional
revenues provide the opportunity for the Company to continue as a
going concern. While the Company believes in the viability of its
strategy to generate additional revenues and in its ability to
raise additional funds, there can be no assurances to that effect.
The ability of the Company to continue as a going concern is
dependent upon the Company's ability to further implement its
business plan and generate additional revenues.
A full-text copy of the Company's Form 10-Q is available at
https://tinyurl.com/y95urhbh
About AmeriCann
Americann, Inc. (OTCQB:ACAN) is a specialized cannabis company that
is developing state-of-the-art product manufacturing and greenhouse
cultivation facilities. Its business plan is based on the
continued growth of the regulated marijuana market in the United
States.
As of March 31, 2024, the Company has $14,788,169 in total assets,
$9,418,902 in total liabilities, and a total stockholders' equity
of $5,369,267.
Houston, Texas-based MaloneBailey, LLP, the Company's auditor since
2016, issued a "going concern" qualification in its report dated
December 22, 2023, citing that the Company has suffered recurring
losses from operations and has a net capital deficiency that raises
substantial doubt about its ability to continue as a going
concern.
AMERICANN INC: Incurs $166K Net Loss in Second Quarter
------------------------------------------------------
Americann, Inc., filed with the Securities and Exchange Commission
its Quarterly Report on Form 10-Q reporting a net loss of $166,091
on $453,655 of rental income for the three months ended March 31,
2024, compared to net income of $86,622 on $748,406 of rental
income for the three months ended March 31, 2023.
For the six months ended March 31, 2024, the Company reported a net
loss of $338,090 on $929,284 of rental income, compared to net
income of $109,367 on $1.48 million of rental income for the six
months ended March 31, 2023.
As of March 31, 2024, the Company had $14.79 million in total
assets, $9.42 million in total liabilities, and $5.37 million in
total stockholders' equity.
Americann said, "The Company had an accumulated deficit of
$20,191,534 and $19,853,444 at March 31, 2024 and Sept. 30, 2023,
respectively. These matters, among others, raise substantial doubt
about the Company's ability to continue as a going concern. While
the Company is attempting to increase operations and generate
additional revenues, the Company's cash position may not be
significant enough to support the Company's daily operations.
Management may raise additional funds through the sale of its
securities or borrowings from third parties.
"Management believes that the actions presently being taken to
further implement its business plan and generate additional
revenues provide the opportunity for the Company to continue as a
going concern. While the Company believes in the viability of its
strategy to generate additional revenues and in its ability to
raise additional funds, there can be no assurances to that effect.
The ability of the Company to continue as a going concern is
dependent upon the Company's ability to further implement its
business plan and generate additional revenues."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1508348/000143774924016535/acan20240331_10q.htm
About AmeriCann
Americann, Inc. (OTCQB:ACAN) is a specialized cannabis company that
is developing state-of-the-art product manufacturing and greenhouse
cultivation facilities. Its business plan is based on the
continued growth of the regulated marijuana market in the United
States.
Houston, Texas-based MaloneBailey, LLP, the Company's auditor since
2016, issued a "going concern" qualification in its report dated
Dec. 22, 2023, citing that the Company has suffered recurring
losses from operations and has a net capital deficiency that raises
substantial doubt about its ability to continue as a going concern.
APPTECH PAYMENTS: Posts $3MM Net Loss in Q1 2024
------------------------------------------------
AppTech Payments Corp. filed with the U.S. Securities and Exchange
Commission its Quarterly Report on Form 10-Q reporting a net loss
of $3.04 million on 105,000 of revenue for the three months ended
March 31, 2024, compared to a net loss of $3.15 million on $89,000
of revenue for the three months ended March 31, 2023.
A full-text copy of the Company's Form 10-Q is available at
https://tinyurl.com/4kwmh93z
About AppTech Payments Corp.
AppTech Payments Corp., a Delaware corporation, is a Fintech
Company headquartered in Carlsbad, California. AppTech utilizes
innovative payment processing and digital banking technologies to
complement its core merchant services capabilities.
As of March 31, 2024, the Company has $8.25 million in total
assets, $4.17 million in total liabilities, and a total
stockholders' equity of $4.08 million.
San Diego, California-based DBBMcKennon, the Company's auditor
since 2014, issued a "going concern" qualification in its report
dated April 1, 2024, citing the Company's limited revenues and
recurring losses from operations. These conditions raise
substantial doubt about the Company's ability to continue as a
going concern.
ARCUTIS BIOTHERAPEUTICS: Narrows Net Loss to $35.4MM in Q1 2024
---------------------------------------------------------------
Arcutis Biotherapeutics, Inc. filed with the U.S. Securities and
Exchange Commission its Quarterly Report on Form 10-Q reporting a
net loss of $35.4 million on $49.6 million of total revenue for the
three months ended March 31, 2024, compared to a loss of $80.1
million on $2.8 million of total revenue for the three months ended
March 31, 2023.
The Company's Product revenues for the quarter ended March 31, 2024
were $21.6 million, compared to $2.8 million for the corresponding
period in 2023. Revenues for the quarter were $15 million for
ZORYVE (roflumilast) cream 0.3% and $6.5 million for ZORYVE
(roflumilast) topical foam, 0.3%. Year-over-year increases were due
to strong unit demand as well as improvements in GTN sales
deductions. In addition, the first quarter of 2024 included Other
revenues of $28 million related to the upfront and milestone
payments in connection with the Sato Pharmaceutical and Huadong
Pharmaceutical collaboration and licensing agreements.
Cost of sales for the quarter ended March 31, 2024 were $3.3
million, compared to $0.8 million for the corresponding period in
2023.
Research and development expenses for the quarter ended March 31,
2024 were $23.1 million, compared to $35.3 million for the
corresponding period in 2023. The year-over-year decrease was due
to decreased clinical development costs related to our topical
roflumilast program.
Selling, general, and administrative expenses for the quarter ended
March 31, 2024 were $54.8 million compared to $42.9 million for the
corresponding period in 2023. The year-over-year increase was
primarily due to sales and marketing expenses related to the
launches of ZORYVE cream and foam.
Cash, cash equivalents, restricted cash, and marketable securities
were $404.5 million as of March 31, 2024, compared to $272.8
million as of December 31, 2023. Net cash used in operating
activities was $31.6 million during the first quarter.
"Our strong performance in the first quarter, with the incredibly
well received launch of ZORYVE foam for seborrheic dermatitis, and
continued growth of ZORYVE cream in psoriasis, reinforces the
demand for new and novel steroid-free treatment options and
physician adoption of the ZORYVE portfolio," said Frank Watanabe,
president and chief executive officer. "The growth of ZORYVE cream
and foam, along with a July 7th PDUFA date for ZORYVE cream as a
potential treatment for atopic dermatitis, as well as our robust
development pipeline, position Arcutis for a potentially
transformative year in 2024."
A full-text copy of the Company's Form 10-Q is available at
https://tinyurl.com/4cnx3z8u
About Arcutis
Arcutis Biotherapeutics, Inc. (Nasdaq: ARQT) -- www.arcutis.com --
is a commercial-stage medical dermatology company. It owns a
growing portfolio of products for a range of inflammatory
dermatological conditions including scalp and body psoriasis,
atopic dermatitis, and alopecia areata.
As of March 31, 2024, the Company has $478.5 million in total
assets, $253.6 million in total liabilities, and a total
stockholders' equity of $224.9 million.
Los Angeles, California-based Ernst & Young LLP, the Company's
auditor since 2019, issued a "going concern" qualification in its
report dated Feb. 27, 2024, citing that the Company has not yet met
a requirement under its loan agreement to raise capital by April 1,
2024, has recurring losses from operations, and has stated that
substantial doubt exists about the Company's ability to continue as
a going concern.
ASENSUS SURGICAL: Posts $22.5MM Net Loss in Q1 2024
---------------------------------------------------
Asensus Surgical, Inc. filed with the U.S. Securities and Exchange
Commission its Quarterly Report on Form 10-Q reporting a net loss
of $22.5 million on $1.1 million of revenue for the three months
ended March 31, 2024, compared to a net loss of $22.2 million on
$976,000 of revenue for the three months ended March 31, 2023.
The Company had an accumulated deficit of $961.9 million as of
March 31, 2024. The Company has not established sufficient sales
revenues to cover its operating costs and requires additional
capital to proceed with its operating plan. The Company said its
ability to continue as a going concern is dependent on the Company
obtaining adequate capital to fund operating losses until it
becomes profitable.
The Company will need to obtain additional financing to execute its
business plan. Management's plan to obtain additional resources for
the Company includes a potential sale of the Company and, if that
is not successful, additional sales of equity, traditional
financing, such as loans, entry into strategic collaborations,
entry into an out-licensing arrangement or provision of additional
distribution rights in some or all of its markets, or, if all such
alternatives are not successful, a bankruptcy filing. However,
management cannot provide any assurance that the Company will be
successful in accomplishing any or all of its plans.
A full-text copy of the Company's Form 10-Q is available at
https://tinyurl.com/4cbxm8td
About Asensus Surgical
Durham, N.C.-based Asensus Surgical, Inc. is a medical device
company that is digitizing the interface between the surgeon and
patient to pioneer a new era of surgery, that it refers to as
Performance-Guided Surgery, or PGS, by unlocking clinical
intelligence to enable surgeons to deliver consistently superior
outcomes to patients.
As of March 31, 2024, the Company has $40.8 million in total
assets, $27.8 million in total liabilities, and a total
stockholders' equity of $13 million. As of December 31, 2023, the
Company had $59.1 million in total assets, $25.7 million in total
liabilities, and $33.4 million in total stockholders' equity.
Raleigh, N.C.-based BDO USA PC, the Company's auditor since 2013,
issued a "going concern" qualification in its report dated March
21, 2024, citing the Company has suffered recurring losses from
operations and has not generated positive cash flows from
operations which raise substantial doubt about its ability to
continue as a going concern.
ASPIRA WOMEN'S: All Four Proposals Passed at Annual Meeting
-----------------------------------------------------------
Aspira Women's Health Inc. convened its 2024 annual meeting of
stockholders on May 13, 2024, during which the stockholders:
Proposal 1: Elected Stefanie Cavanaugh, Celeste R. Fralick,
Ph.D., Jannie Herchuk, Lynn O'Connor Vos, Nicole Sandford, Winfred
Parnell, M.D. as directors for a one-year term expiring at the
Company's 2025 annual meeting of stockholders and until their
successors are elected and qualified.
Proposal 2: Approved, on an advisory basis, the compensation
of the Company's named executive officers as disclosed in the
Company's definitive proxy statement filed with the Securities and
Exchange Commission on April 1, 2024.
Proposal 3: Approved an amendment to the Company's 2019 Stock
Incentive Plan to increase the number of shares of common stock
authorized to be granted under the 2019 Plan by 1,000,000 shares
and increase the maximum number of awards that may be granted as
incentive stock options under the 2019 Plan to a total of 3,000,000
shares.
Proposal 4: Ratified the selection of BDO USA, LLP (n/k/a BDO
P.C.) as the Company's independent registered public accounting
firm for the year ending December 31, 2024.
About Aspira Women's Health
Formerly known as Vermillion, Inc., Aspira Women's Health Inc. --
http://www.aspirawh.com/-- is dedicated to the discovery,
development, and commercialization of noninvasive, AI-powered tests
to aid in the diagnosis of gynecologic diseases. OvaWatch and
Ova1Plus are offered to clinicians as OvaSuiteSM. Together, they
provide the only comprehensive portfolio of blood tests to aid in
the detection of ovarian cancer for the 1.2+ million American women
diagnosed with an adnexal mass each year. OvaWatch provides a
negative predictive value of 99% and is used to assess ovarian
cancer risk for women where initial clinical assessment indicates
the mass is indeterminate or benign, and thus surgery may be
premature or unnecessary. Ova1Plus is a reflex process of two
FDA-cleared tests, Ova1 and Overa, to assess the risk of ovarian
malignancy in women planned for surgery.
Boston, Massachusetts-based BDO USA, P.C., the Company's auditor
since 2012, issued a "going concern" qualification in its report
dated March 29, 2024, citing that Company has suffered recurring
losses from operations and expects to continue to incur substantial
losses in the future, which raise substantial doubt about its
ability to continue as a going concern.
ASTRO ONE: Moody's Withdraws 'Ca' CFR Following Debt Restructuring
------------------------------------------------------------------
Moody's Ratings withdrew all of Astro One Acquisition Corporation's
ratings, including its Ca Corporate Family Rating, Ca-PD/LD
Probability of Default Rating, the Ca senior secured first lien
term loan and C senior secured second lien term loan ratings
following completion of the company's previously announced
restructuring. The outlook was changed to rating withdrawn from
negative. The withdrawals follow the restructuring of debt into new
loans and equity.
RATINGS RATIONALE
All of Astro One's ratings have been withdrawn because its rated
debt is no longer outstanding following completion of the
restructuring of the company's capital structure that was announced
on March 20, 2024 with 100% lender support. The company indicated
the restructuring eliminated over $600 million of funded debt as
part of the transaction with the lender group now owning 100% of
the reorganized company. The transactions terminated the previously
rated revolver and first lien and second lien term loan
instruments.
Astro One Acquisition Corporation (founded in 1959 as Doskocil
Manufacturing, Inc., Petmate, headquartered in Arlington, TX) is a
manufacturer of various durable pet supplies products in the United
States, with a diversified product portfolio such as hard goods
(kennels, feeding & watering, food storage), toys, outdoor/soft
goods (shelters, bedding, wire kennels, collars & leashes) and
others. Products are sold across multiple channels such as
e-commerce, mass merchandisers, specialty retail, warehouse, and
others. Astro One was acquired by private equity firm Platinum
Equity in September 2021 and the company purchased Cosmic Pet in
October 2021. Annual revenues are approximately $360 million.
AYTU BIOPHARMA: Incurs $2.89 Million Net Loss in Third Quarter
--------------------------------------------------------------
Aytu Biopharma, Inc., filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q reporting a net loss
of $2.89 million on $17.99 million of net revenue for the three
months ended March 31, 2024, compared to a net loss of $7.20
million on $22.73 million of net revenue for the three months ended
March 31, 2023.
For the nine months ended March 31, 2024, the Company reported a
net loss of $11.23 million on $63.03 million of net revenue,
compared to a net loss of $14.59 million on $76.67 million of net
revenue for the nine months ended March 31, 2023.
As of March 31, 2024, the Company had $128.86 million in total
assets, $83.69 million in total current liabilities, $14.40 million
in total non-current liabilities, and $30.78 million in total
stockholders' equity.
Aytu Biopharma said, "We have incurred significant losses in each
year since inception. Our net loss was $2.9 million and $11.2
million for the three and nine months ended March 31, 2024,
respectively. As of March 31, 2024, and June 30, 2023, we had
accumulated deficits of $315.4 million and $304.1 million,
respectively. As of March 31, 2024, and largely as a result of the
January 2025 maturity of the Avenue Note, there is significant
uncertainty about our ability to fund planned operations for the
twelve months following the filing date of this Form 10-Q, which
raises substantial doubt about our ability to continue as a going
concern."
Management Discussion
"The positive operating momentum we have experienced over the past
two years continued during the third quarter of fiscal 2024, as
ADHD Portfolio revenue continued its rapid growth, increasing 49%,
and we improved our adjusted EBITDA by $7.0 million, compared to
the year ago third quarter. This represents the first March
quarter in the company's history during which Aytu generated
positive adjusted EBITDA, which is notable considering the March
quarter is typically our lowest revenue quarter for the Rx Segment
due largely to patients' insurance deductible resets. Further,
when considering both the current softness of our pediatric product
sales coupled with the well-publicized cyberattack that impacted
the entire healthcare industry, we are very encouraged by the Rx
Segment's demonstrated, year over year revenue growth," commented
Josh Disbrow, chief executive officer of Aytu. "Our business is
better positioned today than at any point in our history. Aytu
generated TTM adjusted EBITDA of $15.4 million, while our balance
sheet remains strong with $19.8 million of cash at the end of March
2024."
"The key drivers to achieving these critical milestones of positive
$15.4 million in TTM companywide adjusted EBITDA and positive $17.1
million in Rx Business TTM adjusted EBITDA, have been a combination
of redefining our corporate strategic mandate to focus our business
solely on the Rx Segment while instituting a number of operational
improvements. These improvements include strong sales force
execution, the leveraging of our innovative Aytu RxConnect
platform, and continued effective expense management.
Additionally, once we have fully transitioned manufacturing of our
ADHD brands out of our Grand Prairie, Texas facility, we expect to
gain additional expense and margin improvements beyond what we're
currently generating. While there is still work to be done to
mitigate the negative impact of the payor changes within our
Pediatric Portfolio, which we believe we will be successful in
addressing, we are excited about the overall trajectory of the
business as we finish fiscal 2024," Mr. Disbrow concluded.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1385818/000143774924017051/aytu20240331_10q.htm
About Aytu BioPharma
Englewood, Colorado-based Aytu BioPharma, Inc., formerly known as
Aytu BioScience, Inc. -- http://www.aytubio.com-- is a
pharmaceutical company focused on commercializing novel
therapeutics and consumer healthcare products. The Company
operates through two business segments (i) the Rx Segment,
consisting of prescription pharmaceutical products and (ii) the
Consumer Health Segment, which consists of various consumer
healthcare products.
Denver, Colorado-based Grant Thornton LLP, the Company's auditor
since 2022, issued a "going concern" qualification in its report
dated Oct. 12, 2023, citing that the Company's net loss was $17.1
million and cash used in operating activities was $5.1 million for
the year ended June 30, 2023, and as of that date, the Company's
accumulated deficit was $304.1 million. These conditions, along
with other matters, raise substantial doubt about the Company's
ability to continue as a going concern.
BERGIO INTERNATIONAL: Narrows Net Loss to $358,144 in Q1 2024
-------------------------------------------------------------
Bergio International, Inc. filed with the U.S. Securities and
Exchange Commission its Quarterly Report on Form 10-Q reporting a
net loss of $358,144 on $624,855 of net revenue for the three
months ended March 31, 2024, compared to a net loss of $981,975 on
$930,586 of net revenue for the three months ended March 31, 2023.
The Company had a net loss attributable to Bergio International,
Inc. and cash used in operations of $258,428 and $356,757,
respectively, for the three months ended March 31, 2024.
Additionally, the Company had an accumulated deficit of
approximately $24.1 million and working capital deficit of
approximately $4.7 million at March 31, 2024.
Management cannot provide assurance that the Company will
ultimately achieve profitable operations or become cash flow
positive or raise additional capital pursuant to debt or equity
financings. The Company may seek to raise additional capital
through additional debt and/or equity financings to fund its
operations in the future; however, no assurance can be provided
that the Company will be able to raise additional capital on
favorable terms, or at all. If the Company is unable to raise
additional capital or secure additional lending in the future to
fund its business plan, the Company may need to curtail or cease
its operations.
A full-text copy of the Company's Form 10-Q is available at
https://tinyurl.com/72u7mdt2
About Bergio International
Bergio International, Inc. is engaged in the product design,
manufacturing, distribution of fine jewelry primarily in the United
States and is headquartered in Fairfield, New Jersey.
As of March 31, 2024, $4.4 million in total assets, $6.5 million in
total liabilities, and a total stockholders' deficit of $2.2
million. As of December 31, 2023, the Company had $4.6 million in
total assets, $6.4 million in total liabilities, and $1.8 million
in total stockholders' deficit.
Lagos, Nigeria-based Olayinka Oyebola & Co., the Company's auditor
since 2023, issued a "going concern" qualification in its report
dated March 21, 2024, citing that the Company suffered an
accumulated deficit of $23.8 million, net loss of $6.6 million and
a negative working capital of $4.35 million. These matters raise
substantial doubt about the Company's ability to continue as a
going concern.
BETTER CHOICE: Receives Noncompliance Letter From NYSE Regulation
-----------------------------------------------------------------
Better Choice Company Inc. announced that it received a warning
letter from NYSE Regulation regarding the Company's disclosure of
material news in a manner that did not comply with the NYSE
American Company Guide.
Section 401(a) of the Company Guide requires a listed company "to
make immediate public disclosure of all material information
concerning its affairs" and that "when such disclosure is to be
made between 7:00 A.M. and 4:00 P.M., Eastern Time, it is essential
that the Exchange be notified at least ten minutes prior to the
announcement."
At approximately 12:50 P.M. Eastern Time on May 17, 2024, the
Company issued a press release announcing its First Quarter 2024
Results, which was a material news disclosure. In doing so, the
Company did not comply with Section 401(a) of the Company Guide by
notifying the Exchange before issuing the announcement or providing
the Exchange an advance copy of the announcement. As such, on May
21, 2024, the Company received a warning letter from NYSE
Regulation in accordance with Section 1009(a)(i) of the Company
Guide, to notify the Company of the noncompliance.
About Better Choice
Headquartered in Tampa, Florida, Better Choice Company Inc. --
http://www.betterchoicecompany.com/-- is a pet health and wellness
company committed to leading the industry shift toward pet products
and services that help dogs and cats live healthier, happier and
longer lives. The Company sells its premium and super-premium
products under the Halo brand umbrella, including Halo Holistic,
Halo Elevate and the former TruDog brand, which has been rebranded
and successfully integrated under the Halo brand umbrella during
the third quarter of 2022.
Tampa, Florida-based BDO USA, P.C., the Company's auditor since
2021, issued a "going concern" qualification in its report dated
April 12, 2024, citing that the Company has continually incurred
operating losses, has an accumulated deficit and failed to meet
certain financial covenants as of Dec. 31, 2023. These matters
create substantial doubt about the Company's ability to continue as
a going concern for a period of twelve months from the date these
consolidated financial statements are issued.
BIA WEST: Voluntary Chapter 11 Case Summary
-------------------------------------------
Debtor: BIA West, Inc.
19888 Quiroz Ct.
City of Industry, CA 91789
Case No.: 24-14166
Chapter 11 Petition Date: May 28, 2024
Court: United States Bankruptcy Court
Central District of California
Judge: Hon. Julia W. Brand
Debtor's Counsel: Stephen R. Wade, Esq.
THE LAW OFFICES OF STEPHEN R. WADE
5150 E. Pacific Coast Hwy.
Ste. 210
Long Beach, CA 90804
Tel: (909) 575-7597
Email: srw@srwadelaw.com
Estimated Assets: $500,000 to $1 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Faycal Namoun as CEO.
A copy of the Debtor's list of 20 largest unsecured creditors is
now available for download. Follow this link to get a copy today
https://www.pacermonitor.com.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/4IL2TEY/BIA_West_Inc__cacbke-24-14166__0001.0.pdf?mcid=tGE4TAMA
BIOLARGO INC: Posts $775,000 Net Loss in Q1 2024
------------------------------------------------
BioLargo, Inc. filed with the U.S. Securities and Exchange
Commission its Quarterly Report on Form 10-Q reporting a net loss
of $775,000 on $4,575,000 of total revenue for the three months
ended March 31, 2024, compared to a loss of $494,000 on $3,742,000
of total revenue for the three months ended March 31, 2023.
For the three months ended March 31, 2024, BioLargo generated net
cash provided by operating activities of $481,000. At March 31,
2024, it had current assets of $7,176,000, of which $4,336,000 was
cash and cash equivalents, current liabilities of $3,404,000, and
working capital of $3,772,000.
While the Company was able to generate $481,000 in net cash from
operating activities during the three months ended March 31, 2024,
it does not have a long history of doing so and are highly reliant
upon third parties for the generation of a majority of its
revenues. BioLargo also continues to use cash to invest in capital
equipment, research and development, and its new technologies.
"For these reasons, we and our partially owned subsidiaries
continue to sell securities to ensure available working capital,"
the Company stated.
During the three months ended March 31, 2024, the Company sold:
(i) $260,000 of its common stock to Lincoln Park Capital Fund,
LLC
(ii) $228,000 of its common stock and warrants to accredited
investors
(iii) $475,000 of Clyra Medical common stock, and
(iv) $50,000 of BETI common stock.
"We have been, and anticipate that we will continue to be, limited
in terms of our capital resources, and expect to continue to need
further investment capital to fund our business plans and
investments into our new technologies."
These factors raise substantial doubt about the Company's ability
to continue as a going concern, unless it is able to:
(i) continue to increase revenues, generate cash from
operations, or generate cash from financing activities
(ii) convert assets such as its $2,473,000 in accounts
receivable into cash; or
(iii) if necessary, reduce ongoing cash obligations by
curtailing portions of our operations.
A full-text copy of the Company's Form 10-Q is available at
https://tinyurl.com/536xrb93
About BioLargo Inc.
Westminster, Calif.-based BioLargo, Inc. (OTCQB:BLGO) is a
cleantech and life sciences innovator and engineering services
solution provider. Its core products address PFAS contamination,
achieve advanced water and wastewater treatment, control odor and
VOCs, improve air quality, enable energy-efficiency and safe
on-site energy storage, and control infections and infectious
disease. Its approach is to invent or acquire novel technologies,
develop them into product offerings, and extend their commercial
reach through licensing and channel partnerships to maximize their
impact.
As of March 31, 2024, the Company has $9,821,000 in total assets,
$4,673,000 in total liabilities, and a total stockholders' equity
of $5,148,000. As of December 31, 2023, the Company had $8,205,000
in total assets, $4,003,000 in total liabilities, and $4,202,000 in
total stockholders' equity.
Orlando, Fla.-based Hacker, Johnson & Smith PA, the Company's
auditor since 2023, issued a "going concern" qualification in its
report dated April 1, 2024, citing that the Company has suffered
recurring losses from operations, has negative cash flow from
operations and has a significant accumulated deficit, which raise
substantial doubt about the Company's ability to continue as a
going concern.
BLUM HOLDINGS: Swings to $3MM Net Loss in Q1 2024
-------------------------------------------------
Blum Holdings, Inc. filed with the U.S. Securities and Exchange
Commission its Quarterly Report on Form 10-Q reporting a net loss
of $3.05 million on $6.78 million of total revenue for the three
months ended March 31, 2024, compared to a net income of $410,000
on $8.61 million of total revenue for the three months ended March
31, 2023.
As of March 31, 2024, and December 31, 2023, the Company had an
accumulated deficit of $457.23 million and $454.18 million,
respectively. At March 31, 2024, the Company had a consolidated
cash balance of $1.18 million.
Management said it expects to experience further net losses in 2024
and in the foreseeable future. The Company may not be able to
generate sufficient cash from operating activities to fund its
ongoing operations. The Company's future success is dependent upon
its ability to achieve profitable operations and generate cash from
operating activities. There is no guarantee that the Company will
be able to generate enough revenue or raise capital to support its
operations.
The Company will be required to raise additional funds through
public or private financing, additional collaborative relationships
or other arrangements until it is able to raise revenues to a point
of positive cash flow. The Company is evaluating various options to
further reduce its cash requirements to operate at a reduced rate,
as well as options to raise additional funds, including obtaining
loans and selling common stock. There is no guarantee that it will
be able to generate enough revenue or raise capital to support its
operations, or if it is able to raise capital, that it will be
available to the Company on acceptable terms, on an acceptable
schedule, or at all.
The issuance of additional securities may result in a significant
dilution in the equity interests of the Company's current
stockholders. Obtaining loans, assuming these loans would be
available, will increase the Company's liabilities and future cash
commitments. There is no assurance that the Company will be able to
obtain further funds required for its continued operations or that
additional financing will be available for use when needed or, if
available, that it can be obtained on commercially reasonable
terms. If the Company is not able to obtain the additional
financing on a timely basis, it will not be able to meet its other
obligations as they become due, and the Company will be forced to
scale down or perhaps even cease its operations.
The risks and uncertainties surrounding the Company's ability to
continue to raise capital and its limited capital resources raise
substantial doubt as to the Company's ability to continue as a
going concern for the next 12 months.
In an effort to achieve liquidity that would be sufficient to meet
all of its commitments, the Company has undertaken a number of
actions, including minimizing capital expenditures and reducing
recurring expenses. However, management believes that even after
taking these actions, the Company will not have sufficient
liquidity to satisfy all of its future financial obligations.
A full-text copy of the Company's Form 10-Q is available at
https://tinyurl.com/26bvspfu
About Blum Holdings
Headquartered in Santa Ana, Calif., Blum Holdings, Inc. --
www.blumholdings.com -- is a cannabis company with operations in
retail and distribution throughout California, with an emphasis on
providing the highest quality of medical and adult use cannabis
products. The Company is home to Korova, a brand of high potency
products across multiple product categories, currently available in
California. The Company operates Blum OC, a premier cannabis
dispensary in Orange County, California. The Company also owns
dispensaries in California which operate as The Spot in Santa Ana,
Blum in Oakland, and Blum in San Leandro.
As of March 31, 2024, the Company has $31.96 million in total
assets, $80.6 million in total liabilities, and a total
stockholders' equity of $48.64 million. As of December 31, 2023,
the Company had $32.1 million in total assets, $77.8 million in
total liabilities, and $45.7 million in total stockholders'
deficit.
Costa Mesa, Calif.-based Marcum LLP, the Company's auditor since
2018, issued a "going concern" qualification in its report dated
April 15, 2024, citing that the Company has a significant working
capital deficiency, has incurred significant losses and needs to
raise additional funds to meet its obligations and sustain its
operations. These conditions raise substantial doubt about the
Company's ability to continue as a going concern.
BRIGHT MOUNTAIN: Incurs $4.77 Million Net Loss in First Quarter
---------------------------------------------------------------
Bright Mountain Media, Inc., filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing a net loss
of $4.77 million on $12.45 million of revenue for the three months
ended March 31, 2024, compared to a net loss of $3.80 million on
$1.50 million of revenue for the three months ended March 31,
2023.
As of March 31, 2024, the Company had $41.72 million in total
assets, $93.04 million in total liabilities, and a total
shareholders' deficit of $51.32 million.
Bright Mountain said, "The Company's ability to continue as a going
concern is dependent upon its ability to meet its liquidity needs
through a combination of factors. The Company is currently
exploring several strategic alternatives, including restructuring
or refinancing its debt, or seeking additional debt, including
borrowing under the Centre Lane Senior Secured Credit Agreement or
raising equity capital. The ability to access the capital market
is also dependent upon the stock volume and market price of the
Company's stock, which cannot be assured. Other measures include
reducing or delaying certain business activities, reducing general
and administrative expenses, including a reduction in headcount.
The ultimate success of these plans is not guaranteed.
"The Company's current cash and working capital, as of the filing
of this Quarterly Report on Form 10-Q, is not expected to be
sufficient to fund its anticipated level of operations over the
next twelve months. As a result, such matters create a substantial
doubt regarding the Company's ability to meet its financial needs
and continue as a going concern."
Management Comments
Matt Drinkwater, CEO of Bright Mountain Media, commented "We are
pleased with the continued progress in our financial performance.
Having accomplished the work of integrating two new businesses and
reducing costs, we are focused on unlocking more synergies,
launching new products and business lines, and delivering the
vision of an AI-enabled marketing services platform to our
customers. An example of these synergies has shown up in our ad
tech business via organic top-line growth. This was primarily
driven by the acceleration of leveraging the data assets of our
market research division. This unique approach in the market is
how we will continue to differentiate and create new opportunities
in advertising services to increase return on advertising spend for
customers across all segments. We remain optimistic that this
represents the first of many synergies to come."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1568385/000162828024023277/bmtm-20240331.htm
About Bright Mountain
Based in Boca Raton, Fla., Bright Mountain Media, Inc. --
http://www.brightmountainmedia.com/-- unites a diverse portfolio
of companies to deliver a full spectrum of advertising, marketing,
technology, and media services under one roof—fused together by
data-driven insights. Bright Mountain Media's subsidiaries include
Deep Focus Agency, LLC, BV Insights, LLC, CL Media Holdings, LLC,
and Bright Mountain, LLC.
East Brunswick, New Jersey-based WithumSmith+Brown, PC, the
Company's auditor since 2021, issued a "going concern"
qualification in its report dated April 1, 2024, citing that the
Company has suffered recurring losses from operations and has a net
capital deficiency that raise substantial doubt about its ability
to continue as a going concern.
BRIGHT MOUNTAIN: Posts $4.8MM Net Loss in Q1 2024
-------------------------------------------------
Bright Mountain Media, Inc. filed with the U.S. Securities and
Exchange Commission its Quarterly Report on Form 10-Q reporting a
net loss of $4.8 million for the three months ended March 31, 2024,
compared to a net loss of $3.8 million for the same period in
2023.
The Company's revenue was $12.4 million, an increase of $10.9
million, or 731%, compared to $1.5 million for the same period in
2023, which was driven by the Big Village Acquisition, and was
partially offset by macroeconomics factors, coupled with an overall
reduction in spending by some customers due to inflationary
concerns, which led to lower than normal rates and lower earnings
specifically impacting our digital publishing division.
Advertising technology revenue was approximately $2.6 million and
digital publishing revenue was approximately $434,000. The new
offerings the Company acquired as part of the Big Village
Acquisition were consumer insights, creative services, and media
services. Consumer insights revenue was approximately $6.7 million,
creative services revenue was approximately $2.1 million, and media
services revenue was approximately $641,000 during the first
quarter of 2024.
Cost of revenue was $9.3 million, an increase of $8.3 million, or
860%, compared to $970,000 for the same period in 2023. The
increase is a result of new costs associated with our new revenue
offerings from the Big Village Acquisition, inclusive of direct
salary and labor cost of approximately $1.9 million for employees
that work directly on customer projects, and direct project costs
of approximately $3.1 million for payments made to third-parties
that are directly attributable to completion of projects to allow
for revenue recognition, $2.1 million for non-direct project cost
and legacy publisher cost of $1.8 million which increased by 270%.
The increase in publisher cost is associated with the increase
noted in advertising technology revenue of approximately 383%.
General and administrative expense was $5.2 million, an increase of
53%, compared to $3.4 million in the same period in 2023. Gross
margin was $3.1 million, an increase of 494%, compared to $528,000
in the same period in 2023.
Adjusted EBITDA loss was $1.2 million, compared to Adjusted EBITDA
loss of $2.1 million in the same period in 2023.
Matt Drinkwater, CEO of Bright Mountain Media, commented on the
results, stating, "We are pleased with the continued progress in
our financial performance. Having accomplished the work of
integrating two new businesses and reducing costs, we are focused
on unlocking more synergies, launching new products and business
lines, and delivering the vision of an AI-enabled marketing
services platform to our customers. An example of these synergies
has shown up in our ad tech business via organic top-line growth.
This was primarily driven by the acceleration of leveraging the
data assets of our market research division. This unique approach
in the market is how we will continue to differentiate and create
new opportunities in advertising services to increase return on
advertising spend for customers across all segments. We remain
optimistic that this represents the first of many synergies to
come."
As of March 31, 2024, the Company has $41.7 million in total
assets, $93 million in total liabilities, and a total shareholders'
deficit of $51.3 million.
A full-text copy of the Company's Form 10-Q is available at
https://tinyurl.com/47b9epu9
About Bright Mountain
Based in Boca Raton, Fla., Bright Mountain Media, Inc. --
www.brightmountainmedia.com -- has an end-to-end digital media and
advertising services platform that efficiently connects brands with
targeted consumer demographics. The Company focuses on digital
publishing, advertising technology, consumer insights, creative and
media services.
As of Dec. 31, 2023, the Company had $43.42 million in total
assets, $90.08 million in total liabilities, and a total
stockholders' deficit of $46.66 million.
East Brunswick, N.J.-based WithumSmith+Brown, PC, the Company's
auditor since 2021, issued a "going concern" qualification in its
report dated April 1, 2024, citing that the Company has suffered
recurring losses from operations and has a net capital deficiency
that raise substantial doubt about its ability to continue as a
going concern.
C-BOND SYSTEMS: Incurs $317K Net Loss in First Quarter
------------------------------------------------------
C-Bond Systems, Inc., filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q reporting a net loss
of $317,158 on $936,804 of sales for the three months ended March
31, 2024, compared to a net loss of $706,365 on $515,220 of sales
for the three months ended March 31, 2023.
As of March 31, 2024, the Company had $1.96 million in total
assets, $3.07 million in total liabilities, $1.45 million in series
B convertible preferred stock, $1.59 million in series C
convertible preferred stock, and a total shareholders' deficit of
$4.15 million.
Net cash used in operations was $651,236 and $290,971 for the three
months ended March 31, 2024 and 2023, respectively. Additionally,
as of March 31, 2024, the Company had an accumulated deficit,
shareholders' deficit, and working capital deficit of $61,183,221,
$4,151,924 and $980,944, respectively. On May 8, 2023, the Company
sold its nanoShield product line and received proceeds of
$4,042,631. The proceeds were used to repay convertible notes
payable, notes payable and related accrued interest. On March 31,
2024, the Company had cash of $197,863. According to the Company,
these factors raise substantial doubt about the Company's ability
to continue as a going concern for a period of twelve months from
the issuance date of this report.
C-Bond said, "Management cannot provide assurance that the Company
will ultimately achieve profitable operations or become cash flow
positive or raise additional debt and/or equity capital. The
Company is seeking to raise capital through additional debt and/or
equity financings to fund its operations in the future. Although
the Company has historically raised capital from sales of common
shares and preferred shares, and from the issuance of promissory
notes and convertible promissory notes, there is no assurance that
it will be able to continue to do so. If the Company is unable to
raise additional capital or secure additional lending in the near
future, management expects that the Company will need to curtail
its operations."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1421636/000121390024042971/ea0205862-10q_cbond.htm
About C-Bond Systems
C-Bond Systems, Inc., San Antonio, TX, is a nanotechnology company
and sole owner and developer of the patented C-Bond technology.
The Company is engaged in the implementation of proprietary
nanotechnology applications and processes to enhance properties of
strength, functionality, and sustainability of brittle material
systems. The Company's present primary focus is in the
multi-billion-dollar glass and window film industry with target
markets in the United States and internationally. The Company
operates in two divisions: C-Bond Transportation Solutions (through
the date of sale on May 8, 2023) and Patriot Glass Solutions.
C-Bond Transportation Solutions sold a windshield strengthening,
water repellent solution called C-Bond nanoShield and disinfection
products. The Company's Patriot Glass Solutions subsidiary sells
multi-purpose glass strengthening primer and window film mounting
solutions, including C-Bond BRS, a ballistic-resistant film system,
and C-Bond Secure, a forced entry system. The Company currently
own four U.S. patents and one patent license spanning core and
strategic nano-technology applications and processes.
Boca Raton, Florida-based Salberg & Company, P.A., the Company's
auditor since 2017, issued a "going concern" qualification in its
report dated April 1, 2024, citing that the Company has cash used
in operations of $1,602,218, in 2023 and a working capital deficit,
shareholders' deficit and accumulated deficit of $1,351,954,
$4,324,535 and $60,851,714 respectively, at Dec. 31, 2023. These
matters raise substantial doubt about the Company's ability to
continue as a going concern.
C-BOND SYSTEMS: Narrows Net Loss to $317,158 in Q1 2024
-------------------------------------------------------
C-Bond Systems, Inc. filed with the U.S. Securities and Exchange
Commission its Quarterly Report on Form 10-Q reporting a net loss
of $317,158 on $474,875 of gross profit for the three months ended
March 31, 2024, compared to a net loss of $706,365 on $269,860 of
gross profit for the three months ended March 31, 2023.
C-Bond's net cash used in operations was $651,236 and $290,971 for
the three months ended March 31, 2024, and 2023, respectively.
Additionally, as of March 31, 2024, the Company had an accumulated
deficit, shareholders' deficit, and working capital deficit of
$61,183,221, $4,151,924 and $980,944, respectively. On May 8, 2023,
C-Bond sold its nanoShield product line and received proceeds of
$4,042,631. The proceeds were used to repay convertible notes
payable, notes payable and related accrued interest. On March 31,
2024, the Company had cash of $197,863. These factors raise
substantial doubt about its ability to continue as a going concern
for the next 12 months.
Management said it cannot provide assurance that the Company will
ultimately achieve profitable operations or become cash flow
positive or raise additional debt or equity capital.
"We are seeking to raise capital through additional debt and/or
equity financings to fund our operations in the future," the
Company stated. "Although we have historically raised capital from
sales of common shares and preferred shares, and from the issuance
of promissory notes and convertible promissory notes, there is no
assurance that we will be able to continue to do so. If we are
unable to raise additional capital or secure additional lending in
the near future, management expects that we will need to curtail
our operations."
A full-text copy of the Company's Form 10-Q is available at
https://tinyurl.com/2a64bjy3
About C-Bond Systems Inc.
San Antonio, Texas-based C-Bond Systems, Inc. is a nanotechnology
company and sole owner and developer of the patented C-Bond
technology. The Company is engaged in the implementation of
proprietary nanotechnology applications and processes to enhance
properties of strength, functionality, and sustainability of
brittle material systems.
As of March 31, 2024, the Company has $1,956,016 in total assets,
$3,074,104 in total liabilities, and a total stockholders' deficit
of $4,151,924. As of December 31, 2023, the Company had $2,283,113
in total assets, $3,782,521 in total liabilities, $2,825,127 in
commitments and contingencies, and $4,324,535 in total
shareholders' deficit.
Boca Raton, Fla.-based Salberg & Company, P.A., the Company's
auditor since 2017, issued a "going concern" qualification in its
report dated April 1, 2024, citing that the Company has cash used
in operations of $1,602,218 in 2023 and a working capital deficit,
shareholders' deficit and accumulated deficit of $1,351,954,
$4,324,535 and $60,851,714 respectively, at December 31, 2023.
These matters raise substantial doubt about the Company's ability
to continue as a going concern.
CANNMART LABS: Lifeist Wellness Unit Launches BIA Proceedings
-------------------------------------------------------------
Lifeist Wellness Inc. (TSXV: LFST) (FRANKFURT: M5B) (OTCMKTS:
LFSWF) has commenced restructuring proceedings pursuant to the
Bankruptcy and Insolvency Act for one of its wholly owned
subsidiaries, CannMart Labs Inc. The restructuring of CannMart
Labs is part of a broader strategic initiative to enhance the
company's operational effectiveness while maintaining its
commitment to innovation and growth.
On May 2, 2024, CannMart Labs sought and obtained an initial order
("Initial Order") from the Ontario Superior Court of Justice
(Commercial List) ("Court") under the Companies' Creditors
Arrangement Act. msi Spergel inc. was appointed as monitor of the
Company ("Monitor"). The Initial Order provides, among other
things, a stay of proceedings until July 17, 2024 ("Stay Period").
The Company said it is important to note that this restructuring
does not impact CannMart Inc., Lifeist's flagship subsidiary and a
leading distributor of licensed and in-house branded adult-use
cannabis and cannabis-derived products in Canada.
"Following a thorough financial and strategic review, we believe
that it is in the best interest of shareholders for CannMart Labs
alone to enter into restructuring proceedings in order to address
its obligations and contributions to Lifeist's balance sheet," said
Meni Morim, CEO of Lifeist. "We are fully committed to
streamlining the operations of our cannabis divisions to better
meet the present moment in the industry and are optimistic that
this restructuring of CannMart Labs will allow Lifeist's cannabis
operations to unlock greater shareholder value. We expect that
these proceedings will have no impact on the day-to-day operations
of CannMart Inc. or any of our other operating divisions."
Following the vote of shareholders at the Company's recent annual
general and special meeting rejecting the sale of the CannMart
Group, Lifeist's cannabis operating division, management undertook
a bottom-up review of the businesses to identify opportunities for
optimization and improvement. The decision to restructure CannMart
Labs was made with input from advisors and legal counsel, with the
objective of achieving sustainable growth toward future
profitability for the benefit of all Lifeist shareholders. This
strategic move is part of a broader commitment to ensure the
long-term success of the public company.
While the restructuring does not apply to CannMart Inc., this
strategic move aims to optimize operational efficiency and
streamline the company's focus in alignment with its long-term
vision. The decision to initiate restructuring proceedings for
CannMart Labs underscores Lifeist's dedication to adaptability and
resilience in navigating the dynamic landscape of the cannabis
industry. By optimizing the operational structure of CannMart
Labs, Lifeist aims to bolster its ability to deliver innovative
wellness solutions that positively impact the lives of its
customers.
Lifeist said it remains steadfast in its mission to leverage
advancements in science and technology to build breakthrough
ventures that transform human wellness. The Company is confident
that the restructuring of Labs will further strengthen its position
as a leader in the health-tech industry and pave the way for
continued growth and innovation.
In accordance with Section 23(1) of the CCAA and paragraph 50 of
the Initial Order, a copy of the Initial Order is available on the
Monitor's Case Website at
https://www.spergelcorporate.ca/engagements/cannmart-labs-inc/
The Monitor can be reached at:
MSI Spergel Inc.
200 Yorkland Boulevard
Suite 1100
Toronto ON M2J 5C1
Mukul Manchanda
Email: mmanchanda@spergel.ca
Frank Kisluk
Email: fkisluk@spergel.ca
Lawyers for CannMart Labs:
Thornton Grout Finnigan LLP
TD West Tower, Toronto-Dominion Centre
100 Wellington Street West, Suite 3200
Toronto, ON M5K 1K7
Leanne Williams
Tel: (416) 304-0060
Email: lwilliams@tgf.ca
Mitchell Grossell
Tel: (416) 304-7978
Email: mgrossell@tgf.ca
Ines Ferreira
Tel: (416) 304-1616
Email: iferreira@tgf.ca
Lawyers for the Monitor:
Reconstruct LLP
200 Bay Street Suite 2305
Toronto, Ontario M5J 2J3
Caitlin Fell
Email: cfell@reconllp.com
Jared Rosenbaum
Email: jrosenbaum@reconllp.com
CannMart Labs Inc. -- https://cannmart.com/ -- is a health-tech
company that leverages advancements in science and technology to
build breakthrough ventures that transform human wellness.
CAPSTONE COMPANY: Posts $262,260 Net Loss in Q1 2024
----------------------------------------------------
Capstone Companies, Inc. filed with the U.S. Securities and
Exchange Commission its Quarterly Report on Form 10-Q reporting a
net loss of $262,260 on $5,450 of net revenue for the three months
ended March 31, 2024, compared to a net loss of $466,675 on $5,552
of net revenue for the three months ended March 31, 2023.
As of March 31, 2024, the Company had negative working capital of
$3,535,622, an accumulated deficit of $11,059,476, a cash balance
of $1,693, short-term notes payable of $2,659,737 and $320,329 of
long-term liabilities for deferred taxes. Further, during the three
months ended March 31, 2024, the Company used cash in operations of
$124,773.
Capstone said, "We are seeking alternative sources of liquidity,
including but not limited to debt or equity funding through
issuance of securities, or other alternative financing measures.
However, instability in, or tightening of the capital markets,
could adversely affect our ability to access the capital markets on
terms acceptable to us. An economic recession or a slow recovery
could adversely affect our business and liquidity."
The lack of operating income from products and the financial
condition of the Company are also hindering efforts to locate
working capital funding. The Company is also pursuing a merger or
acquisition with a private operating company as a means of
improving the financial condition and prospects of the Company, but
the Company has not located a potential candidate as of May 14,
2024, the date of its Form 10-Q. There can be no assurance that the
Company will be able to locate and consummate any transaction to
improve its liquidity condition.
Certain directors have provided necessary funding, including a
working capital line to support the Company's cash needs through
this period of revenue development, but this funding is limited in
amount and frequency. Unless the Company succeeds in raising
additional capital or successfully increases cash generated from
operations, or finds and consummates an alternative transaction to
improve its financial condition, management believes there is
substantial doubt about the Company's ability to continue as a
going concern and meet its obligations over the next 12 months.
A full-text copy of the Company's Form 10-Q is available at
https://tinyurl.com/3xsxfdmj
About Capstone Companies Inc.
Deerfield Beach, Fla.-based Capstone Companies, Inc. is a public
holding company organized under the laws of the State of Florida.
The Company is a designer, manufacturer and marketer of consumer
products that are designed to simplify daily living through
technology.
As of March 31, 2024, the Company has $1,391,906 in total assets,
$3,895,986 in total liabilities, and a total stockholders' deficit
of $2,504,080. As of December 31, 2023, the Company has $1,423,608
in total assets, $3,665,428 in total liabilities, and $2,241,820 in
total stockholders' deficit.
Margate, Fla.-based Assurance Dimensions, the Company's auditor
since 2023, issued a "going concern" qualification in its report
dated March 29, 2024, citing that the Company has incurred
recurring operating losses, has incurred negative cash flows from
operations and has an accumulated deficit. These and other factors
raise substantial doubt about the Company's ability to continue as
a going concern.
CARDIFF LEXINGTON: Inks Securities Exchange Agreement with Leonite
------------------------------------------------------------------
Cardiff Lexington Corporation disclosed in a Form 8-K Report filed
with the U.S. Securities and Exchange Commission that on May 13,
2024, the Company entered into a securities exchange agreement with
Leonite Capital LLC, pursuant to which Leonite exchanged a
consolidated senior secured convertible promissory note issued by
the Company on September 22, 2022, with a balance of $3,755,632 as
of such date, for 938,908 shares of the Company's newly designated
series Y senior convertible preferred stock.
The Exchange Agreement contains customary representations and
warranties and covenants for a transaction of this type. In
addition, pursuant to the Exchange Agreement, so long as the shares
of series Y senior convertible preferred stock are outstanding, the
Company agreed that it will not, without Leonite's prior written
consent:
(i) change the nature of its business;
(ii) sell, divest, acquire, change the structure of any
material assets other than in the ordinary course of business;
(iii) enter into any Variable Rate Transactions (as defined in
the Exchange Agreement) or solicit any offers for, respond to any
unsolicited offers for, or conduct any negotiations with any other
person or entity in respect of any Variable Rate Transactions; or
(iv) accept a merchant-cash-advance in which the Company sells
future receivables at a discount or any other factoring
transactions, or similar financing instruments or financing
transactions. Pursuant to the Exchange Agreement, the Company also
granted Leonite with piggy-back registration rights to register the
shares of common stock underlying the series Y senior convertible
preferred stock.
The Exchange Agreement also contains a standard most favored
nations provision which provides that, upon any issuance of (or
announcement of intent to effect an issuance of) any security, or
amendment to (or announcement of intent to effect an amendment to)
any security that was originally issued before the date of the
Exchange Agreement, by the Company or any subsidiary, with any term
that Leonite reasonably believes is more favorable to the purchaser
of such security than to Leonite, or with a term in favor of the
purchaser of such security that Leonite reasonably believes was not
similarly provided to it, then (i) the Company shall notify Leonite
of such additional or more favorable term within three business
days of the issuance and/or amendment (as applicable) of the
respective security, which notice shall be deemed to have been
given to Leonite if the terms of such issuance or amendment are
publicly disclosed, and (ii) such term, Leonite's option, shall
become a part of the securities issued to Leonite.
In connection with securities exchange agreement, the Company also
entered into a security and pledge agreement with Leonite, pursuant
to which the Company granted grant a security interest in all of
its assets and those of its subsidiaries.
The terms of the series Y senior convertible preferred stock are
governed by a certificate of designation filed with the Nevada
Secretary of State on May 14, 2024. Pursuant to the Certificate of
Designation, the Company designated 1,000,000 shares of its
preferred stock as series Y senior convertible preferred stock.
A summary of the material terms of the series Y senior convertible
preferred stock include:
* The series Y senior convertible preferred stock ranks, with
respect to the payment of dividends and the distribution of assets
upon liquidation, (i) senior to all common stock and each series of
the Company's preferred stock, and to each other class or series
that is not expressly made senior to or on parity with the series Y
senior convertible preferred stock; (ii) on parity with each class
or series that is not expressly subordinated or made senior to the
series Y senior convertible preferred stock; and (iii) junior to
each class or series that is expressly made senior to the series Y
senior convertible preferred stock.
* Dividend Rights: Holders of series Y senior convertible
preferred stock are entitled to dividends at a rate per annum of
10.0% of the stated value ($4.00 per share); provided that upon an
Event of Default (as defined in the Certificate of Designation),
such rate shall increase by 5% per annum. Dividends shall accrue
from day to day, whether or not declared, and shall be cumulative.
Dividends shall be payable quarterly in arrears on each dividend
payment date and may be paid in cash or common stock at the
Company's discretion; provided that the Company may only pay
dividends in common stock if such common stock is free-trading,
freely transferable, and does not contain a legend (or be subject
to stop transfer or similar instructions) restricting the resale or
transferability thereof. Dividends payable in common stock shall be
calculated based on a price equal to 80% of the volume weighted
average price for the Company's common stock on its principal
trading market during the five trading days immediately prior to
the applicable payment date.
* Liquidation Right: Subject to the rights of creditors and
the holders of any Senior Securities or Parity Securities, upon any
Liquidation Event, before any payment or distribution of the assets
of the Company (whether capital or surplus) shall be made to or set
apart for the holders of Junior Securities, including the common
stock, each holder of outstanding series Y senior convertible
preferred stock shall be entitled to receive an amount of cash
equal to the greater of (i) 100% of the stated value of $4.00 per
share, plus an amount of cash equal to all accumulated accrued and
unpaid dividends thereon (whether or not declared) to, but not
including the date of final distribution to such holders or (ii)
such amount per share as would have been payable had all shares of
series Y senior convertible preferred stock been converted into
common stock immediately prior to such liquidation event.
* Voting Rights: Holders of series Y senior convertible
preferred stock do not have any voting rights; provided that, so
long as any shares of series Y senior convertible preferred stock
are outstanding, the affirmative vote of holders of a majority of
the series Y senior convertible preferred stock, which majority
must include Leonite so long as it holds any shares of series Y
senior convertible preferred stock, voting as a separate class,
shall be necessary for approving, effecting or validating any
amendment, alteration or repeal of any of the provisions of the
Certificate of Designation, prior to the Company's issuance of
additional shares of series Y senior convertible preferred stock or
prior to the creation or issuance of any securities that are not
subordinate to the series Y senior convertible preferred stock or
new Indebtedness (as defined in the Certificate of Designation);
provided that the foregoing shall not apply to any financing
transaction the use of proceeds of which will be used to redeem the
series Y senior convertible preferred stock in full.
* Conversion Rights: Commencing on the first anniversary of
the date on which the Company's common stock begins trading on a
national stock exchange, including without limitation the New York
Stock Exchange, NYSE American or the Nasdaq Stock Market (any
tier), each share of series Y senior convertible preferred stock,
plus all accrued and unpaid dividends thereon, shall be
convertible, at the option of the holder thereof, at any time and
from time to time, into such number of fully paid and nonassessable
shares of common stock determined by dividing the stated value
($4.00 per share), plus the value of the accrued, but unpaid,
dividends thereon, by a conversion price equal to the lowest VWAP
during the five trading days immediately prior to the applicable
conversion date. Such conversion price is subject to adjustment if
the Company issues common stock or securities convertible into or
exercisable or exchangeable for common stock at a price lower than
such conversion price, subject to certain exceptions.
Notwithstanding the foregoing, in no event shall the holder of any
series Y senior convertible preferred stock be entitled to convert
any number of shares that upon conversion the sum of (i) the number
of shares of common stock beneficially owned by the holder and its
affiliates and (ii) the number of shares of common stock issuable
upon the conversion of the series Y senior convertible preferred
stock with respect to which the determination of this proviso is
being made, would result in beneficial ownership by the holder and
its affiliates of more than 4.99% of the then outstanding common
stock. This limitation may be waived (up to a maximum of 9.99%) by
the holder and in its sole discretion, upon not less than 61 days'
prior notice to the Company.
Full-text copies of the Exchange Agreement, the Security Agreement
and the Certificate of Designation is available at
https://tinyurl.com/4y2aurd9, https://tinyurl.com/4y2aurd9, and
https://tinyurl.com/4y2aurd9, respectively.
About Cardiff Lexington
Headquartered in Las Vegas, Nevada, Cardiff Lexington Corporation
is an acquisition holding company focused on locating undervalued
and undercapitalized companies, primarily in the healthcare
industry, and providing them capitalization and leadership to
maximize the value and potential of their private enterprises while
also providing diversification and risk mitigation for its
stockholders.
As of December 31, 2023, the Company had $20,745,811 in total
assets, $14,124,289 in total liabilities, $5,890,104 in total
mezzanine equity, and $731,418 in total stockholders' equity.
Jericho, New York-based Grassi & Co., CPAs, PC, the Company's
auditor since 2022, issued a "going concern" qualification in its
report dated March 27, 2024, citing that the Company has sustained
an accumulated deficit and negative cash flows from operations,
which raise substantial doubt about its ability to continue as a
going concern.
CAREVIEW COMMUNICATIONS: Reports $1MM Net Loss in Q1 2024
---------------------------------------------------------
CareView Communications, Inc. filed with the U.S. Securities and
Exchange Commission its Quarterly Report on Form 10-Q reporting a
net loss of $1,022,226 on $2,203,238 of total revenue for the three
months ended March 31, 2024, compared to a net loss of $1,346,812
on $1,782,259 of total revenue for the three months ended March 31,
2023.
As of March 31, 2024, the Company had a working capital deficit of
$38,253,839. Management has evaluated the significance of the
conditions described above in relation to the Company's ability to
meet its obligations and concluded that, without additional
funding, the Company will not have sufficient funds to meet its
obligations within the next 12 months. While management will look
to continue funding operations by increased sales volumes and
raising additional capital from sources such as sales of its debt
or equity securities or loans to meet operating cash requirements,
there is no assurance that management's plans will be successful.
On March 30, 2023, noteholders owning Replacement Notes in an
aggregate of $26,200,000, entered into a Replacement Note
Conversion Agreement, wherein the Replacement Notes were converted
into shares of the Company's common stock at a conversion price of
$0.10 per share, resulting in the issuance of an aggregate of
262,000,000 shares.
Upon this conversion, and as of March 31, 2024, the Company's
officers and board of directors held the majority of the Company's
outstanding voting stock. With controlling interest of the majority
of outstanding shares, the Company's majority shareholders voted to
amend its articles of incorporation to increase the authorized
shares available for issuance from 500,000,000 to 800,000,000, with
an effective date of May 22, 2023.
On May 24, 2023, noteholders owning Replacement Notes in the
aggregate of $18,000,000, presented Conversion Notices, per the
terms of the Replacement Notes, to the Company to convert the
Replacement Notes into 180,000,000 shares of the Company's common
stock at a conversion price of $0.10 per share.
Management continues to monitor the immediate and future cash flows
needs of the company in a variety of ways which include forecasted
net cash flows from operations, capital expenditure control, new
inventory orders, debt modifications, increases in sales outreach,
streamlining and controlling general and administrative costs,
competitive industry pricing, sale of equities, debt conversions,
new product or services offerings, and new business partnerships.
As of March 31, 2024, the Company has $4,272,514 in total assets,
$41,504,193 in total liabilities, and a total stockholders' deficit
of $37,231,679.
A full-text copy of the Company's Form 10-Q is available at
https://tinyurl.com/2zjw7nwk
About CareView Communications
Headquartered in Lewisville, Texas, CareView Communications, Inc.
-- http://www.care-view.com-- is a provider of products and
on-demand application services for the healthcare industry,
specializing in bedside video monitoring, software tools to improve
hospital communications and operations, and patient education and
entertainment packages.
As of Dec. 31, 2023, the Company had $4.26 million in total assets,
$40.52 million in total liabilities, and a total stockholders'
deficit of $36.26 million.
Somerset, New Jersey-based Rosenberg Rich Baker Berman & Co., the
Company's auditor since 2022, issued a "going concern"
qualification in its report dated March 27, 2024, citing that the
Company outlines the net losses, cash outflows, and working capital
deficit that raise substantial doubt about its ability to continue
as a going concern.
CEMTREX INC: Incurs $1.57 Million Net Loss in Second Quarter
------------------------------------------------------------
Cemtrex, Inc., filed with the Securities and Exchange Commission
its Quarterly Report on Form 10-Q reporting a net loss of $1.57
million on $17.16 million of revenues for the three months ended
March 31, 2024, compared to a net loss of $539,529 on $16.07
million of revenues for the three months ended March 31, 2023.
For the six months ended March 31, 2024, the Company reported a net
loss of $2.87 million on $34.04 million of revenues, compared to a
net loss of $6.88 million on $28.04 million of revenues for the six
months ended March 31, 2023.
As of March 31, 2024, the Company had $47.25 million in total
assets, $42.09 million in total liabilities, $4.69 million in total
stockholders' equity, and $463,260 in non-controlling interest.
Cemtrex said, "The Company has incurred substantial losses of
$9,196,875 and $13,020,958 for fiscal years 2023 and 2022,
respectively, and has losses on continuing operations for the six
months ending March 31, 2024, of $2,894,579 and has debt
obligations over the next year of $18,105,429 and working capital
of $10,300,384, that raise substantial doubt with respect to the
Company's ability to continue as a going concern."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1435064/000149315224019239/form10-q.htm
About Cemtrex
Cemtrex, Inc. was incorporated in 1998 in the state of Delaware and
has evolved through strategic acquisitions and internal growth into
a multi-industry company. During the first quarter of fiscal year
2023, the Company reorganized its reporting segments to be in line
with its current structure consisting of (i) Security, (ii)
Industrial Services, and (iii) Cemtrex Corporate.
Jericho, New York-based Grassi & Co, CPAs, P.C., the Company's
auditor since 2021, issued a "going concern" qualification in its
report dated Dec. 28, 2023, citing that the Company has sustained
net losses and has significant short-term debt obligations, which
raise substantial doubt about its ability to continue as a going
concern.
CEMTREX INC: Reports $1.6MM Net Loss in Q2 2024
-----------------------------------------------
Cemtrex, Inc. filed with the U.S. Securities and Exchange
Commission its Quarterly Report on Form 10-Q reporting a net loss
of $1,569,721 on $17,159,595 of revenue for the three months ended
March 31, 2024, compared to a net loss of $539,529 on $16,073,397
of revenue for the same period in 2023.
For the six months ended March 31, 2024, the Company reported a net
loss of $2,873,624 on $34,037,761 of revenue, compared to a net
loss of $6,875,903 on $28,043,639 for the six months ended March
31, 2023.
As of March 31, 2024, the Company has $47,246,262 in total assets
and $42,093,604 in total liabilities.
A full-text copy of the Company's Form 10-Q is available at
https://tinyurl.com/yhdxf5b8
About Cemtrex
Hauppauge, N.Y.-based Cemtrex, Inc. operates as a technology
company. The Company focuses on driving innovation in markets such
as internet of things (IoT), augmented, virtual reality, artificial
intelligence, and computer vision in a wide range of sectors.
Cemtrex serves clients in the United States.
Cemtrex, Inc. cautioned in its quarterly report on Form 10-Q for
the period ended December 31, 2023, that substantial doubt exists
about the Company's ability to continue as a going concern.
According to the Company, it has incurred substantial losses of
$9,196,875 and $13,020,958 for fiscal years 2023 and 2022,
respectively, and has losses on continuing operations for the three
months ending December 31, 2023, of $1,314,395 and has current
liabilities of $28,696,123 and working capital deficit of
$2,284,787, that raise substantial doubt with respect to the
Company's ability to continue as a going concern.
CHARGING ROBOTICS: Incurs $198K Net Loss in First Quarter
---------------------------------------------------------
Charging Robotics Inc. filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q reporting a net loss
of $198,000 for the three months ended March 31, 2024, compared to
a net loss of $53,000 for the three months ended March 31, 2023.
As of March 31, 2024, the Company had $285,000 in total assets,
$558,000 in total liabilities, and a total stockholders' deficit of
$273,000.
Charging Robotics said, "The Company has incurred a loss since
inception resulting in an accumulated deficit of [$1,966,000] as of
December 31, 2023, and [$2,164,000] as of March 31, 2024, and
further losses are anticipated in the development of its business.
Management expects the Company to continue to generate substantial
operating losses and to continue to fund its operations primarily
through utilization of its current financial resources and through
additional raises of capital.
"Such conditions raise substantial doubts about the Company's
ability to continue as a going concern. Management's plan includes
raising funds from outside potential investors. However, there is
no assurance such funding will be available to the Company or that
it will be obtained on terms favorable to the Company or will
provide the Company with sufficient funds to meet its objectives."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1459188/000121390024042456/ea0205654-10q_charging.htm
About Charging Robotics
Charging Robotics Inc. (formerly Fuel Doctor Holdings Inc.) was
formed in February 2021, as an Israeli corporation, with the main
goal of developing an innovative wireless electric vehicles (EV)
charging technology. At the heart of the technology is a wireless
power transfer module that uses resonance induction coils to
transfer electricity wirelessly.
Mitzpe Netofa, Israel-based Elkana Amitai CPA, the Company's
auditor since 2023, issued a "going concern" qualification in its
report dated March 12, 2024, citing that as of Dec. 31, 2023, the
Company suffered losses from operations and further losses are
anticipated in the development of its business. These and other
factors raise substantial doubt about the Company's ability to
continue as a going concern.
CITIUS PHARMACEUTICALS: Narrows Net Loss to $8.5MM in Fiscal Q2
---------------------------------------------------------------
Citius Pharmaceuticals Inc. filed with the U.S. Securities and
Exchange Commission its Quarterly Report on Form 10-Q reporting a
net loss of $8.5 million for the three months ended March 31, 2024,
compared to a net loss of $10.5 million for the same period in
2023.
For the six months ended March 31, 2024, the Company incurred a net
loss of $17.8 million, compared to a net loss of $14.1 million for
the six months ended March 31, 2023.
The Company had cash and cash equivalents of $12.6 million as of
March 31, 2024 and had $15 million in gross proceeds from a
registered direct offering on April 30, 2024, extends the Company's
cash runway through December 2024.
As of March 31, 2024, the Company had 159,094,781 common shares
outstanding.
Based on the Company's cash and cash equivalents as of March 31,
2024, and after giving effect to a capital raising that closed on
April 30, 2024, it expects to have sufficient funds to continue its
operations through December 2024. The Company expects to raise
additional capital in the future to support our operations beyond
December 2024.
Commenting on the results, Leonard Mazur, Chairman and CEO of
Citius, said, "I am pleased to share that we made solid progress
this quarter as we focused on execution and managing our finances.
The data analysis of our late-stage asset, Mino-Lok, the only
treatment of its kind in development to salvage infected catheters,
remains on track. We look forward to reporting the topline results
later this quarter. Once we review the results, we plan to engage
with the FDA to determine the optimal next steps in the program and
look forward to advancing this much-needed alternative to the
current standard of care, which often involves painful and costly
catheter removal and replacement."
"Importantly, the BLA submission for LYMPHIR, our novel IL-2
receptor targeted oncology therapy, was accepted by the FDA, and
assigned a late summer 2024 PDUFA target action date. In
anticipation of potential approval, we continue to align the
organization for a successful launch," added Mazur.
"Despite a tough capital market environment for pre-revenue
companies, we successfully completed a $15 million registered
direct offering, expanding our cash runway and providing capital to
support the execution of our strategic plan. We believe that the
merger of our oncology subsidiary with TenX to form a publicly
listed company will make our company more attractive to investors
and increase the value of our assets. This transaction is
progressing, and we expect it to be completed in the coming months
as we finalize SEC review and await approval by TENK shareholders.
As we continue to meet our goals, we believe additional
opportunities to strengthen our capital structure will become
available," concluded Mazur.
As of March 31, 2024, the Company has $90.7 million in total
assets, $10.7 million in total liabilities, and a total equity of
$80 million.
A full-text copy of the Company's Form 10-Q is available at
http://bit.ly/3QXPCt2
About Citius Pharmaceuticals Inc.
Headquartered in Cranford, N.J., Citius Pharmaceuticals, Inc.
--http://www.citiuspharma.com/-- is a late-stage pharmaceutical
company dedicated to the development and commercialization of
first-in-class critical care products with a focus on oncology,
anti-infectives in adjunct cancer care, unique prescription
products and stem cell therapy.
As of December 31, 2023, the Company had $97.40 million in total
assets, $12.06 million in total liabilities, and $85.33 million in
total equity.
Boston, Mass.-based Wolf & Company, P.C., the Company's auditor
since 2014, issued a "going concern" qualification in its report
dated December 29, 2023, citing that the Company has suffered
recurring losses and negative cash flows from operations and has a
significant accumulated deficit. These conditions raise
substantial doubt about the Company's ability to continue as a
going concern.
CLARKSON ROAD: Seeks CCAA Protection to Sell Assets
---------------------------------------------------
Clarkson Road Developments GP Inc. and its affiliates, Clarkson
Road Holdings Inc., 2813427 Ontario Inc. ("Companies"), Clarkson
Road Development Limited Partnership ("Clarkson LP") and Eleven11
Limited Partnership ("Eleven11LP"), sought and obtained an initial
order from the Ontario Superior Court Justice (Commercial List)
pursuant to the Companies' Creditors Arrangement Act. Pursuant to
the initial order, PricewaterhouseCoopers Inc. LIT was appointed as
monitor of the Companies.
Pursuant to the initial order, Clarkson LP and Eleven11 LP will
enjoy the benefits of the protection and authorization provided in
the initial order and will be subject to the same restrictions as
the Companies. In accordance with the initial order, the stay
proceedings extends to WPAM Royal Windsor Limited Partnership and
its general partner WPAM Royal Windsor GP Inc. ("stay parties")
from any proceedings that relate to the Companies or their business
or property.
During the CCAA proceedings, it is expected that the monitor will
run a sale and investment solicitation process to maximize value
for the Companies and their stakeholders. In this regard, once
approved by the Court, the monitor on behalf of the Companies will
enter into an investment agreement with a new investor with respect
to acquiring the business and assets of the Companies, which
subject to Court approval, will serve as the "stalking horse" bid
in the sale process. If approved by the Court, the Companies are
also seeking to complete construction of the underground parking
lot to address certain critical structural issues.
Pursuant to the initial order, all proceedings against the
Companies and stay parties, their directors and officers and the
monitor are stayed and no such proceedings may be commenced or
continued without leave of the Court. The stay of proceedings
prohibits any contractual parties from ceasing to perform their
contracts with the Companies and the stay parties on account of the
CCAA filing or there being any outstanding amounts due as the
filing date. In addition, except as provided for in the initial
order, all amounts owing by the Companies and the stay parties to
their creditors for the period prior to the filing date are stayed
and cannot be paid at this time.
For further information in respect of these CCAA proceedings,
contact the Monitor at ca_1111clarkson@pwc.com.
A copy of the Initial Order is available on the Monitor's Website
at
https://www.pwc.com/ca/1111clarkson
The Monitor can be reached at:
PricewaterhouseCoopers Inc.
Suite 2500
18 York Street
Toronto, ON M5J 0B2
John McKenna
Tel: 416-941-8314
Email: john.p.mckenna@pwc.com
Lindsay Pellett
Email: lindsay.s.pellett@pwc.com
Tammy Muradova
Email: tammy.muradova@pwc.com
Counsel for the Companies:
McCarthy Tetrault LLP
PO Box 48, Suite 5300
Toronto-Dominion Bank Tower
Toronto, ON M5K 1E6
Heather Meredith
Tel: 416-601-8342
Email: hmeredith@mccarthy.ca
Seneea Tanvir
Tel: 416-601-8181
Email: stanvir@mccarthy.ca
Counsel for the Monitor:
Blake Cassels Graydon LLP
Suite 4000
199 Bay Street, Commerce Court West
Toronto, ON M5L 1A9
Chris Burr
Tel: 416-863-3261
Email: chris.burr@blakes.com
Clarkson Road owns a real estate development project on lands
municipally known as 1111 Clarkson Road in Mississauga, Canada.
CONGRUEX GROUP: Moody's Lowers CFR & Sr. Secured Term Loan to Caa1
------------------------------------------------------------------
Moody's Ratings downgraded Congruex Group LLC's corporate family
rating to Caa1 from B3, its probability of default rating to
Caa1-PD from B3-PD, and the ratings on its senior secured bank
credit facility - including the senior secured revolving credit
facility and senior secured term loan - to Caa1 from B3. The rating
outlook is stable.
Governance considerations under the Moody's ESG framework,
including financial strategy and risk management, were a key driver
of the rating action. Moody's has revised Congruex's governance
issuer profile score (IPS) to G-5 from G-4, and its credit impact
score (CIS) to CIS-5 from CIS-4 given the company's weakness in
financial risk management.
RATINGS RATIONALE
The downgrade of Congruex's ratings reflects: (1) 2023 results
being significantly weaker than Moody's prior expectations as a
result of weaker spending by customers in the wireless segment,
thereby putting pressure on credit metrics – Moody's adjusted
leverage (Debt/EBITDA) was 7.2x at year-end 2023 compared to 5.0x
at year-end 2022; (2) Moody's expectation for no meaningful
year-over-year improvement in 2024. As such, Moody's adjusted
leverage is expected to be around 6.8x at year-end 2024, with
interest coverage around 0.9x; (3) tight liquidity, with very
limited covenant headroom, and (4) continued lack of sustained
positive free cash flow generation.
Congruex's Caa1 CFR is supported by its entrenched market position
as a provider of design, engineering, construction, and maintenance
services to blue chip US broadband network operators in tier 2 US
markets. The credit profile is also supported by Moody's
expectations for ongoing capital spending in wireline and wireless
broadband infrastructure by Congruex's customers, driven by
increasing demand for network bandwidth to ensure reliable video,
voice, and data service.
The credit profile is constrained by Congruex's small revenue scale
and limited end-market and customer diversity, with its top 5
customers representing 52% of 2023 revenue. The rating is also
constrained by Moody's anticipation for aggressive financial
strategies under private equity ownership, especially debt-funded
acquisitions. Since Congruex's inception in 2017, the company has
acquired and successfully integrated 22 companies.
Congruex's liquidity is weak. At December 31, 2023, the company had
cash and cash equivalents of $13.6 million, and $33 million of
remaining availability under its $75 million revolving credit
facility. Moody's expects Congruex to generate negative free cash
flow in 2024, with working capital continuing to be a net use of
cash, which will put additional pressure on liquidity. Congruex's
revolver contains a maximum total net leverage ratio covenant of
6.5x. While Congruex was in compliance with the covenant at
year-end 2023, Moody's sees limited cushion against the covenant
during 2024, with the likelihood of a breach. Alternate liquidity
is limited as the company's credit facilities are secured by a
first-priority lien on substantially all tangible and intangible
assets.
The change in governance IPS and CIS scores reflects a sharp
deterioration in credit metrics during 2023, limited covenant
headroom, tight liquidity, and lack of consistent positive free
cash flow generation.
The stable outlook reflects Moody's expectations for steadily
improving earnings over the next few quarters, with sufficient
liquidity to support operations over the next 12-18 months, along
with an expectation for revolver covenant relief given limited
current headroom.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Congruex's ratings could be upgraded if the company enhances its
scale and business diversity while its operating performance,
credit metrics and liquidity strengthen such that the company
consistently generates positive free cash flow and financial
leverage is sustained below 6.5x.
Congruex's ratings could be downgraded if liquidity weakens
materially, the company fails to improve covenant headroom –
either with or without covenant relief from lenders, operating
performance deteriorates, there are disruptions integrating
acquisitions, top customers choose not to renew contracts, or if
financial leverage is sustained above 8.0x.
Congruex Group LLC, formed in 2017 and based in Boulder, Colorado,
provides end-to-end design, engineering, construction, and
maintenance services to broadband network operators. The company is
majority owned by affiliates of private equity sponsor Crestview
Partners.
The principal methodology used in these ratings was Construction
published in September 2021.
CORETEC GROUP: Posts $524,220 Net Loss in Q1 2024
-------------------------------------------------
The Coretec Group, Inc. filed with the U.S. Securities and Exchange
Commission its Quarterly Report on Form 10-Q reporting a net loss
of $524,220 for the three months ended March 31, 2024, compared to
a net loss of $507,384 for the same period in 2023.
The Company said it has insufficient revenue and capital
commitments to fund the development of its planned products, pay
current operating expenses and debt commitments beyond the next 12
months.
On March 1, 2024, the Company entered into a Share Exchange
Agreement with Core Optics, LLC, a Virginia limited liability
company, Core Optics Co., Ltd., a Republic of Korea corporation and
Core SS LLC, a Virginia limited liability company, which Member
holds all outstanding membership interests in Core Optics. Pursuant
to the Share Exchange Agreement, the closing of which remains
subject to the satisfaction of various closing conditions, the
Member agreed to sell all of its membership interests in Core
Optics to the Company in exchange for the Company's issuance of:
(i) 10,000,000 shares of Series C Convertible Preferred Stock,
par value $0.0002 per share, of the Company; and
(ii) 705,561,076 shares of the Company's common stock, for the
Membership Interests so transferred by the Member. Upon
consummation of the Exchange, Core Optics will be a
wholly-owned-direct subsidiary of the Company, Operating Subsidiary
will be a wholly-owned-indirect subsidiary of the Company, the
combined company will continue to operate under the name The
Coretec Group, Inc., the Company's common stock will continue to
trade under the ticker symbol "CRTG", and the Member is expected to
beneficially own approximately 80% of the Company's common stock on
a fully-diluted basis.
Each share of the Series C Preferred Stock is expected to be
convertible into 150 shares of common stock and has a stated value
of $3.00. The Preferred Stock is not expected to: require the
payment of any dividends; include any operational covenants; or
require the Company to redeem the Series C Preferred Stock. Each
holder of Series C Preferred Stock is expected to be entitled to
cast the number of votes equal to the number of shares of Company
common stock into which the Series C Preferred Stock held by such
holder are convertible. In addition, it is expected that all
outstanding Series C Preferred Stock will be automatically
converted after a mandatory conversion event, which will be set
forth in a certificate of designation that the Company would file
with the Secretary of the State of Oklahoma at or before the
closing of the Exchange.
Consummation of the Exchange is subject to customary conditions,
including without limitation:
(i) the delivery to the Company by the Member or its
designees, if any, of a representation letter attesting to its
status as an "accredited investor;"
(ii) the delivery to the Company by the Member or its
designees, if any, a lock up agreement in the form attached to the
Share Exchange Agreement;
(iii) the delivery by the Company of lock up agreements, in the
form attached to the Share Exchange Agreement, from certain members
of the Company's management;
(iv) the delivery to the Company of the required consolidated
financial statements, as specified under the Share Exchange
Agreement;
(v) delivery by the Company to Core Optics of an applicable
notice or approval from the OTC Markets that Company's Common Stock
continue to be quoted on the OTCQB after the Closing; and
(vi) delivery by the Company and Core Optics of all required
consents to consummate all transactions contemplated by the Share
Exchange Agreement. Consummation of the Exchange may also be deemed
as a fundamental transaction under certain outstanding derivative
securities, which could result, among other things, in a mandatory
cash redemption payment based on the Black-Scholes value on the
outstanding instrument.
The Share Exchange Agreement contains certain termination rights
for the Company, Core Optics, and the Member.
The Company and the Core Optics management team are actively
working toward a closing date for the merger. Both parties are
engaged in carefully proceeding through standard closing conditions
and expect to close the transaction prior to June 30, 2024.
The ability of the Company to continue as a going concern depends
on the successful completion of the Company's referenced share
exchange agreement with Core Optics, LLC and the ability of the
Company, post-merger, to fund the combined entities activities and
development of its planned products.
In the event that the referenced share exchange agreement does not
close, then the Company intends to continue to raise additional
capital through other debt and equity financings. There is no
assurance that these funds will be sufficient to enable the Company
to fully complete its development activities or attain profitable
operations. If the Company is unable to obtain such additional
financing on a timely basis or, notwithstanding any request the
Company may make, the Company's debt holders do not agree to
convert their notes into equity or extend the maturity dates of
their notes, the Company may have to curtail its development,
marketing and promotional activities, which would have a material
adverse effect on the Company's business, financial condition and
results of operations, and ultimately the Company could be forced
to discontinue its operations and liquidate.
A full-text copy of the Company's Form 10-Q is available at
https://bit.ly/3KcXKlF
About Coretec Group Inc.
The Coretec Group, Inc. is an Ann Arbor, Mich.-based developer of
engineered silicon and is using its expertise to develop silicon
anodes for lithium-ion batteries that will charge faster and last
longer. The Company owns intellectual property and patents related
to the production and application of engineered silicon to enable
new technologies and to improve the lifespan and performance of a
variety of materials in a range of industries.
As of March 31, 2024, the Company has $1,283,409 in total assets,
$1,688,525 in total liabilities, and a total stockholders' deficit
of $405,116. As of December 31, 2023, the Company had $1,761,329
in total assets, $1,651,185 in total liabilities, and $110,144 in
total stockholders' equity.
Tulsa, Okla.-based HoganTaylor LLP, the Company's auditor since
2016, issued a "going concern" qualification in its report dated
March 21, 2024, citing that the Company has insufficient revenue
and capital commitments to fund the development of its planned
products, pay current operating expenses and debt commitments
beyond a year following the issuance of its financial statements.
This raises substantial doubt about the Company's ability to
continue as a going concern.
CORRELATE ENERGY: Incurs $4.48 Million Net Loss in First Quarter
----------------------------------------------------------------
Correlate Energy Corp. filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q reporting a net loss
of $4.48 million on $432,799 of revenues for the three months ended
March 31, 2024, compared to a net loss of $3.41 million on $50,734
of revenues for the three months ended March 31, 2023.
As of March 31, 2024, the Company had $3.05 million in total
assets, $8.87 million in total liabilities, and a total
stockholders' deficit of $5.82 million.
Correlate said, "The Company has incurred losses since inception
and has not generated positive cash flows from operations. These
matters, among others, raise substantial doubt about the Company's
ability to continue as a going concern.
"The Company's ability to continue in existence is dependent on its
ability to develop additional sources of capital, and/or achieve
profitable operations and positive cash flows. Management's plans
with respect to operations include aggressive marketing,
acquisitions, and raising additional capital through sales of
equity or debt securities as may be necessary to pursue its
business plans and sustain operations until such time as the
Company can achieve profitability. Management believes that
aggressive marketing combined with acquisitions and additional
financing as necessary will result in improved operations and cash
flow in 2024 and beyond. However, there can be no assurance that
management will be successful in obtaining additional funding or in
attaining profitable operations. The accompanying condensed
consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1108645/000147793224003000/cipi_10q.htm
About Correlate Energy
Correlate Energy Corp. (OTCQB: CIPI), formerly Correlate
Infrastructure Partners Inc., through its main operating
subsidiary, Correlate Inc., offers a complete suite of proprietary
clean energy assessment and fulfilment solutions for the commercial
real estate industry. The Company believes scaling distributed
clean energy solutions is critical in mitigating the effects of
climate change. The Company believes that it is at the forefront in
creating an industry-leading energy solution and financing platform
for the commercial and industrial sector. The Company sees
tremendous market opportunity in reducing site-specific energy
consumption and deploying clean energy generation and energy
efficiency solutions at scale.
Dallas, Texas-based Turner, Stone & Company LLP, the Company's
auditor since 2006, issued a "going concern" qualification in its
report dated April 1, 2024, citing that the Company has suffered
recurring losses from operations and has a net capital deficiency
that raise substantial doubt about its ability to continue as a
going concern.
CREDIT ACCEPTANCE: Moody's Affirms Ba3 CFR, Outlook Remains Stable
------------------------------------------------------------------
Moody's Ratings has affirmed the Ba3 long-term corporate family
rating and senior unsecured debt rating of Credit Acceptance
Corporation (CAC). The rating outlook remains stable.
RATINGS RATIONALE
The ratings affirmation reflects Moody's unchanged view of CAC's
credit profile, which is supported by the firm's strong earnings,
modest leverage, solid liquidity, and long track record operating
in the subprime consumer auto lending market. The ratings also
reflect recently weaker performance, driven largely by elevated
provision expense due to increased loan growth and weaker
performance in 2021 and 2022 vintage loans, as well as higher
interest and operating expenses.
CAC has reported strong, albeit reduced earnings in recent periods.
The firm reported an annualized ratio of net income to average
managed assets (NI/AMA) of 3.3% for the first quarter of 2024, down
from 5.7% and 12.7% in the first quarters of 2023 and 2022,
respectively. The company's US GAAP earnings have been
significantly more volatile since the implementation of the Current
Expected Credit Losses (CECL) accounting standard in January 2020.
This is because CECL requires that that the firm compute a
provision for loan losses based on contractual cash flows which the
firm does not expect to collect, resulting in a larger provision
expense at the time of origination relative to what it had
typically recognized prior to CECL implementation.
While the firm earns back higher revenue over the life of these
assets under CECL, the change has meant that during periods of high
growth earnings decline, while during periods of low growth
earnings increase. The firm attempts to adjust for this effect
through its non-GAAP adjusted earnings, which recognizes income
from loans on a level-yield basis over the life of those assets.
Using that measure, the annualized ratio of net income to total
managed assets was 5.7% for the first quarter of 2024, relative to
7.1% a year prior, a more modest decline.
CECL-related volatility notwithstanding, earnings have been
impacted by lower loan collections, as 2021 and 2022 vintage loans
have performed worse than CAC's initial forecasts. The firm's
current collection forecasts for the 2021 and 2022 loans are 2.0
and 5.4 percentage points lower than the initial forecasts,
respectively. The variance of the 2022 loans from the initial
forecast represents the weakest performance of any of CAC's loan
vintages since the financial crisis. However, these headwinds are
mitigated because CAC operates with a substantial earnings cushion,
with the spread between collections and amounts advanced to dealers
to acquire these loans typically exceeding 20%. Management
currently forecasts the spread of the 2021 and 2022 loans to be
18.3% and 14.7%, respectively, still quite profitable for the
firm.
CAC's also operates with higher capitalization as measured by
tangible common equity to tangible managed assets (TCE/TMA) than
peers. As of March 31, 2024, TCE/TMA measured 20.4% compared to
24.1% one year earlier. CECL has also significantly impacted the
firm's equity base, which CAC attempts to capture in its non-GAAP
adjusted equity figure. Based on the firm's adjusted measure,
TCE/TMA would have stood at approximately 29% as of March 31, 2024,
relatively unchanged over the last year. CAC also maintains solid
liquidity – as of March 31, 2024, the firm had $1.4 billion in
unused and available lines of credit, supported by over $4 billion
in unpledged gross loans receivable, or about 40% of the firm's
total gross loans receivable.
CAC is currently the subject of a lawsuit by the Consumer Finance
Protection Bureau (CFPB) and the New York State Attorney General
(NY AG) regarding the firm's origination and underwriting practices
in New York. Among other things, the plaintiffs allege that CAC's
practice of purchasing consumer auto loans at a discount to their
original value from dealers amounts to a "hidden finance charge,"
thereby circumventing the state's usury laws. Discounting is a
common practice across the non-prime auto lending industry and a
ruling in favor of the plaintiffs would likely have repercussions
not only for CAC, but for other industry participants as well. An
adverse ruling that results in substantial fines or changes to
business practices would likely negatively impact the ratings of
the firm.
The stable outlook reflects Moody's expectation that CAC's asset
quality will normalize over the next 12-18 months as the firm
maintains solid profitability and stable capitalization and
liquidity.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Given the pending resolution of the lawsuit by the CFPB and the NY
AG, an upgrade is unlikely at this time. Over time and absent a
significantly adverse outcome from that case, CAC's ratings could
be upgraded if the firm is able to maintain its competitive
position in the US subprime auto lending market and demonstrate
stable asset quality, particularly with respect to its growing
purchased loan program, while maintaining strong profitability and
debt to equity at or below 2.5x (on a CECL-adjusted basis).
CAC's ratings could be downgraded if debt to equity increases above
3.0x (on a CECL-adjusted basis), or if profitability falls and
remains below 6% as measured by NI/AMA or if asset quality
deteriorates. CAC's senior unsecured debt ratings could also be
downgraded if the proportion of senior unsecured debt relative to
recourse secured debt were to decline, increasing the risk of
losses for these creditors due to lower protection from reduced
debt volume. The ratings could also be downgraded if the firm is
subject to significantly adverse legal or regulatory rulings.
The principal methodology used in these ratings was Finance
Companies Methodology published in November 2019.
CYTTA CORP: Incurs $989K Net Loss in Second Quarter
---------------------------------------------------
Cytta Corp. filed with the Securities and Exchange Commission its
Quarterly Report on Form 10-Q reporting a net loss of $988,541 on
$0 of revenues for the three months ended March 31, 2024, compared
to a net loss of $663,311 on $8,118 of revenues for the three
months ended March 31, 2023.
For the six months ended March 31, 2024, the Company reported a net
loss of $2.05 million on $2,411 of revenues, compared to a net loss
of $1.76 million on $13,824 of revenues for the six months ended
March 31, 2023.
As of March 31, 2024, the Company had $1.37 million in total
assets, $3.04 million in total liabilities, and a total
stockholders' deficit of $1.66 million.
As of March 31, 2024, the Company had an accumulated deficit of
$34,651,149 and has also generated losses since inception.
According to the Company, these factors, among others, raise
substantial doubt about the ability of the Company to continue as a
going concern.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1383088/000147793224003165/cyca_10q.htm
About Cytta Corp.
Headquartered in Las Vegas, NV, Cytta Corp. has focused on
developing and marketing advanced streaming and integrated
communication products, using technology based upon the SUPR
(Superior Utilization of Processing Resources) video compression
codec/algorithm and our IGAN (Incident Global Area Network)
incident command proprietary software solutions. Cytta currently
develops, markets, and distributes proprietary video streaming
products and services that improve how video is streamed, consumed,
transferred, and stored in enterprise environments.
Hackensack, New Jersey-based Prager Metis CPAs, LLC, the Company's
auditor since 2020, issued a "going concern" qualification in its
report dated Jan. 12, 2024, citing that as of Sept. 30, 2023, the
Company had an accumulated deficit of $32,603,480 and has also
generated losses since inception. These factors, among others,
raise substantial doubt regarding the Company's ability to continue
as a going concern.
DALRADA FINANCIAL: Incurs $2.91 Million Net Loss in Third Quarter
-----------------------------------------------------------------
Dalrada Financial Corporation filed with the Securities and
Exchange Commission its Quarterly Report on Form 10-Q reporting a
net loss of $2.91 million on $10.31 million of total revenues for
the three months ended March 31, 2024, compared to a net loss of
$4.05 million on $9.47 million of total revenues for the three
months ended March 31, 2023.
For the nine months ended March 31, 2024, the Company reported a
net loss of $13.19 million on $21.40 million of total revenues,
compared to a net loss of $11.70 million on $18.99 million of total
revenues for the nine months ended March 31, 2023.
As of March 31, 2024, the Company had $30.17 million in total
assets, $21.35 million in total liabilities, and $8.82 million in
total stockholders' equity.
Dalrada said, "The continuation of the Company as a going concern
is dependent upon the continued financial support from related
parties, its ability to identify future investment opportunities,
obtain the necessary debt or equity financing, and generate
profitable operations. The Company had net losses of approximately
$13.1 million, accumulated deficit of $154.8 million and net cash
used in operations of $5.7 million for the nine months ended March
31, 2024. These factors raise substantial doubt regarding the
Company's ability to continue as a going concern for a period of
twelve months from the issue date of this report."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/725394/000168316824003323/dalrada_i10q-033124.htm
About Dalrada
Dalrada Financial Corporation has five business divisions: Genefic,
Dalrada Climate Technology, Dalrada Precision Manufacturing,
Dalrada Technologies and Dalrada Corporate. Within each of these
divisions, the Company drives transformative innovation while
creating solutions that are sustainable, accessible, and
affordable. Dalrada's global solutions directly address climate
change, gaps in the health care industry, and technology needs that
facilitate a new era of human behavior and interaction and ensure a
bright future for the world around us.
Melville, New York-based Macias Gini & O'Connell LLP, the Company's
auditor since 2023, issued a "going concern" qualification in its
report dated Oct. 19, 2023, citing that the Company has suffered
recurring losses from operations, negative cash flows from
operating activities and continues to have a working capital
deficit. This raises substantial doubt about the Company's ability
to continue as a going concern.
DALRADA FINANCIAL: Norrows Net Loss to $2.9MM in Q2 2024
--------------------------------------------------------
Dalrada Financial Corp. filed with the U.S. Securities and Exchange
Commission its Quarterly Report on Form 10-Q reporting a net loss
of $2.9 million on $10.3 million of total revenue for the three
months ended March 31, 2024, compared to a loss of $4 million on
$9.5 million of total revenue for the three months ended March 31,
2023.
For the nine months ended March 31, 2024, the Company reported a
net loss of $13.1 million on $21.4 million of total revenue,
compared to a net loss of $11.7 million on $19 million of total
revenue for the same period in 2023.
The Company had an accumulated deficit of $154.8 million and net
cash used in operations of $5.7 million for the nine months ended
March 31, 2024.
"We will be required to raise substantial capital to fund our
capital expenditures, working capital, and other cash
requirements," the Company said. "We will continue to rely on
related parties and seek other financing to complete our business
plans. The successful outcome of future financing activities cannot
be determined at this time and there are no assurances that, if
achieved, we will have sufficient funds to execute our intended
business plan or generate positive operational results."
"In addition to our current deficit, we may incur additional losses
during the foreseeable future, until we are able to successfully
execute our business plan. There is no assurance that we will be
able to obtain additional financing through private placements
and/or public offerings necessary to support our working capital
requirements. To the extent that funds generated from any private
placements and/or public offerings are insufficient, we will have
to raise additional working capital through other sources, such as
bank loans and/or financings. No assurance can be given that
additional financing will be available, or if available, will be on
acceptable terms."
A full-text copy of the Company's Form 10-Q is available at
https://tinyurl.com/eu4a6zwb
About Dalrada Financial Corp
Escondido, Calif.-based Dalrada Financial Corporation operates as a
technology and manufacturing company. The Company owns and operates
a global group of clean energy, healthcare, precision
manufacturing, and technology companies. Dalrada Financial serves
customers worldwide.
As of March 31, 2024, the Company has $30.2 million in total
assets, $21.3 million in total liabilities, and a total
stockholders' equity of $8.8 million.
The Company cautioned in its quarterly report for period ended
December 31, 2023, that its net loss and limited working capital
raise substantial doubt about its ability to continue as a going
concern. The Company incurred a net loss of $5.4 million and $10.3
million during the three and six months ended December 31, 2023,
respectively.
DARE BIOSCIENCE: Narrows Net Loss to $6.8MM in Q1 2024
------------------------------------------------------
Dare Bioscience, Inc. filed with the U.S. Securities and Exchange
Commission its Quarterly Report on Form 10-Q reporting a net loss
of $6.8 million for the three months ended March 31, 2024, compared
to a net loss of $8 million for the same period in 2023.
As of March 31, 2024, the Company had an accumulated deficit of
approximately $178.0 million, cash and cash equivalents of
approximately $3.6 million, deferred grant funding liabilities
under the Company's grant agreements related to DARE-LARC1,
DARE-LBT and its bacteria-based live biotherapeutic product of
approximately $11.8 million, and a working capital deficit of
approximately $7.7 million. The Company's cash and cash equivalents
at March 31, 2024 represented grant funds received under such
agreements that may be applied solely toward direct costs for the
development of DARE-LARC1, DARE-LBT and its bacteria-based live
biotherapeutic product, other than approximately 10% of such funds,
which may be applied toward general overhead and administration
expenses that support the entire operations of the Company. For the
three months ended March 31, 2024, the Company had negative cash
flow from operations of approximately $6.8 million.
Based on the Company's current operating plan estimates, the
Company does not have sufficient cash to satisfy its working
capital needs and other liquidity requirements over at least the
next 12 months. The Company will need to raise substantial
additional capital to continue to fund its operations and to
successfully execute its current strategy.
Dare Bioscience said there can be no assurance that capital will be
available when needed or that, if available, it will be obtained on
terms favorable to the Company and its stockholders. If the Company
cannot raise capital when needed, on favorable terms or at all, the
Company will not be able to continue development of its product
candidates, will need to reevaluate its planned operations and may
need to delay, scale back or eliminate some or all of its
development programs, reduce expenses, file for bankruptcy,
reorganize, merge with another entity, or cease operations. If the
Company becomes unable to continue as a going concern, the Company
may have to liquidate its assets, and might realize significantly
less than the values at which they are carried on its condensed
consolidated financial statements, and stockholders may lose all or
part of their investment in the Company's common stock.
A full-text copy of the Company's Form 10-Q is available at
https://bit.ly/3yu7Agq
About Dare Bioscience
Headquartered in San Diego, Calif., Dare Bioscience --
http://www.darebioscience.com/-- is a biopharmaceutical company
committed to advancing innovative products for women's health. The
Company's mission is to identify, develop and bring to market a
diverse portfolio of differentiated therapies that prioritize
women's health and well-being, expand treatment options, and
improve outcomes, primarily in the areas of contraception, vaginal
health, reproductive health, menopause, sexual health and
fertility.
As of March 31, 2024, the Company has $13 million in total assets,
$24 million in total liabilities, and a total stockholders' deficit
of $11 million. As of December 31, 2023, the Company had $21.3
million in total assets, $26.3 million in total liabilities, and $5
million in total stockholders' deficit.
Irvine, Calif.-based Haskell & White LLP, the Company's auditor
since 2023, issued a "going concern" qualification in its report
dated March 28, 2024, citing that the Company has recurring losses
from operations, negative cash flow from operations and is
dependent on additional financing to fund operations. These
conditions raise substantial doubt about the Company's ability to
continue as a going concern.
DELCATH SYSTEMS: Incurs $11.11 Million Net Loss in First Quarter
----------------------------------------------------------------
Delcath Systems, Inc., filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q reporting a net loss
of $11.11 million on $3.14 million of total revenues for the three
months ended March 31, 2024, compared to a net loss of $9 million
on $597,000 of total revenues for the three months ended March 31,
2023.
As of March 31, 2024, the Company had $36.10 million in total
assets, $21.48 million in total liabilities, and $14.62 million in
total stockholders' equity.
Delcath stated, "The Company's future results are subject to
substantial risks and uncertainties. The Company has operated at a
loss for its entire history and there can be no assurance that it
will ever achieve or maintain profitability. The Company has
historically funded its operations primarily with proceeds from
sales of common stock, warrants and pre-funded warrants for the
purchase of common stock, sales of preferred stock, proceeds from
the issuance of convertible debt and borrowings under loan and
security agreements.
"If there is a substantial delay in the activation of sites to
administer HEPZATO, the Company expects to need to raise additional
capital under structures available to the Company, including debt
and/or equity offerings, which may not be on favorable terms. In a
substantially delayed site activation scenario, the Company would
not have sufficient funds to meet its obligations within twelve
months from the issuance date of these condensed consolidated
financial statements. As such, there is uncertainty regarding the
Company's ability to maintain liquidity sufficient to operate its
business effectively, which raises substantial doubt about the
Company's ability to continue as a going concern. Debt financing
and equity financing, if available, may involve agreements that
include covenants limiting or restricting the Company's ability to
take specific actions, such as incurring additional debt, making
capital expenditures or declaring dividends. If the Company raises
funds through collaborations or other similar arrangements with
third parties, it may have to relinquish valuable rights to its
technologies, future revenue streams, research programs for product
candidates and/or grant licenses on terms that may not be favorable
to the Company, any of which may reduce the value of its common
stock. If the Company is unable to raise additional funds through
equity or debt financings when needed, it may be required to delay,
limit, reduce or terminate its product development or future
commercialization efforts or grant rights to develop and market its
product candidates to third parties even if the Company would
otherwise prefer to develop and market such product candidates
itself."
Management Comments
"We continue to make steady progress in the training and activation
of new treatment centers which is a testament to both the emerging
role of HEPZATO in the treatment of patients with metastatic uveal
melanoma and the capability and dedication of our field force,"
said Gerard Michel, Delcath's chief executive officer. "We are
committed to expanding the availability of HEPZATO to patients in
need and I am confident that we will reach our goal of 20 treating
centers by the end of 2024."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/872912/000162828024023087/dcth-20240331.htm
About Delcath Systems
Headquartered in New York, NY, Delcath Systems, Inc. --
http://www.delcath.com-- is an interventional oncology company
focused on the treatment of primary and metastatic liver cancers.
The company's proprietary products, HEPZATO KIT (Hepzato
(melphalan) for Injection/Hepatic Delivery System) and CHEMOSAT
Hepatic Delivery System for Melphalan percutaneous hepatic
perfusion (PHP) are designed to administer high-dose chemotherapy
to the liver while controlling systemic exposure and associated
side effects during a PHP procedure.
New York, NY-based Marcum LLP, the Company's auditor since 2018,
issued a "going concern" qualification in its report dated March
26, 2024, citing that the Company has a significant working capital
deficiency, has incurred significant losses and needs to raise
additional funds to meet its obligations and sustain its
operations. These conditions raise substantial doubt about the
Company's ability to continue as a going concern.
DELCATH SYSTEMS: Reports $11.1MM Net Loss in Q1 2024
----------------------------------------------------
Delcath Systems, Inc. filed with the U.S. Securities and Exchange
Commission its Quarterly Report on Form 10-Q reporting a net loss
of $11.1 million on $3.1 million of total revenue for the three
months ended March 31, 2024, compared to a net loss of $9 million
on $0.6 million of total revenue for the three months ended March
31, 2023.
The Company had cash, cash equivalents and investment totaling
$27.2 million as of March 31, 2024, which includes a $7 million
private placement financing which closed on March 19, 2024.
Research and development expenses for the quarter ended March 31,
2024, were $3.7 million compared to $4.6 million for the same
period in the prior year. The change in research and development
expenses is primarily due to a decrease in clinical trial
activities and expenses related to the FDA inspection offset by an
increase in personnel related expenses.
Selling, general and administrative expenses for the quarter ended
March 31, 2024, were $8.8 million compared to $4.2 million for the
same period in the prior year. The increase primarily relates to
commercial launch activities including marketing-related expenses
and additional personnel in the commercial team.
Commenting on the results, Gerard Michel, Delcath's Chief Executive
Officer, said, "We continue to make steady progress in the training
and activation of new treatment centers which is a testament to
both the emerging role of HEPZATO in the treatment of patients with
metastatic uveal melanoma and the capability and dedication of our
field force. We are committed to expanding the availability of
HEPZATO to patients in need and I am confident that we will reach
our goal of 20 treating centers by the end of 2024."
A full-text copy of the Company's Form 10-Q is available at
https://tinyurl.com/547h6vmz
About Delcath Systems
Headquartered in New York, NY, Delcath Systems, Inc. --
http://www.delcath.com-- is an interventional oncology company
focused on the treatment of primary and metastatic liver cancers.
The company's proprietary products, HEPZATO KIT (Hepzato
(melphalan) for Injection/Hepatic Delivery System) and CHEMOSAT
Hepatic Delivery System for Melphalan percutaneous hepatic
perfusion (PHP) are designed to administer high-dose chemotherapy
to the liver while controlling systemic exposure and associated
side effects during a PHP procedure.
As of March 31, 2024, the Company has $36.1 million in total
assets, $21.5 million in total liabilities, and a total
stockholders' equity of $14.6 million.
New York, NY-based Marcum LLP, the Company's auditor since 2018,
issued a "going concern" qualification in its report dated March
26, 2024, citing that the Company has a significant working capital
deficiency, has incurred significant losses and needs to raise
additional funds to meet its obligations and sustain its
operations. These conditions raise substantial doubt about the
Company's ability to continue as a going concern.
DERMTECH INC: Incurs $20MM Net Loss in Q1 2024
----------------------------------------------
DermTech, Inc. reported its first-quarter 2024 financial results,
disclosing that:
* Billable sample volume declined 14% from the first quarter
of 2023 to approximately 15,360.
* Test revenue was $3.7 million, up 7% from the first quarter
of 2023, primarily due to a higher ASP for the DMT.
* Total revenue was $3.8 million, an 11% increase from the
first quarter of 2023, driven by higher test revenue.
* Cost of test revenue was $3.1 million, a 19% decrease from
the first quarter of 2023, yielding a test gross margin of 16%,
compared to negative 11% for the first quarter of 2023. Cost of
test revenue decreased primarily because of lower employee-related
costs.
* Sales and marketing expenses were $7.8 million, a 49%
decrease from the first quarter of 2023. The decrease was primarily
attributable to lower employee-related and marketing expenditures.
* Research and development expenses were $3.3 million, a 26%
decrease from the first quarter of 2023, largely due to lower
employee-related and clinical study costs.
* General and administrative expenses were $10.1 million, a
15% decrease from the first quarter of 2023. The decrease was
driven primarily by lower employee-related costs. The first quarter
of 2024 also included an approximately $1.3 million non-recurring
restructuring charge.
* Net loss was $20 million, or ($0.58) per share, which
included $2.7 million of non-cash stock-based compensation expense,
as compared to $31.3 million, or ($1.02) per share, for the first
quarter of 2023, which included $4.7 million of non-cash
stock-based compensation expense.
* Cash, cash equivalents, restricted cash and short-term
marketable securities were $42.4 million as of March 31, 2024.
A full-text copy of the Company's report filed on Form 8-K with the
Securities and Exchange Commission is available at
https://tinyurl.com/5xx8ctxy
About DermTech, Inc.
San Diego, Calif.-based DermTech, Inc. is a molecular diagnostic
company developing and marketing novel non-invasive genomics tests
to aid in the diagnosis and management of melanoma.
As of December 31, 2023, the Company had $121.93 million in total
assets, $64.75 million, and a total stockholders' equity of $57.18
million.
San Diego, Calif.-based KPMG LLP, the Company's auditor since 2016,
issued a "going concern" qualification in its report dated February
29, 2024, citing that the Company has suffered recurring losses
from operations and has an accumulated deficit that raise
substantial doubt about its ability to continue as a going concern.
DIAMONDHEAD CASINO: Incurs $471K Net Loss in First Quarter
----------------------------------------------------------
Diamondhead Casino Corporation filed with the Securities and
Exchange Commission its Quarterly Report on Form 10-Q reporting a
net loss of $471,447 for the three months ended March 31, 2024,
compared to a net loss of $497,957 for the three months ended March
31, 2023.
As of March 31, 2024, the Company had $5.70 million in total
assets, $19.06 million in total liabilities, and a total
stockholders' deficit of $13.36 million.
Diamondhead Casino stated, "The Company has had no operations since
it ended its gambling cruise ship operations in 2000. Since that
time, the Company has concentrated its efforts on the development
of its Diamondhead, Mississippi property. That development is
dependent upon the Company obtaining the necessary capital, through
either equity and/or debt financing, unilaterally or in conjunction
with one or more partners, to master plan, design, obtain permits
for, construct, open, and operate a casino resort.
"In the past, in order to raise capital to pay on-going costs and
expenses, the Company has borrowed funds, through Private
Placements of convertible instruments as well as through other
secured notes... The Company is in default with respect to payment
of both principal and interest under the terms of most of these
instruments. In addition, at March 31, 2024, the Company had
$13,948,423 of accounts payable and accrued expenses and $312,883
in cash on hand.
"The above conditions raise substantial doubt as to the Company's
ability to continue as a going concern."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/844887/000149315224019691/form10-q.htm
About DiamondHead
Headquartered in Alexandria, Virginia, Diamondhead Casino
Corporation owns, operates, and manages a casino resort. The
Company constructs a casino resort and hotel and associated
amenities. Diamondhead Casino serves customers in the United
States.
EVOKE PHARMA: Audit Committee Finds Accounting Error in Financials
------------------------------------------------------------------
Evoke Pharma, Inc., disclosed in a Form 8-K filed with the
Securities and Exchange Commission that on May 13, 2024, the Audit
Committee of the board of directors of the Company determined,
based on the recommendation of management, that the Company's
previously issued financial statements as of and for the year ended
Dec. 31, 2023, and quarterly reports as of and for the periods
ended June 30, 2023 and Sept. 30, 2023 should no longer be relied
upon due to an error identified in the Affected Periods in the
classification of a note payable issued to Eversana Life Science
Services, LLC pursuant to the Loan Agreement, dated Jan. 21, 2020
and related accrued interest payable. The maturity date of all
amounts, including interest, borrowed under the Eversana Credit
Facility will be 90 days after the expiration or earlier
termination of the Commercial Services Agreement, dated Jan. 21,
2020, by and between the Company and Eversana. As previously
disclosed, either Eversana or the Company may terminate the
Eversana Agreement if, among other reasons, the net profit is
negative for any two consecutive calendar quarters beginning with
the with the measurement date of June 30, 2023. Beginning with the
quarter ended June 30, 2023 and as of the balance sheet date for
each of the Affected Periods, the Company's net profits were
negative for the two preceding calendar quarters and therefore
either Eversana or the Company could have exercised the Net Profit
Quarterly Termination Right during the 60-day period following the
end of each of the Affected Periods. As such, the Aggregate Note
Payable balance should have been classified within current
liabilities rather than long-term liabilities for the Affected
Periods. The effect of the Classification Error did not impact
Total Assets, Total Liabilities, Stockholder's Equity (Deficit) in
the balance sheets or the statements of operations, stockholder's
equity (deficit) or cash flows for the Affected Periods.
The error was identified during quarterly review procedures.
As a result of the information described above, the Company's
management has concluded that the Company's disclosure controls and
procedures were not effective at the reasonable assurance level and
the Company's internal control over financial reporting was not
effective as of the end of each of the periods covered by the
Affected Periods, and the "Management's Report on Internal Control
Over Financial Reporting" included under Item 9A of Part II of the
Company's Form 10-K for the year ended Dec. 31, 2023 should be
revised to reflect this updated determination.
In connection with the above, the Company has identified a material
weakness in internal control over financial reporting related to
this matter.
The Company expects to file restated financial statements for the
Affected Periods on Form 10-K/A, as soon as reasonably practical.
The Company's remediation plan will be described in more detail in
an amendment to the Amended Report. Because of this restatement,
the previously-issued financial statements for the Affected
Periods, as well as the relevant portions of any communication
which describes or are based on such financial statements, should
no longer be relied upon.
About Evoke Pharma
Headquartered in Solana Beach, California, Evoke Pharma, Inc. --
http://www.evokepharma.com/-- is a specialty pharmaceutical
company focused primarily on the development of drugs to treat GI
disorders and diseases. The Company is developing Gimoti, a nasal
spray formulation of metoclopramide, for the relief of symptoms
associated with acute and recurrent diabetic gastroparesis.
San Diego, California-based BDO USA, P.C., the Company's auditor
since 2014, issued a "going concern" qualification in its report
dated March 14, 2024, citing that the Company has suffered
recurring losses and negative cash flows from operations since
inception. These factors raise substantial doubt about the
Company's ability to continue as a going concern.
EVOKE PHARMA: Incurs $1.58 Million Net Loss in First Quarter
------------------------------------------------------------
Evoke Pharma, Inc. filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q reporting a net loss
of $1.58 million on $1.74 million of net product sales for the
three months ended March 31, 2024, compared to a net loss of $2.24
million on $810,408 of net product sales for the three months ended
March 31, 2023.
As of March 31, 2024, the Company had $12.45 million in total
assets, $8.96 million in total liabilities, and $3.50 million in
total stockholders' equity.
Evoke Pharma said, "The Company has incurred recurring losses and
negative cash flows from operations since inception and expects to
continue to incur net losses for the foreseeable future until such
time, if ever, that it can generate significant revenues from the
sale of Gimoti. As of March 31, 2024, the Company had
approximately $9.7 million in cash and cash equivalents. The
Company anticipates that it will continue to incur losses from
operations due to commercialization activities, including
manufacturing Gimoti, conducting the post-marketing commitment
single-dose pharmacokinetics ("PK") clinical trial of Gimoti to
characterize dose proportionality of a lower dose strength of
Gimoti, and for other general and administrative costs to support
the Company's operations. Additionally, if Eversana were to
terminate the Commercial Services and Loan Agreement...the
principal and interest on the Loan, $6.7 million as of March 31,
2024, becomes due in 90 days. As a result, the Company believes
that there is substantial doubt about its ability to continue as a
going concern for one year after the date these financial
statements are issued.
"The Company's net losses may fluctuate significantly from
quarter-to-quarter and year-to-year. The Company anticipates that
it will be required to raise additional funds through debt, equity
or other forms of financing, such as potential collaboration
arrangements, to fund future operations and continue as a going
concern.
There can be no assurance that additional financing will be
available when needed or on acceptable terms. If the Company is
not able to secure adequate additional funding, the Company may be
forced to make reductions in spending, extend payment terms with
suppliers, and/or suspend or curtail commercialization activities.
Any of these actions could materially harm the Company's business,
results of operations, financial condition and future prospects.
There can be no assurance that the Company will be able to
successfully commercialize Gimoti. Because the Company's business
is entirely dependent on the success of Gimoti, if the Company is
unable to secure additional financing, successfully commercialize
Gimoti or identify and execute on strategic alternatives for Gimoti
or the Company, the Company will be required to curtail all of its
activities and may be required to liquidate, dissolve or otherwise
wind down its operations."
Management Comments
Matt D'Onofrio, CEO of Evoke Pharma commented, "The results
achieved in the first quarter of 2024 reflect continued momentum
with the adoption of GIMOTI. The real-world healthcare utilization
data, including outcomes from over 500 patients, have consistently
supported GIMOTI's efficacy for diabetic gastroparesis treatment
compared to oral. Moreover, testimonials from leading physicians
and the positive experiences shared by patients underscore the
growing demand and trust in GIMOTI."
"In the first quarter of 2024, our net revenue of approximately
$1.7 million faced marginal impacts from transient challenges,
including a cyberattack on the largest U.S. medical claims
processor and an increase in co-pay expenses covered by Evoke. The
increase in co-pay expenses was partly due to lower payor
reimbursements against higher patient deductibles typical at the
year's start. The cyberattack in late February also disrupted new
patient enrollments and refill adjudications for GIMOTI. Despite
these obstacles, our adaptive strategies and resilience are
yielding positive results. Notably, we've achieved a 70%
quarter-over-quarter growth in prescriber numbers and a 10%
increase in medication fills. Additionally, our strengthened
partnership with ASPN Pharmacies is poised to further enhance our
service delivery and patient reach. We are confident that the
issues from this quarter will fully resolve as the year progresses.
Coupled with our strong performance on key sales indicators, we
anticipate accelerated growth throughout the remainder of 2024,"
Mr. D'Onofrio continued.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1403708/000095017024059596/evok-20240331.htm
About Evoke Pharma
Headquartered in Solana Beach, California, Evoke Pharma, Inc. --
http://www.evokepharma.com-- is a specialty pharmaceutical company
focused primarily on the development of drugs to treat GI disorders
and diseases. The Company is developing Gimoti, a nasal spray
formulation of metoclopramide, for the relief of symptoms
associated with acute and recurrent diabetic gastroparesis.
San Diego, California-based BDO USA, P.C., the Company's auditor
since 2014, issued a "going concern" qualification in its report
dated March 14, 2024, citing that the Company has suffered
recurring losses and negative cash flows from operations since
inception. These factors raise substantial doubt about the
Company's ability to continue as a going concern.
EVOKE PHARMA: Posts $1.6MM Net Loss in Q1 2024
----------------------------------------------
Evoke Pharma, Inc. filed with the U.S. Securities and Exchange
Commission its Quarterly Report on Form 10-Q reporting a net loss
of $1.6 million for the three months ended March 31, 2024, compared
to a net loss of $2.2 million for the same period in 2023.
Matt D'Onofrio, CEO of Evoke Pharma commented, "The results
achieved in the first quarter of 2024 reflect continued momentum
with the adoption of GIMOTI. The real-world healthcare utilization
data, including outcomes from over 500 patients, have consistently
supported GIMOTI's efficacy for diabetic gastroparesis treatment
compared to oral. Moreover, testimonials from leading physicians
and the positive experiences shared by patients underscore the
growing demand and trust in GIMOTI."
"In the first quarter of 2024, our net revenue of approximately
$1.7 million faced marginal impacts from transient challenges,
including a cyberattack on the largest U.S. medical claims
processor and an increase in co-pay expenses covered by Evoke. The
increase in co-pay expenses was partly due to lower payor
reimbursements against higher patient deductibles typical at the
year's start. The cyberattack in late February also disrupted new
patient enrollments and refill adjudications for GIMOTI. Despite
these obstacles, our adaptive strategies and resilience are
yielding positive results. Notably, we've achieved a 70%
quarter-over-quarter growth in prescriber numbers and a 10%
increase in medication fills. Additionally, our strengthened
partnership with ASPN Pharmacies is poised to further enhance our
service delivery and patient reach. We are confident that the
issues from this quarter will fully resolve as the year progresses.
Coupled with our strong performance on key sales indicators, we
anticipate accelerated growth throughout the remainder of 2024,"
Mr. D'Onofrio continued.
Evoke reiterates its net revenue guidance in 2024 of approximately
$14 million. Evoke's 2024 guidance is dependent on its current
business and expectations, including recent growth rates in net
sales, assumptions regarding reimbursements and prescription fills,
as well as factors that are outside of our control, such as the
global macroeconomic and geopolitical environment, continued supply
chain constraints and inflationary pressures.
As of March 31, 2024, the Company's cash and cash equivalents were
approximately $9.7M which includes the funds recently raised from
its public offering and related warrant exercises. The Company
believes, based on its current operating plan, that its existing
cash and cash equivalents, as well as future cash flows from net
product sales of GIMOTI, will be sufficient to fund operations into
the first quarter of 2025.
"During our recent Key Opinion Leader webinar, Dr. Michael Cline
from the Cleveland Clinic discussed the limitations of oral
metoclopramide for treating gastroparesis, noting its unpredictable
effects due to gastric emptying variations. GIMOTI addresses these
issues with its nasal delivery system, bypassing the faulty GI
track in these patients. Moving forward, we will amplify our
promotional efforts for GIMOTI through the insights of our KOLs,
real-world data, and conferences such as the upcoming Digestive
Disease Week (DDW). Later this month at DDW we will present data on
the clinical use of nasal metoclopramide in women with
gastroparesis, highlighting its benefits and practical
application," Mr. D'Onofrio concluded.
A full-text copy of the Company's Form 10-Q is available at
https://tinyurl.com/dtmuneyw
About Evoke Pharma
Headquartered in Solana Beach, California, Evoke Pharma, Inc. --
http://www.evokepharma.com-- is a specialty pharmaceutical company
focused primarily on the development of drugs to treat GI disorders
and diseases. The Company is developing Gimoti, a nasal spray
formulation of metoclopramide, for the relief of symptoms
associated with acute and recurrent diabetic gastroparesis.
Evoke Pharma reported a net loss of $7.79 million in 2023, a net
loss of $8.22 million in 2022, and a net loss of $8.54 million for
the year ended Dec. 31, 2021.
As of March 31, 2024, the Company has $12.5 million in total
assets, $9 million in total liabilities, and a total stockholders'
equity of $3.5 million.
San Diego, California-based BDO USA, P.C., the Company's auditor
since 2014, issued a "going concern" qualification in its report
dated March 14, 2024, citing that the Company has suffered
recurring losses and negative cash flows from operations since
inception. These factors raise substantial doubt about the
Company's ability to continue as a going concern.
EVOKE PHARMA: To Restate 2023 Financials Due to Note Payable Error
------------------------------------------------------------------
Evoke Pharma, Inc. disclosed in a Form 8-K Report filed with the
U.S. Securities and Exchange Commission that on May 13, 2024, the
Audit Committee of the board of directors of the Company
determined, based on the recommendation of management, that the
Company's previously issued financial statements as of and for the
year ended December 31, 2023, and quarterly reports as of and for
the periods ended June 30, 2023 and September 30, 2023 should no
longer be relied upon due to an error identified in the Affected
Periods in the classification of a note payable issued to Eversana
Life Science Services, LLC pursuant to the Loan Agreement, dated
January 21, 2020 and related accrued interest payable. The maturity
date of all amounts, including interest, borrowed under the
Eversana Credit Facility will be 90 days after the expiration or
earlier termination of the Commercial Services Agreement, dated
January 21, 2020, by and between the Company and Eversana.
Either Eversana or the Company may terminate the Eversana Agreement
if, among other reasons, the net profit is negative for any two
consecutive calendar quarters beginning with the with the
measurement date of June 30, 2023. Beginning with the quarter ended
June 30, 2023 and as of the balance sheet date for each of the
Affected Periods, the Company's net profits were negative for the
two preceding calendar quarters and therefore either Eversana or
the Company could have exercised the Net Profit Quarterly
Termination Right during the 60-day period following the end of
each of the Affected Periods. As such, the Aggregate Note Payable
balance should have been classified within current liabilities
rather than long-term liabilities for the Affected Periods. The
effect of the Classification Error did not impact Total Assets,
Total Liabilities, Stockholder's Equity (Deficit) in the balance
sheets or the statements of operations, stockholder's equity
(deficit) or cash flows for the Affected Periods.
The error was identified during quarterly review procedures.
As a result of the information described above, the Company's
management has concluded that the Company's disclosure controls and
procedures were not effective at the reasonable assurance level and
the Company's internal control over financial reporting was not
effective as of the end of each of the periods covered by the
Affected Periods, and the "Management's Report on Internal Control
Over Financial Reporting" included under Item 9A of Part II of the
Company's Form 10-K for the year ended December 31, 2023 should be
revised to reflect this updated determination.
In connection, the Company has identified a material weakness in
internal control over financial reporting related to this matter.
The Company expects to file restated financial statements for the
Affected Periods on Form 10-K/A, as soon as reasonably practical.
The Company's remediation plan will be described in more detail in
an amendment to the Amended Report. Because of this restatement,
the previously-issued financial statements for the Affected
Periods, as well as the relevant portions of any communication
which describes or are based on such financial statements, should
no longer be relied upon.
About Evoke Pharma
Headquartered in Solana Beach, California, Evoke Pharma, Inc. --
http://www.evokepharma.com-- is a specialty pharmaceutical company
focused primarily on the development of drugs to treat GI disorders
and diseases. The Company is developing Gimoti, a nasal spray
formulation of metoclopramide, for the relief of symptoms
associated with acute and recurrent diabetic gastroparesis.
Evoke Pharma reported a net loss of $7.79 million in 2023, a net
loss of $8.22 million in 2022, and a net loss of $8.54 million for
the year ended Dec. 31, 2021.
As of March 31, 2024, the Company has $12.5 million in total
assets, $9 million in total liabilities, and a total stockholders'
equity of $3.5 million.
San Diego, California-based BDO USA, P.C., the Company's auditor
since 2014, issued a "going concern" qualification in its report
dated March 14, 2024, citing that the Company has suffered
recurring losses and negative cash flows from operations since
inception. These factors raise substantial doubt about the
Company's ability to continue as a going concern.
GAUCHO GROUP: Incurs $2.73 Million Net Loss in First Quarter
------------------------------------------------------------
Gaucho Group Holdings, Inc., filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q reporting a net loss
of $2.73 million on $587,378 of sales for the three months ended
March 31, 2024, compared to a net loss of $2.70 million on $447,767
of sales for the three months ended March 31, 2023.
As of March 31, 2024, the Company had $16.37 million in total
assets, $11.60 million in total liabilities, and $4.77 million in
total stockholders' equity.
"Based upon projected revenues and expenses, the Company believes
that it may not have sufficient funds to operate for the next
twelve months from the date these condensed consolidated financial
statements are issued. The aforementioned factors raise
substantial doubt about the Company's ability to continue as a
going concern," said Gaucho Group in the Report.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1559998/000149315224020719/form10-q.htm
About Gaucho Group
Headquartered in New York, NY, Gaucho Group Holdings, Inc. was
incorporated on April 5, 1999. Effective Oct. 1, 2018, the Company
changed its name from Algodon Wines & Luxury Development, Inc. to
Algodon Group, Inc., and effective March 11, 2019, the Company
changed its name from Algodon Group, Inc. to Gaucho Group Holdings,
Inc. Through its wholly-owned subsidiaries, GGH invests in,
develops and operates real estate projects in Argentina. GGH
operates a hotel, golf and tennis resort, vineyard and producing
winery in addition to developing residential lots located near the
resort. In 2016, GGH formed a new subsidiary, Gaucho Group, Inc.
and in 2018, established an e-commerce platform for the manufacture
and sale of high-end fashion and accessories. In February 2022,
the Company acquired 100% of Hollywood Burger Argentina, S.R.L.,
now Gaucho Development S.R.L, through InvestProperty Group, LLC and
Algodon Wine Estates S.R.L., which is an Argentine real estate
holding company. In addition to GD, the activities in Argentina
are
conducted through its operating entities: InvestProperty Group,
LLC, Algodon Global Properties, LLC, The Algodon - Recoleta S.R.L,
Algodon Properties II S.R.L., and Algodon Wine Estates S.R.L.
Algodon distributes its wines in Europe under the name Algodon
Wines (Europe). On June 14, 2021, the Company formed a wholly-owned
Delaware limited liability company subsidiary, Gaucho Ventures I --
Las Vegas, LLC, for purposes of holding the Company's interest in
LVH Holdings LLC.
New York, NY-based Marcum LLP, the Company's auditor since 2013,
issued a "going concern" qualification in its report dated April
29, 2024, citing that the Company has a significant working capital
deficiency, has incurred significant losses and needs to raise
additional funds to meet its obligations and sustain its
operations. These conditions raise substantial doubt about the
Company's ability to continue as a going concern.
GUARDIAN US: Moody's Affirms 'B2' CFR & Alters Outlook to Negative
------------------------------------------------------------------
Moody's Ratings affirmed Guardian US Holdco LLC's (Intrado) B2
Corporate Family Rating, B2-PD Probability of Default Rating, and
B2 rating on the company's upsized backed senior secured first lien
bank credit facilities. The company is raising an incremental term
loan to fund a distribution to the private equity owners, Stonepeak
Partners. Moody's also assigned a B2 to the upsized backed senior
secured first lien bank credit facilities. The outlook was revised
to negative from stable.
The outlook revision to negative reflects the increase in Intrado's
debt and corresponding higher interest expense, as well as the
potential that cash flow and leverage will remain weak for an
extended period. Free cash flow for the eleven months ended
December 31, 2023 was just over breakeven on a GAAP basis. The
company accessed $45 million from its revolver prior to year end
but subsequently repaid the outstanding amount with proceeds from
an add on term loan in January 2024. Leverage at close of the
proposedincremental term loan is approximately 8x which is high for
the rating. However, Intrado will moderately improve revenue and
EBITDA over the next year potentially reducing leverage to 7x over
the next 12- 18 months absent additional debt financed
distributions or acquisitions.
RATINGS RATIONALE
Intrado's B2 CFR reflects high leverage offset by the leading
position the company has built in multiple segments of the 911
infrastructure business and long term partnership with AT&T
providing various 911 services. 911 infrastructure and services
remain a critical function with 911 funding stable through economic
cycles. The continuing rollout of next generation 911 services
should support mid-single digit or higher growth for the industry
and Intrado. Although the concentration of revenues with AT&T
remains significant, the partnership has been in place for over 20
years and continues to expand.
Intrado's liquidity is good based on an estimated $27 million of
cash as of closing of the transaction, $100 million revolver
(expected to be undrawn at the closing of the transaction) and
Moody's expectation of modest but positive free cash flow over the
next year. The revolver has springing covenants if 40% is drawn.
Moody's expects that Intrado will remain in compliance with
covenants over the next year.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if Intrado demonstrates disciplined
financial policies, sustains leverage below 4.5x, and generates
free cash flow to debt of 10% or greater. The ratings could be
downgraded if performance deteriorates, the company loses a major
contract, leverage exceeds 6.5x on other than a temporary basis, or
free cash flow is not solidly positive in 2024.
Headquartered in Longmont, Colorado, Intrado is one of the largest
providers of 911 software, services, hardware and systems to
carriers, enterprises and public safety organizations. Revenues for
the twelve months ended December 31, 2023 were $355 million. The
company was acquired by Stonepeak Partners LP in January 2023 after
being carved out of West Technology Group, LLC (fka Intrado
Corporation). Stonepeak is a private equity firm specializing in
communications and digital infrastructure, energy, and
transportation.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
GUIDED THERAPEUTICS: Posts $402,000 Net Loss in Q1 2024
-------------------------------------------------------
Guided Therapeutics, Inc. filed with the U.S. Securities and
Exchange Commission its Quarterly Report on Form 10-Q reporting a
net loss of $402,000 for the three months ended March 31, 2024,
compared to a net loss of $869,000 for the same period in 2023.
The Company has experienced net losses since its inception and, as
of March 31, 2024, it had an accumulated deficit of approximately
$151.6 million. To date, the Company has engaged primarily in
research and development efforts and the early stages of marketing
its products. The Company may not be successful in growing sales
for its products.
Moreover, required regulatory clearances or approvals may not be
obtained in a timely manner, or at all. The Company's products may
not ever gain market acceptance and the Company may not ever
generate significant revenues or achieve profitability. The
development and commercialization of the Company's products
requires substantial development, regulatory, sales and marketing,
manufacturing and other expenditures. The Company expects operating
losses to continue for the foreseeable future as it continues to
expend substantial resources to complete development of its
products, obtain regulatory clearances or approvals, build its
marketing, sales, manufacturing and finance capabilities, and
conduct further research and development.
The Company is not organized by multiple operating segments for the
purpose of making operating decisions or assessing performance.
Accordingly, the Company operates in one reportable operating
segment. The Company's principal decision maker is the Chief
Executive Officer and acting Chief Financial Officer. Management
believes that its business operates as one reportable segment
because:
a) the Company measures profit and loss as a whole;
b) the principal decision makers do not review information
based on any operating segment;
c) the Company does not maintain discrete financial
information on any specific segment; d) the Company has not chosen
to organize its business around different products and services,
and
e) the Company has not chosen to organize its business around
geographic areas.
At March 31, 2024, the Company had a negative working capital of
approximately $4.1 million, accumulated deficit of $151.6 million,
and incurred a net loss including preferred dividends of $0.4
million for the three months then ended. Stockholders' deficit
totaled approximately $4.0 million at March 31, 2024, primarily due
to recurring net losses from operations.
During the year ended December 31, 2023, the Company received $436
thousand of proceeds from warrant exercises. The Company will need
to continue to raise capital in order to provide funding for its
operations and FDA/NMPA approval process. If sufficient capital
cannot be raised, the Company will continue its plans of curtailing
operations by reducing discretionary spending and staffing levels
and attempting to operate by only pursuing activities for which it
has external financial support. However, there can be no assurance
that such external financial support will be sufficient to maintain
even limited operations or that the Company will be able to raise
additional funds on acceptable terms, or at all. In such a case,
the Company might be required to enter into unfavorable agreements
or, if that is not possible, be unable to continue operations, and
to the extent practicable, liquidate and/or file for bankruptcy
protection.
A full-text copy of the Company's Form 10-Q is available at
https://tinyurl.com/2e58spap
About Guided Therapeutics
Peachtree Corners, Ga.-based Guided Therapeutics, Inc. is a medical
technology company focused on developing innovative medical devices
that have the potential to improve healthcare.
As of March 31, 2024, the Company has $1.5 million, $5.5 million in
total liabilities, and a stockholder's deficit of $4 million.
Sterling Heights, Mich.-based UHY LLP the Company's auditor since
2007, issued a "going concern" qualification in its report dated
March 28, 2024, citing that the Company has recurring losses from
operations, limited cash flow, and an accumulated deficit. These
conditions raise substantial doubt about the Company's ability to
continue as a going concern.
GULF TILE: Voluntary Chapter 11 Case Summary
--------------------------------------------
Debtor: Gulf Tile Distributors of Florida, Inc.
2802 N Howard Ave
Tampa, FL 33607
Case No.: 24-03027
Business Description: Gulf Tile is a full service distributor of
tile, wood, LVP, mosaics, porcelain pavers,
exterior stone, accessories, pool tile, and
installation materials.
Chapter 11 Petition Date: May 28, 2024
Court: United States Bankruptcy Court
Middle District of Florida
Judge: Hon. Catherine Peek Mcewen
Debtor's Counsel: Megan Murray, Esq.
UNDERWOOD MURRAY, P.A.
100 North Tampa St 2325
Tampa, FL 33602
Tel: 813-540-8401
Email: mmurray@underwoodmurray.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: Unknown
The petition was signed by Lynette Garcia as secretary/shareholder
and Frank Garcia as shareholder.
The Debtor failed to attach in the petition a list of its 20
largest unsecured creditors.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/SCBKSPA/Gulf_Tile_Distributors_of_Florida__flmbke-24-03027__0001.0.pdf?mcid=tGE4TAMA
GULFSLOPE ENERGY: Delays Q1 Form 10-Q Over Working Capital Issues
-----------------------------------------------------------------
GulfSlope Energy, Inc. filed a 12b-25 notification with the
Securities and Exchange Commission with respect to the delay in the
filing of its Quarterly Report on Form 10-Q for the period ended
March 31, 2024. The Company said it was unable to complete the
preparation of its Form 10-Q in a timely manner because of working
capital issues.
About Gulfslope
Headquartered in Houston, Texas, Gulfslope Energy, Inc. --
http://www.gulfslope.com-- is an independent crude oil and natural
gas exploration and production company whose interests are
concentrated in the United States Gulf of Mexico federal waters.
The Company is a technically driven company, and it uses its
licensed 2.2 million acres of advanced three-dimensional (3-D)
seismic data to identify, evaluate, and acquire assets with
attractive economic profiles.
The Company has incurred accumulated losses as of June 30, 2023 of
$69.8 million, has negative working capital of $14.7 million and
for the nine months ended June 30, 2023 generated losses of $0.94
million. Further losses are anticipated in developing its
business. As a result, the Company said there exists substantial
doubt about its ability to continue as a going concern. As of June
30, 2023, the Company had approximately $2,200 of unrestricted cash
on hand.
HEARTLAND DENTAL: Moody's Lowers Sr. Secured Rating to 'B3'
-----------------------------------------------------------
Moody's Ratings affirmed HEARTLAND DENTAL, LLC's B3 corporate
family rating and B3-PD probability of default rating. Moody's has
assigned a B3 rating to the $310 million backed senior secured
incremental first lien term loan that the company is current
arranging. Proceeds of the incremental first lien term loan will be
used to retire the senior unsecured bonds and pay related fees and
expenses. In connection with the add-on term loan, the company is
also repricing its existing term loan. Moody's also downgraded the
ratings on the company's existing backed senior secured first lien
credit facilities and backed senior secured bonds to B3 from B2.
The backed senior unsecured notes rated Caa2 will be withdrawn upon
full repayment. The outlook remains stable.
The affirmation of the B3 CFR reflects the expectation that
Heartland will continue to be aggressive in its growth strategy but
that it will maintain good liquidity and could reduce discretionary
investment should it face a more challenging operating environment.
The downgrade of the senior secured first lien debt instruments
reflects the change in the debt capital structure to all secured
following the retirement of the unsecured notes.
RATINGS RATIONALE
Heartland's B3 corporate family rating reflects its high
debt/EBITDA of 7.2x at December 31, 2023, and negative free cash
flow considering the company's aggressive growth strategy.
Heartland consistently levers up for acquisitions of existing
practices and new clinic growth but has a good track record of
deleveraging. Moody's expects that leverage will decline to near 6x
by the end of 2024 on continued strong earnings growth. Organic
growth, improved productivity from hygienists, rising payor rates,
acquisitions / clinic expansions and cost discipline will improve
earnings. The rating also reflects the company's position as one of
the largest dental support organizations (DSOs) in the US,
favorable industry dynamics and its good geographic diversity.
Additionally, Heartland has some ability to improve cash flow and
liquidity if it were to reduce new office openings and new dentist
affiliation investments.
Moody's expects Heartland to maintain good liquidity over the next
12-18 months. The company has historically had negative free cash
flow due to growth and acquisition spending. However, Moody's
believes that free cash flow will be about breakeven in 2024 as
strong cash flow from operations will be able to fund the company's
budget for affiliation acquisitions, and new clinic openings. Cash
of $118 million pro forma for the incremental term loan, cash
remaining above $60 million through 2025 and an undrawn $280
million revolver support the good liquidity assessment.
HEARTLAND DENTAL, LLC's (Heartland) CIS-4 Indicates the rating is
lower that it would have been if ESG risk exposures did not exist.
Credit exposure to environmental risks includes the company's
exposure to physical climate risk as Heartland has significant
concentration in Texas and Florida, which makes the company
susceptible to hurricanes and other extreme weather conditions that
could disrupt operations. Heartland's S-4 reflects social risks
related to demographic and societal trends such as the rising
concerns around the access and affordability of healthcare
services. The company is exposed to changes in reimbursement rates
by its payors as well as economic downturns that could affect
patients' spending. Heartland is also exposed to labor pressures
and human capital constraints as the company relies on highly
specialized labor to provide its services. The G-4 governance score
reflects Heartland's aggressive financial strategy to support the
company's rapid expansion as it grows through a combination of new
clinic openings and acquisitions. Heartland remains susceptible to
shareholder friendly financial policies because of its ownership by
private equity sponsors.
The stable outlook reflects Moody's expectation that Heartland will
continue to benefit from strong demand for general dentistry,
rising payor rates, and margin improvements driven by cost cutting
efforts.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if Heartland adopts less aggressive
financial policies and reduces debt to EBITDA below 6.0 times.
Additionally, the company would have to materially improve free
cash flow.
The ratings could be downgraded if the company's earnings weaken or
financial leverage increases. Pursuit of an overly aggressive
expansion strategy or deterioration in Heartland's cash flow or
liquidity could also result in a ratings downgrade.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
Heartland provides support staff and comprehensive business support
functions under administrative service agreements to its affiliated
dental offices, organized as professional corporations. Heartland
currently operates more than 1699 offices across 38 states.
Heartland is majority-owned by KKR, and Ontario Teachers' Pension
Plan Board maintains partial ownership. The company generated about
$3.2 billion in net patient service revenue as of December 31,
2023.
INSPIREMD INC: Incurs $7.03 Million Net Loss in First Quarter
-------------------------------------------------------------
InspireMD, Inc., filed with the Securities and Exchange Commission
its Quarterly Report on Form 10-Q reporting a net loss of $7.03
million on $1.51 million of revenues for the three months ended
March 31, 2024, compared to a net loss of $4.26 million on $1.24
million of revenues for the three months ended March 31, 2023.
As of March 31, 2024, the Company had $42.03 million in total
assets, $6.94 million in total liabilities, and $35.09 million in
total equity.
InspireMD said, "As of March 31, 2024, we have the ability to fund
our planned operations for at least the next 12 months from
issuance date of the financial statement. However, we expect to
continue incurring losses and negative cash flows from operations
until our products (primarily CGuard EPS) reach commercial
profitability. Therefore, in order to fund our operations until
such time that we can generate substantial revenues, we may need to
raise additional funds.
"Our plans include continued commercialization of our products and
raising capital through sale of additional equity securities, debt
or capital inflows from strategic partnerships. There are no
assurances, however, that we will be successful in obtaining the
level of financing needed for our operations. If we are
unsuccessful in commercializing our products or raising capital, we
may need to reduce activities, curtail or cease operations."
Management Comments
Marvin Slosman, CEO of InspireMD, commented: "Our first quarter
results reflect continued momentum and share gains in our served CE
Mark territories, including total revenue of $1.51 million that
increased 22.0% year-over-year. We sold more than 2,500 stents
during the quarter, up 25.6% year-over-year and bringing our
real-world experience with the CGuard EPS stent platform to over
50,000 stents sold to date, a noteworthy milestone for our
company.
"At the same time, we remain acutely focused on advancing our
ongoing C-GUARDIANS PMA clinical trial through to completion for
U.S. market approval. Recall that the 30-day results that were
presented at last year's VIVA23 and VEITH Symposium showed that
stenting with CGuard in patients with carotid artery stenosis and
at high risk for carotid endarterectomy had a DSMI rate of 0.95%.
These are best-in-class results from any carotid pivotal trial
conducted to date and form the foundation of our 'stent first'
strategy.
"We were very pleased to have recently announced that an abstract
of the one-year results from C-GUARDIANS will be presented at the
LINC conference in Germany later this month. This key milestone
will potentially allow us to file a Premarket Approval (PMA)
application with the FDA later this year and give us line-of-sight
to potential approval in the first half of 2025.
"I am very pleased with our progress, including building our core
business as well as advancing our clinical trials and new product
pipeline, anticipating and preparing for a launch of our
best-in-class carotid platforms in the U.S. in 2025," Mr. Slosman
concluded.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1433607/000149315224018889/form10-q.htm
About InspireMD
Headquartered in Tel Aviv, Israel, InspireMD, Inc. --
http://www.inspiremd.com-- is a medical device company focusing on
the development and commercialization of its proprietary MicroNet
stent platform technology for the treatment of complex vascular and
coronary disease. A stent is an expandable "scaffold-like" device,
usually constructed of a metallic material, that is inserted into
an artery to expand the inside passage and improve blood flow. Its
MicroNet, a micron mesh sleeve, is wrapped over a stent to provide
embolic protection in stenting procedures.
InspireMD reported a net loss of $19.92 million in 2023, a net loss
of $18.49 million in 2022, a net loss of $14.92 million in 2021, a
net loss of $10.54 million in 2020, and a net loss of $10.04
million in 2019.
INVO BIOSCIENCE: Incurs $1.60 Million Net Loss in First Quarter
---------------------------------------------------------------
INVO Bioscience, Inc., filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q reporting a net loss
of $1.60 million on $1.58 million of total revenue for the three
months ended March 31, 2024, compared to a net loss of $2.55
million on $348,025 of total revenue for the three months ended
March 31, 2023.
As of March 31, 2024, the Company had $18.32 million in total
assets, $18.31 million in total liabilities, and $10,155 in total
stockholders' equity.
Invo Bioscience said, "Although the Company's audited consolidated
financial statements for the year ended December 31, 2023 were
prepared under the assumption that it would continue operations as
a going concern, the report of the Company's independent registered
public accounting firm that accompanies the Company's financial
statements for the year ended December 31, 2023 contains a going
concern qualification in which such firm expressed substantial
doubt about the Company's ability to continue as a going concern,
based on the financial statements at that time. Specifically, as
noted above, the Company has incurred significant operating losses
and the Company expects to continue to incur significant expenses
and operating losses as it continues to ramp up the
commercialization of INVOcell and develop new INVO Centers. These
prior losses and expected future losses have had, and will continue
to have, an adverse effect on the Company's financial condition.
If the Company cannot continue as a going concern, its stockholders
would likely lose most or all of their investment in the Company."
Management Commentary
"We are pleased with the progress we have made at INVO, reporting
record first quarter 2024 revenue with of growth of 353% compared
to the first quarter of 2023, and a substantial $1.2 million
improvement in our adjusted EBITDA," commented Steve Shum, CEO of
INVO. "The strategic initiatives we have implemented to capture a
greater share of the total fertility cycle revenue and profit
through the transformation of INVO from a medical device company
into an innovative healthcare services company are starting to bear
fruit. The growth in revenue, coupled with careful management of
our operating expenses demonstrates that we are potentially on
track to achieve our stated goals of reaching break-even or
profitability with our current operations (excluding the proposed
merger with NAYA) in 2024. We also remain excited about our
position in the fertility market, the opportunities we have to
acquire additional clinics and to open new INVO Centers, and our
ongoing efforts to make advanced fertility care more accessible and
inclusive to people around the world."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1417926/000149315224019786/form10-q.htm
About INVO Bioscience Inc.
INVO Bioscience, Inc. is a healthcare services fertility company
dedicated to expanding the assisted reproductive technology
marketplace by making fertility care more accessible and inclusive
to people around the world. Its commercial strategy is primarily
focused on operating fertility-focused clinics, which includes the
opening of dedicated "INVO Centers" offering the INVOcell and IVC
procedure (with three centers in North America now operational) and
the acquisition of US-based, profitable in vitro fertilization
clinics (with the first acquired in August 2023).
The Woodlands, Texas-based M&K CPAS, PLLC, the Company's auditor
since 2019, issued a "going concern" qualification in its report
dated April 16, 2024, citing that the Company has suffered net
losses from operations and has a net capital deficiency, which
raises substantial doubt about its ability to continue as a going
concern.
KCIBT HOLDINGS: Moody's Downgrades PDR to D-PD on Deal Amendments
-----------------------------------------------------------------
Moody's Ratings downgraded KCIBT Holdings, L.P.'s ("CIBT")
probability of default rating to D-PD from Caa3-PD, following the
company's latest amendment to its first and second lien credit
agreements. The amendments will extend the company's debt
maturities to 2027 from 2026, as well as extend its amortization
holiday and PIK period. The borrower of the company's debt
instruments is CIBT Global, Inc. CIBT is a Virginia-based provider
of third-party travel visa, passport, and immigration logistics
services for corporate clients worldwide.
Moody's considers the maturity extensions as a distressed exchange
and a default under Moody's definition. The D-PD rating will be a
temporary assignment and the PDR will be changed to Caa3-PD after
three business days. Concurrently, Moody's affirmed the company's
Caa3 corporate family rating as there remains an elevated risk of
default in the next 12-18 months. As part of this rating action,
Moody's assigned Caa2 ratings to the company's new first lien debt
instruments, including the $425 million senior secured first lien
term loan and $58.5 million senior secured first lien revolving
credit facility. Moody's also assigned a Ca rating to the company's
new $210 million senior secured second lien term loan and $5
million senior secured first lien term loan Last-Out. The outlook
is maintained at stable.
Governance risks including an aggressive financial policy and a
shareholder-friendly distressed exchange have negatively impacted
CIBT's credit profile and are a key consideration to this rating
action.
RATINGS RATIONALE
On April 3, 2024, CIBT completed an amendment and extension of its
$425 million first lien term loan, $58.5 million first lien
revolving credit facility, $5 million first lien term loan
last-out, and $210 million second lien term loan, substantially the
entire capital structure. The amendment also extended the
amortization holiday and the PIK period for two additional quarters
through Q4 2024. Also included in the first lien amendment is the
revolving credit facility springing covenant, now scheduled to
restart in Q4 2025. CIBT also amended its second lien term loan,
extending its interest waiver period through at least March 2026
and maturity to 2027 from 2026. Although the company was able to
extend its debt maturity profile, Moody's views the current capital
structure as being unsustainable, which may result in additional
distressed exchanges. For fiscal year 2023, Moody's expects
revenues to be approximately 80% of pre-COVID levels, still
constrained by lower-than-expected visa volumes and the lingering
effects of the delayed opening of large travel lanes. Furthermore,
the company's margins have being negatively impacted by wage
inflation, employee turnover, and the ramp up in hiring and
training in advance of higher volumes expectation.
The company's Caa3 CFR reflects its very high and unsustainable
leverage, minimal cash flow generation, compressing margins, and
likelihood of additional distressed exchanges. The rating also
reflects the company's very small revenue scale. Moreover, CIBT's
credit profile is constrained by the cyclicality of the business
travel market, which has been severely impacted following the COVID
pandemic and other geopolitical conflicts. Enhancing its credit
profile is the company's strong market position, demonstrated by
its proven ability of managing complex document application and
procurement processes in the immigration and international travel
segment. The company also benefits from its longstanding customer
relationships and very high retention rates.
The Caa2 rating assigned to CIBT's senior secured first lien credit
facilities reflects the Caa3-PD PDR (changed from D-PD after three
business days) and considers the bank debt's priority claim on the
collateral and senior ranking in the capital structure relative to
CIBT's senior secured second lien debt.
The first lien term loan due June 2027 has no amortization through
Q4 2024. The maturities of the revolver and first lien term loan
have been extended to June 2027 as a result of the amendment.
The senior secured second lien credit facility, also extended to
December 2027, is rated Ca reflecting its subordinate lien on the
collateral. The company's $5 million term loan Last-Out is also
rated Ca reflecting its subordination towards the first lien debt.
The rated debts are guaranteed by CIBT Global, Inc.'s material
domestic subsidiaries and KCIBT Intermediate II, Inc., which is the
direct parent of CIBT Global, Inc.
Moody's considers CIBT's liquidity as weak supported by its
expectations of low cash balances, negative free cash flow
generation, and minimal revolver availability during the next 12 to
18 months. The company's $58.5 million revolver was mostly drawn as
of the end of December 2023 ($50 million drawn). Moody's
expectation of weak liquidity is supported by the PIK accrual
nature of the first and second lien term loans. In addition, the
company is not required to make scheduled amortization payments on
the first lien term loan until Q1 2025. Given the business is not
capital intensive, capital expenditures are minimal and have been
scaled back.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if the company's liquidity profile
was to improve, underpinned by sustained free cash generation and
good revolver availability. The ratings could also be upgraded if
the company's revenues continue to increase and profitability
improves to where debt-to-EBITDA decreases to sustainable levels.
The ratings could be downgraded if the company's revenue remains at
depressed levels, further deterioration of liquidity, and
likelihood of default became more imminent.
Headquartered in McLean, Virginia and controlled by affiliates of
private equity sponsor Kohlberg & Company, CIBT is a provider of
third party travel visa, passport, and immigration logistics
services for corporate clients worldwide. The company operates in
two segments: travel services and immigration.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
KROLL MIDCO: Moody's Affirms 'B3' CFR, Outlook Remains Stable
-------------------------------------------------------------
Moody's Ratings affirmed Kroll Midco Corporation's corporate family
rating at B3 and probability of default rating at B3-PD. Moody's
also assigned a B2 rating to Deerfield Dakota Holding, LLC's senior
secured multi-currency revolving credit facility due 2027 and
affirmed the senior secured first lien bank credit facilities at B2
and senior secured second lien bank credit facility at Caa2. The
outlook remains stable. Kroll provides consulting and business
services globally.
"Although leverage will remain very high, interest coverage will
stay quite weak and liquidity is limited, almost $150 million of
fresh equity funded in late 2023 and early 2024 enabled Kroll to
maintain investments in business expansion and cost management
initiatives that could power the earnings growth needed to drive
improving credit metrics in 2024," said Edmond DeForest, Moody's
Senior Vice President.
RATINGS RATIONALE
The B3 CFR reflects Moody's anticipation for very high debt to
EBITDA leverage above 10.0 times as of December 31, 2023 to remain
above 8.0 times in 2024, pressured by low revenue growth due to
subdued global mergers and acquisitions activity, and only modest
free cash flow, which will be limited by high interest expense.
Interest coverage will remain adequate at around only 1.0 time and
EBITDA margins will remain pressured, positioning Kroll weakly
compared to many other B3-rated business services companies. An
appetite for debt-funded M&A has led to very high financial
leverage, and Moody's expects the company will continue to pursue
leveraging M&A transactions that will result in sustained
integration risks and ongoing transition costs. However, Moody's
does not anticipate material debt-funded acquisitions until debt
leverage declines from current highly-elevated levels.
All financial metrics cited reflect Moody's standard adjustments.
Kroll benefits from an established franchise as a provider of a
broad range of financial advisory, risk management, bankruptcy
solutions, valuation, governance and cyber services to a
diversified client base. Well-known brands, such as Duff & Phelps
and Kroll, and an entrenched network of customer relationships
provide revenue stability. While the majority of client fees are
not contractually recurring, a large proportion of existing
assignments require periodic updates, resulting in predictable
contributions to revenue. New revenue streams acquired over the
past several years have increased revenue and customer diversity.
Moody's expects that the company's risk advisory and cyber segments
will show strong growth over the next 12 to 18 months, balancing
lower corporate finance growth due to limited M&A market activity.
Under Kroll's business plan, its weak profitability metrics and
free cash flow profile will recover rapidly once internal
investments in business growth and cost management subside, the
benefits of those initiatives are realized and interest rates
decline. Moody's notes that lower interest rates would both lower
the company's interest expense and likely boost the market for
mergers and acquisitions, leading to higher corporate finance
revenue growth, although perhaps slow restructuring activity.
Although Moody's considers the pace of profit rate increases
uncertain and does not expect an imminent uptick in M&A activity,
its anticipation for the company's elevated internal investment
levels to greatly decline, cost reduction benefits to be realized
and prevailing interest rates to begin to fall in 2024 provide
support for an eventual recovery in Kroll's revenue growth and
profitability rates, and the B3 CFR.
The senior secured first lien bank credit facilities, consisting of
the $200 million of revolvers and a $2.7 billion (remaining
balance) multicurrency term loan due April 2027, are rated B2,
which is one notch above the B3 CFR, reflecting their senior-most
position ahead of and first-loss support provided by the senior
secured second lien term loan. The $450 million senior secured
second lien term loan due April 2028 is rated Caa2, which is two
notches below the B3 CFR, reflecting its junior ranking and small
size relative to the first lien obligations within the capital
structure.
Moody's considers Kroll's liquidity profile as limited but
adequate. The company had about $70 million of cash and about $44
million of available capacity under its $200 million revolving
credit facilities as of March 31, 2024. Moody's expects some free
cash flow in 2024, but likely only around 1-2% of debt. Cash flow
is seasonal, with most of the cash usage to occur in the first
fiscal quarter (ends March 31 ) when cash bonuses are paid and for
free cash flow to be generated in each of the later three quarters.
Given Moody's anticipation for negative cash flow of -$100 million
or less during the coming fiscal first quarter ending March 31,
2025, additional liquidity needs beyond that expected seasonal need
could prove difficult to fund.
The term loans are not subject to financial maintenance covenants.
The revolver includes a springing 8.0x maximum senior secured
first-lien net leverage (as defined in the loan agreement) covenant
when 35% or more of the revolver is drawn. Moody's expects that the
company will remain in compliance with the covenant over the next
12 to 15 months.
The stable outlook reflects Moody's expectations for
low-single-digit range revenue growth, slowly improving profit
rates and very high debt to EBITDA that will decline and remain
below 7.5 times by 2025 and an adequate liquidity profile.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if the company demonstrates a
commitment to more balanced financial policies, sustaining debt to
EBITDA below 6.0 times and EBITA to interest above 2.0x, combined
with improved liquidity and free cash flow to debt above 5%.
Increasing revenue scale and evidence of strong and sustainable
organic revenue growth and improving profit margins would benefit
credit metrics and create upward rating momentum.
The ratings could be downgraded if Moody's anticipates debt to
EBITDA will be sustained above 7.5x, EBITA to interest will be
sustained around 1.0x or free cash flow to debt will remain in a
low single digit percentage range, or if there is a weakening in
the company's liquidity position.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
Kroll is a global consulting and business services firm that
operates in six main business segments: valuation advisory;
corporate finance; governance and risk advisory; cyber security;
business services; and digital. The company is controlled by
affiliates of private equity sponsor Stone Point Capital, with
minority stakes held by affiliates of Further Global and Permira.
Moody's expects revenue in 2024 of about $1.8 billion.
LIONS GATE 1: Fitch Assigns 'B-' LongTerm IDR, Outlook Stable
-------------------------------------------------------------
Fitch Ratings has assigned a first-time Long-Term Issuer Default
Rating (IDR) of 'B-' to Lions Gate Capital Holdings 1, Inc.
(LGCH1). Fitch has also assigned 'B+'/'RR2' ratings to LGCH1's
senior unsecured bonds. The Rating Outlook is Stable.
Fitch has affirmed the IDRs of Lions Gate Entertainment Corp.,
Lions Gate Entertainment Inc. and Lions Gate Capital Holdings LLC
(LGCH) (collectively Lions Gate) at 'B-'. Fitch has affirmed Lions
Gate's senior secured ratings at 'BB-'/'RR1' and upgraded the
senior unsecured bonds to 'B+'/'RR2' from 'B/RR3' due to an
increase in the company's Fitch-calculated recovery value. The
Outlook is Stable.
On May 8, 2024, Lions Gate completed a private exchange transaction
between LGCH1 and LGCH, whereby $389 million of 5.5% senior
unsecured bonds previously issued by LGCH were exchanged for $389
million 5.5% senior unsecured bonds newly issued by LGCH1. The
exchanged bonds rank pari passu with other senior unsecured bonds
in the capital structure, therefore instrument ratings are
equalized and upgraded to 'B+'/'RR2.'
KEY RATING DRIVERS
Parent-Subsidiary Relationship: Fitch equalizes the IDRs of Lions
Gate and LGCH1 due to a stronger parent and high legal incentives,
evidenced by parent guarantees.
Studio Launch: On May 14, 2024, Lionsgate Studios (LGS) was
launched as a standalone pure play, publicly traded company. LGS
was formed from the combination of Lions Gate's studio business and
Screaming Eagle Acquisition Corp. (SEAC), a Special Purpose
Acquisition Company. Lions Gate will retain 87.2% ownership of LGS
and receive $350 million in gross proceeds for the remaining 12.8%
stake held by external investors in SEAC.
The transaction implies an enterprise value of $4.6 billion for
LGS, at 10.7x 2025 EBITDA. Fitch believes that the
quasi-separation, structured as a subsidiary IPO, was undertaken to
raise capital from new investors and place a floor value on the
studio business. It is a step toward full separation of LGS from
Starz, which management expects to happen by YE 2024.
Bonds Exchange Transaction: On May 8, 2024, Lions Gate completed a
private exchange transaction between LGCH1 and LGCH, whereby $389
million of 5.5% senior unsecured bonds previously issued by LGCH
were exchanged for $389 million 5.5% senior unsecured bonds newly
issued by LGCH1. The exchanged bonds will be guaranteed by existing
obligors of LGCH's senior unsecured bonds. Upon full separation of
LGS from Lions Gate, LGCH1 will become a wholly owned subsidiary of
LGS' parent (ultimate or intermediate). At such time, the interest
on the exchanged bonds will increase to 6%, the maturity date will
be extended to April 2030 and LGCH (and by extension, Lions Gate)
will be released from all obligations and guarantees with respect
to the exchanged bonds.
DERIVATION SUMMARY
The 'B-' rating reflects heightened credit risk from increased
leverage and Fitch's expectation that the company will stay outside
ratings sensitivities for longer than previously anticipated. The
Stable Outlook reflects Lions Gate's film library, which expanded
with the eOne acquisition; scale; leadership in film and television
content production; and the Starz-branded premium subscription
video services, along with the relative stability of the company's
media networks business.
Fitch includes the $2.5 billion of outstanding production loans and
nonrecourse working capital facilities generally held by SPVs (and
secured by all rights to a specific picture, including copyrights,
rights to produce and distribution rights) in its estimation of
debt, which is consistent with Fitch's Corporate Rating Criteria
and its belief that these production loans are important financing
channel for Lions Gate.
As such, the company is unlikely to allow any specific SPV default
on a production loan obligation, which could increase borrowing and
collateral requirements for future film financing. Per Fitch's
criteria on accounts receivable sales, Fitch adjusted debt to
include the $587.1 million of outstanding accounts receivable and
$250 million of production tax credit facility that the company
monetized as of Dec. 31, 2023. Although the receivables sale
transactions are nonrecourse to Lions Gate, the programs relate to
its recurring business.
Lions Gate has used these working capital programs as an
alternative source of funding, which is more efficient from a cost
of capital perspective by taking advantage of the high
creditworthiness of the counterparties, including investment-grade
customers and governments, rather than relying on other debt
instruments, such as a revolver, to support operations. As such,
Fitch adjusts Lions Gate's metrics to improve comparability of
credit metrics with other issuers while recognizing that most of
the receivables monetized have multiyear tenors and would not come
back onto Lions Gate's balance sheet should the financing no longer
be available.
The ratings also incorporate the inherent "hit driven" volatility
of the film and television content business; the company's smaller
relative scale, which requires it to rely more heavily on
co-financing and co-production arrangements to offset the high
upfront content costs; and the overall rising costs of premium
content production owing to increasing competition from other media
companies, such as Netflix, Apple, Amazon. This is mitigated by
Lions Gate's international theatrical pre-licensing model and lower
theatrical print and advertising expenses, as well as the
diversification of its film and television slates.
KEY ASSUMPTIONS
- Revenue grows in the low- to mid-double digits per year in the
medium term, including the impact of revenue from the eOne
acquisition;
- Approximately $60 million in run-rate post synergy EBITDA for
eOne for 2024 and 2025, in line with management expectations;
- Gradual improvement to EBITDA margins to the low teen percentages
over the rating horizon;
- Paydown of production loans over the rating horizon.
RECOVERY ANALYSIS
Fitch's recovery analysis for Lions Gate incorporates an
independent third-party valuation of Lions Gates' film and
television library. Fitch believes that in the event of a
bankruptcy Lions Gate could monetize its library in order to
generate funds to pay lenders. Fitch believes the growth of
streaming services has created an excess demand for content, and
Lions Gate, which specializes in content production, is well
positioned to benefit from the market.
The third-party valuation of Lions Gate's library was completed
using March 31, 2023 year-end data on unsold library rights and was
undertaken by a reputable consulting firm with expertise in this
area. For the purpose of the analysis, the consulting firm relied
on unsold rights forecasts provide by management by title, media
platform, and territory.
Fitch calculates its going concern (GC) EBITDA after adjusting for
estimated EBITDA associated with the company's library and SPVs
holding production loans and non-recourse production tax credits. A
multiple of 8.0x was applied to the GC EBITDA to form the estimated
enterprise value of the remaining business. Estimated library sale
proceeds are then added to form the basis of Fitch's recovery
estimate. A 10% administrative fee was assumed.
In arriving at the 8x multiple Fitch considered recent peer
multiples in the marketplace. MGM, one of Lions Gates closest
competitors, was acquired by Amazon for a multiple of approximately
49x EBITDA. Also, RHI Entertainment, a television content business,
emerged from bankruptcy at a 7.4x multiple of post-emergence EBITDA
in 2011. Given the elevated valuations in the content production
space, Fitch believes that an 8.0x emergence multiple is
reasonable.
Applying the Fitch estimated enterprise value of the business to
the securities and using standard notching criteria, Fitch arrives
at an IDR of 'BB-'/'RR1' on the first lien debt and a rating of
'B+'/'RR2' on the unsecured debt.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- A material asset sale with the asset sale proceeds applied to
debt repayments;
- EBITDA Leverage below 7.0x;
- Sustained operating margins in the mid-teens percentages.
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Sustained negative FCF;
- Expectations of EBITDA Leverage remaining above 8.0x over the
next 18 months-24 months;
- Sustained underperformance of Lions Gate's film and production
segments and/or notable churn in Starz's subscriber base.
LIQUIDITY AND DEBT STRUCTURE
Debt: As of Dec. 31, 2023, debt at the company includes:
- Term loan A: $407.1 million, maturing April 6, 2026;
- Term loan B: $822.3 million, maturing March 24, 2025;
- 5.5% senior notes: $715 million, maturing April 15, 2029;
- Production loans and working capital facilities ($2.5 billion):
Fitch includes $2.5 billion of outstanding production loans and
nonrecourse working capital facilities in its debt estimate. The
nonrecourse working capital facilities enhance Lions Gate's access
to alternative sources of liquidity, reduce the its cost of capital
and add to its financial flexibility;
- $375 million outstanding of $1.25 billion revolver maturing April
6, 2026.
Strong Liquidity: As of Dec. 31, 2023, liquidity consists of $283
million in cash and $875 million in revolver availability.
ISSUER PROFILE
Lions Gate is a vertically integrated filmed entertainment and
television content production company with a library of over 20,000
titles and linear and digital distribution platforms (Starz).
Sources of Information
Fitch made use of an independent third-party library valuation,
dated Mar. 31, 2023, to calculate the recovery enterprise value.
EXTERNAL APPEAL COMMITTEE OUTCOMES
In accordance with Fitch's policies the Issuer appealed and
provided additional information to Fitch that resulted in a rating
action that is different than the original rating committee
outcome.
ESG CONSIDERATIONS
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Recovery Prior
----------- ------ -------- -----
Lions Gate Capital
Holdings LLC LT IDR B- Affirmed B-
senior
unsecured LT B+ Upgrade RR2 B
senior secured LT BB- Affirmed RR1 BB-
Lions Gate Capital
Holdings 1, Inc. LT IDR B- New Rating
senior
unsecured LT B+ New Rating RR2
Lions Gate
Entertainment Inc. LT IDR B- Affirmed B-
Lions Gate
Entertainment Corp. LT IDR B- Affirmed B-
MADISON 33: Secured Party Sets June 4 Auction
---------------------------------------------
For default in payment and performance of obligations under certain
pledge and security agreement dated Aug. 29, 2018, by defaulting
Madison 33 Partners LLC ("Debtor/Pledgor"), Mannion Auctions LLC by
William E. Mannion, auctioneer, and Matthew D. Mannion, Auctioneer,
on behalf of Palm Avenue Hialeah Trust, a Delaware statutory trust,
for and behalf of and solely with respect to Series 2023-3,
("secured party") will sell at public auction on June 4, 2024, at
11:00 a.m., certain collateral, via virtual Zoom platform and
in-person at the offices of Offit Kurman PA, attorney's for secured
party, located at 590 Madison Avenue, 6th Floor, New York, New York
10022.
The collateral will mean all pledged membership interests in
Madison 33 Owner LLC ("Borrower"), books and records relating to
pledged membership interests and all rights, distributions,
certificates, options, securities, security entitlements and other
investment property of financial assets, all or any of the pledged
membership interests, and all proceeds of all of the foregoing.
Borrower is the owner of improved real estate at 172-174 Madison
Avenue aka 21 E. 33rd Street, New York, New York 10010.
Additional information, bidding requirements, deposit amounts,
bidding procedures and the consummation of the public sale are
available by contacting the secured party's representative: Jason
A. Nagi, Esq., Offit Kurpman PA, at jason.nagi@offitkurman.com or
212-380-4108, Joyce A. Kuhns, Esq., Offit Kurman PA at
jkuhns@offitkurman.com, 410-209-6400, or Matthew D. Mannion at
mdamannion@jpandr.com or 212-267-6698, or Alex Fuchs at
Afuchs@rosewoodrg.com or 212-358-9912.
The bid deadline is May 30, 2024 at 5:00 p.m. ET.
Only a bona fide bidder whore wires $1 million lien holders and the
Debtor/Borrower/Pledgor will be permitted to participate in the
Auction.
MERCON COFFEE: Hearing Today on Sale of Assets to StoneX
--------------------------------------------------------
Mercon Coffee Corporation will ask the U.S. Bankruptcy Court for
the Southern District of New York at a hearing today to approve the
sale of its assets to StoneX Commodity Solutions, LLC.
The assets include inventory, intellectual property, furnishings
and equipment, unexpired contracts and other assets used to operate
the company's business.
Under the sale agreement, the aggregate consideration for the
assets will be the assumption by StoneX of certain liabilities of
Mercon, plus an amount equal to (i) $5,428,886.78, (ii) minus the
so-called inventory adjustment and accounts receivable adjustment,
if any, (iii) minus the "interim cash amount" as adjusted and
determined pursuant to a final closing statement.
The interim cash amount refers to any cash and cash equivalents
received in connection with a delivery made by Mercon on or after
Feb. 21 and prior to sale closing pursuant to a contract purchased
under the sale agreement and relating to an identifiable portion of
the acquired inventory.
The assets will be sold "free and clear" of liens, claims,
encumbrances, and other interests.
Cooperatieve Rabobank U.A., New York Branch, the agent under a
pre-bankruptcy senior secured credit facility, has properly
perfected security interests in, and liens on, the assets and is
consenting to the sale.
The net proceeds from the sale received by Mercon will be deposited
and distributed in accordance with the bankruptcy court's final
order authorizing the company to use cash collateral, and liens
will attach to such proceeds in accordance therewith.
About Mercon Coffee
Mercon Coffee Corp. -- https://www.merconcoffeegroup.com/ -- is a
supplier of green coffee to the international coffee roasting
industry. It is headquartered in the Netherlands and has offices
around the globe.
Mercon and its affiliates filed Chapter 11 petitions (Bankr.
S.D.N.Y. Case No. 23-11945) on Dec. 7, 2023. In the petition filed
by its chief restructuring officer, Harve Light, Mercon reported
$100 million to $500 million in both assets and liabilities.
Judge Michael E. Wiles oversees the cases.
The Debtors tapped Baker & McKenzie, LLP and Chipman Brown Cicero &
Cole, LLP as bankruptcy counsels; Dentons Nicaragua, S.A. and Resor
N.V. as special counsels; Rothschild & Co US Inc. and Rothschild &
Co Mexico S.A. de C.V. as financial advisor and investment banker;
Harve Light of Riveron Management Services, LLC as chief
restructuring officer. Kroll Restructuring Administration, LLC is
the Debtors' claims and noticing agent and administrative advisor.
The U.S. Trustee for Region 2 appointed an official committee to
represent unsecured creditors in the Debtors' Chapter 11 cases.
O'Melveny & Myers, LLP and Ankura Consulting Group, LLC serve as
the committee's legal counsel and financial advisor, respectively.
MOBIVITY HOLDINGS: Incurs $2.25 Million Net Loss in First Quarter
-----------------------------------------------------------------
Mobivity Holdings Corp. filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q reporting a net loss
of $2.25 million on $1.60 million of revenues for the three months
ended March 31, 2024, compared to a net loss of $2.48 million on
$1.88 million of revenues for the three months ended March 31,
2023.
As of March 31, 2024, the Company had $2.10 million in total
assets, $13.91 million in total liabilities, and a total
stockholders' deficit of $11.81 million.
Mobivity said, "As shown in the accompanying financial statements,
the Company has incurred net losses from operations resulting in an
accumulated deficit of $132.2 million as of March 31, 2024.
Further losses are anticipated in the development of the Company's
business raising substantial doubt about the Company's ability to
continue as a going concern. The ability to continue as a going
concern is dependent upon the Company generating profitable
operations in the future and/or obtaining the necessary financing
to meet its obligations and repay its liabilities arising from
normal business operations when they come due. Management intends
to finance operating costs over the next 12 months with proceeds
from the sale of securities, and/or revenues from operations.
These financial statements do not include any adjustments relating
to the recoverability and classification of recorded asset amounts,
or amounts and classification of liabilities that might result from
this uncertainty."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1447380/000149315224019795/form10-q.htm
About Mobivity
Headquartered in Chandler, Arizona, Mobivity Holdings Corp. is in
the business of developing and operating proprietary platforms
through which brands and enterprises can conduct national and
localized, data-driven marketing campaigns.
The Woodlands, TX-based M&K CPAS, PLLC, the Company's auditor since
2012, issued a "going concern" qualification in its report dated
April 16, 2024, citing that the Company has suffered net losses
from operations and has a net capital deficiency, which raises
substantial doubt about its ability to continue as a going concern.
MONDORIVOLI LLC: Voluntary Chapter 11 Case Summary
--------------------------------------------------
Debtor: Mondorivoli, LLC
873 E. Third Street
Durango, CO 81301
Case No.: 24-12895
Chapter 11 Petition Date: May 28, 2024
Court: United States Bankruptcy Court
District of Colorado
Judge: Hon. Joseph G. Rosania Jr.
Debtor's Counsel: Bonnie Bell Bond, Esq.
LAW OFFICE OF BONNIE BELL BOND
8400 E. Prentice Avenue, Suite 1040
Englewood CO 80111
Email: BONNIE@BELLBONDLAW.COM
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Jean-Pierre Bleger as manager.
A copy of the Debtor's list of 20 largest unsecured creditors is
now available for download. Follow this link to get a copy today
https://www.pacermonitor.com.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/JLZ5FAA/Mondorivoli_LLC__cobke-24-12895__0001.0.pdf?mcid=tGE4TAMA
MOTUS GROUP: Fitch Affirms 'B-' LongTerm IDR, Outlook Stable
------------------------------------------------------------
Fitch Ratings has affirmed Motus Group, LLC's (Motus) Long-Term
Issuer Default Rating (IDR) at 'B-'. The Rating Outlook is Stable.
Fitch has downgraded the $50 million secured revolving credit
facility (RCF) and upsized $500 million first-lien secured term
loan to 'B'/'RR3' from 'B+'/'RR2'. This action follows Motus'
planned $118 million upsizing of the first-lien facility, with the
proceeds to be used to fully repay the existing $135 million second
lien term loan.
Motus' rating reflects high leverage and weak FCF. The 'B-' IDR
also reflects Fitch's concern about near-term credit profile
weakness because of recent increases in operating expenses, as the
company invests in the business during a time of elevated interest
rates. The rating also reflects the company's strong gross margins
and high retention rates.
KEY RATING DRIVERS
Leverage Remains Elevated: At the end of 2023, Motus had leverage
(defined as debt to Fitch-adjusted EBITDA) of 8.4x, down from 9.5x
at the end of 2022. The reduction in leverage was primarily due to
the company's revenue enhancement and a slight elevation in EBITDA.
Fitch projects that the company will continue to see topline growth
along with modest EBITDA margin expansion and that over time,
Leverage could trend below 7.0x by YE 2026. Importantly, the
company's private equity ownership will likely prioritize ROE
optimization over deleveraging.
FCF Should Improve: In 2023, Motus generated modestly positive
Fitch-adjusted FCF, and with recently announce transaction company
will likely bear lower interest expense in 2024, Fitch projects
that FCF may be slightly positive for the year. Motus did place an
interest rate swap that mitigates some interest rate risk for two
years beginning in June 2023. With higher EBITDA and lower interest
expense in 2025 and beyond, Fitch projects that the company can
generate positive FCF over the longer term although there is
execution risk for margin expansion.
Weak yet improving Interest Coverage: For 2023, Motus reported an
interest coverage ratio of 1.2x amidst a high-interest rate
climate. Fitch projects that, over the next few years, this ratio
will improve to between 1.4x and 2.0x. This enhancement is partly
due to expected improvements in EBITDA margins as well as a
decrease in the effective interest rate following the refinancing
of the second lien term loan.
Liquidity Remains Sufficient: Given the company's FCF generation in
rating horizon, full availability on its $50 million secured
revolver, and cash on the balance sheet of over $30 million, Fitch
believes Motus has sufficient liquidity. Furthermore, there are no
debt maturities in the near term. The $50 million revolver is due
in 2026 and the first lien term loan is due in 2028.
High Recurring Revenues/Revenue Retention: For calendar year 2023,
recurring revenues were over 90%. Net retention was strong and over
100% in 2023. From 2018 until the end of financial year 2023, ARR's
grew in the low double-digit range on a CAGR basis. These figures
demonstrate that once a company becomes a customer, they generally
renew, ensuring stability of cash flows. Most of the top 10
customers have been with Motus for at least 10 years.
Some Diversity of Revenues: In 2023, Motus had revenues from
vehicle reimbursement programs for expense claims and distribution
making up over 85% of total revenues, with the balance coming from
wireless device expense programs and relocation/remote work
services. Expansion into wireless device expense programs began in
2019 when it acquired Wireless Analytics and in 2020 when it
acquired Vision Wireless. Employee relocation/remote work
reimbursements began with a product launch in 2020.
Leading FAVR Provider: Motus is a leading employee vehicle
reimbursement solutions provider. It has more than 2,700 customers
and offers end-to-end cloud-based software solutions for fixed and
variable rate reimbursements (FAVR), which allows companies to
reimburse employees for personal vehicle use on a tax-free basis.
Growth in the industry is expected as employers continue to shift
toward having employees drive their own vehicles and expense
tracking and costs.
DERIVATION SUMMARY
Motus' 'B-' rating is supported by its leading position in the
vehicle reimbursement industry and reflects the company's elevated
leverage. Fitch views its financial flexibility as relatively more
constrained than peers in the technology sector. Its revenue scale,
leverage and liquidity profile are consistent with the 'B-' rating.
Cash flow metrics and leverage metrics remain in line with other
similarly rated software companies. Like other private equity owned
issuers, Fitch believes that the company's focus may be on ROE
rather than debt reduction.
RECOVERY ANALYSIS
Key Recovery Rating Assumptions
The recovery analysis assumes that the enterprise value of Motus
would be maximized in a going-concern situation as opposed to a
liquidation given limited tangible assets on the company's balance
sheet. Fitch makes the following assumptions in its calculation of
expected recovery:
- 10% administrative claim applied to the Going Concern (GC)
EBITDA;
- GC EBITDA of $50 million, in line with the prior review;
- Enterprise Valuation (EV)/EBITDA multiple of 7.0x times.
The recovery analysis assumes that Motus enters a distressed
scenario due to challenges surrounding their main business line,
vehicle reimbursement due to increased competition. Fitch also
assumes their device and location solution segment experiences
compressed margins as a result of direct peers ramping up their
offerings and competing head-to-head for market share resulting in
price battles. Given these challenges, Fitch assumes a GC EBITDA of
$50 million.
EV/EBITDA Multiple Rationale: An EV Multiple of 7x EBITDA is
applied to the GC EBITDA to calculate a post-reorganization
enterprise value. The choice of this multiple considered the
following factors:
- Fitch's Bankruptcy Enterprise Values and Creditor Recoveries
showed that bankruptcy case study exit multiples for technology
peer companies ranged from 2.6x-10.8x.
- Of these companies, only five were in the Software sector: Allen
Systems Group, Inc. (8.4x); Avaya Inc. (2017: 8.1x and 2023: 7.5x);
Aspect Software Parent, Inc. (5.5x), Sungard Availability Services
Capital, Inc. (4.6x) and Riverbed Technology Software (8.3x).
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- (CFO-capex)/debt in the mid-to high single digits;
- End market or product diversification from expansion or
acquisitions into adjacent markets;
- Expectations for leverage below 7.5x on a sustained basis.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- (CFO-capex)/debt trending toward 0%;
- EBITDA interest coverage below 1.5x on a sustained basis;
- Organic revenue growth sustained near or below 0%, erosion of
retention rates, or declines in annual recurring revenues (ARR);
- Erosion of liquidity driven by aggressive spending or weaker
economic conditions.
LIQUIDITY AND DEBT STRUCTURE
Sufficient Liquidity: Fitch views Motus' liquidity as sufficient
over the near to medium term. Pro forma for the refinancing
transaction, the company will have over $30 million of unrestricted
cash on the balance sheet and full revolver availability of $50
million for total liquidity of over $80 million.
Debt Structure: Motus has first lien senior secured facilities
including an undrawn $50 million revolver and has $500 million of
secured first lien debt, pro forma for the recently announced
issuance of add-on first lien term loan. The revolver matures in
2026 and the first lien term loan in 2028, providing the company
ample headroom before the first maturity in 2026.
ISSUER PROFILE
Motus Group, LLC is a "Software as a Service" provider of software
solutions for vehicle reimbursement. It also offers reimbursement
solutions for wireless devices and relocation/remote work. The
company is privately owned by Thoma Bravo and Permira Advisors.
ESG CONSIDERATIONS
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Recovery Prior
----------- ------ -------- -----
Motus Group, LLC LT IDR B- Affirmed B-
senior secured LT B Downgrade RR3 B+
MOTUS GROUP: Moody's Affirms 'B3' CFR & Cuts 1st Lien Loans to 'B3'
-------------------------------------------------------------------
Moody's Ratings affirmed the B3 corporate family rating and B3-PD
probability of default rating of Motus Group, LLC (Motus), a
provider of software for vehicle reimbursement and mileage tracking
as well as device and remote work and relocation reimbursement
solutions. Concurrently, Moody's downgraded the company's Senior
Secured First Lien Bank Credit Facilities (Term Loan and Revolver)
to B3 from B2. Moody's maintained the stable outlook.
The downgrade of the credit facilities results from the proposed
$136 million fungible add-on to the first lien term loan, which
will be used to repay the existing $135 million Senior Secured
Second Lien Term Loan (not rated), thus removing the first loss
absorption buffer for the first lien tranche of the debt capital
structure.
The affirmation of the B3 CFR with a stable outlook reflect Moody's
expectations that the company's revenue will grow in the low-to-mid
single digit percentage range over the next 12 to 18 months while
maintaining good liquidity and generating a modest amount of free
cash flow. Moody's expects the company's Moody's cash adjusted
financial leverage to decline towards 7.5x over the same period.
RATINGS RATIONALE
Motus' B3 CFR reflects the company's very small scale, limited
product offerings, and high financial leverage. Since the LBO by
financial sponsors in 2021, financial leverage remains elevated at
around 8x Moody's adjusted debt/cash EBITDA. Solid revenue growth
in the low double-digit percentage range has been offset by
increased investments in product, sales and marketing and resulted
in very modest earnings growth. Moody's expects 2024 revenue growth
to slow down to the low-to-mid single digit percentage range as US
job growth slows down, leading to a decrease in additional license
sales to Motus' current customers. Meanwhile, earnings are
projected to increase as the pace of investment growth decelerates.
As a result, Moody's expects Moody's adjusted debt/cash EBITDA to
approach 7.5x over the next 12 months.
Motus benefits from a leading market position as a provider of FAVR
(fixed and variable rate) vehicle mileage reimbursement solutions.
This is underpinned by the company's proprietary data and the
relatively low penetration of software applications in its target
markets that support strong revenue growth. The stickiness of the
company's offerings is evidenced by gross retention rates in the
mid-90% range. In addition, Motus benefits from its highly
recurring subscription revenue base (around 85%) that provides some
future visibility.
Liquidity is good, and is supported by pro forma cash of over $50
million as of March 31, 2024, a $50 million undrawn revolving
credit facility due December 2026, and Moody's expectations of
around $8 million of free cash flow in 2024. The revolving credit
facility contains a maximum 9.6x total net first lien leverage
covenant triggered when 40% ($20 million) or more is outstanding.
Moody's does not anticipate the covenant to be tested and expects
that Motus will maintain strong cushion over at least the next
year.
The B3 ratings for senior secured credit facilities are consistent
with the CFR reflecting a single class of secured debt comprising
the preponderance of Motus' capital structure, pro forma for the
proposed transaction.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded with a material increase in scale and
improved revenue diversification. Continued organic revenue growth
and Moody's cash adjusted leverage expected to remain below 6x
debt-to-EBITDA could also lead to an upgrade.
Declines in organic revenue, Moody's cash adjusted leverage
sustained above 8x debt-to-EBITDA, free cash flow to debt below 2%,
and/or a weakening of liquidity could also lead to a downgrade.
The principal methodology used in these ratings was Software
published in June 2022.
Headquartered in Boston, MA, Motus Group, LLC is a provider of
software for vehicle reimbursement and mileage tracking, as well as
device and remote work and relocation reimbursement solutions.
Motus generated over $150 million of revenue for the LTM period
ended March 31, 2024. The company is owned by Thoma Bravo, Permira
and management.
NEMAURA MEDICAL: Shareholders Approve Reverse Common Stock Split
----------------------------------------------------------------
Nemaura Medical Inc. disclosed in a Form 8-K filed with the
Securities and Exchange Commission that on May 9, 2024, the
Shareholders of the Company approved by written consent to
authorize amendments to the Articles of Incorporation of the
Company to effect a reverse stock split of the common stock, par
value $0.001 per share, of the Company ranging in ratio between
1-for-10 and 1-for-150, with one share of Common Stock being issued
for a range of between each 10 and 150 shares of Common Stock
issued and outstanding, with such final ratio to be determined by
the Board following approval thereof by the shareholders of the
Company, with any fractional shares of Common Stock resulting
therefrom being rounded up to the nearest whole share of Common
Stock, and to amend the Articles to effect the Reverse Split.
About Nemaura Medical
Nemaura Medical, Inc., is a medical technology company developing
and wearable diagnostic devices. The company is currently
commercializing sugarBEAT and proBEAT. sugarBEAT, a CE mark
approved Class IIb medical device, is a non-invasive and flexible
continuous glucose monitor (CGM) providing actionable insights
derived from real time glucose measurements and daily glucose trend
data, which may help people with diabetes and pre-diabetes to
better manage, reverse, and prevent the onset of diabetes. Nemaura
Medical has submitted a proposal for a Modular PMA (Premarket
Approval Application) application for sugarBEAT to the U.S. FDA,
for its generation II, 24 hour sensor. proBEAT is a non-regulated
version of sugarBEAT which combines non-invasive glucose data
processed using artificial intelligence and a digital healthcare
subscription service as a general wellness product as part of its
BEAT diabetes program.
The Company stated in its Quarterly Report for the period ended
Dec. 31, 2023, that "As reflected in the accompanying financial
statements, for the nine months ended December 31, 2023, the
Company recorded a net loss of $5,968,086 and used cash in
operations of $7,203,676. These factors raise substantial doubt
about the Company's ability to continue as a going concern within
one year of the date that the financial statements are issued. In
addition, the Company's independent registered public accounting
firm in its report on the Company's March 31, 2023 financial
statements, raised substantial doubt about the Company's ability to
continue as a going concern."
NEPA STORAGE: Secured Party Sets 100% Stock Sale on June 14
-----------------------------------------------------------
In accordance with applicable provisions of the Uniform Commercial
Code, as enacted in the State of Delaware, Loan Originations, LLC
("Secured Party") will offer for sale, at public auction, all stock
("Collateral") in and to Nepa Storage Solutions, LLC ("Debtor"),
which Debtor owns, without limitation, the real property located at
537 Stock Farm Road, Lake, Pennsylvania 18436.
The public auction will be held on June 14, 2024 at 10:00 a.m.,
Central Standard Time, by remote auction via Zoom to the highest
qualified bidder; provided, however that Secured Party reserves the
right to cancel the sale in its entirety, or to adjourn the sale to
a future date. The sale will be conducted by AuctionWorks, a
division of AW Properties Global, LLC ("Auctioneer").
This sale is being held to enforce Secured Party’s rights in the
Collateral, which secures payment of outstanding indebtedness owing
from Debtor to Secured Party ("Credit Obligations"), following
Debtors' defaults under applicable loan documents. At the time the
Credit Obligations were incurred, Debtor was the sole owner of
certain real property located at 537 Stock Farm Road, Lake,
Pennsylvania, 18436. The Collateral will be sold together in a
single block, and there will be no warranty or representations
relating to title, possession, quiet enjoyment, merchantability,
fitness, or the like, in this disposition. Secured Party reserves
the right for itself and any assignee to bid (whether by cash and
crediting some or all of the secured obligations) and to become the
purchaser of the Collateral at the sale.
In order to participate in the bidding process, at least five (5)
business days prior to the Sale, each person ("Potential Bidder")
must deliver to
legal@spectracapital.com:
a) an executed confidentiality agreement in form and substance
satisfactory to Secured Party;
b) a financing commitment or current financial statements of the
Potential Bidder that will show the Potential Bidder’s sufficient
ability to pay the purchase price bid for the Collateral;
c) a statement that fully discloses (A) the identity of each entity
or person that will be bidding for, or will be otherwise
participating in a bid for, the Collateral; (B) such entity or
person's relationship, affiliation, or connection, if any, with any
other Potential Bidder, the Debtor, or Ronald Escobar-Pineda
("Guarantor"); and (C) if any entity has been formed for the
purpose of acquiring the Collateral;
d) evidence of authorization and approval from such Potential
Bidder's board of directors (or comparable governing body)
evidencing the authority of the Potential Bidder to make a binding
and irrevocable bid for the Auctioned Collateral and to consummate
the Sale if such Potential Bidder is the successful bidder, as such
bid may be improved prior to or at the Sale;
e) evidence that the Potential Bidder is an "accredited investor"
as defined in Rule 501(a) of Regulation D under the Securities Act
and the Securities Act Certifications; and
f) a deposit of Ten Thousand ($10,000) in immediately available
funds via (i) electronic fund transfer, (ii) certified check, or
(iii) bank cashier’s check, in each instance made payable to
Secured Party.
AuctionWorks can be reached at:
AuctionWorks
Attn: Diana Peterson
Emily Gottlieb
707 Skokie Blvd. Suite 600
Northbrook, IL 60062
Tel: 847-509-2757
Email: diana@awproperties.com
emilyg@awproperties.com
Nepa Storage Solutions -- https://www.nepastorage.com/ -- operates
a storage facility.
NEPHROS INC: All Four Proposals Passed at Annual Meeting
--------------------------------------------------------
Nephros, Inc. disclosed in a Form 8-K filed with the Securities and
Exchange Commission that on May 23, 2024, it held its 2024 Annual
Meeting of the Stockholders at which the stockholders:
(1) elected Arthur H. Amron and Oliver Spandow to the Company's
Board of Directors to each serve a three-year term expiring
in 2027;
(2) ratified the appointment of Baker Tilly US, LLP as the
Company's independent registered public accounting firm for
the fiscal year ending Dec. 31, 2024;
(3) approved the Nephros, Inc. 2024 Equity Incentive Plan; and
(4) approved the compensation of the Company's named executive
officers on an advisory (non-binding) basis.
About Nephros
South Orange, New Jersey-based Nephros, Inc. --
http://www.nephros.com/-- provides innovative water filtration
products and services, along with water-quality education, as part
of an integrated approach to water safety.
Nephros, Inc., reported a net loss of $1.57 million in 2023, a net
loss of $7.11 million in 2022, a net loss of $3.87 million in 2021,
a net loss of $4.53 million in 2020, a net loss of $3.18 million in
2019, and a net loss of $3.32 million for the year ended Dec. 31,
2018.
ONDAS HOLDINGS: Falls Short of Nasdaq Minimum Bid Price Requirement
-------------------------------------------------------------------
Ondas Holdings Inc. disclosed in a Form 8-K filed with the
Securities and Exchange Commission that on May 22, 2024, it
received a letter from The Nasdaq Stock Market LLC indicating that,
for the last 30 consecutive business days, the bid price for the
Company's common stock had closed below the minimum $1.00 per share
requirement for continued listing on The Nasdaq Capital Market
under Nasdaq Listing Rule 5550(a)(2).
In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company
has been provided an initial period of 180 calendar days, or until
Nov 18, 2024, to regain compliance. The Nasdaq Staff Deficiency
Letter states that the Nasdaq staff will provide written
notification that the Company has achieved compliance with Rule
5550(a)(2) if at any time before Nov. 18, 2024, the bid price of
the Company's common stock closes at $1.00 per share or more for a
minimum of 10 consecutive business days. The Nasdaq Staff
Deficiency Letter has no immediate effect on the listing or trading
of the Company's common stock.
The Company intends to continue actively monitoring the bid price
for its shares of common stock between now and the expiration of
the Compliance Period and will consider all available options to
resolve the deficiency with every intention to regain compliance
with the Minimum Bid Price Requirement.
If the Company does not regain compliance with Rule 5550(a)(2)
within the Compliance Period, the Company may be eligible for an
additional 180 calendar day compliance period. To qualify, the
Company would be required to meet the continued listing requirement
for market value of publicly held shares and all other initial
listing standards for Nasdaq, with the exception of the bid price
requirement, and would need to provide written notice of its
intention to cure the deficiency during the second compliance
period, for example, by effecting a reverse stock split, if
necessary. However, if it appears to the Nasdaq staff that the
Company will not be able to cure the deficiency, or if the Company
is otherwise not eligible, Nasdaq would notify the Company that its
securities would be subject to delisting. In the event of such a
notification, the Company may appeal the Nasdaq staff's
determination to delist its securities. There can be no assurance
that the Company will be eligible for the additional 180 calendar
day compliance period, if applicable, or that the Nasdaq staff
would grant the Company's request for continued listing subsequent
to any delisting notification.
About Ondas Holdings
Marlborough, MA-based Ondas Holdings Inc. is a provider of private
wireless, drone, and automated data solutions through its
subsidiaries Ondas Networks Inc., Ondas Autonomous Holdings Inc.,
Airobotics, Ltd, and American Robotics, Inc.
Somerset, New Jersey-based Rosenberg Rich Baker Berman, P.A., the
Company's auditor since 2017, issued a "going concern"
qualification in its report dated April 1, 2024, citing that the
Company has experienced recurring losses from operations, negative
cash flows from operations and a working capital deficit as of Dec.
31, 2023.
ORGANON & CO: Moody's Ups Rating on Secured 1st Lien Notes to Ba1
-----------------------------------------------------------------
Moody's Ratings upgraded the senior secured first lien global notes
due 2028 and the senior secured first lien term loan B due 2028 of
Organon & Co. to Ba1 from Ba2. There are no changes to Organon's
existing other ratings including the Ba2 Corporate Family Rating,
the Ba2-PD Probability of Default Rating, Ba1 senior secured first
lien credit facility and notes, B1 unsecured notes or the SGL-1
Speculative Grade Liquidity Rating (SGL). The outlook remains
unchanged at stable.
The upgrade on the senior secured instruments to Ba1 from Ba2
reflects the completion of Organon's recent refinancing transaction
in which the mix of secured debt in the capital structure declined,
raising recovery prospects for senior secured lenders. The action
is consistent with Moody's expectations at the time Moody's
assigned ratings to the proposed debt offering on May 7, 2024 which
included Ba1 ratings to new senior secured first lien credit
facilities and notes and a B1 rating to new senior unsecured
notes.
RATINGS RATIONALE
Organon's Ba2 Corporate Family Rating reflects its niche position
in the global pharmaceutical industry, offering women's health
products, biosimilars, and established off-patent products. Organon
has good diversity at the product and geographic level. The
established brands have good name recognition in global markets.
The women's health franchise has good growth prospects owing to
demographic trends including rising demand for fertility
treatments.
These strengths are offset by limited organic growth owing to the
nature of established brands which face pricing and volume pressure
amid competition from generics. Organon's free cash flow will
remain constrained by costs associated with separating from Merck
and restructuring activities. However, free cash flow will improve
as these costs decline over time, facilitating improvement in
credit ratios. There is event risk of acquisitions as the company
is likely to pursue initiatives to improve earnings growth.
The outlook is stable, reflecting Moody's expectation for declining
financial leverage over the next 12 to 18 months such that gross
debt/EBITDA is sustained below 4.5x.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could lead to an upgrade include improvement in
organic growth rates, substantial expansion in free cash flow, and
debt/EBITDA sustained below 3.5x. Factors that could lead to a
downgrade include a significant contraction in revenue due to
pricing pressure or competition, substantial debt-financed
acquisitions, or debt/EBITDA sustained over 4.5x.
Headquartered in Jersey City, New Jersey, Organon & Co., is a
global pharmaceutical company with expertise in women's health,
established brands and biosimilars. Revenues in 2023 totaled $6.3
billion.
The principal methodology used in these ratings was Pharmaceuticals
published in November 2021.
PORTSMOUTH SQUARE: All Four Proposals Passed at Annual Meeting
--------------------------------------------------------------
Portsmouth Square, Inc. disclosed in a Form 8-K filed with the
Securities and Exchange Commission that the Company's Fiscal 2023
Annual Meeting of the Shareholders was held on May 20, 2024 at the
Hilton San Francisco Financial District, 750 Kearny Street, San
Francisco, California, at which the shareholders:
(1) elected John V. Winfield, Yvonne L. Murphy, John C. Love,
William J. Nance, and Steve Grunwald as directors;
(2) ratified the appointment of WithumSmith+Brown as the
Company's Independent Registered Public Accounting Firm for
the fiscal year ending June 30, 2024;
(3) approved, in a non-binding vote, the compensation of the
Company's named executive officers; and
(4) determined, in a non-binding vote, that future advisory vote
to
approve the compensation of the Company's named executive
officers should occur every three years.
About Portsmouth
Headquartered in Los Angeles, California, Portsmouth Square, Inc.,
is a California corporation, incorporated on July 6, 1967, for the
purpose of acquiring a hotel property in San Francisco, California
through a California limited partnership, Justice Investors Limited
Partnership. As of June 30, 2023, approximately 75.7% of the
outstanding common stock of Portsmouth was owned by The InterGroup
Corporation, a public company (NASDAQ: INTG). As of June 30, 2023,
the Company's Chairman of the Board and Chief Executive Officer,
John V. Winfield, owns approximately 2.5% of the outstanding common
shares of the Company. Mr. Winfield also serves as the president,
Chairman of the Board and chief executive officer of InterGroup and
owns approximately 68.6% of the outstanding common shares of
InterGroup as of June 30, 2023.
East Brunswick, NJ-based WithumSmith+Brown, PC, the Company's
auditor since 2022, issued a "going concern" qualification in its
report dated Oct. 13, 2023, citing that the outstanding balance as
of June 30, 2023 of the mortgage notes payable consists of a senior
mortgage loan and mezzanine loan totaling $107,117,000. Both loans
mature on January 1, 2024. In addition, the Company has recurring
losses and has an accumulated deficit of $105,727,000. Due to
these factors and the Company's ability to successfully refinance
the debt on favorable terms in the current lending environment
gives rise to substantial doubt about the Company's ability to
continue as a going concern for one year after the financial
statement issuance date.
PRECIPIO INC: Reports $2.1MM Net Loss in Q1 2024
------------------------------------------------
Precipio, Inc. filed with the U.S. Securities and Exchange
Commission its Quarterly Report on Form 10-Q reporting a net loss
of a net loss of $2.1 million for the three months ended March 31,
2024, compared to a net loss of $3.03 million for the same period
in 2023. The Company also reported net cash used in operating
activities of $0.7 million. As of March 31, 2024, the Company had
an accumulated deficit of $100.2 million and a working capital
deficit of $0.7 million.
To meet its current and future obligations, the Company has taken
steps to capitalize the business. On April 14, 2023, the Company
entered into a sales agreement with AGP, pursuant to which the
Company may offer and sell its common stock having aggregate sales
proceeds of up to $5.8 million, to or through AGP, as sales agent.
The sale of its shares of common stock to or through AGP, pursuant
to the AGP 2023 Sales Agreement, will be made pursuant to the
registration statement on Form S-3 (File No. 333-271277), filed by
the Company with the SEC on April 14, 2023, as amended by Amendment
No. 1 filed by the Company with the SEC on April 25, 2023, and
declared effective on April 27, 2023. As of May 14, 2024, the
Company has received $0.1 million in gross proceeds through the AGP
2023 Sales Agreement from the sale of 11,847 shares of common
stock. The Company has approximately $3.7 million available for
future sales pursuant to the AGP 2023 Sales Agreement. On April 8,
2024, the Company filed a prospectus supplement to its prospectus
dated April 25, 2023 registering the offer and sale of up to
$1,061,478 of shares of its common stock. Precipio have
approximately $1 million of remaining availability pursuant to this
prospectus supplement.
On June 8, 2023, the Company entered into a securities purchase
agreement pursuant to which it received $2 million in gross
proceeds through the sale of 206,250 shares of common stock and
warrants to purchase shares of our common stock. Issuance costs
were approximately $0.2 million and the Company intends to use the
net proceeds for working capital and general corporate purposes.
Notwithstanding the circumstances, the Company acknowledged there
remains substantial doubt about its ability to continue as a going
concern for the next 12 months. There can be no assurance that the
Company will be able to successfully achieve its initiatives
summarized above in order to continue as a going concern over the
next 12 months from the date of issuance of its Quarterly Report
Form 10-Q.
As of March 31, 2024, the Company has $16.6 million in total
assets, $3.9 million in total liabilities, and a total
stockholders' equity of 12.7 million.
A full-text copy of the Company's Form 10-Q is available at
https://tinyurl.com/p5bf5aa9
About Precipio
Omaha, Neb.-based Precipio, Inc., formerly known as Transgenomic,
Inc. -- http://www.precipiodx.com/-- is a healthcare solutions
company focused on cancer diagnostics. Its business mission is to
address the pervasive problem of cancer misdiagnoses by developing
solutions to mitigate the root causes of this problem in the form
of diagnostic products, reagents, and services.
As of December 31, 2023, the Company has $18.1 million in total
assets, $3.7 million in total liabilities, and $14.4 million in a
total stockholders' equity.
New Haven, Conn.-based Marcum LLP, the Company's auditor since
2016, issued a "going concern" qualification in its report dated
March 29, 2024, citing that the Company has incurred significant
losses and needs to raise additional funds to meet its obligations
and sustain its operations. These conditions raise substantial
doubt about the Company's ability to continue as a going concern.
PROFESSIONAL DIVERSITY: Receives Noncompliance Notice From Nasdaq
-----------------------------------------------------------------
Professional Diversity Network, Inc., disclosed in a Form 8-K filed
with the Securities and Exchange Commission that on May 21, 2024,
the Company received a letter from Nasdaq notifying the Company
that it is not in compliance with the minimum stockholders' equity
requirement for continued listing on the Nasdaq Capital Market.
Nasdaq Listing Rule 5550(b)(1) requires listed companies to
maintain stockholders' equity of at least $2.5 million. In the
Company's Quarterly Report on Form 10-Q for the period ended March
31, 2024, the Company reported stockholders' equity of $1,845,775,
which is below the minimum stockholders' equity required for
continued listing. Further, as of May 21, 2024, the Company does
not meet the alternatives of market value of listed securities or
net income from continuing operations.
This notification has no immediate effect on the Company's listing
on the Nasdaq Capital Market. Nasdaq has provided the Company with
45 calendar days, or until July 5, 2024, to submit a plan to regain
compliance with the minimum stockholders' equity standard. If the
Company's plan to regain compliance is accepted, Nasdaq may grant
an extension of up to 180 calendar days from the date of the
notification letter to evidence compliance.
The Company is presently evaluating potential courses of action to
regain compliance with the Nasdaq minimum stockholders' equity
standard and intends to timely submit a plan to Nasdaq to regain
compliance with that standard.
About Professional Diversity
Headquartered in Chicago, Illinois, Professional Diversity Network,
Inc. -- https://www.prodivnet.com/ -- is a global developer and
operator of online and in-person networks that provides access to
networking, training, educational and employment opportunities for
diverse professionals. The Company serves a variety of such
communities, including Women, Hispanic-Americans,
African-Americans, Asian-Americans, persons with disabilities,
Military Professionals, and Lesbian, Gay, Bisexual, Transgender and
Queer (LGBTQ+). The Company's goal is (i) to assist its registered
users and members in their efforts to connect with like-minded
individuals and identify career opportunities within the network
and (ii) connect members with prospective employers while helping
the employers address their workforce diversity needs. The Company
believes that the combination of its solutions allows it to
approach recruiting and professional networking in a unique way and
thus create enhanced value for its members and clients.
Oak Brook, Illinois-based Sassetti LL, the Company's auditor since
2022, issued a "going concern" qualification in its report dated
March 29, 2024, citing that the Company has incurred recurring
operating losses, has a significant accumulated deficit, and will
need to raise additional funds to meet its obligations and the
costs of its operations. These conditions raise substantial doubt
about the Company's ability to continue as a going concern.
QBS PARENT: Moody's Raises CFR to Caa1 & Alters Outlook to Stable
-----------------------------------------------------------------
Moody's Ratings upgraded QBS Parent, Inc.'s (dba "Quorum")
corporate family rating to Caa1 from Caa2 and its probability of
default rating to Caa1-PD from Caa2-PD. Moody's also upgraded the
oil and gas ("O&G") software provider's backed senior secured first
lien bank credit facilities, including the backed senior secured
first lien revolving credit facility and backed senior secured
first lien term loan, to B3 from Caa1. The outlook was changed to
stable from negative.
"Quorum's upgrade to Caa1 CFR with a stable outlook reflects the
company's improved earnings quality and cash flow generation,
driven by good expense management and lower integration costs,"
said Oleg Markin, a Moody's analyst. "Moody's expect the company
will maintain a positive revenue trajectory, primarily bolstered by
expansion with existing upstream clients, while continuing to build
out its salesforce," added Markin.
The company's near-term liquidity remains weak due to looming debt
maturities, including the revolver in December 2024 and the first
lien term loan in September 2025.
RATINGS RATIONALE
The Caa1 CFR reflects Quorum's high debt-to-EBITDA leverage
(Moody's adjusted) in the mid-7.0 times as of the twelve months
ended March 31, 2024 and Moody's view that the company's capital
structure may not be sustainable, particularly given the heightened
refinancing risk and ongoing reliance on the revolving credit
facility for seasonal cash flow needs. Quorum's modest revenue
scale and exposure to cyclical energy industry also constrain the
company's credit profile.
The rating is supported by the mission-critical nature of the
company's solutions and its strong niche position as a provider of
vertically-focused back-office business software solutions to
companies in the energy industry. Past acquisitions have
diversified Quorum's revenue sources beyond upstream enterprise
resource processing ("ERP") services, and into midstream operations
that are less exposed to energy commodity prices than the upstream
segment. The company has high gross customer retention rates in a
mid-90s% range. An ongoing transition to a more recurring-revenue
model, in which subscriptions now make up roughly 70% of revenue,
provide an ancillary cushion against energy sector volatility.
Moody's considers Quorum to have weak liquidity over the next 12-15
months, underpinned by the heightened refinancing risk and
continued reliance on the revolving credit facility to support cash
flow shortfalls. The upfront payments for Quorum's
subscription-based revenue model allow for good working capital
dynamics, but there is a pronounced seasonality to its cash flows.
Quorum generates most of its annual cash flow in the first quarter
given the large renewal cycle for its subscription contracts, with
the balance depleting during the seasonally weaker latter quarters
of the year. At March 31, 2024, the company had in excess of $10.0
million of balance sheet cash and $10 million of loans outstanding
under its $35 million revolving credit facility expiring December
2024. Although the company repaid an additional $3 million in
revolver loans in April 2024, Moody's anticipates the company will
need to tap into its revolving credit facility for the rest of the
year. Moody's considers the outstanding revolving loans due and
payable on December 21, 2024 and the first lien term loan on its
maturity date in September 2025, pressuring the liquidity profile.
The company's term loans include no financial maintenance
covenants, while the revolver includes a static, maximum senior
secured first lien net leverage covenant set at 7.25x and that is
triggered at 35% utilization. The company's reported first lien net
leverage ratio was around 4.37x as of March 31, 2024 (40% covenant
cushion). Moody's anticipates comfortable covenant cushion will be
maintained until the revolver expires.
The upgrade of the first lien senior secured credit facility rating
to B3 from Caa1, one notch higher than the company's Caa1 CFR,
reflects the expected benefit of the loss absorption support
provided to the credit facility by the unrated $125 million senior
secured second lien term maturing September 2026.
The stable outlook reflects Moody's view that Quorum's refinancing
risk has been reduced by an improvement in earnings and positive
cash flow generation. The outlook further incorporates Moody's
expectation that Quorum will maintain annual organic revenue growth
around 3% to 4%, accompanied by a gradual improvement in credit
metrics, and begin to address the upcoming debt maturities over the
next several months.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
An upgrade is unlikely while there is considerable uncertainty over
how the company's debt maturities will be addressed. The ratings
could be upgraded if the company puts in place a more tenable
capital structure and reduces reliance on the revolving credit
facility. Quantitatively, an upgrade will require the company to
sustain debt-to-EBITDA (Moody's adjusted) below 7.0 times and
maintain free cash flow to debt (Moody's adjusted) in a
low-single-digit percentage range.
The ratings could be downgraded if Quorum's operating performance
deteriorates, resulting in weakening of the company's liquidity
profile or if looming debt maturities are not addressed.
The principal methodology used in these ratings was Software
published in June 2022.
Headquartered in Houston, TX, Quorum is a software development and
consulting company that designs, develops, implements, and supports
ERP software solutions to companies in the North American energy
industry. The company is owned by affiliates of Thoma Bravo.
RENOVARO INC: Amends Bylaws to Update Company Name, Officer Titles
------------------------------------------------------------------
Renovaro Inc. disclosed in a Form 8-K filed with the Securities and
Exchange Commission that the Board of Directors of the Company
approved an amendment to and restatement of the Company's existing
Bylaws, as amended, effective as of May 21, 2024. The Amended and
Restated Bylaws updates the Company's name to Renovaro Inc. and the
titles of the different corporate officers used throughout.
About Renovaro
Renovaro aims to accelerate precision and personalized medicine for
longevity powered by mutually reinforcing AI and biotechnology
platforms for early diagnosis, better-targeted treatments, and drug
discovery. Renovaro includes Renovaro Bio with its advanced
cell-gene immunotherapy company and RenovaroCube. RenovaroCube has
developed an award-winning AI platform that is committed to the
early detection of cancer and its recurrence and monitoring
subsequent treatments. RenovaroCube intervenes at a stage where
potential therapy can be most effective. RenovaroCube is a
molecular data science company with a background in FinTech and a
10-year history. It brings together proprietary artificial
intelligence (AI) technology, multi-omics, multi-modal data, and
the expertise of a carefully selected multidisciplinary team to
radically accelerate precision medicine and enable breakthrough
changes in cancer care.
Draper, UT-based Sadler, Gibb & Associates, LLC, the Company's
auditor since 2018, issued a "going concern" qualification in its
report dated Oct. 1, 2023, citing that the Company has incurred
substantial recurring losses from operations and has a net capital
deficiency which raises substantial doubt about its ability to
continue as a going concern.
Renovaro stated in its Quarterly Report for the period ended March
31, 2024, that, "The Company's consolidated financial statements
are prepared using the generally accepted accounting principles
applicable to a going concern, which contemplates the realization
of assets and liquidation of liabilities in the normal course of
business. However, the Company has incurred substantial recurring
losses from continuing operations, has used cash in the Company's
continuing operations, and is dependent on additional financing to
fund operations. The Company incurred a net loss of $17,024,414
and $30,728,563 for the three and nine months ended March 31, 2024,
respectively. As of March 31, 2024, the Company had cash and cash
equivalents of $312,697 and an accumulated deficit of $274,757,816
and a working capital deficit of $19,654,098. These conditions
raise substantial doubt about the Company's ability to continue as
a going concern for one year after the date the financial
statements are issued."
SCORPIUS HOLDINGS: Gets Nasdaq Notice Over Non-Filing of Form 10-Q
------------------------------------------------------------------
Scorpius Holdings, Inc. disclosed in a Form 8-K filed with the
Securities and Exchange Commission that on May 21, 2024, the
Company received a notice from the NYSE Regulation stating that the
Company is not in compliance with the continued listing standards
of the Exchange because the Company failed to timely file its
Quarterly Report on Form 10-Q for the quarter ended March 31, 2024,
which was due to be filed with the SEC no later than May 20, 2024.
As previously reported in the Company's Notification of Late Filing
on Form 12b-25 filed with the SEC on May 16, 2024, the Company was
unable to file its Annual Report on Form 10-K by the filing due
date of April 16, 2024. The 2023 10-K was filed on April 26, 2024.
The Company said the amount of time that was required to complete
and file the 2023 10-K has materially impacted the completion of
the Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 2024. Subsequent to filing the Form 12b-25, the Company
continued to dedicate significant resources to the completion of
procedures related to its quarter-end process but was unable to
file the Form 10-Q by May 20, 2024, the end of the extension period
provided by the Form 12b-25. The Company requires additional time
to complete such procedures. Based on currently available
information and subject to the completion of the Company's
quarter-end procedures, the Company does not expect the financial
results that will be included in the Form 10-Q to differ materially
from the preliminary financial information reported in the May Form
12b-25. The Company is working diligently to complete the
necessary work to file the Form 10-Q as soon as practicable and
currently expects to file the Form 10-Q by May 31, 2024; however,
there can be no assurance that the Form 10-Q will be filed by such
date.
The Company is now subject to the procedures and requirements set
forth in Section 1007 of the NYSE American Company Guide. During
the six month period from the date of the Filing Delinquency, the
Exchange will monitor the Company and the status of the Delinquent
Report and any subsequent delayed filings, including through
contact with the Company, until the Filing Delinquency is cured.
If the Company fails to cure the Filing Delinquency within the
Initial Cure Period, the Exchange may, in its sole discretion,
grant an up to six-month additional cure period. The Company can
regain compliance with the Exchange's continued listing standards
at any time during the Initial Cure Period or Additional Cure
Period, as applicable, by filing the Delinquent Report and any
subsequent delayed filings with the SEC. If the Exchange
determines that an Additional Cure Period is not appropriate,
suspension and delisting procedures will commence in accordance
with the procedures set out in Section 1010 of the Company Guide.
If the Exchange determines that an Additional Cure Period is
appropriate, and the Company fails to file the Delinquent Report
and any subsequent delayed filings by the end of that period,
suspension and delisting procedures will generally commence.
Notwithstanding the foregoing, however, the Exchange may, in its
sole discretion, decide (i) not to afford the Company any Initial
Cure Period or Additional Cure Period, as the case may be, at all
or (ii) at any time during the Initial Cure Period or Additional
Cure Period, to truncate the Initial Cure Period or Additional Cure
Period, as the case may be, and immediately commence suspension and
delisting procedures if the Company is subject to delisting
pursuant to any other provision of the Company Guide, including if
the Exchange believes, in the its sole discretion that continued
listing and trading of the Company's securities on the Exchange is
inadvisable or unwarranted in accordance with Sections 1001 through
1006 thereof. There can be no assurance that the Company will
ultimately regain compliance with all applicable Exchange listing
standards.
On May 20, 2024, Scorpius notified the NYSE that it was unable to
file its Quarterly Report on Form 10-Q for the quarter ended
March 31, 2024 by the extended filing date under Rule 12b-25 of the
Securities Exchange Act of 1934.
About Scorpius Holdings, Inc.
Headquartered in Morrisville, NC, Scorpius Holdings, Inc. --
www.scorpiusbiologics.com -- is a contract development and
manufacturing organization ("CDMO") that provides a comprehensive
range of biologics manufacturing services from process development
to Current Good Manufacturing Practices ("CGMP") clinical and
commercial manufacturing of biologics for the biotechnology and
biopharmaceutical industries. Scorpius pairs CGMP biomanufacturing
and quality control expertise with cutting edge capabilities in
immunoassays, molecular assays, and bioanalytical methods to
support the production of cell- and gene-based therapies as well as
large molecule biologics. The Company's services include clinical
and commercial drug substance manufacturing, release and stability
testing and variety of process development services, including
upstream and downstream development and optimization, analytical
method development, as well as cell line development, testing and
characterization. Its San Antonio, TX facility commenced
operations in September 2022.
Raleigh, North Carolina-based BDO USA, P.C., the Company's auditor
since 2012, issued a "going concern" qualification in its report
dated April 26, 2024, citing that the Company has suffered
recurring losses from operations and has not generated significant
revenue or positive cash flows from operations. These factors
raise substantial doubt about the Company's ability to continue as
a going concern.
SMITH MICRO: Grosses $4.1MM in Stock Offering, Private Placement
----------------------------------------------------------------
Smith Micro Software, Inc. disclosed in a Form 8-K Report filed
with the U.S. Securities and Exchange Commission that the Company
has entered into a securities purchase agreement with certain
institutional and accredited investors relating to the registered
direct offering and sale of an aggregate of 1,065,000 shares of the
Company's common stock, par value $0.001 per share at an offering
price of $2.15 per share of Common Stock and pre-funded warrants to
purchase up to 845,000 shares of Common Stock, which Pre-Funded
Warrants are issued to the extent that the applicable Purchaser
determines, in its sole discretion, that such Purchaser would
beneficially own in excess of 4.99% (or at the Purchaser's
election, 9.99%). The Pre-Funded Warrants have an exercise price of
$0.001 per share and can be exercised at any time after their
original issuance until such Pre-Funded Warrants are exercised in
full. The shares of Common Stock and Pre-Funded Warrants were
offered by the Company pursuant to a prospectus supplement dated
May 10, and accompanying prospectus dated May 12, 2022, in
connection with a takedown from the Company's shelf registration
statement on Form S-3 (File No. 333-264667), which was declared
effective by the Securities and Exchange Commission on May 12,
2022.
Pursuant to the Purchase Agreement, in a concurrent private
placement, the Company also agreed to sell to the Purchasers
unregistered to purchase up to an aggregate of 1,910,000 shares of
Common Stock. Each unregistered Common Warrant has an exercise
price of $2.34 per share, is exercisable at any time beginning six
months following their original issuance and will expire five years
from the initial exercise date. Neither the Common Warrants nor the
Common Warrant Shares have been registered under the Securities Act
of 1933, as amended. The Common Warrants were, and Common Warrant
Shares will be, issued without registration under the Securities
Act, in reliance on the exemptions provided by Section 4(a)(2) of
the Securities Act as transactions not involving a public offering
and Rule 506 promulgated under the Securities Act as sales to
accredited investors.
Roth Capital Partners, LLC acted as the exclusive placement agent
for the Offering and the Private Placement pursuant to a placement
agency agreement dated May 10, 2024, by and between the Company and
the Placement Agent, and a related engagement letter with the
Placement Agent.
The gross proceeds to the Company from the Offering and the Private
Placement were approximately $4.1 million, before deducting
Placement Agent fees and other offering expenses payable by the
Company. The Company expects to use the net proceeds from the
Offering and the Private Placement for working capital and general
corporate purposes. The closing of the Offering and the Private
Placement occurred on May 14, 2024.
The Purchase Agreement contains representations, warranties and
covenants made by the Company that are customary for transactions
of this type. Under the terms of the Purchase Agreement, and
subject to certain exceptions, the Company has agreed not to (i)
issue, enter into any agreement to issue or announce the issuance
or proposed issuance of any shares of Common Stock or Common Stock
equivalents or (ii) file any registration statement or amendment or
supplement thereto, for a period of 75 days following the closing
of the Offering and the Private Placement. The Company has also
agreed not to effect or enter into an agreement to effect any
issuance of Common Stock or Common Stock equivalents involving a
Variable Rate Transaction, as defined in the Purchase Agreement,
for a period of one year following the closing of the Offering and
the Private Placement.
Further pursuant to the Purchase Agreement, the Company agreed
that, on or before the 45th day following the closing of the
Offering and the Private Placement, the Company will file a
registration statement with the SEC registering for resale of the
Common Warrant Shares issuable upon exercise of the Common
Warrants. The Company has further agreed that such registration
statement will be declared effective by the SEC no later than 75
days following the closing of the Offering and the Private
Placement.
In connection with the Offering, the Company's directors and
executive officers have agreed, for a period of 90 days from the
closing of the Offering and subject to certain exceptions set forth
in the lock-up agreements, not to:
(1) offer, pledge, announce the intention to sell, sell,
contract to sell, sell any option or contract to purchase, purchase
any option or contract to sell, grant any option, right or warrant
to purchase, or otherwise transfer or dispose of, directly or
indirectly, or file (or participate in the filing of), other than
on behalf of the Company, a registration statement with the SEC in
respect of, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for shares of
Common Stock;
(2) enter into any swap or other agreement that transfers, in
whole or in part, any of the economic consequences of ownership of
such securities;
(3) make any demand for or exercise any right with respect to,
the r registration of such securities; or
(4) publicly announce an intention to effect any such
transaction.
Pursuant to the Placement Agency Agreement, the Company has agreed
to pay the Placement Agent a cash fee equal to 6% of the gross
proceeds received by the Company in the Offering and the Private
Placement from sales arranged for by the Placement Agent. In
addition to the cash fee, the Company agreed to issue to the
Placement Agent warrants to purchase up to 133,700 shares of Common
Stock, which represents 7% of the aggregate number of shares of
Common Stock and Pre-Funded Warrants sold in the Offering. The
Placement Agent Warrants have substantially the same terms as the
Common Warrants, except that the Placement Agent Warrants have an
exercise price equal to $2.86, and have an expiration date of two
and a half years from the effective date of the Offering. The
Placement Agent Warrants shall not be transferable for 180 days
from the date of the Offering except as permitted by Financial
Industry Regulatory Authority Rule 5110(e)(1)(2). The Company also
agreed to reimburse the Placement Agent's expenses of up to
$125,000, payable immediately upon the closing of the Offering.
About Smith Micro Software
Pittsburgh, Pa.-based Smith Micro Software, Inc., develops software
to simplify and enhance the mobile experience, providing solutions
to some of the leading wireless and cable service providers around
the world. Smith Micro's portfolio includes family safety software
solutions to support families in the digital age and a wide range
of products for creating, sharing, and monetizing rich content,
such as visual voice messaging, retail content display
optimization, and performance analytics.
As of December 31, 2023, the Company had $85.6 million in total
assets, $10.2 million in total liabilities, and a total
stockholders' equity of $75.4 million.
Los Angeles, Calif.-based SingerLewak LLP., the Company's auditor
since 2005, issued a "going concern" qualification in its report
dated Feb. 26, 2024, citing that the Company has suffered recurring
losses from operations and has projected future cash flow
requirements to meet continuing operations in excess of current
available cash. This raises substantial doubt about the Company's
ability to continue as a going concern.
SOLARIS MIDSTREAM: Moody's Alters Outlook on 'B2' CFR to Positive
-----------------------------------------------------------------
Moody's Ratings changed Solaris Midstream Holdings, LLC's (Solaris)
rating outlook to positive from stable and concurrently affirmed
the company's B2 Corporate Family Rating, B2-PD Probability of
Default Rating and B3 senior unsecured notes rating. Moody's also
assigned a Speculative Grade Liquidity Rating (SGL) of SGL-3,
reflecting adequate liquidity.
Solaris Midstream Holdings, LLC, is the primary operating
subsidiary of Aris Water Solutions, Inc., which is a publicly
traded company that owns and operates an integrated water
infrastructure system in the Delaware and Midland Basin areas in
New Mexico and Texas.
"The positive outlook reflects Solaris' growing EBITDA and free
cash flow and Moody's expectation that the company will maintain
low financial leverage while managing capital spending and
shareholder distributions prudently," said Sajjad Alam, a Moody's
Vice President.
RATINGS RATIONALE
The B2 CFR reflects Solaris' modest scale, volumetric risks
inherent in its water services business, and reliance on upstream
investment and oil prices remaining supportive. The CFR also
considers the company's high basin concentration and indirect
exposure to federal land in New Mexico. The credit profile is
supported by Solaris' long-term fee-based contracts with strong
investment-grade rated oil and gas producers in the Permian Basin,
limited direct commodity price exposure, good organic growth
prospects, low debt level, and declining financial leverage. The
company has successfully grown over time and the vast majority of
Solaris' revenue is underpinned by either acreage dedication or
minimum volume commitment (MVCs) contracts with a remaining
weighted-average life of ~7.5 years for its produced water
contracts.
Solaris has adequate liquidity, which is captured in the SGL-3
rating. Capital expenditures have moderated and the company plans
to spend $85-$105 million in 2024, which will facilitate meaningful
free cash flow generation. With lower projected spending, the
company should be able to cover the current $0.105/share quarterly
dividend ($24-$25 million annually) comfortably through 2025. As of
March 31, 2024, the company had $21 million of cash and $26 million
outstanding under its $350 million committed revolving credit
facility (expires on October 12, 2027), which the company will look
to repay in 2024. The company's intrinsic liquidity strengths are
somewhat offset by the need to refinance its $400 million senior
notes (due April 1, 2026) since the revolver maturity will spring
forward 91 days ahead of the notes maturity if the notes are not
refinanced by the end of 2025. Moody's expects that the company
will address this refinancing in the ordinary course well ahead of
the springing revolver maturity. There is ample headroom under the
financial covenants governing the revolving credit agreement.
The senior unsecured notes are rated B3, one notch below Solaris'
B2 CFR, reflecting their subordinated claim to the company's assets
behind the senior secured revolving credit facility (unrated).
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Solaris' ratings could be upgraded if the company delivers
consistent earnings and cash flow growth with EBITDA approaching
$200 million, while keeping debt/EBITDA below 3x and improving
liquidity by addressing its refinancing requirements. Ratings could
be downgraded and/or the outlook changed if debt/EBITDA rises above
4x, liquidity weakens, or regulatory changes negatively affect
water volumes and earnings.
The principal methodology used in these ratings was Midstream
Energy published in February 2022.
STAFFING 360: Delays Filing of Q1 2024 Report
---------------------------------------------
Staffing 360 Solutions, Inc. disclosed in a Form 12b-25 filed with
the U.S. Securities and Exchange Commission that the Company is
unable, without unreasonable effort or expense, to file its
Quarterly Report on Form 10-Q for the quarterly period ended March
30, 2024, within the prescribed time period due to a delay
experienced by the Company in completing the audit of its financial
statements and other disclosures in connection with the Company's
Annual Report on Form 10-K for the year ended December 30, 2023. As
a result of the delay in filing the 10-K, the Company will be
delayed in filing its Form 10-Q. The Company intends to file the
Form 10-Q as soon as practicable after the completion of the
Company's financial statements and disclosures review.
About Staffing 360 Solutions, Inc.
Staffing 360 Solutions, Inc. --
http://www.staffing360solutions.com/-- is engaged in the execution
of a buy-integrate-build strategy through the acquisition of
staffing organizations in the United States. The Company believes
that the staffing industry offers opportunities for accretive
acquisitions, and as part of its targeted consolidation model, is
pursuing acquisition targets in the finance and accounting,
administrative, engineering, IT, and light industrial staffing
space.
Staffing 360 said, "We have an unsecured payment due in the next 12
months associated with a historical acquisition and secured current
debt arrangements representing approximately $8,469 which are in
excess of cash and cash equivalents on hand, in addition to funding
operational growth requirements. Historically, we have funded such
payments either through cash flow from operations or the raising of
capital through additional debt or equity. If we are unable to
obtain additional capital, such payments may not be made on time.
These factors raise substantial doubt as to our ability to continue
as a going concern."
SVB FINANCIAL: Hearing Today on Sale of SVB Capital Biz
-------------------------------------------------------
SVB Financial Group will ask the U.S. Bankruptcy Court for the
Southern District of New York at a hearing today to approve its
sale agreement with Pinegrove Sierra HoldCo, LLC.
SVB Financial Group is selling its so-called SVB capital business,
which includes (i) a portion of the issued and outstanding equity
interests of certain target companies and general partners; and
(ii) all of the issued and outstanding equity interests of Redwood
Evergreen Fund, L.P., Qualified Investors Fund, LLC and Qualified
Investors Fund VII, LLC that are owned directly or indirectly by
the company.
Pinegrove made a cash offer of $340 million for the SVB capital
business, subject to certain adjustments.
The business is being sold "free and clear" of any liens, claims,
interests and encumbrances, according to the sale agreement signed
on May 2.
Judge Martin Glenn had earlier approved the so-called buyer
protections payable to Pinegrove in the event the sale agreement is
terminated and an alternative transaction is consummated. These
buyer protections include a termination fee of $15.15 million and
expense reimbursement of up to $3.5 million.
In the event the May 2 agreement terminates as the result of an
alternative transaction or SVB Financial Group's breach of the
agreement, Pinegrove will receive up to $2.2 million of fees and
expenses it incurred in connection with a hedging arrangement, with
an initial term ending on or before June 30.
The hedging arrangement protects Pinegrove against the risk of
fluctuations in the prices of publicly traded securities held by
Redwood Evergreen Fund that Pinegrove will be exposed to during the
interim period between the signing and closing of the sale
transaction.
About SVB Financial Group
SVB Financial Group (Pink Sheets: SIVBQ) is a financial services
company focusing on the innovation economy, offering financial
products and services to clients across the United States and in
key international markets.
Prior to March 10, 2023, SVB Financial Group owned and operated
Silicon Valley Bank, a state chartered bank. During the week of
March 6, 2023, Silicon Valley Bank, Santa Clara, CA, experienced a
severe "run-on-the-bank." On the morning of March 10, the
California Department of Financial Protection and Innovation seized
SVB and placed it under the receivership of the Federal Deposit
Insurance Corporation. SVB was the nation's 16th largest bank and
the biggest to fail since the 2008 financial meltdown.
On March 17, 2023, SVB Financial Group sought Chapter 11 bankruptcy
protection (Bankr. S.D.N.Y. Case No. 23-10367). The Debtor had
assets of $19,679,000,000 and liabilities of $3,675,000,000 as of
Dec. 31, 2022.
The Hon. Martin Glenn is the bankruptcy judge.
The Debtor tapped Sullivan & Cromwell, LLP as bankruptcy counsel;
Centerview Partners, LLC as investment banker; and Alvarez & Marsal
North America, LLC as restructuring advisor. William Kosturos, a
partner at Alvarez & Marsal, serves as the Debtor's chief
restructuring officer. Kroll Restructuring Administration, LLC, is
the claims and noticing agent and administrative advisor.
The U.S. Trustee for Region 2 appointed an official committee to
represent unsecured creditors in the Debtor's Chapter 11 case.
The committee tapped Akin Gump Strauss Hauer & Feld, LLP as
bankruptcy counsel; Cole Schotz P.C. as conflict counsel; Lazard
Freres & Co. LLC as investment banker; and Berkeley Research Group,
LLC as financial advisor.
SVB FINANCIAL: May 29 SVB Capital Business Sale Set
---------------------------------------------------
The Hon. Martin Glenn of the U.S. Bankruptcy Court for the Southern
District of New York will hold a hearing on May 29, 2024, at 11:00
a.m. (prevailing Eastern Time) at One Bowling Green, New York, New
York, for the sale of SVB Capital business free and clear of liens,
claims, interests and encumbrances. Objections to the sale, if
any, is May 22, 2024, at 4:00 p.m. (prevailing Eastern Time).
As reported by the Troubled Company Reporter on May 21, 2024, SVB
Financial Group (Pink Sheets: SIVBQ) on May 2, 2024, announced that
it has entered into a definitive agreement under which a newly
created entity affiliated with Pinegrove Capital Partners and
backed by permanent capital from Brookfield Asset Management and
Sequoia Heritage, will acquire the Company's investment platform
business, SVB Capital. Under the terms of the agreement, SVB
Capital would be acquired for a combination of cash and other
economic consideration.
Pinegrove is a capital solutions partner for the venture capital
ecosystem. Pinegrove provides customized and scalable secondary
liquidity solutions for general partners and limited partners with
a focus on investing in leading mid-to-late-stage private
technology companies.
As part of this differentiated partnership, Pinegrove and SVB
Capital will operate independently, each led by their existing
management teams, with the common long-term financial backing of
Brookfield and Sequoia Heritage and an aligned focus on providing
flexible and innovative capital solutions to their trusted
clients.
"The SVB Capital business has built an exceptional reputation as
the premier investment partner to top venture capital firms and
technology companies, and we are pleased to have reached an
agreement that will position the business to thrive over the
long-term and has the support of SVB Financial Group's major
creditor groups," said Bill Kosturos, Chief Restructuring Officer
of SVB Financial Group. "We believe the agreement maximizes the
value for the benefit of SVB Financial Group's constituents, with a
significant cash component as well as the ability to participate in
the future upside potential of the business. In addition, the
transaction is a strong outcome for the team at SVB Capital, its
limited partners and other key stakeholders."
"Over the last quarter-century, our firm has thrived on the deep
trust we've cultivated with the most sought-after general
partnerships in venture capital. In addition, we have consistently
aligned our interests with those of our limited partners. Those
foundational principles will guide us into the future. Leveraging
SVB Capital's extensive history and track record, our partnership
with Pinegrove will expand our multi-strategy platform to directly
meet the unique needs of the venture capital and limited partner
communities," said Aaron Gershenberg, Founding Partner and Member
of the Operating Committee, SVB Capital.
"Pinegrove is honored to partner with Aaron and the SVB Capital
team. We are thrilled to work collaboratively on our collective
mission of enhancing liquidity options in the venture capital
ecosystem," said Brian Laibow, CEO and Founding Partner of
Pinegrove.
Transaction Details
The agreement is subject to Bankruptcy Court and regulatory
approval, as well as other customary closing conditions. On May 2,
2024, SVB Financial Group filed a motion seeking the Court's
authorization to approve buyer protections for the Pinegrove
affiliate and consummate a sale of the SVB Capital business. SVB
Financial Group intends to seek approval of the buyer protections
at a hearing on May 16, 2024, and has requested that the Bankruptcy
Court schedule a hearing to approve the sale of SVB Capital on June
5, 2024.
The transaction is supported by SVB Financial Group and key
creditor groups, including the Official Committee of Unsecured
Creditors, the Ad Hoc Group of Senior Noteholders and the Ad Hoc
Cross-Holder Group.
Court filings and other information related to the SVB Financial
Group's Chapter 11 proceeding are available on a website
administrated by the Company's claims agent, Kroll, at
https://restructuring.ra.kroll.com/svbfg or by emailing
SVBFGInfo@ra.kroll.com.
Advisors
Centerview Partners LLC is serving as financial advisor, Sullivan &
Cromwell LLP is serving as legal counsel and Alvarez & Marsal is
serving as the restructuring advisor to SVB Financial Group as
debtor-in-possession. Paul, Weiss, Rifkind, Wharton & Garrison LLP
is serving as legal counsel to Pinegrove.
About SVB Financial Group
SVB Financial Group (Pink Sheets: SIVBQ) is the holding company for
various financial services companies, including SVB Capital.
About SVB Capital
Founded in 1999 as a division of SVB Financial Group, SVB Capital
is a multi-strategy investment platform targeting the Innovation
Economy with approximately $10B of assets under management across
venture capital fund of funds, direct funds, and private credit
funds. Uniquely positioned to access highly sought-after
opportunities in start-up companies and venture capital funds, SVB
Capital invests in fund managers and private technology and life
science companies throughout the innovation economy around the
world.
About Pinegrove
Pinegrove Capital Partners is a capital solutions partner that
provides customized and scalable secondary liquidity solutions for
the venture and growth ecosystem, focusing on investing into
leading mid-to-late-stage private technology companies. Pinegrove
is backed with $1 billion for its strategy inclusive of $500
million from its sponsors, Sequoia Heritage and Brookfield Asset
Management. On the Web: http://www.pinegrovecp.com/
About Sequoia Heritage
Sequoia Heritage is a private investment partnership dedicated to
compounding long term capital.
About Brookfield
Brookfield Asset Management Ltd. (NYSE: BAM, TSX: BAM) is a leading
global alternative asset manager with over $900 billion of assets
under management across renewable power and transition,
infrastructure, private equity, real estate, and credit. We invest
client capital for the long-term with a focus on real assets and
essential service businesses that form the backbone of the global
economy. We offer a range of alternative investment products to
investors around the world — including public and private
pension plans, endowments and foundations, sovereign wealth funds,
financial institutions, insurance companies and private wealth
investors. We draw on Brookfield's heritage as an owner and
operator to invest for value and generate strong returns for our
clients, across economic cycles.
About SVB Financial Group
SVB Financial Group is a financial services company focusing on the
innovation economy, offering financial products and services to
clients across the United States and in key international markets.
Prior to March 10, 2023, SVB Financial Group owned and operated
Silicon Valley Bank, a state-chartered bank. During the week of
March 6, 2023, Silicon Valley Bank, Santa Clara, CA, experienced a
severe "run-on-the-bank." On the morning of March 10, the
California Department of Financial Protection and Innovation seized
SVB and placed it under the receivership of the Federal Deposit
Insurance Corporation. SVB was the nation's 16th largest bank and
the biggest to fail since the 2008 financial meltdown.
On March 17, 2023, SVB Financial Group sought Chapter 11 bankruptcy
protection (Bankr. S.D.N.Y. Case No. 23-10367). The Debtor had
assets of $19,679,000,000 and liabilities of $3,675,000,000 as of
Dec. 31, 2022.
The Hon. Martin Glenn is the bankruptcy judge.
The Debtor tapped Sullivan & Cromwell, LLP as bankruptcy counsel;
Centerview Partners, LLC as investment banker; and Alvarez & Marsal
North America, LLC as restructuring advisor. William Kosturos, a
partner at Alvarez & Marsal, serves as the Debtor's chief
restructuring officer. Kroll Restructuring Administration, LLC, is
the claims and noticing agent and administrative advisor.
The U.S. Trustee for Region 2 appointed an official committee to
represent unsecured creditors in the Debtor's Chapter 11 case. The
committee tapped Akin Gump Strauss Hauer & Feld, LLP as bankruptcy
counsel; Cole Schotz P.C. as conflict counsel; Lazard Freres & Co.
LLC as investment banker; and Berkeley Research Group, LLC as
financial advisor.
TABOOLA INC: Moody's Ups CFR & Sr. Secured First Lien Debt to 'Ba3'
-------------------------------------------------------------------
Moody's Ratings upgraded Taboola, Inc.'s Corporate Family Rating to
Ba3 from B1, Probability of Default Rating to Ba3-PD from B1-PD and
the backed senior secured first lien bank credit facilities rating
to Ba3 from B1. The Speculative Grade Liquidity (SGL) rating
remains unchanged at SGL-1. The outlook is stable.
The upgrade reflects Taboola's solid operating performance driven
by new publisher wins including Yahoo and NBC Universal, and
expanding user reach and improving user engagement through more
targeted recommendations. Moody's expects solid revenue growth and
EBITDA margin expansion in 2024 resulting from the full integration
of Yahoo native ads on Taboola's platform. This should lead to
adjusted debt to EBITDA falling below 2.0x and free cash flow
generation of $90-$100 million in the next 12 months. Governance
considerations were a key driver of the rating action. Despite the
lack of a publicly articulated leverage target, the company's
conservative approach to capital deployment, evidenced by voluntary
debt repayments, has contributed to deleveraging.
"The full integration between Yahoo and Taboola will provide
significant upside to Taboola's top line and profits" said Alison
Chisuhl Jung, a Moody's VP-Senior Analyst. "Moody's expect the
company's adjusted leverage ratio to improve to below 2x, while
maintaining very good liquidity in 2024."
RATINGS RATIONALE
Taboola, Inc.'s credit profile reflects the company's exposure to
cyclical advertising revenue, intense industry competition,
concentration in its publishing partners' base and risks associated
with changing regulations towards greater privacy and the
elimination of third-party cookies. Counterbalancing these credit
challenges are Taboola's all-digital business model, global
diversification, direct integration with digital properties which
minimizes reliance on third party cookies, moderate financial
leverage and very good liquidity. The company's growth prospects
are supported by the ongoing shift of brand marketing spend and
consumer purchase activity from traditional channels to online
platforms.
Moody's expects revenue growth of over 30% and adjusted EBITDA
margin in the mid-single digits in 2024 resulting from the full
integration of Yahoo's native supply onto Taboola's platform by
mid-2024. As a result, Moody's expects Taboola's adjusted financial
leverage to improve to 1.7x in 2024 from 3.7x in 2023. Taboola will
benefit from the monetization opportunities provided by Yahoo's
scale of nearly 900 million monthly active users. The incremental
benefits will depend on the successful integration of Yahoo and
Taboola which includes balancing the supplyof Yahoo's different ad
placements and demand from advertisers.
The SGL-1 rating reflects Moody's expectation that the company will
maintain very good liquidity over the next 12-18 months supported
by a substantial cash balance (including short-term investments) of
$182 million as of March 2024, a fully available $90 million
revolver, and solid free cash flow generation of $90-$100 million
per annum. The company's cash needs are modest and predictable
relative to internally generated cash flows and consist of roughly
$30-40 million of capex and modest working capital cash use.
Taboola's cash flows are moderately seasonal, higher in Q4 and Q1
related to advertisers' tendency to increase their spending around
the holidays and the timing of collections related to the higher
spend. Moody's does not expect Taboola to draw on the revolver over
the next 12-18 months given its high cash balance.
In February 2024, the company authorized a share buyback program
for the repurchase of up to $100 million. The company has an
aggregate amount of $92 million in remaining authorization as of
March 2024. Moody's expects the company to utilize free cash flow
primarily to support the repurchase program.
Taboola's debt maturity profile is well-positioned with its $90
million revolving facility to expire in August 2027, and $153
million of outstanding first lien term loan B due September 2028.
Following the August 2022 amendment, the company's credit agreement
includes one financial maintenance covenant (maximum net leverage
of 3.25x) that applies to the revolver only. Moody's expects
Taboola to maintain ample cushion over the requirement in the next
12-18 months.
The Ba3 rating on the first lien senior secured credit facilities
reflects the probability of default of the company, as reflected in
the Ba3-PD probability of default rating and an average expected
family recovery rate of 50% at default given an all-bank debt
structure with a maintenance financial covenant that is only
applicable to the revolver.
Taboola' ESG Credit Impact Score of CIS-3 indicates that ESG
considerations have a limited impact on the current rating with
potential for greater negative impact over time. The company has
exposure to customer relations due to the changing regulations with
respect to privacy. In addition, the company has a short track
record of operating as a public company and lacks a clear financial
leverage target.
The stable outlook reflects Moody's expectation of a successful
integration between Yahoo and Taboola by mid-2024. Moody's projects
adjusted debt to EBITDA will decline below 2x and liquidity to
remain very good over the next 12-18 months.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if Taboola delivers organic EBITDA
growth leading to Moody's adjusted EBITDA margin in the low to
mid-teens and financial leverage of under 2.0x on a sustained
basis, while maintaining very good liquidity.
The ratings could be downgraded if difficulties with the Yahoo
integration, significant client losses, or weak organic revenue
trends lead to a weakening of liquidity, Moody's adjusted leverage
above 3.5x or Moody's adjusted free cash flow to debt declining to
below 10% on a sustained basis.
Taboola, Inc.'s parent company, Taboola.com Ltd. (NASDAQ:TBLA) is a
technology company that runs a recommendation platform across the
open web with an artificial intelligence-based, algorithmic
approach. The company provides a recommendation engine that helps
publishers and advertisers promote their content to targeted
audiences across various digital platforms. Revenue is generated
when consumers click on, purchase from or, in some cases, view the
ads that appear within its recommendation platform. Taboola became
a publicly traded company in June 2021 following a business
combination with ION Acquisition Corp 1, Ltd., a special purpose
acquisition company. The company generated revenue of $1.53 billion
as of the last twelve months ended March 2024.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
TED BAKER: Gets Court's CCAA Initial Stay Order; A&M as Monitor
---------------------------------------------------------------
Ted Baker Canada Inc., Ted Baker Limited, OSL Fashion Services
Canada Inc. and OSL Fashion Services, Inc. ("Companies") made an
application to the Ontario Superior Court of Justice (Commercial
List) ("Court") and were granted an order ("Initial Order"), which,
among other things, provides for a stay of proceedings pursuant to
the Companies' Creditors Arrangement Act ("CCAA").
Pursuant to the Initial Order, Alvarez & Marsal Canada Inc. was
appointed as monitor ("Monitor") of the business and financial
affairs of the Companies.
On April 24, 2024, Companies also commenced ancillary proceedings
in the United States Bankruptcy Court for the Southern District of
New York under Chapter 15 of the Bankruptcy Code, 11 U.S.C. Sec.
101-1330, as amended, seeking recognition of the CCAA proceedings
as foreign main proceedings and to give effect to the Initial Order
in the United States. On or about April 26, 2024, the U.S.
Bankruptcy Court entered orders granting provisional relief and
scheduling a hearing on the Companies' request for recognition of
the CCAA as foreign main proceedings for May 8, 2024.
A copy of the Initial Order and all materials filed in the CCAA
Proceedings and the Chapter 15 Proceedings may be obtained at the
Monitor's Website at https://www.alvarezandmarsal.com/TBRetail or
on request from the Monitor by calling 1-833-591-1289 or by
emailing TBRetail@alvarezandmarsal.com.
The Monitor can be reached at:
Alvarez & Marsal Inc.
Attn: Josh Nevsky
Greg Karpel
Nate Fennema
Connor Good
Stephen Moore
Royal Bank Plaza, South Tower
200 Bay Street, Suite 3501
Toronto ON M5J 2J1
Email: jnevsky@alvarezandmarsal.com
gkarpel@alvarezandmarsal.com
nfennema@alvarezandmarsal.com
cgood@alvarezandmarsal.com
smoore@alvarezandmarsal.com
Counsel to the Monitor:
Bennett Jones LLP
Attn: Sean Zweig
Jesse Mighton
Milan Singh-Cheema
3400 One First Canadian Place
P.O. Box 130
Toronto, Ontario
M5X 1A4 Canada
Email: zweigs@bennettjones.com
mightonj@bennettjones.com
singcheemam@bennettjones.com
Counsel to Companies:
Osler, Hoskin & Harcourt LLP
Attn: Tracy Sandler
Shawn Irving
Blair McRadu
Marleigh Dick
1 First Canadian Place
100 King Street West
Suite 6200
Toronto, Ontario M5X 1B8
Email: tsandler@osler.com
sirving@osler.com
bmcradu@osler.com
mdick@osler.com
U.S. Counsel to Companies:
Cole Schotz P.C.
Attn: Warren A. Usatine
Felice Yudkin
Mark Tsukerman
Jonathan Friedman
Court Plaza North
25 Main Street
Hackensack, NJ 07601
1325 Avenue of the Americas
19th Floor
New York, NY 10019
Email: wusatine@coleschotz.com
fyudkin@coleschotz.com
mtsukerman@coleschotz.com
jfriedman@coleschotz.com
Ted Baker Canada Inc. -- https://www.tedbaker.ca/ -- is a British
clothing retail founded in 1988 in Glasgow, Scotland.
TPT GLOBAL: Delays Filing of First Quarter 2024 Form 10-Q
---------------------------------------------------------
TPT Global Tech, Inc., disclosed via Form 12b-25 filed with the
Securities and Exchange Commission that it was unable without
unreasonable effort and expense to prepare its accounting records
and schedules in sufficient time to allow its accountants to
complete their review of the Company's financial statements for the
period ended March 31, 2024 before the required filing date for the
Quarterly Report on Form 10-Q. The Company intends to file the
subject Quarterly Report on Form 10-Q on or before the fifth
calendar day following the prescribed due date.
About TPT Global Tech
TPT Global Tech, Inc. -- www.tptglobaltech.com -- is based in San
Diego, California, and operates as a technology-based company with
divisions providing telecommunications, construction and product
distribution, media content for domestic and international
syndication as well as technology solutions. The Company operates
as a Media Content Hub for Domestic and International syndication,
Technology/Telecommunications company using its own proprietary
Global Digital Media TV and Telecommunications infrastructure
platform and also provide technology solutions to businesses
domestically and worldwide. The Company offers Software as a
Service (SaaS), Technology Platform as a Service (PAAS),
Cloud-based Unified Communication as a Service (UCaaS) and
carrier-grade performance and support for businesses. The
Company's cloud-based UCaaS services allow businesses of any size
to enjoy all the latest voice, data, media and collaboration
features in today's global technology markets. It also operates as
a Master Distributor for Nationwide Mobile Virtual Network
Operators (MVNO) and Independent Sales Organization (ISO) as a
Master Distributor for Pre-Paid Cellphone services, Mobile phones,
Cellphone Accessories and Global Roaming Cellphones.
Draper, UT-based Sadler, Gibb & Associates, LLC, the Company's
auditor since 2016, issued a "going concern" qualification in its
report dated May 10, 2024, citing that the Company has suffered
recurring losses from operations and has a net capital deficiency
that raise substantial doubt about its ability to continue as a
going concern.
TREES CORP: Incurs $1.39 Million Net Loss in First Quarter
----------------------------------------------------------
Trees Corporation filed with the Securities and Exchange Commission
its Quarterly Report on Form 10-Q reporting a net loss of $1.39
million on $3.69 million of total revenue for the three months
ended March 31, 2024, compared to a net loss of $1.89 million on
$5.11 million of total revenue for the three months ended March 31,
2023.
As of March 31, 2024, the Company had $22.30 million in total
assets, $23.55 million in total liabilities, and a total
stockholders' deficit of $1.24 million.
Trees Corp said, "We have incurred recurring losses and negative
cash flows from operations since inception and have primarily
funded our operations with proceeds from the issuance of debt and
equity. We expect our operating losses to continue into the
foreseeable future as we continue to execute our acquisition and
growth strategy. As a result, we have concluded that there is
substantial doubt about our ability to continue as a going concern.
Our unaudited condensed consolidated financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
"Our ability to continue as a going concern is dependent upon our
ability to raise additional capital to fund operations, support our
planned investing activities, and repay our debt obligations as
they become due. If we are unable to obtain additional funding, we
would be forced to delay, reduce, or eliminate some or all of our
acquisition efforts, which could adversely affect our growth
plans."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1477009/000121390024042976/ea0205856-10q_trees.htm
About Trees Corp
TREES Corporation is a cannabis retailer and cultivator in the
States of Colorado and Oregon. The Company presently operates six
cannabis dispensaries. The Company's principal business model is
to acquire, integrate and optimize cannabis companies in the retail
and cultivation segments utilizing the combined experience of
entrepreneurs and synergistic operations of its vertically
integrated network.
Salt Lake City, Utah-based Haynie & Company, the Company's auditor
since 2021, issued a "going concern" qualification in its report
dated April 10, 2024, citing that the Company has suffered
recurring losses from operations and has a negative working capital
that raise substantial doubt about its ability to continue as a
going concern.
TREES CORP: Posts $1.4MM Net Loss in Q1 2024
--------------------------------------------
Trees Corporation filed with the U.S. Securities and Exchange
Commission its Quarterly Report on Form 10-Q reporting a net loss
of $1,389,762 for the three months ended March 31, 2024, compared
to a net loss of $1,886,534 for the three months ended March 31,
2023, and had an accumulated deficit of $101,891,802 as of March
31, 2024. The Company had cash and cash equivalents of $414,225 and
$969,676 as of March 31, 2024 and December 31, 2023, respectively.
Trees Corp said, "We have incurred recurring losses and negative
cash flows from operations since inception and have primarily
funded our operations with proceeds from the issuance of debt and
equity. We expect our operating losses to continue into the
foreseeable future as we continue to execute our acquisition and
growth strategy. As a result, we have concluded that there is
substantial doubt about our ability to continue as a going
concern."
"Our ability to continue as a going concern is dependent upon our
ability to raise additional capital to fund operations, support our
planned investing activities, and repay our debt obligations as
they become due. If we are unable to obtain additional funding, we
would be forced to delay, reduce, or eliminate some or all of our
acquisition efforts, which could adversely affect our growth
plans."
A full-text copy of the Company's Form 10-Q is available at
https://tinyurl.com/mrxnkumf
About Trees Corporation
Trees is a cannabis company at the intersection of community,
content, and commerce. Listed on Cboe Canada, Trees offers a
differentiated retail experience, that aims to educate, amplify and
unlock emerging consumer segments and need states that allows Trees
to uniquely engage the 360-cannabis consumer. The Trees Group
currently has 13 branded Trees storefronts in Canada, including 9
stores owned and operated in Ontario and 4 stores owned and
operated in BC.
As of March 31, 2024, the Company has $22,300,000 in total assets,
$23,554,335 in total liabilities, and $1,244,335 in a total
stockholders' deficit.
VERITAS FARMS: Delays Filing of Q1 2024 Quarterly Report
--------------------------------------------------------
Veritas Farms, Inc. disclosed in a Form 12b-25 filed with the
Securities and Exchange Commission it has determined that it is
unable to file its Quarterly Report on Form 10-Q for the period
ended March 31, 2024 within the prescribed time period without
unreasonable effort or expense as the Company needs additional time
to provide information to its independent registered public
accounting firm necessary to complete the review of the financial
statements for the period ended March 31, 2024. Despite working
diligently to timely file its Q1 2024 Quarterly Report, the Company
will be unable to complete all work necessary to timely file its Q1
2024 Quarterly Report.
About Veritas
Fort Lauderdale, Florida-based Veritas Farms, Inc. --
https://www.TheVeritasFarms.com/ -- is a vertically-integrated
agribusiness focused on growing, producing, marketing, and
distributing whole plant, full spectrum hemp oils and extracts
containing naturally occurring phytocannabinoids. Veritas Farms
owns and operates a 140-acre farm in Pueblo, Colorado, capable of
producing over 200,000 proprietary full spectrum hemp plants which
can potentially yield a minimum annual harvest of 250,000 to
300,000 pounds of outdoor-grown industrial hemp.
Hackensack, NJ-based Prager Metis CPAs LLC, the Company's auditor
since 2018, issued a "going concern" qualification in its report
dated April 17, 2023, citing that the Company has sustained
substantial losses from operations since its inception. As of and
for the year ended Dec. 31, 2022, the Company had an accumulated
deficit of $39,474,622, and a net loss of $5,543,908. These
factors, among others, raise substantial doubt about the ability of
the Company to continue as a going concern within a year from the
date the financial statements are issued. Continuation as a going
concern is dependent on the ability to raise additional capital
and
financing, though there is no assurance of success.
WENDY'S COMPANY: Moody's Affirms 'B3' CFR, Outlook Remains Stable
-----------------------------------------------------------------
Moody's Ratings affirmed Wendy's Company's (Wendy's) B3 corporate
family rating, B3-PD probability of default rating. At the same
time, Moody's upgraded Wendy's International, LLC's senior
unsecured notes rating to B3 from Caa2. The outlooks for both
remain stable.
The affirmation reflects Wendy's better operating profit
performance and good liquidity, including its positive free cash
flow to fund its growth plans and strategic initiatives. For the
last-twelve month period ending March 31, 2024, leverage as
measured by debt / EBITDA was 6.5x, down from 7.1x at fiscal
year-end 2022. The company's improved credit profile has largely
come from modest but positive same-restaurant sales, prudent cost
control initiatives and contributions from its new restaurant
additions. However, risks still persist such as signs of weakened
traffic patterns across the QSR burger segment leaving further
improvement more difficult.
The upgrade of the senior unsecured notes to B3 from Caa2 reflects
the company's improved financial performance, the paydown of the
instrument, of which the remaining outstanding is more than
sufficiently covered by cash balances, resulting in an improved
recovery rate. Additionally, the instrument is the only piece of
funded debt in the restricted group capital structure.
The stable outlook reflects the anticipation that despite signs of
weaker QSR burger traffic patterns, the company will generate
modest but positive same-restaurant sales, while continuing to
control costs as inflationary pressures subside driving
incrementally better earnings. Moody's expects the maintenance of
leverage and interest coverage at least at current levels and for
liquidity to remain ample to fund capex initiatives such as the
digital platform and new unit growth plans.
RATINGS RATIONALE
Wendy's B3 CFR reflects its high leverage with debt to EBITDA of
around 6.5x and its debt structure made up of effectively of senior
securitization notes. The ratings further consider the very
competitive and highly promotional quick-service restaurant segment
of the restaurant industry, as well as increasing uncertainty
around labor and commodity costs. The ratings benefits from Wendy's
strong brand awareness, significant scale with over 7,000 locations
and good liquidity including large cash balances and an undrawn
revolving credit facility (not rated).
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could result in an upgrade include debt to EBITDA
sustained around 5.5x, EBIT to interest expense of over 1.75x and
good liquidity.
Factors that could result in a downgrade include a sustained
deterioration in operating performance or earnings, with EBIT to
interest of below 1.25x or debt to EBITDA above 7.0x on a sustained
basis. The ratings could also be downgraded if liquidity were to
deteriorate for any reason.
Wendy's Company, through its wholly owned subsidiary Wendy's
Restaurants, LLC, owns, operates and franchises approximately 7,248
quick-service hamburger restaurants systemwide, of which 411 were
operated by the company and 6,837 operated by a total of 314
franchisees. Annual revenues are approximately $1.75 billion, and
global systemwide sales are about $14.1 billion. Wendy's
International, LLC is a subsidiary of Wendy's Restaurants, LLC.
The principal methodology used in these ratings was Restaurants
published in August 2021.
WESTERN REGIONAL: Case Summary & Five Unsecured Creditors
---------------------------------------------------------
Debtor: Western Regional Properties, LLC
21031 Ventura Boulevard
Suite 200
Woodland Hills, CA 91364
Case No.: 24-10860
Business Description: Western Regional owns, as tenant-in-common,
properties in Los Angeles, Calif., valued
at $1.3 million.
Chapter 11 Petition Date: May 28, 2024
Court: United States Bankruptcy Court
Central District of California
Judge: Hon. Martin R. Barash
Debtor's Counsel: Richard Baum, Esq.
RICHARD T. BAUM
6627 Maryland Drive
Los Angeles, CA 90048
Tel: (310) 277-2040
Fax: (310) 286-9525
Email: rickbaum@hotmail.com
Total Assets: $1,374,512
Total Liabilities: $934,036
The petition was signed by Temidayo Akinyemi as managing member.
A full-text copy of the petition containing, among other items, a
list of the Debtor's five unsecured creditors is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/O7JSCLY/Western_Regional_Properties_LLC__cacbke-24-10860__0001.0.pdf?mcid=tGE4TAMA
WESTLAKE 555: Ohio Office Building Up for Auction on June 6
-----------------------------------------------------------
Colliers will hold an on-site auction on June 6, 2024, at 11:00
a.m., for the sale of a 64,064 sf class B office building on
3.04+/- acre located in 24650 Center Ridge Road in Westlake, Ohio
44145, which is owned by Westlake 555 LLC and its
debtor-affiliates. For more information on the sale, contact:
OH Auctioneer
OH RE Salesperson
Mark Abood, Esq.
Tel: +1 216 239 5121
Email: mark.abood@colliers.com
OH RE Salesperson
Elizabeth Finazzo, Esq.
Tel: +1 216 239 5072
Email: elizabeth.finazzo@colliers.com
[] California Commercial Agriculture Up for Sale
------------------------------------------------
A 19.5-acre commercial agriculture facility located at 650 Buena
Vista Drive, Watsonville, California, was up for sale starting on
May 18, 2024. The auction was being conducted in compliance with
Section 2328 of the Commercial Code, Section 535 of the Penal Code,
and the provisions of the California Civil Code Sec. 1812.600a.
For information regarding the sale, contact broker Neil David
Brandom or 931-302-4717.
[] New York Commercial Complex Up for Auction on July 9
-------------------------------------------------------
A bankruptcy auction is scheduled on July 9, 2024, for the sale of
a 100+ acres residential, self-storage, commercial/office building
and vacant land properties near Colgate University in New York.
The deadline to submit bids for the properties is June 28, 2024.
Further information regarding the sale, contact Keen-Summit Capital
Partners LLC at (646) 381-9222 or visit
https://MBMarshall-RealEstateSale.com/
*********
Monday's edition of the TCR delivers a list of indicative prices
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*********
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*** End of Transmission ***