Note 2 - Basis of Presentation

3 Months Ended

Mar. 31, 2022

Notes to Financial Statements

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

2.         Basis of Presentation

The accompanying unaudited condensed consolidated financial statements are presented on the same basis as the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (“2021 Form 10-K”) filed with the Securities and Exchange Commission (“SEC”) on March 24, 2022. The Company has made its disclosures in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.  In the opinion of Company management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation with respect to interim financial statements, have been included. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto in the 2021 Form 10-K.  

References to amounts in the condensed consolidated financial statement sections are in thousands, except share and per share data, unless otherwise specified.

As of March 31, 2022, and December 31, 2021, restricted cash primarily consisted of pledged cash pursuant to the CIT Northbridge Credit LLC (“CNC Credit Agreement”) discussed in Note 11 of these Notes to Unaudited Condensed Consolidated Financial Statements.

Going Concern

The accompanying unaudited condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

During the three-month period ended March 31, 2022, the Company incurred a net loss of $4.3 million and had net cash flows used in operating activities of $2.3 million. On March 31, 2022, the Company had $3.8 million in cash and cash equivalents and an accumulated deficit of $359.7 million. Based on current operating and cash forecasts, the Company does not believe that it currently has sufficient cash to sustain operations for the entire remainder of 2022. Other than the CNC Credit Agreement, which expires March 26, 2023, the Company currently has no committed source of funding from either debt or equity financings. Borrowings under the CNC Credit Agreement are dependent on, among other things, the level of the Company’s eligible accounts receivable. Given these factors, management believes that there is substantial doubt about the Company’s ability to continue as a going concern for a period of one year after the date the financial statements are issued.

A Special Committee of the Company’s Board of Directors (“Special Committee”) has been created to explore strategic alternatives for the Company and will consider a full range of operational, financial, and other strategic alternatives (“Strategic Alternatives”). The Special Committee has retained Houlihan Lokey Capital, Inc. as its financial advisor to assist with this process. Strategic Alternatives that may be explored or evaluated as part of this process include, but are not limited to:

● Continuing to seek debt or equity financing on terms and conditions acceptable to the Company;

● Evaluating potential sale/divestiture transactions, including a sale of the Company or its assets;

● Seeking partnering/licensing transactions; and

● Restructuring the Company’s debt and operations, including the possibility that the Company may seek protection under the U.S. Bankruptcy Code.

The Company’s ability to continue to fund its operations for the entire remainder of 2022 is dependent upon Company management’s near-term operating plans to address the Company’s near-term cash and liquidity needs (“Near-Term Operating Plans”), which plans may include, but are not limited to:

● Conducting a review of and reductions to the Company’s cost and expense structure, including reductions in employee expense (which may include furloughs and terminations);

● Working with current and potential vendors to decrease costs and expenses;

● Seeking bridge financing that may consist of debt, equity or a combination of the two;

● Suspending investments in growth strategies and the Company's transformation from a digital media company to a transaction-enabled matchmaker;

● Suspending capital expenditures; and

● Suspending, or reducing the scope of or ceasing some or all of the Company’s operations. Management has already determined that it will immediately move to suspend operations of its used vehicle acquisition business.

The Company’s ability to continue as a going concern is contingent upon the successful execution of Strategic Alternatives and the Near-Term Operating Plans, but the Near-Term Operating Plans, may themselves have a material and adverse effect on the Company’s business, results of operations, financial condition, earnings per share, cash flow or the trading price of the Company’s stock (individually and collectively referred to as the Company’s “financial performance”). There can be no assurance that the Company will be successful in achieving either the Strategic Alternatives or Near-Term Operating Plans or that new financings or other transactions will be available to the Company on commercially acceptable terms, or at all. Additionally, any debt or equity financing that may be obtained may result in substantial shareholder dilution and could have a material and adverse impact on the Company’s financial performance.

The Special Committee and the Company’s management team, working with the Company’s financial, legal and other advisers, plan to proceed in a timely and orderly manner, but have not set a definitive timetable for completion of this process, nor has it made any decisions related to Strategic Alternatives at this time. The Company undertakes no obligation to provide further disclosure regarding developments or the status of the process, the Company’s efforts to pursue implementation of potential Strategic Alternatives or Near-Term Operating Plans, or a decision to seek bankruptcy protection under the U.S. Bankruptcy Code and does not intend to make such disclosure unless and until events warrant disclosure, the Company has filed for protection under the U.S. Bankruptcy Code, or further disclosure is legally required.