LIQUIDITY

12 Months Ended

Dec. 31, 2023

Liquidity

LIQUIDITY

3. LIQUIDITY

The Company has a history of net losses, including the accompanying financial statements for the years ended December 31, 2023 and 2022 where the Company had net losses of $16.1 million (which includes $4.3 million of non-cash expenses) and $19.7 million (which includes $9.1 million of non-cash expenses), respectively, and net cash used in operating activities of $13.3 million and $18.1 million, respectively. During 2023, the $13.3 million of operating cash usage included a $9.5 million increase in accounts receivable related to the strong increase in revenues in the fourth quarter of 2023 compared to the fourth quarter of 2022, and the acquisition of Amiga.

At December 31, 2023, the Company had a cash balance of $10.4 million and working capital of $23.8 million. In June 2023, the Company raised $25.4 million in net proceeds from a public offering through the issuance of common stock which was intended to cover cash payments for the acquisition of Amiga as well as for working capital. Based on the Company’s current operating plan, the Company believes that it has the ability to fund its operations and meet contractual obligations for at least twelve months from the date of this report. In September 2022, the Company entered into a Common Stock Purchase Agreement and Registration Rights Agreement with B. Riley Principal Capital II, LLC (“B. Riley”) under which the Company has the right, but not the obligation, to sell up to $30.0 million shares or a maximum of two million shares of its common stock over a period of 24 months in its sole discretion (see note 12 for further information). The Company issued 198,033 shares of stock in 2023 for $2.5 million under this agreement. Furthermore, we could pursue other equity or debt financings. In addition, the Company’s outstanding warrants have generated $0.2 million and $0.5 million of proceeds during the years ended December 31, 2023 and 2022, respectively. The Company believes that it will become profitable in the next few years as our revenues continue to grow, we improve our gross profit margins and we leverage our overhead costs, but we expect to continue to incur losses for a period of time. There is no guarantee that profitable operations will be achieved, the warrants will be exercised or that additional capital or debt financing will be available.