MANAGEMENT’S PLAN

The Company’s unaudited interim condensed consolidated financial statements were prepared on a going concern basis, which assumes continuity of operations and realization of assets and satisfaction of liabilities in the ordinary course of business. The financial statements do not include any adjustments to reflect possible future effects on the recoverability and classification of assets and liabilities that may result in the event the Company’s plans are not successful. As noted above, Huntington Bank advised us that the failure to meet financial covenants pertaining to our credit facility constituted an event of default under the Agreement and reserved all of its rights with respect thereto, subject to its agreement to forgo those rights during the forbearance period described above. These circumstances and the Company’s ability to find replacement financing raise substantial doubt about the Company’s ability to continue as a going concern, and management has and will continue to take measures to mitigate that possibility.

The Company is engaged in exploring initiatives to address solutions to our credit issues, which includes the evaluation and pursuit of various sources of financing. Management is also undergoing a detailed review of all current pricing strategies and market programs and has begun new initiatives designed to increase revenue. Lastly, management has been, and continues to be actively engaged in driving operating costs lower by more effectively controlling operating costs and manpower costs.

The Forbearance Agreement provides management with additional time to engage in discussions with other parties regarding replacing our debt, including amounts outstanding under the revolving loan, and to explore alternative liquidity solutions.