Liquidity and Going Concern

6 Months Ended

Aug. 31, 2018

Debt Disclosure [Abstract]

Liquidity and Going Concern

Liquidity and Going Concern

Pursuant to ASC Topic 205-40, Going Concern, the Company is required to evaluate whether there is substantial doubt about its ability to continue as a going concern each reporting period. In evaluating the Company’s ability to continue as a going concern for this reporting period, management evaluated the conditions and events that could raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date the financial statements were issued (October 11, 2018). Management considered the Company’s current projections of future cash flows, current financial condition, sources of liquidity and debt obligations due on or before October 11, 2019.

The Company’s revolver expired on August 31, 2018 and its term loan is due no later than April 18, 2019. As of August 31, 2018, the Company has $28.0 million outstanding under its term loan, and has approximately $7 million of cash on hand. The Company believes it can fund its future operational needs with its cash on hand and cash generated from operations, but will not be able to repay its term loan by April 18, 2019 absent other actions.

Management is currently exploring a number of options that would allow the Company to repay its term loan by April 18, 2019. Management believes that it is probable that it will refinance its remaining term loan under the 2014 Credit Agreement prior to April 18, 2019. The Company has successfully refinanced its credit agreement debt many times in the past. Recent asset sales and associated term loan repayments have significantly reduced the Company’s leverage ratio, which management believes has enhanced its ability to refinance the debt. Management is also exploring several alternatives that would further reduce our term loan obligations and enhance our ability to refinance, including securing additional investors in our TagStation business or otherwise reducing our cash burn from that business, and the sale of WLIB-AM in New York City and other assets.

Management’s intention and belief that the credit agreement debt will be refinanced prior to April 18, 2019 assumes, among other things, that the Company will continue to be successful in implementing its business strategy and that there will be no material adverse developments in its business, liquidity or capital requirements. If one or more of these factors do not occur as expected, it could cause a default under the Company’s credit agreement.