Company Specific Risk Factors
There is substantial doubt about our ability to continue as a going concern.
Our financial statements were prepared using principles under Generally Accepted Accounting Principles in the United States of America (GAAP) applicable to a going concern. Because of our losses, working capital deficiencies, negative operating cash flow and shareholders’ deficiency, we concluded that there is substantial doubt as to our ability to continue as a going concern.
We have experienced net losses, negative operating cash flows, working capital deficiencies, and have a shareholders’ deficiency, which have affected, and which are expected to continue to affect, our ability to satisfy our obligations. In addition, we are in default under various debt obligations which are currently due on demand. Charter rates for bulkers have experienced a high degree of volatility and continue to be distressed. The coal business has experienced some of the lowest prices in coal history. However, charter rates for the oil tanker/asphalt carriers are within expected levels. To date, we have also been unable to generate sustainable positive cash flows from operating activities. For the year ended December 31, 2014, our loss from continuing operations was $68.3 million. As of December 31, 2014, the Company’s cash and cash equivalents were $0.4 million and current liabilities of $247.5 million including $122.3 million of debt and convertible notes in default due on demand, were payable within the next twelve months.
The above conditions raise substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should we are unable to continue as a going concern.
We believe that our existing cash resources, combined with projected cash flows from operations, will not be sufficient to execute our business plan and continue operations for the next twelve months. Our existence is dependent upon our ability to obtain necessary financing, which we are currently in the process of attempting to secure. In addition, we intend to continue to explore various strategic alternatives. Management is also actively taking steps to increase future revenues and reduce our future operating expenses. However, we cannot provide any assurance that operating results will generate sufficient cash flow to meet our working capital needs or that we will be able to raise additional financing as needed.
If all of our indebtedness was accelerated as a result of our current events of default, we may not have sufficient funds at the time of acceleration to repay most of our indebtedness and we may not be able to find additional or alternative financing to refinance any such accelerated obligations on terms acceptable to us or on any terms, which could have a material adverse effect on our ability to continue as a going concern.
