Form 8-K for PROJECT GROUP INC
6-Jul-2005
Other Events
Item 8.01. Other Events
The Project Group, Inc. announced today that it has failed to meet its most recent payroll. The failure to meet its payroll resulted from a delay in securing a subordination agreement from the IRS which, in turn, resulted in the company's principal lender refusing to release receivables to the company or loan additional funds to the company. The company has been engaged in ongoing discussions with the IRS in an effort to secure an agreement to subordinate delinquent tax obligations to amounts owing to the company's principal lender, which amounts are secured by a security agreement covering the company's accounts receivable, among other assets. While the company has repaid, in full, amounts borrowed under its factoring agreement, the lender has asserted an ongoing claim to the company's accounts receivable to secure repayment of amounts advanced by the lender outside of the factoring agreement. As a result, all collections on receivables have been applied to reduction of amounts owed to the lender leaving the company without funds to support operations. Accordingly, there is substantial doubt as to the company's ability to continue its operations unless and until additional financing is provided, either by its existing lender or other sources.
