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Liquidity and Management's Plans

12 Months Ended

Dec. 31, 2020

3.	Liquidity and Management’s Plans

Through December 31, 2020, the Company had incurred an accumulated deficit since its inception of $22,996,267, including operating losses and operating cash flow deficits in recent years. Since inception, the Company’s operations have primarily been funded through a combination of gross profits, government-sponsored loans, and the sale of both equity and debt securities. At December 31, 2020, the Company had a cash balance of $1,907,882.

On March 2, 2020, the Company issued shares and debt totaling $5.5 million, and converted approximately $6 million in existing debt principal and interest to equity. This resulted in a recapitalization of the balance sheet and new debt of $2 million, reducing the Company’s interest burden. Simultaneously, the Company used the proceeds from the capital raise to purchase Graphic Sciences, Inc. On April 21, 2020, the Company purchased substantially all the assets of CEO Imaging Systems, Inc. The acquisitions significantly helped the Company reach its current monthly cash flow. Further, the Company received a loan through the Paycheck Protection Program (“PPP”) in April 2020 amounting to $838,700, and received notice on January 20, 2021 that its forgiveness application was accepted by the Small Business Administration. With improved operating results over the course of the latter half of 2020, the consolidated Company has significantly better liquidity than in prior years.

Our ability to meet our capital needs in the future will depend on many factors, including maintaining and enhancing our operating cash flow, successfully managing the transition of our recent acquisitions of Graphic Sciences and CEO Image, successfully retaining and growing our client base in the midst of general economic uncertainty, and managing the continuing effects of the COVID-19 pandemic on our business. We will need to successfully manage our revenues to support potential future earnout commitments for previous transactions and current debt service commitments, and our future cash resources and capital requirements may vary materially from those now planned. Our ability to obtain additional capital or debt financing on favorable terms, if needed, would likely be adversely affected by our history of operating losses. Prior to 2020, management has historically assessed that there was substantial doubt regarding our ability to continue as a going concern. These conditions raise substantial doubt over the Company’s ability to meet all of its obligations over the twelve months following the date of this Report. However, management has evaluated these conditions and believes, based on its improved balance sheet, improved consolidated cash flow, and current plans and expectations, that it will be able to meet those obligations, although there is no assurance.

Based on our plans and assumptions as of the date of this report, we believe our capital resources, including our cash and cash equivalents, along with funds expected to be generated from our operations, will be sufficient to meet our anticipated cash needs, including for working capital, earnout liability payments for previous transactions, capital spending, and debt service commitments, for at least the next 12 months. However, any projections of future cash needs and cash flows are subject to risks and uncertainties, such as our history of operating losses, the current COVID-19 pandemic, as well as general overall economic conditions.