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Liquidity and Management's Plans

3 Months Ended

Mar. 31, 2021

3.	Liquidity and Management’s Plans

We have financed our operations primarily through a combination of cash on hand, cash generated from operations, borrowings from third parties and related parties, and proceeds from private sales of equity. From 2012 through March 2021 we raised a total of approximately $18.6 million in cash through issuance of debt and equity securities. As of March 31, 2021, we had $2,003,052 in cash and cash equivalents, net working capital of $455,067, and an accumulated deficit of approximately $22 million.

In 2020, we engaged in several actions that significantly improved our liquidity and cash flows, including:

	●	acquiring the expected positive cash flow generated by Graphic Sciences and CEO Image,

	●	receiving aggregate gross proceeds of $3.5 million from the private placement of our common stock,

	●	converting all of the outstanding principal and accrued interest payable on our then-existing convertible debt in the approximate amount of $6.0 million into shares of common stock at a conversion price of $4.00 per share, and

	●	receiving $2.0 million in proceeds from the issuance of 12% subordinated promissory notes due February 28, 2023, which we refer to as the 2020 Notes, and

	●	obtaining the PPP loan in the principal amount of $838,700, the principal and interest on which was forgiven in its entirety by the SBA by notice we received on January 20, 2021.

Overall, we reduced our outstanding debt by approximately $3 million during 2020 and have not incurred any new debt in 2021 as of the date of this Quarterly Report.

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 cash flows to support potential future earn-out commitments and debt service commitments. In the past, management had assessed that there was substantial doubt regarding our ability to continue as a going concern, in light of our history of operating losses and prior projections of cash flows relative to cash needs. However, management has re-evaluated these conditions in light of our improved balance sheet and consolidated cash flow, and our recently enhanced business plan and operating projections in light of our recent capital restructuring and business acquisitions.

Based on our current plans and assumptions, 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 arising in the ordinary course of business for at least the next 12 months, including to satisfy our expected working capital needs, earn-out obligations and capital and debt service commitments.