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LIQUIDITY

9 Months Ended

Sep. 30, 2024

2.	LIQUIDITY

The Company had net losses of $6.7 million (which includes $0.4 million of non-cash expenses) and $11.0 million (which includes $3.0 million of non-cash expenses) and net cash used in operating activities of $3.1 million and $13.8 million for the nine months ended September 30, 2024 and 2023, respectively. At September 30, 2024, the Company had a cash balance of $4.9 million and working capital of $17.9 million. Based on the Company’s current operating plan and the available working capital that can be converted to cash (specifically the accounts receivable balance of approximately $11.3 million), the Company believes that it has the ability to fund its operations and meet contractual obligations for at least twelve months from the date of this report.

In 2022, the Company entered into a Common Stock Purchase Agreement and Registration Rights Agreement with B. Riley Principal Capital II, LLC under which the Company issued 281,157 shares for approximately $3.0 million. The facility was terminated on October 1, 2024.

The Company’s outstanding warrants generated $0.7 million and $0.3 million of proceeds during each of the nine months ended September 30, 2024 and 2023, respectively. Warrants to purchase 282,334 shares of common stock which were issued as part of our 2019 public offering expired on April 18, 2024. The Company has a warrant outstanding to purchase up to 200,000 shares of our common stock at an exercise price equal to $17.00 per share that expires in March 2028 and that could generate up to an additional $3.4 million of proceeds, conditioned upon the market price of our common stock and the warrant holder’s ability and decision to exercise them.

In March 2023, the Company entered into a supply chain line of credit agreement with OCI Group for up to $100 million to further support our working capital requirements. Subject to the terms of the agreement, OCI Group will make available to the Company funding based on amounts owed to the Company by its customers. To date, the Company has not borrowed against this line of credit.

Although the Company believes that it will become profitable in the next few years as our revenues grow, we improve our gross profit and we leverage our overhead costs, we expect to continue to incur losses for a period of time. If necessary, the Company may raise additional capital to finance its future operations through equity or debt financings. There is no guarantee that profitable operations will be achieved, or that additional capital or debt financing will be available on a timely basis, on favorable terms, or at all, and such funding, if raised, may not be sufficient to meet our obligations or enable us to continue to implement our long-term business strategy. In addition, obtaining additional funding or entering into other strategic transactions could result in significant dilution to our stockholders.