2020 has been a difficult year so far. Just since Jan 1,500+ public companies in 283 industries have disclosed that they have “substantial doubt” about their ability to continue as a going concern. Reasons range far and wide, but cash flow, debt and revenue losses remain the highest concerns.
Metrics illuminate the results of research like nothing else. More than just hits in context and a general feel for what’s happening, Kaleidoscope delivers real statistics on trends, industry hot spots and vulnerabilities that public companies must disclose to investors, clients and suppliers.
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And the disclosure is not always where you expect it to be. Over 90 different forms contained the “substantial doubt” caveat.
Below are just a few examples of “substantial doubt” disclosures:
A. “The negative impact on our financial condition of the oversupply of oil, and the substantial decline in demand for oil as a result of COVID-19 and related mitigation steps, raises significant uncertainty as to whether we can remain in compliance throughout 2020. Our failure to comply with those covenants could result in an event of default that, if not cured or waived, would result in the acceleration of all our debt, which would result in substantial doubt about our ability to continue as a going concern.”
B. “ . . .the Company’s significant operating losses raise substantial doubt about its ability to continue as a going concern.”
C. The Company’s existing balance of cash and cash equivalents as of March 31, 2020 is not sufficient to fund operations for one year after the date the financial statements are issued. While there is substantial doubt about the Company’s ability to continue as a going concern through the year period from the date of this filing, management’s plans to mitigate this risk include raising additional capital through equity or debt financings, or through strategic transactions.
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