LIQUIDITY |
9 Months Ended |
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Sep. 30, 2024 | |
| Equity [Abstract] | |
| LIQUIDITY | LIQUIDITY The Company recently identified certain negative financial trends, including recurring operating losses, cash flows from operations that would be negative if not for an arrearage in the payment of preferred dividends, and unfavorably priced long-term purchase commitments, all as discussed further below.
To mitigate the adverse conditions of recurring operating losses as noted above, the Company engaged in a restructuring activity (see Note 12 — Restructuring Charges) in the third quarter of 2024 to reduce operational expenses, especially in the area of salaries and benefits. The Company has, in 2024, made the decision to accept fewer hardware sales contracts where these sales contracts would have generated revenue but been disadvantageous from an associated cost of sales perspective, and further plans to continue such activities into 2025. The Company also plans to wind down its non-core service offerings that are deemed to be unprofitable. Finally, the Company plans to continue to review its global footprint and rationalize legal entities where possible. As part of this process the Company will be reviewing existing office space to determine if working remotely will be more cost-effective in those locations.
The Company has accrued and unpaid dividends due to Searchlight on the mandatorily redeemable preferred stock due to affiliate, which are accrued on a daily basis, compound quarterly and payable quarterly in arrears. Due to the underlying nature of the preferred stock instrument as debt, these dividends are reflected on the condensed consolidated balance sheets as accrued interest due to affiliate. As of September 30, 2024, the Company owed approximately $18.2 million to Searchlight for this accrued interest. As of November 19, 2024, the total amount of the accrued interest due to affiliate was $21.2 million (see Note 10 — Related Party Transactions). The Company plans to continue the arrearage of preferred dividends in order to preserve cash, and may, in the future, refinance the associated preferred stock to a more advantageous interest rate in another form of debt instrument, should interest rates continue to decrease.
Additionally, the Company has purchase commitments payable that were not recorded as liabilities on its condensed consolidated balance sheet as of September 30, 2024, of which $9.2 million is expected to be purchased through the remainder of 2024 (see Note 11 — Commitments and Contingencies). The Company plans to re-negotiate certain of these long-term purchase commitments which are deemed to be disadvantageous.
As of September 30, 2024, the Company had approximately $18.6 million of cash on hand.
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