Item 8.01.
Other Events.
As of July 25, 2019, we have approximately $204 million of outstanding
indebtedness under our credit facility with the Teachers’ Retirement System of Alabama (the “TRSA”) and The Employees’
Retirement System of Alabama (the “ERSA” and, together with TRSA, “RSA”). We were obligated to make a $10.1
million interest payment to RSA under our credit facility on July 1, 2019. As previously disclosed in our Quarterly Report on Form
10-Q for the quarter ended March 31, 2019, we expected to draw down a substantial portion of the remaining principal balance of
the credit facility to make the interest payment. To date, however, RSA has not made additional funds available to us under the
credit facility for the purpose of making the interest payment and we have not made the interest payment as of the date hereof.
We remain in active discussions with RSA and its advisors regarding the availability of the undrawn principal balance under our
credit facility, and the restructuring of our outstanding indebtedness. RSA has not declared an event of default under the credit
facility.
There can be no assurance as to when or whether we will be able
to access additional funds under our credit facility or restructure our outstanding indebtedness. We also can provide no assurance
that RSA will not declare an event of default under our credit facility. In the event RSA declares an event of default under our
credit facility, our outstanding indebtedness under the credit facility will become immediately due and payable. Our liquidity,
consisting of cash on hand, as of July 25, 2019 was $2.2 million. We do not have adequate cash on hand or other available assets
to repay our outstanding indebtedness and RSA could foreclose upon the property that is pledged to secure the credit facility,
which property includes substantially all of our assets. If we are unable to restructure our outstanding indebtedness, including
our credit facility with RSA, our significant indebtedness and lack of liquidity will have a material adverse effect on our business,
prospects, financial condition, and our ability to continue as a going concern.
We have engaged financial and legal advisors to assist us in, among
other things, analyzing various strategic financial alternatives to address our liquidity and capital structure, including strategic
financial alternatives to restructure our indebtedness. We may elect to implement a restructuring or a strategic alternative through
Chapter 11 in order to obtain court approval of such transactions and to facilitate the stakeholder approvals necessary to implement
such transactions, or it may otherwise become necessary for us to seek protection under Chapter 11. If a Chapter 11 proceeding
is commenced, our management would be required to spend a significant amount of time and effort dealing with the proceeding, including
managing the potential impact to our business and relationships. We also need to ensure that during any Chapter 11 proceeding,
we retain management and other key personnel necessary to the success and growth of our business. In addition, during any period
of time we are involved in a bankruptcy proceeding, our customers and suppliers might lose confidence in our ability to reorganize
our business successfully and could seek to establish alternative commercial relationships, which may cause, among other things,
our suppliers, vendors, counterparties and service providers to renegotiate the terms of our agreements, attempt to terminate their
relationship with us or require financial assurances from us. Additionally, all of our indebtedness is senior to the existing common
stock in our capital structure. As a result, we believe that any restructuring of our indebtedness and the confirmation of a plan
that has requisite stakeholder support under a Chapter 11 proceeding could cause the shares of our existing common stock to be
canceled, resulting in a limited recovery, if any, for holders of our common stock, and would place holders of our common stock
at significant risk of losing all of their investment in our shares. Additionally, we have a significant amount of secured indebtedness
that is senior to our unsecured indebtedness. As a result, we believe that the outcome of a Chapter 11 proceeding could result
in a limited recovery, if any, for unsecured creditors.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
In addition to historical information, this Current Report on Form
8-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, including statements regarding our liquidity, and our negotiations with our lenders, our pursuit
of strategic financial alternatives, including our potential filing of Chapter 11 proceedings, and other plans, objectives, expectations
and intentions and other statements that are not historical facts. Forward-looking statements relate to expectations, beliefs,
projections, future plans and strategies, anticipated events or trends and similar matters that are not historical facts. In some
cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “could,”
“estimate,” “expect,” “intend,” “may,” “plan,” “potential,”
“should,” “will” and “would” or the negatives of these terms or other comparable terminology,
but the absence of these particular words does not mean that a statement is not forward-looking.
You should not place undue reliance on forward-looking statements.
You should understand that the following important factors, as well as factors identified under the heading “Risk Factors”
in our Annual Report on Form 10-K, our Quarterly Reports on Form 10-K and our Periodic Reports on Form 8-K, could affect our future
results and could cause actual results to differ materially from those expressed in our forward-looking statements: our inability
to meet our debt service obligations or restructure our outstanding indebtedness; our ability to continue as a going concern; our
inability to operate profitably; our inability to regain compliance with NASDAQ listing standards; our failure to meet any operational
and financial performance guidance we provide to the public; and our ability to compete and succeed in a highly competitive and
evolving industry.
Although the forward-looking statements in this Current Report on
Form 8-K are based on our beliefs, assumptions and expectations, taking into account all information currently available to us,
we cannot guarantee future transactions, results, performance, achievements or outcomes. No assurance can be made to any investor
by anyone that the expectations reflected in our forward-looking statements will be attained. Should one or more of the risks or
uncertainties referred to above and elsewhere in this Form 8-K materialize, or should any of our assumptions prove to be incorrect,
our actual results may vary in material and adverse respects from those projected in these forward-looking statements. We undertake
no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise,
except as may be required under applicable securities laws.