Item
8.01. Other Events.
The
Securities and Exchange Commission (the “SEC”) issued an Order under Section 36 of the Securities Exchange Act of
1934 Modifying Exemptions From the Reporting and Proxy Delivery Requirements for Public Companies, dated March 25, 2020 (Release
No. 34-88465) (the “Order”), which provides conditional relief to registrants subject to the reporting requirements
of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 that are unable to meet a filing deadline due to circumstances
related to COVID-19.
We
have experienced significant disruptions to our business and operations due to circumstances related to COVID-19. Among other
factors, we reduced the number of our employees significantly, including a portion of our finance staff, and all of our personnel
are working remotely. In addition, we rely on third parties to perform analyses and other services related to the preparation
of our financial statements, and those third parties have also experienced disruptions to their operations due to circumstances
related to COVID-19. We will require additional time to prepare and finalize our Quarterly Report on Form 10-Q for the quarter
ended March 31, 2020 (the “1Q 10Q”) due to circumstances related to COVID-19.
In
accordance with the Order, we are filing this report to report that we are relying on the Order with respect the 1Q 10Q, and that
we expect to file the 1Q 10Q by approximately May 21, 2020, and in any event no later than 45 days after May 15, 2020.
Risk
Factor Update
In
light of recent developments relating to the COVID-19 pandemic, we are supplementing the risk factors previously disclosed in
Item 1A. of our Annual Report on Form 10-K for the year ended December 31, 2019 and in our Current Report on Form 8-K, as filed
with the SEC on March 19, 2020 and March 30, 2020, respectively, as follows:
Our
cash flows from operations and liquidity have been materially adversely affected by the effects of the COVID-19 pandemic. We need
to raise capital in the near term and our inability to do so could result in our lender foreclosing on all of our assets and/or
us pursuing a restructuring, which may include a reorganization or bankruptcy under Federal bankruptcy laws, or a dissolution,
liquidation and/or winding up.
Our
cash flows from operations and liquidity have been materially adversely affected by the effects of the COVID-19 pandemic. The
pandemic quickly negatively impacted the restaurant and bar industry, and our business suffered materially as a result. In many
jurisdictions, including those in which we have many customers and prospective customers, restaurants and bars have been ordered
by the government to shut down or close all on-site dining. Approximately 70% of our customers have requested that their subscriptions
to our service be temporarily suspended, and we are uncertain if any of these customers will reopen for business or if they will
continue to subscribe to our service if they do reopen. As a result, we have experienced material decreases in subscription revenue,
advertising revenue and cash flows from operations, which we expect to continue for at least as long as the restaurant and bar
industry continues to be negatively impacted by the COVID-19 pandemic.
We
are carefully monitoring our liquidity, which has been materially and adversely impacted by the COVID-19 pandemic, and have taken
steps to reduce our operating expenses and preserve capital. While we expect to meet our near term debt service obligations to
Avidbank under our loan and security agreement, and we believe we satisfied our financial covenants under that agreement as of
March 31, 2020, we expect that it will be difficult for us to do so in subsequent periods. Our ability to meet our debt service
obligations and to satisfy our financial covenants will depend on our ability to operate and manage our business during this challenging
time, particularly in light of having only 17 employees (as compared to 74 at December 31, 2019), on the extent to which the COVID-19
pandemic ultimately impacts our cash flows and on the duration of the impact, and on our ability to recover from the impact, all
of which are uncertain and difficult to predict at this time. We may be required to implement additional cost-reduction measures
going forward, which could further adversely affect our ability to manage and operate our business.
We
currently have no arrangements for capital and no assurances can be given that we will be able to raise sufficient capital when
needed, on acceptable terms, or at all. The effects of the COVID-19 pandemic on macroeconomic conditions and the capital markets
make it more challenging to raise capital. If we are unable to raise sufficient additional capital in the very near term, we may
default on our payment obligations to Avidbank or not satisfy our financial covenants to Avidbank, and if we do, Avidbank may
declare a default, which could lead to all payment obligations becoming immediately due and payable. Avidbank has a first-priority
security interest in all our personal property and may foreclose on our personal property to satisfy our payment obligations.
In addition, we will be required to curtail or terminate some or all of our business operations and we may determine to pursue
a restructuring, which may include a reorganization or bankruptcy under Federal bankruptcy laws, or a dissolution, liquidation
and/or winding up. Our investors may lose their entire investment in the event Avidbank forecloses on our personal property to
satisfy our payment obligations and/or in the event of a reorganization, bankruptcy, liquidation, dissolution or winding up.