DXYN · Dixie Group Inc · Documents

Substantial doubt about the company's ability to continue as a going concern.

“At the time of issuance of these financial statements, conditions and events, including recent operating losses, reduced availability under its credit facility, macroeconomic pressures, past covenant violations cured by waivers and uncertainty of future covenant violations, raised substantial doubt about its ability to continue as a going concern within twelve months after the date the financial statements are issued. Management has developed plans that are intended to improve liquidity and address these conditions, including profit improvement initiatives and seeking additional debt financing. Management is also evaluating opportunities to sale an existing building, subject to customary closing conditions and lender payoff requirements, which would be expected to generate net cash proceeds that would improve liquidity; however, because of the uncertainty of closing on such a sale, management has not assumed the full benefit in concluding whether substantial doubt is alleviated. The Company's evaluation of these plans, and its assumptions regarding their execution and timing, requires significant judgment and is subject to inherent uncertainty, therefore management has concluded that these plans do not alleviate the substantial doubt about the Company's ability to continue as a going concern.”