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Going Concern
6 Months Ended
Jun. 30, 2016
Going Concern [Abstract]  
Going Concern

Note 2 – Going Concern

 

The accompanying Consolidated Financial Statements have been prepared assuming the Company will continue as a going concern, which contemplates continuity of operations, realization of assets and the satisfaction of liabilities in the normal course of business for the twelve month period following the date of these Consolidated Financial Statements.

 

On May 17, 2016, Nytis LLC, entered into an amendment to its credit facility with Bank of Oklahoma that reduced the borrowing base under the credit facility from $20.0 million to $5.5 million (of which $500,000 is reserved for future interest payments as those payments become due under the credit facility) and changed the maturity date of the credit facility from May 31, 2017 to January 2, 2017. As a result of the reduction in the borrowing base (and associated borrowing base capacity) and the continuation of low commodity prices, the Company is not in compliance with the financial covenants under the credit facility (nor does it expect to be throughout the remainder of the year) and Bank of Oklahoma has curtailed the advancement of funds under the credit facility. Due to non-compliance with financial covenants, Bank of Oklahoma has the right to call a default under the credit facility. In addition, with the change in the maturity of the credit facility from May 31, 2017 to January 2, 2017, outstanding borrowings under the credit facility were classified as current on the Company’s Consolidated Balance Sheet, resulting in negative working capital of approximately $8.5 million as of June 30, 2016.

 

We are in the process of analyzing various alternatives to enhance our liquidity and capital structure including obtaining a new credit facility, issuing additional equity, divesting nonstrategic assets, reducing costs, or engaging in similar type activities. Although management believes that it will be able to obtain the necessary funding to allow the Company to remain a going concern through the methods discussed above, there can be no assurance that such methods will prove successful. The accompanying Consolidated Financial Statements do not include any adjustments that might result from the outcome of this uncertainty.