Note 2 - Liquidity and Going Concern

3 Months Ended

Mar. 31, 2026

Substantial Doubt about Going Concern [Text Block]

NOTE 2: LIQUIDITY AND GOING CONCERN

Basis of evaluation. In accordance with ASC 205‑40, Presentation of Financial Statements—Going Concern, management evaluated whether conditions and events, considered in the aggregate, raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the accompanying consolidated financial statements are issued. The accompanying financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classifications of liabilities that might result from the outcome of this uncertainty.

Conditions and events. As of March 31, 2026, our cash and cash equivalents was $7.0 million and working capital of $1.7 million, compared to cash and cash equivalents of $6.2 million and working capital of $1.8 million as of December 31, 2025. The Company experienced a decline in net sales, incurred operating losses and negative cash flows from operating activities during the year ended December 31, 2025, which caused liquidity constraints. Management also considered (i) capital expenditure requirements that have historically reduced available liquidity and (ii) an organizational structure that is no longer aligned with the Company’s current operating scale, resulting in inefficiencies and elevated fixed costs. These conditions and events have raised substantial doubt about the Company’s ability to continue as a going concern within one year after the date these financial statements are issued.

Management’s plans. To address the conditions noted above, management has implemented or commenced the following plans:

	●	Capital discipline: suspension of non‑essential capital expenditures; no discretionary capital projects are planned for fiscal year 2026.
	●	Cost reduction plan: execution of a comprehensive cost program to better align fixed and variable costs with current operations, including reductions in certain functional areas and fixed selling, general and administrative expenses.
	●	Margin initiatives: targeted pricing actions and continued supply chain optimization intended to improve gross margin.
	●	Compensation and cost controls: adjustments to compensation structures and other controls designed to reduce operating expenses and improve cash flow.
	●	Revenue stabilization and growth: initiatives aimed at stabilizing and increasing revenue to support improved operating performance and liquidity.
	●	Systems remediation: actions to remediate 2025 order‑processing issues in North America that negatively affected revenue and operating cash flows.

Additional Cost-Cutting measures effective March 31, 2026

The Company implemented the following additional measures effective March 31, 2026:

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Director compensation — conversion to equity: On March 10, 2026, the Board of Directors approved changes to director compensation effective April 1, 2026, enabling directors to elect to receive the remaining balance of their 2026 retainer and other fees as stock grants in lieu of cash for the remainder of the calendar year. The Company received final elections from all Board members by March 13, 2026. The conversion of Board fees from cash to equity is expected to generate an annual cash preservation benefit of approximately $0.8 million, with approximately $0.6 million expected to be realized during the remainder of fiscal 2026.

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Headcount and personnel cost reductions: The Company implemented meaningful headcount-related reductions across headquarters personnel, while preserving key capabilities in finance, legal, operations, and revenue support. These reductions are expected to generate significant cost savings over the next 12 months, with a proportionate benefit anticipated over the remainder of fiscal 2026.

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Facilities and overhead actions: Management is evaluating lease renegotiation and sublease alternatives to reduce facilities expenses.

Management’s plans are subject to inherent risk and uncertainty. There can be no assurance that the Company will be successful in its efforts, and there can be no assurance that management will be able to execute their plan nor that the Company will achieve sufficient revenue, profitable operations, or liquidity to continue as a going concern.

- Definition

The entire disclosure when substantial doubt is raised about the ability to continue as a going concern. Includes, but is not limited to, principal conditions or events that raised substantial doubt about the ability to continue as a going concern, management's evaluation of the significance of those conditions or events in relation to the ability to meet its obligations, and management's plans that alleviated or are intended to mitigate the conditions or events that raise substantial doubt about the ability to continue as a going concern.

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