|3 Months Ended|
Mar. 31, 2020
3. COVID-19 Impact
The spread of COVID-19 around the world in the first quarter of 2020 has resulted in significant volatility in the U.S. and international markets. The Company is closely monitoring the impact of the COVID-19 pandemic on all aspects of its business. Although there have been logistical and other challenges to date, there was no material adverse impact on the Company’s first quarter 2020 results of operations. The Company began to see the impacts of COVID-19 from delayed waste shipment from certain customers and suspended project work in late March 2020 which is expected to impact its results of operations beginning with the second quarter of 2020 and potentially further.
At this time, the Company believes it has sufficient liquidity on hand to continue business operations during the next twelve months. At March 31, 2020, the Company had cash on hand of approximately $1,859,000 and borrowing availability under our credit facility of $8,537,000. Additionally, we received a $5,666,300 loan in April 2020 (“PPP Loan”) under the Paycheck Protection Program (“PPP”) that was established under the recently enacted Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) (see “Note 16 – Subsequent Events - CARES Act – Paycheck Protection Program” for further detail of this loan). The Company remains committed to reducing operating costs during this volatile time, which have included curtailing capital expenditures and implementing a hiring freeze, among other things.
The Company is closely monitoring our customers’ payment performance. However, as a significant portion of our revenues is derived from government related contracts, the Company does not expect its accounts receivable collections to be materially impacted, subject to the impact of COVID-19.
The situation surrounding COVID-19 remains fluid and the potential for a material impact on the Company increases the longer COVID-19 impacts the level of economic activities in the United States and globally as our customers may continue to delay/halt waste shipments and project work. For this reason, we cannot reasonably estimate with any degree of certainty the future impact COVID-19 may have on our results of operations, financial position, and liquidity which may impact our ability to meet our financial covenant requirements under our credit facility. Given the current economic environment and the market volatility from COVID-19, the Company considered whether these events or changes in circumstances triggered the need for an interim impairment analysis of our long-lived tangible assets and intangible assets. Based on the Company’s assessment of the impact of these conditions on our business, the Company determined there was no triggering event as of March 31, 2020. However, as the effects of the COVID-19 pandemic continue to evolve, the Company will continue to assess the need to perform interim impairment tests of our long-lived tangible assets and intangible assets.
The CARES Act, among other things, includes modifications to net operating loss carryforwards and corporate alternative minimum tax (“AMT”) provisions and the net interest expense deduction, and deferment of social security tax payments. The Company has elected to defer payment of its shares of social security taxes starting in April 2020 (see “Note 16 – Subsequent Events – CARES ACT – Deferral of Employment Tax Deposits”). We are currently evaluating the provisions of the CARES Act and how certain other elections may impact our financial position, results of operations, and disclosures, if elected.