The optical components and subsystems supplier also warned it has about US$900,000 of restricted cash on hand and if it cannot raise sufficient capital quickly, may have to go to insolvency proceedings.
"This (money) is only sufficient to operate on a limited basis until additional financing is received. The company has stopped making payments on its $3 million convertible debenture, and is violation of certain bank covenants for a $2.8 million secured note payable," Enablence stated.
"The company continues to work with potential investors and lenders to obtain the necessary funding to execute the company’s business plan. However, no funding has been negotiated at the time of this press release."
The Toronto-headquartered company, which has a presence in Ottawa, said it is pursuing all avenues possible, including a review of strategic alternatives, to raise financing. The phrase "strategic alternatives" is often used when a company is considering a sale.
“While we continue to work with potential investors, there is no assurance that our efforts will be successful, and that we will be able to renegotiate our existing obligations. If we are not successful, we will be forced to pursue formal insolvency proceedings."
The firm's third-quarter results showed a reported net income of $1.4 million that was due to the sale of Teledata. Its net loss from continuing operations was $9.1 million, which included an impairment charge of $5.7 million.
Revenues fell 66 per cent to $2.8 million "due generally to a general market slowdown."
Mr. Thorsteinson was brought in as CEO just over two years ago after three months as chief operating officer of the firm.
"(He) has rapidly identified the challenges Enablence faces and initiated the changes required to meet those challenges and elevate our operating performance," Enablence stated in April 2010, when he was appointed.
"Tim brings proven success in the management of growing public companies and together, we anticipate a bright future for Enablence and its stakeholders.”
Since then, the company sold an underperforming systems division that burned through half the company's cash reserves in four months and also sold inventory and reduced staff, among other measures to address quarterly losses.