As a result of those ongoing discussions and other related matters that have required the attention of senior management and other key personnel, the Company could not, without unreasonable effort and expense, complete its financial statements for the three and six months ended June 30, 2015 and related disclosures and, consequently, could not file its the second-quarter of 2015 Form 10-Q within the prescribed time period.
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American Apparel has been posting losses for last five years.
American Apparel said it is in violation of the covenants of its revolving credit line with Capital One and there is no guarantee it will reach a deal with the lender. The company said it expects second-quarter revenue to show a 17 percent drop to $134 million compared with a year earlier.
However, the company now noted that it intends to file the second-quarter of 2015 Form 10-Q within 5 calendar days of its prescribed due date.
Besides being plagued by lawsuits since last year’s alleged “wrongful termination” of founder and CEO Dov Charney, the struggling Los Angeles-based clothier’s sales have continued to slide.
Shares of American Apparel are plunging Wednesday after the company said it doesn’t have enough financing to keep operating for the next year, meaning it will need to raise money or find new financing.
American Apparel noted that “substantial uncertainty” exists as to the ultimate outcome of its talks with Capital One and its other financial stakeholders. During that period, its market value shrank to $90 million from $540 million.
According to the Bloomberg report, the net loss expanded to about $19.4 million from $16.2 million the company said Tuesday in a filing.
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APP closed Tuesday’s trading at $0.21, down $0.003 or 1.65 percent on a volume of 412,243 shares.
