The Company has an accumulated deficit, a working capital deficiency and has defaulted on a bank loan, which casts substantial doubt on the Company's ability to continue as a going concern. The Company's ability to meet its obligations as they fall due and to continue to operate as a going concern is dependent on further financing and ultimately, the attainment of profitable operations. These consolidated financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue as a going concern. Management of the Company plans to fund its future operation by obtaining additional financing through loans and private placements and through the sale of the properties held for sale. However, there is no assurance that the Company will be able to obtain additional financing or sell the properties held for sale.
December December 31, 2012 31, 2011(in thousands of Canadian dollars)Accumulated deficit $291,358 $273,506Working capital (deficiency) $60,661 $62,787
On February 17, 2013, the convertible debenture with CZL of $7,600 (Note 15 (b)(ii)) was due. The Company did not repay the loan and it is currently in default.
In April 2013 the Company was made aware by the bank with an outstanding balance of $39,315, that they are taking legal actions to demand repayment. As of the reporting date that Company has not received any formal claim.
Fiscal 2012 Major Corporate Developments
Club Med Resorts management has further improved the revenue of Sun Mountain Yabuli Resort
In 2012, Club Med started its first summer operation from July 14 till September 2, 2012 for a total of 50 days at the Sun Mountain Yabuli Resort. The resort provided outdoor activities including: archery, cross country mountain bike/hiking, mountain top afternoon tea party, etc. The first summer operation of ClubMed promoted the Yabuli summer brand, so that guests from all over the country could experience Yabuli beautiful summer scenery. The revenue created in the summer operations reached $1.2 million in 2012, and management is expecting the revenue to be further increased to $1.5 million in the 2013 summer operation.
New bank loan for the amount of RMB 140 million
On February 14, 2012, the Company secured a new bank loan for the amount of $22.36 million (RMB 140 million) with the Harbin Bank (the "New Bank Loan"). The New Bank Loan carries a three year term with a maturity date of February 15, 2015 and a fixed annual interest rate of 7.315%, with interest to be paid on a monthly basis commencing February 16, 2012. The principal of the New Bank Loan is repayable in four instalments of $5.59 million (RMB 35 million) each, starting with the first instalment repayment due on August 15, 2013 and each subsequent instalment repayment due every six month thereafter. The original 23.96 million (RMB 150 million) bank loan with the same bank was repaid with advances from a short term bridge loan made by a third party trust company when it was due in on February 9, 2012. The Company then used the advance from the New Bank Loan and $1.60 million (RMB 10 million) of its own funds to repay bridge loan from the third party trust company.