As a result of the deferred tax valuation allowance of $76.5 million we recorded as of March 31, 2014 against U.S. domestic tax assets,
we failed to meet the financial covenants in our credit facility related to fixed charge coverage and consolidated net worth. The lenders waived
the event of default caused by the failure to meet the fixed charge coverage ratio, and the Company and the lenders entered into a first
amendment to the credit facility to permanently amend the definition of consolidated net worth to exclude non-cash charges related to the 76.5
million deferred tax asset valuation allowance. However, the valuation allowance against tax assets will also cause us to fail the fixed charge
coverage ratio for the quarter ending June 30, 2014. Additionally, our credit facility also requires us to maintain a composite score of no less
than 1.5 in any fiscal year, and, as a result of the deferred tax asset valuation allowance, we currently expect that our composite score for the
fiscal year ending June 30, 2014 will be below 1.5. We expect to seek a waiver or amendment of the credit facility from the lenders when those
events of default occur. No assurances can be given that our lenders will provide a waiver of any event of default, and failure to receive a waiver
or some other accommodation from the lenders could have a material adverse effect on the Company, its liquidity and access to financial
resources.