The auditor of Garden Grove’s DPAC Technologies Corp. has some doubts about the electronics maker’s viability.
DPAC said its forthcoming annual report includes a statement from its auditor about “going concern,” or its ability to keep the business going.
The statement was sparked by operating losses, negative cash flow and a need for more capital.
DPAC, which makes electronics for wireless networking, plans to combine with QuaTech Inc. of Ohio, pending shareholder approval.
The companies must raise about $5 million in financing to fund the deal.
“We believe the completion of the merger with QuaTech is the best means to address our need for additional capital, while gaining a broader revenue base and the continuation of our expansion into the growing machine to machine connectivity market,” said Kim Early, DPAC’s chief executive.