What changed in this filing

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2022-03-31 compared with 2021-03-16 · 47 added, 52 removed, 11 unchanged (90% of the section changed)

1 unchanged sentence

are required to make certain disclosures regarding our financial instruments, including derivatives, if any.

financial instrument is defined as cash, evidence of an ownership interest in an entity, or a contract that imposes on one entity

a contractual obligation either to deliver or receive cash or another financial instrument to or from a second entity.

of financial instruments include cash and cash equivalents, deposits, trade accounts receivable, loans, investments, trade accounts

payable, accrued expenses, options and forward contracts.

The disclosures below include, among other matters, the nature and terms

of derivative transactions, information about significant concentrations of credit risk, and the fair value of financial assets

and liabilities.

financial instrument is defined as cash, evidence of an ownership interest in an entity, or a contract that imposes on one entity a contractual

obligation either to deliver or receive cash or another financial instrument to or from a second entity.

Examples of financial instruments

include cash and cash equivalents, deposits, trade accounts receivable, loans, investments, trade accounts payable, accrued expenses,

options and forward contracts.

The disclosures below include, among other matters, the nature and terms of derivative transactions, information

about significant concentrations of credit risk, and the fair value of financial assets and liabilities.

Value of Financial Instruments

values of financial instruments included in current assets and current liabilities are estimated to approximate their book values

due to the short maturity of such investments.

values of financial instruments included in current assets and current liabilities are estimated to approximate their book values due

to the short maturity of such investments.

Concentrations

of Credit Risk

Company’s financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally

of cash and trade accounts receivable.

The Company’s cash was deposited with a U.S.

Company’s financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of

cash and trade accounts receivable.

The Company’s cash was deposited with a U.S.

bank and amounted to approximately $1,722,000

at December 31, 2021.

Approximately 32% of the accounts receivable at December 31, 2020 was due from two customers, 20% from one

and 12% from another, who pay their receivables over usual credit periods.

Credit risk with respect to the balance of trade receivables

is generally diversified due to the number of entities comprising the Company’s customer base.

The Company does not believe

there is significant risk of non-performance by these counterparties.

March 2019, OmniMetrix reinstated its loan and security agreement which provided OmniMetrix with access to accounts receivable

formula-based financing of the lesser of 75% of eligible receivables or $1 million.

Debt incurred under this financing arrangement

bore interest at the greater of 6% and prime plus 1.5% per year.

In addition, OmniMetrix paid a monthly service charge of 0.75%

of the average aggregate principal amount outstanding for the prior month, for an effective rate of interest on advances of 15%.

OmniMetrix also agreed to maintain a minimum loan balance of $150,000 in its line-of-credit with the lender for a minimum of two

years beginning March 1, 2019.

From time to time, the balance outstanding fell below $150,000 based on collections applied against

the loan balance and the timing of loan draws.

We elected not to renew this line of credit and allowed it to expire in accordance

with its terms on February 28, 2021.

OmniMetrix no longer has interest rate risk related to debt.

The Company did not have any one customer that represented at least 10% of its accounts receivable at December

Credit risk with respect to the balance of trade receivables is generally diversified due to the number of entities comprising

the Company’s customer base.

The Company does not believe there is significant risk of non-performance by these counterparties.

March 2019, OmniMetrix reinstated its loan and security agreement which provided OmniMetrix with access to accounts receivable formula-based

financing of the lesser of 75% of eligible receivables or $1 million.

Debt incurred under this financing arrangement bore interest at

the greater of 6% and prime plus 1.5% per year.

In addition, OmniMetrix paid a monthly service charge of 0.75% of the average aggregate

principal amount outstanding for the prior month, for an effective rate of interest on advances of 15%.

OmniMetrix also agreed to maintain

a minimum loan balance of $150,000 in its line-of-credit with the lender for a minimum of two years beginning March 1, 2019.

to time, the balance outstanding fell below $150,000 based on collections applied against the loan balance and the timing of loan draws.

We elected not to renew this line of credit and allowed it to expire in accordance with its terms on February 28, 2021.

OmniMetrix no

longer has interest rate risk related to debt.

Pandemic Risk to Supply Chain

discussed above under the “RISK FACTORS”

heading, the COVID-19 pandemic could substantially interfere with general

commercial activity related to our supply chain and customer base, which could have a material adverse effect on our financial

condition, results of operations, business, or prospects.

Some of the electronic devices and hardware we purchase, like antennas,

radios, and GPS modules are very specific to our application;

there are not likely to be practical alternatives.

In some cases,

our circuit boards were designed around specific electronic hardware that met our specifications.

We continue to work closely

with our contract manufacturers and suppliers in order to mitigate as much as possible the risks to our supply chain for these

critical devices and hardware, including identifying any lead-time issues and any potential alternate sources.

We also continue

to examine all currently open purchase orders in an effort to identify whether we need to issue additional orders to secure product

that is critical, already has questionable lead times and/or is unique to our requirements.

Alternate sources may not be available

or may result in delays in shipments to us from our supply chain and subsequently to our customers, each of which would affect

our results of operations.

Further, if our customers’

businesses are similarly affected as a result of the pandemic, they

might delay or reduce purchases from us, which could adversely affect our results of operations.

discussed above under the “RISK FACTORS” heading, the COVID-19 pandemic could substantially interfere with general commercial

activity related to our supply chain and customer base, which could have a material adverse effect on our financial condition, results

of operations, business, or prospects.

Some of the electronic devices and hardware we purchase, like antennas, radios, and GPS modules

are very specific to our application;

and there are not likely to be practical alternatives.

In some cases, our circuit boards were designed

around specific electronic hardware that met our specifications.

We continue to work closely with our contract manufacturers and suppliers

in order to mitigate, as much as possible, the risks to our supply chain for these critical devices and hardware, including identifying

any lead-time issues and any potential alternate sources.

We also continue to examine all currently open purchase orders in an effort

to identify whether we need to issue additional orders to secure product that is critical, already has questionable lead times and/or

is unique to our requirements.

Alternate sources may not be available or may result in delays in shipments to us from our supply chain

and subsequently to our customers, each of which would affect our results of operations.

Further, if our customers’ businesses

are similarly affected as a result of the pandemic, they might delay or reduce purchases from us, which could adversely affect our results

of operations.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk