Item 7A. Quantitative and Qualitative Disclosures About Market Risk
ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
General
We
are required to make certain disclosures regarding our financial instruments, including derivatives, if any.
A
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.
Fair
Value of Financial Instruments
Fair
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
The
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 $1,450,000 at December 31,
2022. The Company had one customer that represented 12% of its accounts receivable at December 31, 2022. 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.
Interest
Rate Risk
OmniMetrix
has no interest rate risk related to debt since the Company paid off our credit line in February 2021.
COVID-19
Pandemic Risk to Supply Chain
As
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.
ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Furnished
at the end of this report commencing on page F-1.
ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.