What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-08-05 compared with 2021-05-06 · 102 added, 55 removed, 207 unchanged (43% of the section changed)

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We market these products through creative marketing communications, including our web sites, local and on-line seminars, webinars, social media, direct e-mail, and printed materials.

We have subsidiaries in the United States, Canada, Netherlands, United Kingdom and Ireland, through which sales are made.

We have subsidiaries in the United States, Canada, the Netherlands, the United Kingdom and Ireland, through which sales are made.

We are closely monitoring the impact of the 2019 novel coronavirus, or COVID-19, pandemic on all aspects of our business.

COVID-19 has resulted and will continue to result in significant economic disruption, which could also impact our business.

In the first quarter of 2020, we took a number of precautionary measures designed to help minimize the risk of the spread of the virus to our employees, including temporarily closing our offices and requiring all employees to work remotely.

The majority of our employees continue to work remotely through the second quarter of 2021.

While we did not incur significant disruptions to our operations during the three months ended March 31, 2021 as a result of the COVID-19 pandemic, we are unable to predict the impact that the COVID-19 pandemic will have on our business, liquidity or results of operations at this time.

While we did not incur significant disruptions to our operations during the three and six months ended June 30, 2021 as a result of the COVID-19 pandemic, we are unable to predict the impact that the COVID-19 pandemic will have on our business, liquidity or results of operations at this time.

This situation is changing rapidly, and additional impacts may arise that we are not aware of currently.

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We derive the majority of our net sales though the sale of third-party software licenses, maintenance and service agreements.

In our Distribution segment, sales are impacted by the number of product lines we distribute, and sales penetration of those products into the reseller channel, product lifecycle competitive, and demand characteristics of the products which we are authorized to distribute.

In our Distribution segment, sales are impacted by the number of product lines we distribute, and sales penetration of those products into the reseller channel, product lifecycle competition, and demand characteristics of the products which we are authorized to distribute.

In our Solutions segment sales are generally driven by sales force effectiveness and success in providing superior customer service and cloud solutions support, competitive pricing, and flexible payment solutions to our customers.

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In addition, we grant discounts, allowances, and rebates to certain customers, which may vary from period to period, based on volume, payment terms and other criteria.

To date, we have been able to implement cost efficiencies such as the use of drop shipments, electronic ordering (“EDI”) and other capabilities to be able to operate our business profitably as gross margins have declined.

We evaluate the profitability of our business based on return on equity and effective margin (see management’s discussion and analysis below).

To date, we have been able to implement cost efficiencies such as the use of drop shipments,

electronic ordering (“EDI”) and other capabilities to be able to operate our business profitably as gross margins have declined.

We evaluate the profitability of our business based on return on equity and effective margin.

Gross profit is calculated as net sales less cost of sales.

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Historically we have sought to return value to investors through the payment of quarterly dividends and share repurchases.

Total dividends paid and shares repurchased were $0.8 million and less than $0.1 million during each of the three months ended March 31, 2021 and 2020, respectively.

Total dividends paid and shares repurchased were $0.7 million and $0.1 million during the three months ended June 30, 2021.

Total dividends paid and shares repurchased were $0.7 million and $3.5 million, which included 261,631 shares of our outstanding common stock repurchased for $3.5 million in accordance with the Settlement Agreement, during the three months ended June 30, 2020.

The payment of future dividends and share repurchases is at the discretion of our Board of Directors and dependent on results of operations, projected capital requirements and other factors the Board of Directors may find relevant.

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Currently, one of the most significant factors is the potential adverse effect of the current COVID-19 pandemic on the Company, the global economy and financial markets.

of the pandemic and containment measures, including the impact on our reseller partners and the end customer markets they serve, among others.

We strongly urge current and prospective investors to carefully consider the cautionary statements and risk factors contained in this report and our annual report on Form 10-K for the year ended December 31, 2020 filed with the Securities and Exchange Commission on March 16, 2021.

The extent to which COVID-19 impacts the Company will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, including the impact on our reseller partners and the end customer markets they serve, among others.

We strongly urge current and prospective investors to carefully consider the cautionary statements and

risk factors contained in this report and our annual report on Form 10-K for the year ended December 31, 2020 filed with the Securities and Exchange Commission on March 16, 2021.

The Company operates in a rapidly changing business, and new risk factors emerge from time to time.

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Financial Overview

Net sales increased 1%, or $0.2 million, to $62.8 million for the three months ended March 31, 2021 compared to $62.6 million for the same period in the prior year.

Gross profit increased 33%, or $2.6 million, to $10.8 million for the three months ended March 31, 2021 compared to $8.2 million for the same period in the prior year.

Selling, general and administrative (“SG&A”) expenses increased 56%, or $3.0 million, to $8.4 million for the three months ended March 31, 2021 compared to $5.4 million for the same period in the prior year.

Amortization and depreciation expense increased 316%, or $0.3 million, to $0.4 million for the three months ended March 31, 2021 compared to $0.1 million for the same period in the prior year.

Net income for the three months ended March 31, 2021 was $1.5 million compared to $0.8 million for the same period in the prior year.

Diluted income per share for the three months ended March 31, 2021 was $0.35 compared to $0.18 for the same period in the prior year.

Net sales increased 33%, or $18.8 million, to $75.4 million for the three months ended June 30, 2021 compared to $56.6 million for the same period in the prior year.

Gross profit increased 54%, or $3.9 million, to $11.0 million for the three months ended June 30, 2021 compared to $7.1 million for the same period in the prior year.

Selling, general and administrative (“SG&A”) expenses increased 49%, or $2.7 million, to $8.1 million for the three months ended June 30, 2021 compared to $5.5 million for the same period in the prior year.

Amortization and depreciation expense increased 178%, or $0.3 million, to $0.4 million for the three months ended June 30, 2021 compared to $0.1 million for the same period in the prior year.

Net income for the three months ended June 30, 2021 was $2.1 million compared to $0.6 million for the same period in the prior year.

Diluted income per share for the three months ended June 30, 2021 was $0.49 compared to $0.13 for the same period in the prior year.

Critical Accounting Policies and Estimates

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The Company does not enter into foreign exchange contracts for trading purposes and the risk of loss on a foreign exchange contract is the risk of nonperformance by the counterparties, which the Company minimizes by limiting its counterparties to major financial institutions.

The fair value of forward purchase contracts at March 31, 2021 was not material to the consolidated financial statements.

The fair value of forward purchase contracts at June 30, 2021 was not material to the consolidated financial statements.

Interest, Net

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This comparison of financial results is not necessarily indicative of future results:

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These key indicators include financial information that is prepared in accordance with US GAAP and presented in our Consolidated Financial Statements as well as non-US GAAP performance measurement tools.

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We consider gross profit growth and effective margin to be key metrics in evaluating our business.

During the three months ended March 31, 2021, gross profit increased 33%, or $2.6 million, to $10.8 million compared to $8.2 million for the same period in the prior year while effective margin decreased to 24.4% compared to 38.2% for the same period in the prior year.

During the three months ended June 30, 2021, gross profit increased 54%, or $3.9 million, to $11.0 million compared to $7.1 million for the same period in the prior year while effective margin increased to 32.0% compared to 29.3% for the same period in the prior year.

During the six months ended June 30, 2021, gross profit increased 43%, or $6.5 million, to $21.8 million

compared to $15.3 million for the same period in the prior year while effective margin decreased to 28.2% compared to 34.1% for the same period in the prior year.

Reconciliations of Non-GAAP Financial Measures

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In addition, other companies, including companies in our industry, might calculate adjusted gross billings of product and services or similarly titled measures differently, which may reduce their usefulness as comparative measures.

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In addition, other companies, including companies in our industry, might calculate adjusted EBITDA, or similarly titled measures differently, which may reduce their usefulness as comparative measures.

Three Months Ended March 31, 2021 Compared to Three Months Ended March 31, 2020

On April 30, 2020 we completed the acquisition of Interwork Technologies Inc.

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Operating results of CDF are included in either our Distribution segment or Solutions segment.

Three Months Ended June 30, 2021 Compared to Three Months Ended June 30, 2020

Net Sales and Adjusted Gross Billings

Net sales for the three months ended March 31, 2021 increased 1%, or $0.2 million, to $62.8 million compared to $62.6 million for the same period in the prior year.

Adjusted gross billings for the three months ended March 31, 2021 increased 22%, or $37.8 million, to $210.9 million compared to $173.1 million for the same period in the prior year.

Net sales for the three months ended June 30, 2021 increased 33%, or $18.8 million, to $75.4 million compared to $56.6 million for the same period in the prior year.

Adjusted gross billings for the three months ended June 30, 2021 increased 48%, or $76.4 million, to $235.1 million compared to $158.7 million for the same period in the prior year.

Adjusted gross billings increased at a faster rate than net sales due to shift in product mix from hardware sales, which are recorded on a gross basis, to security, maintenance and cloud products which are recorded net of related cost of sales.

Distribution segment net sales for the three months ended March 31, 2021 decreased 4%, or $2.5 million, to $54.8 million compared to $57.3 million for the same period in the prior year.

The decrease in net sales was primarily due to lower hardware sales compared to the same quarter last year.

The resulting shift in product mix to products recorded net of cost of sales resulted in a decline in net sales, despite increased adjusted gross billings.

Adjusted gross billings for the Distribution segment for the three months ended March 31, 2021 increased 17%, or $27.4 million, to $193.3 million compared to $165.9 million for the same period in the prior year primarily due to the impact of the acquisitions of Interwork and CDF.

Solutions segment net sales for the three months ended March 31, 2021 increased 49%, or $2.6 million, to $8.0 million compared to $5.4 million for the same period in the prior year.

The increase in net sales in our Solutions segment was primarily due to sales from the CDF acquisition for the three months ended March 31, 2021.

Adjusted gross billings for the Solutions segment for the three months ended March 31, 2021 increased 142%, or $10.3 million, to $17.5 million compared to $7.29 million for the same period in the prior year.

During the three months ended March 31, 2021, we relied on two key customers for a total of 33% of our net sales, with one of these customers accounting for 20% and the other customer accounting for 13% of our total net sales.

The Company had two major customers that accounted for 27% and 14%, respectively, of its total net sales during the three months ended March 31, 2020.

The Company had two major vendors that accounted for 24% and 19%, respectively, of total purchases during the three months ended March 31, 2021 and 22% and 14%, respectively, of total purchases during the three months ended March 31, 2020.

Gross profit for the three months ended March 31, 2021 increased 33%, or $2.6 million, to $10.8 million compared to $8.2 million for the same period in the prior year.

Distribution segment gross profit for the three months ended March 31, 2021 increased 10%, or $0.7 million, to $7.9 million compared to $7.2 million for the same period in the prior year.

The increase in Distribution segment gross profit resulted primarily from the impact of the acquisitions of Interwork and CDF, partially offset by higher early pay discounts and other rebates and discounts offered to our customers and lower vendor rebates.

Distribution segment net sales for the three months ended June 30, 2021 increased 29%, or $15.7 million, to $69.9 million compared to $54.2 million for the same period in the prior year.

Adjusted gross billings for the Distribution segment for the three months ended June 30, 2021 increased 42%, or $64.6 million, to $219.4 million compared to $154.8 million for the same period in the prior year.

The increase in net sales and adjusted gross billings in our Distribution segment was primarily due to the impact of the Interwork and CDF acquisitions for the three months ended June 30, 2021.

Solutions segment net sales for the three months ended June 30, 2021 increased 131%, or $3.1 million, to $5.5 million compared to $2.4 million for the same period in the prior year.

Adjusted gross billings for the Solutions segment for the three months ended June 30, 2021 increased 298%, or $11.8 million, to $15.7 million compared to $3.9 million for the same period in the prior year.

The increase in net sales and adjusted gross billings in our Solutions segment was primarily due to the impact of the CDF acquisition for the three months ended June 30, 2021.

During the three months ended June 30, 2021, we relied on two key customers for a total of 34% of our net sales, with each customer accounting for 17% of our total net sales.

The Company had two major customers that accounted for 29% and 18%, respectively, of its total net sales during the three months ended June 30, 2020.

The Company had two major vendors that accounted for 18% and 12%, respectively, of total purchases during the three months ended June 30, 2021 and 16% and 10%, respectively, of total purchases during the three months ended June 30, 2020.

Gross profit for the three months ended June 30, 2021 increased 54%, or $3.9 million, to $11.0 million compared to $7.1 million for the same period in the prior year.

Distribution segment gross profit for the three months ended June 30, 2021 increased 33%, or $2.2 million, to $8.8 million compared to $6.6 million for the same period in the prior year.

Solutions segment gross profit for the three months ended June 30, 2021 increased 360%, or $1.7 million, to $2.2 million compared to $0.5 million for the same period in the prior year.

The increase in Solutions segment gross profit resulted primarily from increased sales from the acquisition of CDF.

Customer rebates and discounts for the three months ended June 30, 2021 were $2.5 million compared to $1.3 million for the same period in the prior year.

This increase is attributable to a change in payment terms with one of our larger customers during the second quarter of 2020, which resulted in a cash inflow of approximately $30 million from the date the program was implemented, as well as increased rebates and discounts to national resellers.

Customer rebates and discounts vary based on terms of rebate and early pay discount programs offered to customers and timing of payments ultimately received from our customers.

Vendor rebates and discounts for the three months ended June 30, 2021 were $1.1 million compared to $0.9 million for the same period in the prior year.

Vendor rebates are dependent on programs offered by our vendors and in some cases reaching certain volume targets set by our vendors.

The Company monitors vendor rebate levels, competitive pricing, and gross profit margins carefully.

We anticipate that price competition in our market will continue in both of our business segments.

Selling, General and Administrative Expenses

SG&A expenses for the three months ended June 30, 2021 increased 49%, or $2.7 million, to $8.1 million compared to $5.5 million for the same period in the prior year, primarily due to the impact of the acquisition of CDF and Interwork, as well as $0.2 million of employee separation expenses.

SG&A expenses were 10.8% of net sales for the three months ended June 30, 2021, compared to 9.7% for the same period in the prior year.

The Company expects that its SG&A expenses, as a percentage of net sales, may vary depending on changes in sales volume, as well as the levels of continuing investments in key growth initiatives.

We plan to continue to expand our investment in business development, sales and marketing to maximize our market penetration.

Amortization and Depreciation Expense

Amortization and depreciation expense for the three months ended June 30, 2021 increased 178%, or $0.3 million, to $0.4 million compared to $0.1 million for the same period in the prior year, primarily due to the amortization of intangible assets acquired in the Interwork and CDF acquisitions.

Legal and Financial Advisory Expenses, Net – Unsolicited Bid and Related Matters

There were no legal and financial advisory expenses, net – unsolicited bid and related matters incurred during the three months ended June 30, 2021 compared to $0.5 million for the same period in the prior year.

Acquisition Related Costs

There were no acquisition related costs incurred during the three months ended June 30, 2021 compared to $0.2 million for the same period in the prior year.

Acquisition related costs incurred in the prior year were in conjunction with the acquisition of Interwork.

For the three months ended June 30, 2021 and 2020, the Company recorded a provision for income taxes of $0.6 million and $0.4 million, respectively.

The effective tax rate for the three months ended June 30, 2021 and 2020 was 22.3% and 38.4%, respectively.

The change in the effective tax rate for the three months ended June 30, 2021 compared to the same period in the prior year is a result of changes in the mix of jurisdictions in which taxable income was earned and limitations on the deductibility of certain facilitative acquisition related costs in the prior year.

Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020

Net Sales and Adjusted Gross Billings

Net sales for the six months ended June 30, 2021 increased 16%, or $19.0 million, to $138.2 million compared to $119.2 million for the same period in the prior year.

Adjusted gross billings for the six months ended June 30, 2021 increased 34%, or $114.2 million, to $446.0 million compared to $331.8 million for the same period in the prior year.

Distribution segment net sales for the six months ended June 30, 2021 increased 12%, or $13.2 million, to $124.7 million compared to $111.5 million for the same period in the prior year.

Adjusted gross billings for the Distribution segment for the six months ended June 30, 2021 increased 29%, or $92.1 million, to $412.8 million compared to $320.7 million for the same period in the prior year primarily due to the impact of the acquisitions of Interwork and CDF.

Solutions segment net sales for the six months ended June 30, 2021 increased 74%, or $5.8 million, to $13.5 million compared to $7.7 million for the same period in the prior year.

The increase in net sales in our Solutions segment was primarily due to sales from the CDF acquisition for the six months ended June 30, 2021.

Adjusted gross billings for the Solutions segment for the six months ended June 30, 2021 increased 197%, or $22.1 million, to $33.2 million compared to $11.2 million for the same period in the prior year.

During the six months ended June 30, 2021, we relied on two key customers for a total of 34% of our net sales, with each customer accounting for 17% of our total net sales.

The Company had two major customers that accounted for 29% and 18%, respectively, of its total net sales during the six months ended June 30, 2020.

The Company had two major vendors that accounted for 21% and 9%, respectively, of total purchases during the six months ended June 30, 2021 and 19% and 10%, respectively, of total purchases during the six months ended June 30, 2020.

Gross profit for the six months ended June 30, 2021 increased 43%, or $6.5 million, to $21.8 million compared to $15.3 million for the same period in the prior year.

Distribution segment gross profit for the six months ended June 30, 2021 increased 21%, or $2.9 million, to $16.7 million compared to $13.8 million for the same period in the prior year.

The increase in early pay discounts was impacted by a change in payment terms with one of our larger customers during the second quarter of 2020.

Solutions segment gross profit for the three months ended March 31, 2021 increased 196%, or $2.0 million, to $3.0 million compared to $1.0 million for the same period in the prior year.

Solutions segment gross profit for the six months ended June 30, 2021 increased 248%, or $3.6 million, to $5.1 million compared to $1.5 million for the same period in the prior year.

The increase in Solutions segment gross profit resulted primarily from increased sales from the acquisition of CDF.

Customer rebates and discounts for the three months ended March 31, 2021 were $2.1 million compared to $1.1 million for the same period in the prior year.

Customer rebates and discounts for the six months ended June 30, 2021 were $4.5 million compared to $2.4 million for the same period in the prior year.

Customer rebates and discounts vary based on terms of rebate and early pay discount programs offered to customers and timing of payments ultimately received from our customers.

Vendor rebates and discounts for the three months ended March 31, 2021 were $0.9 million compared to $1.0 million for the same period in the prior year.

Vendor rebates and discounts for the six months ended June 30, 2021 and 2020 were $1.9 million, respectively.

Vendor rebates are dependent on programs offered by our vendors and in some cases reaching certain volume targets set by our vendors.

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Selling, General and Administrative Expenses

SG&A expenses for the three months ended March 31, 2021 increased 56%, or $3.0 million, to $8.4 million compared to $5.4 million for the same period in the prior year, primarily due to the impact of the acquisition of CDF and Interwork, as well as $0.3 million of employee separation expenses.

SG&A expenses were 13.4% of net sales for the three months ended March 31, 2021, compared to 8.6% for the same period in the prior year.

SG&A expenses for the six months ended June 30, 2021 increased 52%, or $5.7 million, to $16.6 million compared to $10.9 million for the same period in the prior year, primarily due to the impact of the acquisition of CDF and Interwork, as well as $0.5 million of employee separation expenses.

SG&A expenses were 12.0% of net sales for the six months ended June 30, 2021, compared to 9.1% for the same period in the prior year.

The Company expects that its SG&A expenses, as a percentage of net sales, may vary depending on changes in sales volume, as well as the levels of continuing investments in key growth initiatives.

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Amortization and Depreciation Expense

Amortization and depreciation expense for the three months ended March 31, 2021 increased 316%, or $0.3 million, to $0.4 million compared to $0.1 million for the same period in the prior year, primarily due to the amortization of intangible assets acquired in the Interwork and CDF acquisitions.

Amortization and depreciation expense for the six months ended June 30, 2021 increased 233%, or $0.6 million, to $0.8 million compared to $0.2 million for the same period in the prior year, primarily due to the amortization of intangible assets acquired in the Interwork and CDF acquisitions.

Legal and Financial Advisory Expenses, Net – Unsolicited Bid and Related Matters

There were no legal and financial advisory expenses, net – unsolicited bid and related matters incurred during the three months ended March 31, 2021 compared to $1.3 million for the same period in the prior year.

There were no legal and financial advisory expenses, net – unsolicited bid and related matters incurred during the six months ended June 30, 2021 compared to $1.8 million for the same period in the prior year.

Acquisition Related Costs

There were no acquisition related costs incurred during the three months ended March 31, 2021 compared to $0.4 million for the same period in the prior year.

For the three months ended March 31, 2021 and 2020, the Company recorded a provision for income taxes of $0.4 million and $0.3 million, respectively.

The effective tax rate for the three months ended March 31, 2021 and 2020 was 22.1% and 25.0%, respectively.

The change in the effective tax rate for the three months ended March 31, 2021 compared to the same period in the prior year is a result of changes in the mix of jurisdictions in which taxable income was earned.

There were no acquisition related costs incurred during the six months ended June 30, 2021 compared to $0.6 million for the same period in the prior year.

Acquisition related costs incurred in the prior year were in conjunction with the acquisition of Interwork.

For the six months ended June 30, 2021 and 2020, the Company recorded a provision for income taxes of $1.0 million and $0.6 million, respectively.

The effective tax rate for the six months ended June 30, 2021 and 2020 was 22.2% and 31.1%, respectively.

The change in the effective tax rate for the six months ended June 30, 2021 compared to the same period in the prior year is a result of changes in the mix of jurisdictions in which taxable income was earned and limitations on the deductibility of certain facilitative acquisition related costs in the prior year.

Liquidity and Capital Resources

Our cash and cash equivalents increased to $33.7 million as of March 31, 2021 compared to $29.3 million as of December 31, 2020.

The increase in cash and cash equivalents was primarily the result of $8.2 million of cash and cash equivalents provided by operating activities, offset by $3.1 million of cash used in investing activities and $0.8 million of cash used for dividends.

Net cash and cash equivalents used in operating activities for the three months ended March 31, 2021 was $8.2 million, comprised primarily of net income adjusted for non-cash items of $2.4 million and changes in operating assets and liabilities of $5.8 million.

Net cash and cash equivalents used in investing activities during the three months ended March 31, 2021 consisted of $3.0 million of vendor advances and $0.1 million of purchases of fixed assets.

Net cash and cash equivalents used in financing activities during the three months ended March 31, 2021 was $0.8 million, primarily comprised of dividend payments on our Common Stock.

Our cash and cash equivalents decreased to $23.8 million as of June 30, 2021 compared to $29.3 million as of December 31, 2020.

The decrease in cash and cash equivalents was primarily the result of $0.9 million of cash and cash equivalents used in operating activities, $3.2 million of cash used in investing activities and $1.7 million of cash used for dividends.

Net cash and cash equivalents used in operating activities for the six months ended June 30, 2021 was $0.9 million, comprised primarily of net income adjusted for non-cash items of $5.3 million, partially offset by changes in operating assets and liabilities of $6.2 million.

Net cash and cash equivalents used in investing activities during the six months ended June 30, 2021 consisted of $3.0 million of vendor advances and $0.2 million of purchases of fixed assets.

Net cash and cash equivalents used in financing activities during the six months ended June 30, 2021 was $1.7 million, comprised of dividend payments on our Common Stock of $1.5 million and purchases of treasury stock of $0.2 million.

On November 15, 2017, the Company entered into a $20,000,000 revolving credit facility (the “Credit Facility”) with Citibank, N.A.

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The Amended Credit Facility, which will continue to be used for working capital and general corporate purposes, matures on June 30, 2023, at which time the Company must pay all outstanding principal of all outstanding loans plus all accrued and unpaid interest, and any, fees, costs and expenses.

As of March 31, 2021, no borrowings were outstanding under the Credit Facility.

Subsequent to the quarter end, on April 13, 2021, Wayside Technology UK Holdings Limited (“Wayside UK”), a wholly-owned subsidiary of the Company, entered into an uncommitted short term credit facility of £8,000,000 (“Uncommitted Credit Facility”) with Citibank N.A., London Branch (“Citibank London”) pursuant to certain terms and conditions.

As of June 30, 2021, no borrowings were outstanding under the Credit Facility.

On April 13, 2021, Wayside Technology UK Holdings Limited (“Wayside UK”), a wholly-owned subsidiary of the Company, entered into an uncommitted short term credit facility of £8,000,000 (“Uncommitted Credit Facility”) with Citibank N.A., London Branch (“Citibank London”) pursuant to certain terms and conditions.

Obligations under the Uncommitted Credit Facility are guaranteed by the Company and will be used for working capital and general corporate purposes and have a maturity date of April 13, 2022, at which time Wayside UK must pay all outstanding principal of all outstanding loans plus all accrued and unpaid interest, and any interest, fees, costs and expenses, if any.

As of June 30, 2021, no borrowings were outstanding under the Uncommitted Credit Facility.

We anticipate that our working capital needs will increase as we invest in the growth of our business.

We believe that the funds held in cash and cash equivalents and our unused borrowings under our Credit Facility will be sufficient to fund our working capital and cash requirements for the next 12 months.

We believe that the funds held in cash and cash equivalents and our unused borrowings under our Uncommitted Credit Facility will be sufficient to fund our working capital and cash requirements for the next 12 months.

Foreign Exchange

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Off-Balance Sheet Arrangements

As of March 31, 2021, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

As of June 30, 2021, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

Quantitative and Qualitative Disclosures about Market Risk

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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-Q

Item 2. Management’s Discussion and Analysis