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Our exposure to interest rate sensitivity is impacted by changes in the underlying United States and United Kingdom bank interest rates.
−Removed: Our surplus cash has been invested in interest-bearing savings and money market accounts from time to time.
+Added: Our surplus cash has been invested in interest-bearing savings and short-term deposits from time to time.
We have not entered into investments for trading or speculative purposes.
Due to the conservative nature of our investment portfolio, which is predicated on capital preservation of investments with short-term maturities, we do not believe an immediate one percentage point change in interest rates would have a material effect on the fair market value of our portfolio, and therefore we do not expect our operating results or cash flows to be significantly affected by changes in market interest rates.
+Added: We have borrowed $30.0 million under our debt facility.
+Added: Amounts outstanding under the debt facility bears interest at an annual rate equal to the greater of either (i) the prime rate as reported in The Wall Street Journal plus 1.50% or (ii) 9.75%.
+Added: As of December 31, 2023, the carrying value of the term loan under the debt facility was $28.8 million.
Foreign Currency Exchange Risk
−Removed: We currently maintain the consolidated financial statements of COMPASS Pathways plc in pounds sterling, but for financial reporting purposes our consolidated financial statements have been presented in U.S.
−Removed: dollars, the reporting currency.
−Removed: Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at rates of exchange prevailing at the balance sheet dates.
−Removed: Non-monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing at the date of the transaction.
−Removed: Exchange gains or losses arising from foreign currency transactions are included in other income (expense), net in the consolidated statements of comprehensive loss.
−Removed: The financial statements of entities are translated from their functional currency into the reporting currency as follows:
−Removed: assets and liabilities are translated at the exchange rates at the balance sheet dates, expenses are translated at the average exchange rates for the relevant period and shareholders’ equity (deficit) is translated based on historical exchange rates.
−Removed: Translation adjustments are not included in determining net loss but are included as a foreign exchange adjustment to other comprehensive loss, a component of shareholders’ equity (deficit).
+Added: On January 1, 2023, Compass Pathways plc and its wholly owned subsidiary Compass Pathfinder Holdings Limited changed their functional currency to the U.S.
+Added: Compass Pathways plc and Compass Pathfinder Holdings Limited have no operating activities and their primary functions are to serve as a financing vehicle to fund the operations of the Company’s operating entities, to serve as the listing company needed to access U.S.
+Added: capital markets, and to hold investments.
+Added: Therefore, its financing source is the primary indicator of its cash flows and its functional currency.
+Added: The change in functional currency from the British Pound Sterling is due to a change in the source of the Company’s financing and cash flows going forward, which will now primarily be U.S.
+Added: Dollars (“USD”).
+Added: The functional currency of Compass Pathfinder Holdings Limited’s wholly owned non-U.S.
+Added: subsidiary, Compass Pathfinder Limited, is British Pound Sterling and the functional currency of its U.S.
+Added: subsidiary, Compass Pathways Inc.
+Added: The functional currency of these subsidiaries is the same as the local currency.
+Added: The translated balances of monetary and non-monetary assets and liabilities recorded in the reporting entity’s consolidated financial statements as of the end of the prior reporting period become the new accounting basis for those assets and liabilities in the period of the change.
+Added: To the extent that the distinct and separable operation has monetary assets and liabilities denominated in the old functional currency, such balances will create transaction gains and losses subsequent to the change in functional currency.
+Added: The balance recorded in the cumulative translation adjustment account for prior periods is not reversed upon the change in functional currency.
+Added: The Company translates the assets and liabilities of Compass Pathfinder Limited into USD at the exchange rate in effect on the balance sheet date.
+Added: Income and expenses are translated at the average exchange rate in effect during the period.
+Added: Unrealized translation gains and losses are recorded as a cumulative translation adjustment, which is included in the consolidated statements of shareholders’ equity as a component of accumulated other comprehensive income/(loss).
For the year ended December 31, 2023, $3.7 million of unrealized gains on foreign currency translation was included in other comprehensive loss compared to an unrealized gain of $0.8 million for the year ended December 31, 2022.
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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.