Quantitative and Qualitative Disclosures about Market Risk
−Removed: Interest Rate Risk and Foreign Exchange Risk
−Removed: Cash equivalents that are subject to interest rate volatility represent our principal market risk.
−Removed: We do not expect cash flows to be affected to any significant degree by a sudden change in market interest rates as our notes payable bear fixed interest rates.
−Removed: We do not enter into investments for trading or speculative purposes.
−Removed: Additionally, as of September 30, 2023, the Company had not made any draws under the Revolving Facility, and there were no amounts outstanding.
−Removed: On October 19, 2023, the Company drew down $25 million under the Revolving Facility.
+Added: We are exposed to certain market risks, including those relating to changes in interest rates and foreign currency exchange rates.
+Added: We do not enter into instruments for trading or speculative purposes.
+Added: Interest Rate Risk
+Added: We are subject to interest rate risk relating to our cash equivalents and borrowings under our Revolving Facility, which bear interest at a per annum rate equal to (i) at our option, (x) the base rate or (y) the adjusted term SOFR rate, plus (ii) the applicable margin.
+Added: The applicable margins are based on the Company’s consolidated net leverage ratio, adjusted on a quarterly basis.
+Added: The Company drew down $15,000,000 on February 8, 2024 under the Revolving Facility.
+Added: On February 27, 2024, the Company paid the $40,000,000 line of credit balance.
+Added: On March 4, 2024, the Company drew down $15,000,000 and made an additional $15,000,000 draw on March 18, 2024.
+Added: As of March 31, 2024, the outstanding balance of the line of credit was $30,000,0000.
+Added: While the applicable interest rate is set for a specific term when amounts are drawn down under the terms of the Revolving Facility, any subsequent draws on the Revolving Facility may be subject to a higher or lower interest rate, depending upon, among other things, the then-prevailing SOFR rate.
+Added: We have not utilized interest rate hedging or other strategies in an attempt to mitigate our interest rate risk.
+Added: A hypothetical 10% change in interest rates during the three months ended March 31, 2024 would have had a neutral net impact on our unaudited Condensed Consolidated Financial Statements, as changes in amounts paid for interest expense would have offset changes in interest income earned on cash balances.
+Added: Foreign Exchange Risk
We operate our business primarily within the U.S.
1 unchanged sentence
However, we are exposed to limited foreign exchange risk as a result of our U.K.
−Removed: The foreign exchange loss amounted to $(582,471) to the Company in the third quarter of 2023, compared to $248,283 in the third quarter of 2022.
+Added: The foreign exchange loss amounted to $140,134 to the Company in the first quarter of 2024, compared to $243,658 in the first quarter of 2023.
We have not utilized hedging strategies with respect to such foreign exchange exposure.
This limited foreign currency translation risk is not expected to have a material impact on our consolidated financial statements.
+Added: A hypothetical 10% change in the applicable foreign exchange rate during the three months ended March 31, 2024 would have resulted in a change in total revenues of approximately 0.6% and a change in total assets of approximately 0.9%.
Concentrations of Risk and Significant Clients
−Removed: Our financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents, short-term investments and accounts receivable.
−Removed: Although we deposit our cash with multiple financial institutions in the U.S.
−Removed: and in foreign countries, our deposits, at times, may exceed federally insured limits.
−Removed: The Company had one customer that accounted for approximately 33% of sales and 36% of net accounts receivable and another customer that accounted for 32% of sales and 28% of net accounts receivable for the three months ended September 30, 2023.
−Removed: One customer accounted for approximately 37% of sales and 28% of net accounts receivable and another customer accounted for approximately 17% of sales and 36% of net accounts receivable for the nine months ended September 30, 2023.
−Removed: The Company had one customer that accounted for approximately 35% of sales and 35% of net accounts receivable for the three months ended September 30, 2022.
−Removed: The Company had one customer that accounted for 33% of sales and 35% of net accounts receivable, and another customer that accounted for 11% of sales and 0.1% of net accounts receivable for the nine months ended September 30, 2022.
+Added: Our financial instruments that are exposed to concentrations of credit risk consist primarily of cash, cash equivalents, restricted cash and accounts receivable.
+Added: Although we deposit our cash with multiple financial institutions in the United States and in foreign countries, our deposits, at times, may exceed federally insured limits.
+Added: We do not believe we are exposed to significant credit risk due to the financial strength of the depository institutions in which the funds are held.
+Added: With respect to accounts receivable, the Company had one customer that accounted for approximately 39% of revenues and 34% of net accounts receivable and another customer that accounted for 32% of revenues and 46% of net accounts receivable for the three months ended March 31, 2024.
+Added: The Company had one customer that accounted for approximately 46% of revenues and 62% of net accounts receivable for the three months ended March 31, 2023.
+Added: We perform ongoing evaluations of customers’ financial condition, creditworthiness and payment performance.
+Added: Based on these evaluations, we consider whether or not the accounts receivable exposure to any specific customer is within an acceptable range for that customer.
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.