FITLIFE BRANDS, INC. 10-Q

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK   Our business is currently conducted principally in the United States. As a result of the acquisition of MRC, our financial results can be affected by factors such as changes in foreign currency exchange rates or economic conditions in foreign markets. We engaged in hedging transactions to reduce our exposure to changes in currency exchange rates that impacted the cash required for the acquisition of MRC. As the geographical scope of our business broadens, we may engage in hedging transactions to reduce our exposure to changes in foreign currency rates.   Our exposure to risk for changes in interest rates relates primarily to any borrowings under our Credit Agreement, and our investments in short-term financial instruments. As of March 31, 2023, the Company had a Term Loan balance of $12.5 million and a zero balance under its Line of Credit.   Investments of our existing cash balances in both fixed rate and floating rate interest-earning instruments carry some interest rate risk. The fair value of fixed rate securities may fall due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall. Partly as a result of this, our future interest income will vary due to changes in interest rates and we may suffer losses in principal if we are forced to sell securities that have fallen in estimated fair value due to changes in interest rates. However, as substantially all of our cash equivalents consist of bank deposits and short-term money market instruments, we do not expect any material change with respect to our net income as a result of an interest rate change.   -20-