Item 7A. Quantitative and Qualitative Disclosures About Market Risk
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. As of December 31, 2022, we have outstanding warrants that are subject to market risk. We also have interest rate risk for amounts outstanding under our Revolving Credit Agreement, and foreign currency exchange rate risk from our global operations.
Interest rate risk
As of December 31, 2022, our borrowings, including letters of credit, under the Revolving Credit Agreement bore interest at a variable rate per annum equal to the Daily SOFR (as defined in the Revolving Credit Agreement) plus an applicable rate of 2.50%. On February 24, 2023, our interest rate increased to a variable rate per annum equal to the Daily SOFR plus an applicable rate of 3.50%.
As a result, we are subject to interest rate risk based on the Daily SOFR, and our interest obligation on outstanding borrowings will fluctuate with movements in the Daily SOFR. We are permitted to repay any amounts borrowed under the Revolving Credit Agreement prior to the maturity date without any premium or penalty other than customary breakage costs.
As of December 31, 2022, our exposure to interest rate risk calculated using the Daily SOFR was not material.
Warrants liability financial instrument risk
As a result of having $0.7 million in liability related to outstanding warrants as of December 31, 2022, which warrants are exercisable for shares of Common Stock under certain conditions, we are subject to market risk. The value of the warrants is impacted by changes in the market price of our Common Stock.
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As of December 31, 2022, a 10% increase in the market price of our Common Stock would result in a $0.2 million increase in the fair value of the Series A Warrants, while a 10% decrease in the market price of our Common Stock would result in a $0.2 million decrease in fair value of the Series A Warrants.
For further information on our outstanding warrants, refer to Footnote 5 , Convertible Redeemable Preferred Stock and Stockholders' Equity .
Foreign currency risk
We operate globally, and we predominantly generate revenues and expenses in local currencies. We operate in several countries in Europe, as well as countries throughout South America and Asia Pacific. As such, we have exposure to adverse changes in exchange rates associated with revenues and operating expenses of our foreign operations. We have not engaged in any transactions that hedge foreign currency exchange rate risk.
There can be no guarantee that exchange rates will remain constant in future periods. In addition to the impact from the U.S. Dollar to Euro exchange rate movements, we are also impacted by the movements in the exchange rates between the U.S. Dollar and various South American, Asia Pacific and other European currencies. We performed a sensitivity analysis, assuming a 10% decrease or increase in the value of foreign currencies in which we operate. We determined that a 10% decrease in value would have resulted in a decrease to our net loss of approximately $9.6 million and a 10% increase in value would have resulted in an increase to our net loss of approximately $5.2 million for the year ended December 31, 2022.
As of December 31, 2022, of our total $20.4 million in cash and cash equivalents, including restricted cash, $10.6 million was held by foreign subsidiaries. Of this amount, we believe $3.3 million could be subject to income tax withholding of 5% to 15% if the funds were repatriated to the U.S.
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