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, 2024, we have interest rate risk in connection with the Term Loan under the Credit Agreement and foreign currency exchange rate risk from our global operations.
Interest Rate Risk
Under the Credit Agreement, borrowings bear interest at rates determined based on either the Adjusted Term SOFR rate or the Reference Rate (each as defined in the Credit Agreement). As of December 31, 2024, our Term Loan bore interest at a variable rate based on the Adjusted Term SOFR rate. As a result, we are subject to interest rate risk based on the Adjusted Term SOFR rate (or the Reference Rate, as applicable), and our interest obligation on outstanding borrowings will fluctuate with movements in the Adjusted Term SOFR rate (or the Reference Rate, as applicable). As of December 31, 2024, the stated interest rate on the Term Loan was 11.59%, per annum.
Certain voluntary or mandatory prepayments of the Term Loan, as prescribed by the Credit Agreement, are subject to prepayment premiums as follows: (i) with respect to any such payment occurring on or before December 31, 2025, a 3.0% prepayment premium plus a make-whole amount based on U.S. Treasury notes yield, (ii) with respect to any such payment occurring after December 31, 2025 and on or before December 31, 2026, a 1.0% prepayment premium, and (iii) with respect to any such payment occurring after December 31, 2026, no prepayment premium.
As of December 31, 2024, our exposure to interest rate risk calculated using the Adjusted Term SOFR rate or the Reference Rate was not material. As of December 31, 2024, our exposure to interest rate risk related to prepayment breakage costs and prepayment premiums was not material.
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 $10.9 million and a 10% increase in value would have resulted in an increase to our net loss of approximately $7.3 million for the year ended December 31, 2024.
As of December 31, 2024, of our total $33.5 million in cash and cash equivalents, including restricted cash, $9.1 million was held by foreign subsidiaries. Of this amount, we believe $2.0 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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