Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 3. Quantitative and Qualitative Disclosures about Market Risk
We had a cash balance of $104.8 million as of September 30, 2021. We hold certain portions of our cash balances in overnight money market placements all of which are fully available to us to support our cash flow requirements. The primary objective of our investment policy is to preserve principal and maintain proper liquidity to meet operating needs. Our investment policy specifies credit quality standards for our investments and limits the amount of credit exposure to any single issue, issuer, or type of investment. Our primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of U.S. interest rates. To minimize this risk, we intend to maintain an investment portfolio that may include cash, cash equivalents and investment securities available-for-sale in a variety of securities which may include money market funds, government and non-government debt securities and commercial paper, all with various maturity dates. Due to the low risk profile of our investments, an immediate 100 basis point change in interest rates would not have a material effect on the fair market value of our portfolio.
Our debt under the Financing Agreement accrues interest at either (i) 3-month LIBOR plus 7.75%, subject to a LIBOR floor of 2.70% or (ii) the prime rate plus 6.75%, subject to a prime rate floor of 5.20%. Based on our debt under the Financing Agreement balance of $200.0 million as of September 30, 2021, a 1.0% change in interest rates would result in an impact to loss before income taxes of $2.0 million per annum.
LIBOR is expected to be discontinued after 2021, with one-month LIBOR being discontinued in 2023. The Financing Agreement provides procedures for determining a replacement or alternative rate in the event that LIBOR is unavailable. We may also continue to elect the prime rate in the event that LIBOR is unavailable regardless of whether a replacement or alternative rate has been determined. The prime rate or LIBOR replacement or alternative rate may be more or less favorable to us than LIBOR. Due to these features of the Financing Agreement, we do not believe that the LIBOR transition will have a material impact on our financial statements.
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