DLH(US:DLHC)2025-12-10 21:29Financial Position and Indebtedness - The company has a substantial amount of goodwill on its balance sheet, which may lead to future write-offs that could decrease earnings or increase losses[96] - Following the acquisition of DLH, LLC in December 2022, the company amended its credit agreement, incurring additional indebtedness and modifying financial covenants[97] Dividends and Stock Ownership - The company has not paid dividends on its common stock since inception and does not anticipate paying any in the foreseeable future[100] - As of September 30, 2025, executive officers, directors, and significant stockholders own approximately 41% of the outstanding common stock, which may influence corporate decisions[105] Revenue and Operating Results - The company may experience fluctuations in revenues and operating results due to various factors, including government budgetary delays and contract timing[107] - Increased costs in supply and labor markets due to inflation could adversely affect the company's ability to compete and reduce profits[110] Legal and Insurance Risks - The company is exposed to legal proceedings and disputes, which could result in substantial monetary damages if unfavorable rulings occur[111] - The company does not maintain "key personnel" life insurance on its executive officers, which could materially affect operations if key personnel are lost[112] - The company may not be fully covered by insurance, and inability to renew insurance plans could adversely impact its business[113] Employee Costs and Tax Liabilities - Increases in employee healthcare claims and insurance premiums could significantly affect the company's direct costs and profit margins[114] - Changes to U.S. tax laws may require adjustments in accounting, potentially affecting profitability due to increased tax liabilities and audits[116] Compliance and Operational Risks - Compliance with the Sarbanes-Oxley Act has led to significant management resource allocation, resulting in increased accounting and legal expenses[117] - Future operations may be adversely impacted by global health events, creating volatility and economic disruption, affecting customer demand and service delivery[118] Market Risks and Interest Rates - The company has limited exposure to market risks, with no material engagement in trading practices that would expose it to interest rate or foreign currency risks[187] - A floating-to-fixed interest rate swap with a notional amount of $74.0 million is set to mature on September 30, 2025[187] - A 1.0% increase in SOFR would increase interest expense by approximately $0.6 million annually, with the current floating interest rate debt at 8.38%[188]