DLH(US:DLHC)2023-12-05 16:00Financial Condition and Indebtedness - The company has a substantial amount of goodwill on its balance sheet, which may lead to future write-offs that could adversely affect earnings[88]. - Following the acquisition of Grove Resource Solution, LLC in December 2022, the company amended its credit agreement and incurred additional indebtedness, requiring compliance with various financial covenants[89]. - The company’s increased indebtedness may limit its ability to take advantage of business opportunities and could increase vulnerability to adverse economic conditions[90]. - The company has not paid dividends on its common stock since inception and does not anticipate doing so in the foreseeable future, which may affect stockholder returns[92]. - The company may issue preferred stock with rights senior to common stock, potentially impacting the voting rights of common stockholders[93]. Ownership and Corporate Governance - As of September 30, 2023, executive officers, directors, and significant stockholders own approximately 44% of the outstanding common stock, which may influence corporate decisions and deter changes in control[97]. Legal and Regulatory Risks - The company is exposed to legal proceedings and investigations, which could result in substantial monetary damages and adversely impact financial results[101]. - Changes in U.S. tax laws may affect the company's financial condition and require adjustments in accounting for these changes[107]. - The company faces increased costs and risks due to compliance with the Sarbanes-Oxley Act of 2002, which requires significant management resources for internal control evaluations[108]. Operational Risks - The company may experience fluctuations in revenues and operating results due to various factors, including government budgetary delays and the timing of contract awards[99]. - The COVID-19 pandemic has created significant volatility and uncertainty, adversely impacting the U.S. and global economies, with unpredictable effects on the company's operations and financial results[109]. Financial Instruments and Interest Rates - As of September 30, 2023, the company executed a floating-to-fixed interest rate swap with a notional amount of $16.2 million at a fixed rate of 1.61%, maturing in 2024[188]. - An additional floating-to-fixed interest rate swap with a notional amount of $96.0 million at a fixed rate of 4.10% was executed, maturing in January 2026, bringing the total swap balance to $112.2 million[188]. - A 1.0% increase in the SOFR rate would increase the company's interest expense by approximately $0.7 million per year[188]. - As of September 30, 2023, the interest rate was reported at 9.51%[188]. Employee-Related Costs - The company’s financial condition may be adversely affected by increases in employee healthcare claims and insurance premiums, as these are significant direct costs[104].