Russian Invasion of Ukraine
We are closely monitoring the impact of the Russian invasion of Ukraine and its impact on our business. For our government customers, their focus on addressing
immediate needs in Ukraine has slowed the pipeline and pace of contract awards, pushing revenue further to the right. We continue to expect the geopolitical climate to drive adoption of our offerings over the long term, as it has heightened the need
for advanced AI tools that provide enhanced intelligence and full spectrum cyber operations areas where we have unmatched capabilities. While the conflict is still evolving and the outcome remains highly uncertain, we do not believe the
Russian invasion will have a material impact on our business and results of operations. However, if the conflict continues or worsens, leading to greater disruptions and uncertainty within the technology industry or global economy, our business and
results of operations could be negatively impacted.
First Amendment to the Bank of America Credit Agreement
As of June 30, 2022, the Company was not in compliance with the Fixed Charge Coverage ratio requirement of the Credit Agreement (the Bank of
America Credit Agreement), dated as of December 7, 2021, by and among the Company, the other borrowers party thereto, the lenders from time to time party thereto and Bank of America, N.A., as administrative agent and collateral agent.
The Company notified Bank of America N.A. of the covenant violation, and, on August 9, 2022, entered into the First Amendment (the Amendment) to the Bank of America Credit Agreement, which, among other things, waived the
requirement that the Company demonstrate compliance with the minimum Fixed Charge Coverage ratio provided for in the Credit Agreement for the quarter ended June 30, 2022.
See the Liquidity and Capital Resources section below and Note TSubsequent Events of the consolidated financial statements included in this
Quarterly Report on Form 10-Q for additional information regarding the Amendment.
Components of Results of
Operations
Revenues
We generate
revenue by providing our customers with highly customizable solutions and services for data ingestion, data enrichment, data processing, artificial intelligence, machine learning, predictive analytics and predictive visualization. We have a diverse
base of customers, including government defense, government intelligence, as well as various commercial enterprises.
Cost of Revenues
Cost of revenues primarily includes salaries, stock-based compensation expense, and benefits for personnel involved in performing the services described above
as well as allocated overhead and other direct costs.
We expect that cost of revenues will increase in absolute dollars as our revenues grow and will
vary from period-to-period as a percentage of revenues.
Selling, General and Administrative (SG&A)
SG&A expenses include salaries, stock-based compensation expense, and benefits for personnel involved in our executive, finance, accounting, legal, human
resources, and administrative functions, as well as third-party professional services and fees, and allocated overhead.
We expect that SG&A expenses
will increase in absolute dollars as we hire additional personnel and enhance our systems, processes, and controls to support the growth in our business as well as our increased compliance and reporting requirements as a public company.
Research and Development
Research and development
expenses primarily consist of salaries, stock-based compensation expense, and benefits for personnel involved in research and development activities as well as allocated overhead. Research and development expenses are expensed in the period
incurred.
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