Purple Innovation, Inc. 10-Q

ITEM  3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk Our operating results are subject to risk from interest rate fluctuations on our outstanding borrowings. Our revolving line of credit under our 2020 Credit Agreement bore interest at a variable rate, which exposed us to market risks relating to changes in interest rates. Interest rate risk is highly sensitive due to many factors, including U.S. monetary and tax policies, U.S. and international economic factors and other factors beyond our control. As of June 30, 2023, we had no variable rate debt outstanding as our term loan was paid in full during the first quarter of 2023 and we had no borrowings outstanding under our revolving line of credit . The proceeds we received from the Term Loans entered into in August 2023 bear interest at variable rates which exposes us to market risks relating to changes in interest rates. On August 7, 2023, we had $25.0 million of variable rate debt outstanding under our Term Loans. Based on these debt levels, an increase of 100 basis points in the effective interest rates on these outstanding debt amounts would result in an increase in interest expense of approximately $0.3 million over the next 12 months. We do not use derivative financial instruments for speculative or trading purposes, but this does not preclude our adoption of specific hedging strategies in the future.