Item 3. Quantitative and Qualitative Disclosures About Market Risk
ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest
Rate Risk
Our
operating results are subject to risk from interest rate fluctuations on the outstanding borrowings. 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.
The proceeds we received from the Related Party Loan entered into in January 2024 and amended by the 2025 Amendment and the Second 2025
Amendment, bears interest at a variable rate which exposes us to market risks relating to changes in interest rates. As of September
30, 2025, we had $122.2 million of variable rate debt associated with the Related Party Loan. Based on this debt level, an increase of
100 basis points in the effective interest rate on the outstanding debt amount would result in an increase in interest expense of approximately
$1.2 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.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.