{"url_path":"/sec/iotr/10-k/2026/item-11","section_key":"item-11","section_title":"Item 11 QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK**","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-07-07","source_url":"https://www.sec.gov/Archives/edgar/data/1997637/0001213900-26-075976-index.html","accession_number":"0001213900-26-075976","cik":"0001997637","ticker":"IOTR","issuer_name":"iOThree Ltd","edgar_url":"https://www.sec.gov/Archives/edgar/data/1997637/0001213900-26-075976-index.html","primary_entity_key":"0001997637","primary_entity_name":"iOThree Ltd"},"word_count":796,"has_tables":true,"body_markdown":"**ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK**\n\n \n\nWe have exposure to a variety\nof financial risks from our operations. The key financial risks include credit risk, interest rate risk, economic and political risk,\nexchange rate risk and liquidity risk.\n\n \n\nFurther quantitative disclosures\nare included throughout the consolidated financial statements.\n\n** **\n\n**Credit Risk**\n\n \n\nFinancial instruments that\npotentially subject us to credit risk consist of cash equivalents, restricted cash, accounts and financing receivable. Cash equivalents\nare maintained with high credit quality institutions, the composition and maturities of which are regularly monitored by management. The\nSingapore Deposit Protection Board pays compensation up to a limit of S$100,000 (approximately $74,395) if the bank with which an individual/a\ncompany hold its eligible deposit fails. As of March 31, 2026, 2025 and 2024, cash balance of $2.1, $0.4 million and $0.9 million, respectively,\nheld at financial institutions in Singapore, was subject to credit risk. While management believes that these financial institutions are\nof high credit quality, it also continually monitors their credit worthiness.\n\n \n\nFor accounts receivable,\nwe determine, on a continuing basis, the probable losses, and sets up an allowance for doubtful accounts based on the estimated realizable\nvalue.\n\n \n\nWe have adopted a policy\nof only dealing with creditworthy counterparties. We perform ongoing credit evaluation of our counterparties’ financial condition\nand generally do not require a collateral. We also consider the probability of default upon initial recognition of asset and whether there\nhas been a significant increase in credit risk on an ongoing basis throughout each reporting period.\n\n \n\nWe have determined the default\nevent on a financial asset to be when internal and/or external information indicates that the financial asset is unlikely to be received,\nwhich could include default of contractual payments due for more than 90 days or there is significant difficulty of the counterparty.\n\n \n\nTo minimize credit risk,\nwe have developed and maintained our credit risk grading to categorize exposures according to their degree of risk of default. The credit\nrating information is supplied by publicly available financial information and our own trading records to rate our major customers and\nother debtors. We consider available reasonable and supportive forward-looking information which includes the following indicators:\n\n \n\n \n●\nActual or expected significant adverse changes in business, financial or economic conditions that are expected to cause a significant change to the debtor’s ability to meet its obligations\n\n \n\n \n●\nInternal credit rating\n\n \n\n \n●\nExternal credit rating and when necessary\n\n \n\nRegardless of the analysis\nabove, a significant increase in credit risk is presumed if a debtor is more than 60 days past due in making contractual payment.\n\n \n\nAs of March 31, 2026, approximately\n23.4% of accounts receivable and sale-type lease investments were collectively owed by two customers. The ageing for aforementioned receivables\nwas less than 90 days.\n\n \n\nAs of March 31, 2025, approximately\n23.5% of accounts receivable and sale-type lease investments were collectively owed by two customers. The ageing for aforementioned receivables\nwas less than 90 days.\n\n \n\nAs of March 31, 2024, approximately\n22.1% of accounts receivable and sale-type lease investments were collectively owed by two customers. The ageing for aforementioned receivables\nwas less than 90 days.\n\n \n\n**Interest Rate Risk**\n\n \n\nAs we have no significant\ninterest-bearing assets, our income and operating cash flows are substantially independent of changes in market interest rates.\n\n \n\n76\n\n \n\n  \n\nOur interest-rate risk arises\nfrom bank borrowings. We manage interest rate risk by managing the mixture of fixed and variable rate debt, the issuance and maturity\ndates of debt, limiting the amount of variable rate debt, and continually monitoring the effects of market changes in interest rates.\nAs of March 31, 2026, 2025 and 2024, all our bank borrowings were at fixed interest rates.\n\n** **\n\n**Economic and Political Risk**\n\n \n\nOur major operations are\nconducted in Asia. Accordingly, the political, economic, and legal environments in Asia, as well as the general state of Asia’s\neconomy may influence our business, financial condition, and results of operations.\n\n** **\n\n**Exchange Rate Risk**\n\n \n\nWe cannot guarantee that\nthe current exchange rate will remain steady; therefore, there is a possibility that we could report the same amount of profit for two\ncomparable periods but, because of fluctuations in the exchange rate, actually realize higher or lower profit when converted from S$ to\nUS$. The exchange rate could fluctuate depending on changes in political and economic environments without notice.\n\n** **\n\n**Liquidity Risk**\n\n \n\nLiquidity risk is the risk\nthat we will not be able to meet our financial obligations as they become due. Our policy is to ensure that we have sufficient cash to\nmeet our liabilities when they become due, under both normal and stressed conditions, without incurring unacceptable losses or risking\ndamage to our reputation. A key risk in managing liquidity is the degree of uncertainty in cash flow projections. If future cash flows\nare highly uncertain, liquidity risk increases.** **"}