Company: GULTU
Filing Date: 2025-03-28
Form Type: 10-K
Source: 0001641172-25-001201
Chunk: 15

Company: Gulf Coast Ultra Deep Royalty Trust
Filing Date: 2025-03-28
Form: 10-K
Item: Item 1A
Chunk 15
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 financial statements.

The
Royalty Trust is a smaller reporting company and benefits from certain reduced governance and disclosure requirements, including that
the Royalty Trust’s independent registered public accounting firm is not required to, nor were they engaged to, attest to the effectiveness
of the Royalty Trust’s internal control over financial reporting. The Royalty Trust cannot be certain if the omission of reduced
disclosure requirements applicable to smaller reporting companies will make the Royalty Trust units less attractive to investors.

Currently,
the Royalty Trust is a “smaller reporting company,” meaning that the outstanding Royalty Trust units held by nonaffiliates
had a value of less than $250 million at the end of the Royalty Trust’s most recently completed second fiscal quarter. As a smaller
reporting company, the Royalty Trust is not required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley
Act, meaning the Royalty Trust’s auditors are not required to attest to the effectiveness of the Trust’s internal control
over financial reporting. As a result, investors and others may be less comfortable with the effectiveness of the Royalty Trust’s
internal controls and the risk that material weaknesses or other deficiencies in internal controls go undetected may increase. In addition,
as a smaller reporting company, the Royalty Trust takes advantage of its ability to provide certain other less comprehensive disclosures
in its SEC filings, including, among other things, providing only two years of audited financial statements in annual reports. Consequently,
it may be more challenging for investors to analyze the Royalty Trust’s results of operations and financial prospects, as the information
the Royalty Trust provides to Royalty Trust unitholders may be different from what one might receive from other public companies in which
one holds shares. As a smaller reporting company, the Royalty Trust is not required to provide this information.

Risks
Related to Cybersecurity

Cybersecurity
incidents or other failures in telecommunications or information technology systems could result in information theft, data corruption
and significant disruption of the respective operations of the Trustee and HOGA as they relate to the Royalty Trust.

Each
of the Trustee and HOGA depend heavily upon information technology systems and networks in connection with their respective business
activities as they relate to the Royalty Trust. Despite any security measures implemented, events such as the loss or theft of back-up
tapes or other data storage media could occur, and computer systems could be subject to physical and electronic