| RISKS |
NOTE 17 – RISKS
| A. |
Credit risk |
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Accounts receivable |
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In order to minimize the credit risk, the management of the Company
has delegated a team responsible for determination of credit limits and credit approvals. Other monitoring procedures are in place to
ensure that follow-up action is taken to recover overdue debts. Internal credit rating has been given to each category of debtors after
considering aging, historical observed default rates, repayment history and past due status of respective accounts receivable. Estimated
loss rates are based on probability of default and loss given default with reference to an external credit report and are adjusted for
reasonable and supportable forward-looking information that is available without undue costs or effort while credit-impaired trade balances
were assessed individually. In this regard, the directors consider that the Company’s credit risk is significantly reduced. The
maximum potential loss of accounts receivable for the years ended December 31, 2024 and 2023 was $1,360,656
and $2,131,371. |
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Bank balances |
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The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings assigned by international credit-rating agencies. The Company is exposed to concentration of credit risk on liquid funds which are deposited with several banks with high credit ratings. |
VS MEDIA HOLDINGS LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(Stated in US Dollars, except for number of shares)
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Deposits and other receivables |
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The Company assessed the impairment for its other receivables individually based on internal credit rating and ageing of these debtors which, in the opinion of the directors, have no significant increase in credit risk since initial recognition. Based on the impairment assessment performed by the Company, the directors consider the loss allowance for deposits and other receivables as of December 31, 2024 and 2023 was $1,749,619 and $0. |
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| B. |
Interest risk |
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Cash flow interest rate risk |
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The Company is exposed to cash flow interest rate risk through the changes in interest rates related mainly to the Company’s variable-rates short-term bank loans and bank balances. |
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The Company currently does not have any interest rate hedging policy in relation to fair value interest rate risk and cash flow interest rate risk. The directors monitor the Company’s exposures on an ongoing basis and will consider hedging the interest rate should the need arises. |
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Foreign currency risk |
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Foreign currency risk is the risk that the holding of foreign currency assets will affect the Company’s financial position as a result of a change in foreign currency exchange rates. |
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The Company’s monetary assets and liabilities are mainly denominated in HK$ and NT$, which are the same as the functional currencies of the relevant group entities. Hence, in the opinion of the directors of the Company, the currency risk of $ is considered insignificant. The Company currently does not have a foreign currency hedging policy to eliminate the currency exposures. However, the directors monitor the related foreign currency exposure closely and will consider hedging significant foreign currency exposures should the need arise. |
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| C. |
Economic and political risks |
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The Company’s operations are mainly conducted in HK SAR. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by changes in the political, economic, and legal environments in HK SAR. |
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The Company’s operations in HK SAR are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company’s results may be adversely affected by changes in the political and social conditions in HK SAR, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things. |
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| D. |
Inflation Risk |
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Management monitors changes in prices levels. Historically inflation has not materially impacted the Company’s consolidated financial statements; however, significant increases in the price of labor that cannot be passed to the Company’s customers could adversely impact the Company’s results of operations. |
VS MEDIA HOLDINGS LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(Stated in US Dollars, except for number of shares)
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