19.
Quantitative and Qualitative Disclosure about Market Risks
| A. |
Credit
risk |
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|
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The
Company’s deposits are with banks located in the PRC. They do not carry federal deposit insurance and may be subject to loss
if the banks become insolvent. |
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|
| |
Accounts
receivable are typically unsecured and are derived from revenues earned from customers in the PRC. The credit risk with respect to
account receivables is mitigated by credit control policies we carry out with respect to our customers and our ongoing monitoring
process of outstanding balances. |
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|
| B. |
Economic
and political risks |
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|
| |
The
Company’s operations are conducted in the PRC. Accordingly, the Company’s business, financial condition, and results
of operations may be influenced by changes in the political, economic, and legal environments in the PRC. |
| |
|
| |
The
Company’s operations in the PRC 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 the PRC, 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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|
| C. |
Interest
risk |
| |
|
| |
The
Company is subject to interest rate risk when long term loans become due and require refinancing. |
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|
| D. |
Sensitivity
analysis |
| |
|
| |
The
long-term loans are free of interest for the first 48 months however if interest were to charge at an annual rate of 3%, interest
expense would be $658,647 per year. The Company adopts 3% as an annual interest rate based on the China LPR announced on May 20,
2025 for one-year loans. If interest rate increases or decreases by 10%, it could lead to an increase or decrease in interest expense
of $65,856 per year. |
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