| RISKS AND UNCERTAINTIES |
NOTE
12 – RISKS AND UNCERTAINTIES
| (a) | Customers
Concentrations |
For
the six months ended June 30, 2026 and 2025, there was one customer who accounted for 10% or more of the Company’s revenues. The
customer individually accounted for 10% and 12% of the total revenues for the six months ended June 30, 2026 and 2025, respectively.
As
of June 30, 2026 and December 31, 2025, there were one and two customers who each accounted for more than 10% of total accounts receivable,
respectively. The customer/s accounted for 10% of total accounts receivable as of June 30, 2026 and 27% and 14% of total accounts receivable
as of December 31, 2025, respectively.
Vendors
Concentrations
For
the six months ended June 30, 2026 and 2025, there were none and one single vendor who accounted for 10% or more of the Company’s
cost of revenues, respectively. The vendor accounted for 23% of the total cost of revenues for the six months ended June 30, 2025.
As
of June 30, 2026 and December 31, 2025, there was none and one single vendor who accounted for more than 10% of total accounts payable,
respectively. The one single vendor accounted for 42% of total accounts payable as of December 31, 2025.
| (c) |
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. As of June 30, 2026 and June 30, 2025,
the allowance for credit losses for accounts receivable was nil. |
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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. |
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Deposits,
prepayments 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 loss allowance for deposits, prepayments and other receivables was nil as of December 31, 2025.
As of June 30, 2026, the loss allowance for deposits, prepayments and other receivables amounted to $1,275. |
| (d) |
Interest
risk |
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Cash
flow interest rate risk |
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The
Company is exposed to cash flow interest rate risk through the changes in interest rates related mainly to the Company’s variable-rates
short-term bank loans and bank balances. |
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The
Company currently does not have any interest rate hedging policy in relation to fair value interest rate risk and cash flow interest
rate risk. The directors monitor the Company’s exposures on an ongoing basis and will consider hedging the interest rate should
the need arises. |
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Foreign
currency risk |
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Foreign
currency risk is the risk that the holding of foreign currency assets will affect the Company’s financial position as a result
of a change in foreign currency exchange rates. |
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The
Company’s monetary assets and liabilities are mainly denominated in HK$ 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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| (e) |
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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| (f)
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Inflation
Risk |
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Management
monitors changes in prices levels. Historically inflation has not materially impacted the Company’s unaudited condensed 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. |
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