Company: AGCC
Filing Date: 2025-07-10
Form Type: F-1
Source: 0001213900-25-062654
Chunk: 97

Company: Agencia Comercial Spirits Ltd.
Filing Date: 2025-07-10
Form: F-1
Chunk 97
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 the Consumer Price Index (CPI). These inflationary pressures manifested in the form of higher prices for raw materials, energy, transportation, and labor, potentially increasing our overall operating costs. We experienced inflationary pressures on certain key input costs, including procurement costs of our whisky products and labor costs. These inflationary pressures resulted in an increase in our overall cost of goods sold and operating expenses. We continuously review our operational processes and supply chain to identify opportunities for cost savings and efficiency improvements, helping offset the impact of rising input costs. While inflationary pressures can have an adverse impact on our profitability in the short term, we remain committed to implementing proactive measures to manage these challenges effectively. 63

Market risks Currency risk As a company engaged in international trade, our operations are exposed to fluctuations in exchange rates. With customers and suppliers located in various countries, our revenue and expenses are denominated in multiple currencies. Fluctuations in exchange rates can have a direct impact on our reported financial results, cash flows, and overall profitability. In addition to the transactional currency risks arising from our international trade operations, we are also exposed to translation risks due to the differences between our reporting currency, i.e. the U.S. dollar (USD), functional currency, i.e. New Taiwan dollar (NTD), and the currencies in which our transactions are denominated. While our functional currency is the NTD, which is the currency of the primary economic environment in which we operate, our combined financial statements are presented in USD for reporting purposes. Fluctuations in the exchange rate between the NTD and the USD can impact the translation of our financial results, leading to potential gains or losses on translation. These translation effects can influence our reported financial performance and position, even in the absence of any underlying changes in our operating results or cash flows denominated in NTD. While we continue to monitor and evaluate our exposure to foreign currency risk, as of the date of this prospectus, we have not implemented any formal hedging policy or entered into any derivative instruments to mitigate such risk. We may consider adopting appropriate risk management strategies in the future as our business operations and exposure to foreign exchange fluctuations evolve. Concentration and credit risks Financial instruments that potentially expose us to concentration of credit risk consist primarily of account receivables. We conduct credit evaluations of our customers, and generally does not require collateral or other security from them. We evaluate our collection experience and long outstanding balances to determine the need for an allowance for doubtful accounts. We conduct periodic reviews of financial conditions and payment practices of