The main financial risks which is faced by the Company include interest rate risk, credit risk and liquidity risk. Management continually monitors the Company’s risk management process to ensure adequate balance between risk and control.

Risk management systems and policies are reviewed regularly to conform to changes in market conditions and activities of the Company. In order to manage the Company’s business risks, the Company has taken steps to manage risk as follows:

8 Risk Management of The Company

1. Credit Risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company's objective is to seek continual revenue growth while minimizing losses incurred due to increase credit risk exposure.

The Company trades only with recognized and creditworthy third parties. It is the Company policy that all customers who wish to trade on credit are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the objective that the Company's exposure to bad debts is not significant.

2. Liquidity Risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Company's exposure to liquidity risk arises primarily from mismatch of the maturities of financial assets and liabilities.

3. Risk Due to Technology Changes

The Company is a one of the companies that conducts business activities in the form of online trading (e-commerce) and technology. Online trading business activities are deeply affected by the fast changes in technology. If the Company does not adapt to the changes in technology, it could affect the Company performance.

4. Risk of Not Achieving The Projection

Generating income is a challenge for every company. Hence, the Company always improves the revenue projection to ascertain investors that business activities are running well. Failure to achieve the target increase in net income that has less been projected for succeeding year can reduce the rate of return on investment expected by shareholders.

5. Risk of Business Partners Using the Company's Product

The Company's business activities depend on business partners who cooperate with the Company. The Company always makes regular visitation to every Company's business partner in connection with education and getting a feedback related to the Company's products. The Company's failure in doing regular visitation to business partners may lessen the level of business partners trust to the Company, resulting business partners did not using the Company's product and eventually affecting the Company's revenue.

6. Risk of Internet Connectivity Interruption

To run Passpod's application in mobile devices (iOS and Android, an internet connection is required. In general, the Company's business partners are mostly located far from the city, where internet connection offentimes are affected. If the internet interuptions happen frequently, the Company's business partnes may have difficulty in offering the products in Passpod's application. If the obstacle continues to persist, this will affect income generated by the Company's business partners which in the end will also affect negatively to the Company's performance.

7. Risk of Unsold Product

The products displayed in Passpod's application is divided into 2 parts, which are products sold by third parties and products sold by the Company. Products sold by the Company are products that are purchased first by the Company and stored in the warehouse. Failure of the Company in analyzing the market could affect the inventories / excessive stocks, which will then be sold by the Company at a discount or even sell below its purchase price. If this happens frequently, it will result to a loss of the Company's financial performance.

8. Risk of Slowing Economic Growth in Indonesia

All of the Company's revenues are earned in Indonesia, hence the Company's performance depends on Indonesia's economic condition as a whole. To ensure that this risk does not occur, the Company continues to maintain its sales level by enacting promotional programs and discounts so that customers remain interested in purchasing products offered by the Company.