{"url_path":"/sec/hcai/10-k/2026/item-11","section_key":"item-11","section_title":"Item 11 Quantitative and Qualitative Disclosures About Market Risk**","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-05-13","source_url":"https://www.sec.gov/Archives/edgar/data/1958399/0001213900-26-055775-index.html","accession_number":"0001213900-26-055775","cik":"0001958399","ticker":"HCAI","issuer_name":"Huachen AI Parking Management Technology Holding Co., Ltd","edgar_url":"https://www.sec.gov/Archives/edgar/data/1958399/0001213900-26-055775-index.html","primary_entity_key":"0001958399","primary_entity_name":"Huachen AI Parking Management Technology Holding Co., Ltd"},"word_count":659,"has_tables":true,"body_markdown":"**Item\n11. Quantitative and Qualitative Disclosures About Market Risk**\n\n \n\n*Foreign Exchange Risk*\n\n \n\nSubstantially all of our revenues\nand expenses are denominated in U.S. dollars and Hong Kong dollars and our expenses are denominated in U.S. dollars, Hong Kong dollars\nand Euro. We have not used any derivative financial instruments to hedge exposure to such risk. Financial instruments held for proprietary\ntrading are denominated in Hong Kong dollars, U.S. dollars and EURO. Although in general our exposure to foreign exchange risks should\nbe limited, the value of your investment in our Class A Ordinary Shares will be affected by the exchange rate between the U.S. dollar\nand Hong Kong dollar as well as between U.S. dollar and EURO because a substantial portion of our operating costs and expenses is effectively\ndenominated in EURO, while our Class A Ordinary Shares will be traded in U.S. dollars. We may seek to reduce the currency risk by entering\ninto foreign currency instruments. We did not have any currency hedging instruments as of December 31, 2025, 2024 and 2023, however management\nmonitors movements in exchange rates closely.\n\n \n\nTo the extent we need to convert\nU.S. dollars into Hong Kong dollars for our operations, appreciation of Hong Kong dollar against the U.S. dollar would reduce the amount\nin Hong Kong dollars we receive from the conversion. Conversely, if we decide to convert Hong Kong dollars into U.S. dollars for the purpose\nof making payments for dividends on our Class A Ordinary Shares, or for other business purposes, appreciation of the U.S. dollar against\nthe Hong Kong dollar would reduce the U.S. dollar amounts available to us.\n\n \n\n86\n\n \n\n*Interest Rate Risk*\n\n \n\nOur exposure to interest rate\nrisk relates primarily from our bank deposits and receivables from brokers and dealers. We have not used any derivative financial instruments\nto manage our interest risk exposure. Although these interest earning instruments carry a degree of interest rate risk, we have not been\nexposed to, nor do we anticipate being exposed to, material risks due to changes in market interest rates. However, our future interest\nincome may fall short of expectations due to changes in market interest rates.\n\n \n\n*Credit Risk*\n\n \n\nOur exposure to credit risk,\nwhich will cause a financial loss to us due to failure to discharge an obligation by the counterparties, relates primarily to our bank\ndeposits (including our own cash at banks as well as the segregated clients account balances), receivables from brokers and dealers, and\namount due from a related company. We consider the maximum exposure to credit risk equals to the carrying amount of these financial assets\nin the consolidated statement of financial position.\n\n \n\nFor bank deposits and receivables\nfrom brokers and dealers, the credit risk is limited as the counterparties are reputable financial institutions, brokers, dealers or clearing\nhouses, which are governed by regulators including the Hong Kong Monetary Authority, and the HKSFC. The credit risk exposure arising from\nthe amount due to a related company is considered to be minimal as the related company is owned by our major shareholder and under common\ncontrol.\n\n \n\nOther than concentration of\ncredit risk on liquid funds which are deposited with several banks with high credit ratings, we do not have any other significant concentrations\nof credit risk.\n\n \n\nTo mitigate the credit risk\nfrom defaults, we have adopted a credit policy of dealing with creditworthy counterparties only, which are also under continuous monitoring.\nOur credit exposure is controlled by counterparty limits that are reviewed and approved by our senior management periodically.\n\n \n\n*Price risk*\n\n \n\nPrice risk is the risk that\nthe value of a financial instrument will fluctuate as a result of changes in market prices, whether those changes are caused by factors\nspecific to the individual instrument or all instruments in the market. We are exposed to price risk in respect of financial instruments\nheld for proprietary trading, which comprises investments in certain equity securities. The exposure is limited to the carrying amount\nof the financial instruments."}