Company: CHOW
Filing Date: 2025-04-01
Form Type: F-1
Source: 0001641172-25-001938
Chunk: 250

Company: ChowChow Cloud International Holdings Ltd
Filing Date: 2025-04-01
Form: F-1
Chunk 250
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 which represent the direct cost of hardware sold to customers as part of the Company’s service offerings.                          |
| ● | Software licenses and                                                                                                              
 IT application licenses, which include the costs of licenses procured from third-party vendors and resold or utilized in providing 
 services to customers.                                                                                                             |

Costs are recognized as incurred in the same period as the related revenues, in accordance with ASC 606. The Company does not maintain inventory but purchases hardware and software upon receiving customer orders. Since the setup and delivery are typically completed within a short period, costs are classified as cost of revenues and expensed as incurred when control of the related products or services is transferred to the customer.

The Company has considered ASC 340-40 and determined that no costs meet the criteria for capitalization, as all costs are directly tied to performance obligations that are satisfied within the same reporting period.

Cost of Revenues Classification

The Company categorizes cost of revenues into
cost of products and cost of services based on the final deliverable of the contract. Costs are tracked at the contract level and assigned
to the appropriate category at the time of incurrence, ensuring they are directly attributed to either product or service costs based
on the final deliverable.

The Company utilizes a direct cost assignment
methodology, recording each cost in the relevant category as incurred, rather than aggregating all costs of revenue and allocating them
proportionally based on revenue presentation methodology. This approach ensures that costs align with their respective performance obligations
under each contract and accurately reflect the economic substance of the transaction.

The following table sets forth a breakdown of our costs of revenues, in absolute amounts and percentages of total revenues for the six months ended June 30, 2023 and 2024:

|                                                                                      |     | For the Six Months Ended June 30, |            |     |   |      |     |      |            |     |                 |            |     |   |      |
|                                                                                      |     |                              2023 |            |     |   |      |     | 2024 |            |     |                 |            |     |   |      |
|                                                                                      |     |                               HK$ |            |     | % |      |     |  HK$ |            |     | US$ (Note 2(e)) |            |     | % |      |
| Cost of Products:                                                                    |     |                                   |            |     |   |      |     |      |            |     |                 |            |