Company: KMRK
Filing Date: 2025-08-15
Form Type: 20-F
Source: 0001213900-25-077494
Chunk: 148

Company: K-TECH SOLUTIONS CO LTD
Filing Date: 2025-08-15
Form: 20-F
Item: Item 19
Chunk 148
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 the point when the customer has legal ownership of the toy products, the risks and rewards of the
goods are assumed, and the Company has no remaining performance obligations.

  ii)      Sales for tooling (recognized at a point in time):  

The Company also provides custom production
tools, such as molds and prototypes, designed specifically for customer use. These tools are created based on fixed-price purchase orders
and tailored to customer specifications. Revenue from custom production tools is recognized at a point in time, specifically when the
tools are completed and control is transferred to the customer. Control is deemed to transfer when the tools are:

  completed and accepted by the customer  

  ready for their intended use in the customer’s production  
  processes                                                  
 ─────────────────────────────────────────────────────────────

  stored at the Company’s designated location (if agreed)     

Once the performance
obligation is fulfilled, the Company has no further obligations regarding the tools.

Cost of Revenues

Cost of revenue consists primarily
of materials.

Selling and Distribution Expenses

Selling and distribution expenses
includes transportation, customs declaration expenses, advertising expenses and testing charges.

General and Administrative Expenses

General and administrative
expenses include management and salaries and employee benefits of office staffs, depreciation for office facility and office equipment,
travel and entertainment, legal and accounting, motor vehicle expenses, rental expenses and other office expenses.

F-11

K-TECH SOLUTIONS COMPANY LIMITED AND SUBSIDIARY

NOTE 2 - SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES(cont.)

Income Tax

The Company accounts for income taxes under ASC 740. Deferred
tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated and combined
financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected
to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the
period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount
expected to be realized.

The provisions of ASC 740-10-25, “ Accounting for Uncertainty
in Income Taxes,” prescribe a more-likely-than-not threshold for consolidated and combined financial statement recognition and measurement
of a tax position taken (or expected to be taken) in a tax return. This interpretation also