Company: WCT
Filing Date: 2025-05-16
Form Type: 20-F
Source: 0001213900-25-044576
Chunk: 135

Company: Wellchange Holdings Co Ltd
Filing Date: 2025-05-16
Form: 20-F
Item: Item 19
Chunk 135
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ed basis.

F-16

WELLCHANGE HOLDINGS COMPANY LIMITED

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
AND PRACTICES(cont.)

The Company enters into a distinct and
fixed-fee contract with its customers as a principal for the provision of SaaS digital business management software services on
subscription basis. Pursuant to the contracts, the Company requires to provide a series of digital business management applications
online either being accessed on web or mobile over contract terms beginning on the commencement date of each contract, which is the
date its service is made available to customers. Billings to the customers are generally on a monthly or quarterly basis over the
contract term, which is typically one year. There is no variable consideration in the transaction price. The Company’s
contracts are generally non-cancellable and non-refundable in the event of cancellation. The subscription services contracts
typically include a single performance obligation. There will be an update or upgrade of the MR. CLOUD ERP system when
necessary and which can be utilized by existing customers automatically for the new functions during their contract period. There is
no additional consideration for the update or upgrade of the software and the additional costs for the updates and upgrades were
charged to statements of operations directly in the period incurred. The transaction price of the contract is allocated to the
remaining contract period from the date of the upgraded software available for customers to use. No significant costs were incurred
to update or upgrade the software during the years ended December 31, 2022, 2023 and 2024. There is no maintenance
services attached in the contract.

The revenue from subscription services is recognized
over the contract term as clients receive and consume benefits of such services as provided. Accordingly, the Company recognizes revenues
from subscription services on a monthly basis when it satisfies its performance obligations throughout the contract terms.

Cost of revenues

Cost of revenues consists of depreciation of property
and equipment, amortization of intangible assets (ERP software of MR. CLOUD platform), subcontracting costs for customized software
solution (if any), staff cost and rental of server. Staff costs represent the salaries and wages of engineers and IT staff incurred in
connection with the provision of customized software solutions, white label software design and development services and MR. CLOUD
SaaS platform subscription services. These costs are charged to the consolidated statements of income and comprehensive income as incurred.

Operating expenses

Operating expenses primarily consist of administrative
and selling personnel-related compensation expenses, including salaries and related social insurance