Company: KMRK
Filing Date: 2025-09-15
Form Type: F-1
Source: 0001213900-25-087627
Chunk: 58

Company: K-TECH SOLUTIONS CO LTD
Filing Date: 2025-09-15
Form: F-1
Chunk 58
---
 all time strictly adhere to the terms and conditions under the Service Agreement.

<div align='center'>27</div>

We rely on a limited number of third- party suppliers to manufacture our toy products, and we have limited control over them and may not be able to obtain quality products on a timely basis or in sufficient quantity.

We do not manufacture our products and rely instead on third-party
contract manufacturers. Our products are mostly manufactured and supplied by Fully Starise which represents approximately 85.34% of our
cost of revenue. Despite that we have entered into long term supply agreement with Fully Starise to secure stable supply of quality products
and provide product warranty to our customers, our reliance on a limited number of third-party contract manufacturers increases the risk
of supply disruption. If we experience significant increased demand, or need to replace an existing manufacturer, there can be no assurance
that additional manufacturing capacity will be available when required on terms that are acceptable to us, or at all, or that any supplier
or manufacturer would allocate sufficient capacity to us in order to meet our requirements or fill our orders in a timely manner. We allocate
production orders among our suppliers based on the manufacturers’ capability, capacity and cost, but there is no assurance that
we will be able to utilize capable manufacturers that have capacity at reasonable costs. Even if we are able to diversify our suppliers,
we may encounter delays in production and added costs as a result of the time it takes to train our suppliers and manufacturers in our
methods, products and quality control standards. Delays related to supplier changes could also arise due to an increase in shipping times
if new suppliers are located farther away from our markets or from other participants in our supply chain. Any delays, interruption or
increased costs in the supply of toy products could have an adverse effect on our ability to meet customer demand for our products and
result in lower net sales and income from operations, both in the short and long term. During the two years ended March 31, 2025, we did
not encounter any supply disruption due to such reliance on a limited number of third- party suppliers.

We are subject to the risk of increase in inventories and inventory turnover days and a sudden decrease in market demand for our products may lead to obsolete inventories

As we operate in
an industry that is subject to changing market trends, a sudden decrease in the market demand for our products and the corresponding unanticipated
drop in the sales of our products could cause our inventory to accumulate and may adversely