Company: KMRK
Filing Date: 2025-01-02
Form Type: DRS
Source: 0001213900-25-000267
Chunk: 58

Company: K-TECH SOLUTIONS CO LTD
Filing Date: 2025-01-02
Form: DRS
Chunk 58
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 condition and performance of our Group. We are exposed to risks relating to our suppliers that manufacture our products, and we may not be able to successfully establish and operate manufacturing operations. We have developed a nimble and low -fixedcost business model whereby our products are mostly manufactured and supplied by Fully Starise Limited (“ Fully Starise”) which represents approximately 85% of our cost of revenue. Fully Starise is an independent third party supplier that operates a factory in the PRC. We consider Fully Starise a reliable partner and strong back up of production capability to us whereby we have entered into long term supply agreement with Fully Starise to secure stable and quality supply of toy products. Due to the reliance on our business relationship with Fully Starise, any interruption of its operations, any failure of Fully Starise to accommodate our growing business demands, any termination or suspension of our cooperation terms, or any deterioration of cooperative relationships with Fully Starise may materially and adversely affect our operation. Failure by Fully Starise to provide us satisfactory products and/or services in a timely manner is likely to have material adverse effect on our business, financial condition and results of operations. There is a risk in relying on third -partysupplier in that we are dependent on the supplier’s ability to produce a product which meets our quality standards and delivery requirements as well as being dependent upon the supplier’s production priorities. We do not presently have any plans to engage another supplier since Fully Starise is familiar with our products, and we are devoting our efforts to establishing our own production facilities with no assurance that we can successfully establish manufacturing facilities. 28 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 affect our financial condition and results of operations. In the event that we fail to properly assess our need and maintain an appropriate inventory level, we may build up excessive inventories. As a result, this may have an adverse impact on our financial conditions and results of operations. Our cash flows may deteriorate due to potential mismatch in time between receipt of payments from our customers and payments to our suppliers, which could adversely affect our business, financial condition and results of operation. In the procurement and sales of our products, there are often time lag between making payments to our suppliers