{"url_path":"/sec/chow/10-k/2026/item-19","section_key":"item-19","section_title":"Item 19 EXHIBITS**","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-05-15","source_url":"https://www.sec.gov/Archives/edgar/data/2041829/0001493152-26-023952-index.html","accession_number":"0001493152-26-023952","cik":"0002041829","ticker":"CHOW","issuer_name":"ChowChow Cloud International Holdings Ltd","edgar_url":"https://www.sec.gov/Archives/edgar/data/2041829/0001493152-26-023952-index.html","primary_entity_key":"0002041829","primary_entity_name":"ChowChow Cloud International Holdings Ltd"},"word_count":20261,"has_tables":true,"body_markdown":"**ITEM\n19. EXHIBITS**\n\n \n\n1.1\n \n[Amended\nand Restated Memorandum and Articles of Association of the Company, effective as at October 18, 2024 (incorporated by reference to\nExhibit 3.1 of the Company’s registration statement on Form F-1 filed with the SEC on April 1, 2025)](https://www.sec.gov/Archives/edgar/data/2041829/000164117225001938/ex3-1.htm)\n\n2.1*\n \n[Description of Securities](ex2-1.htm)\n\n10.1\n \n[Form\nof Employment Agreement between the Company and its executive officers (incorporated by reference to Exhibit 10.2 of the Company’s\nregistration statement on Form F-1 filed with the SEC on April 1, 2025)](https://www.sec.gov/Archives/edgar/data/2041829/000164117225001938/ex10-3.htm)\n\n10.2\n \n[Form\nof Employment Agreement between the Company and its independent directors (incorporated by reference to Exhibit 10.4 of the Company’s\nregistration statement on Form F-1 filed with the SEC on April 1, 2025)](https://www.sec.gov/Archives/edgar/data/2041829/000164117225001938/ex10-2.htm)\n\n10.3\n \n[Form\nof Indemnification Agreement (incorporated by reference to Exhibit 10.1 of the Company’s registration statement on Form F-1\nfiled with the SEC on April 1, 2025)](https://www.sec.gov/Archives/edgar/data/2041829/000164117225001938/ex10-1.htm)\n\n10.4\n \n[2025\nShare Incentive Plan (incorporated by reference to Exhibit 10.5 of the Company’s registration statement on Form F-1 filed with\nthe SEC on May 29, 2025)](https://www.sec.gov/Archives/edgar/data/2041829/000164117225012773/ex10-5.htm)\n\n11.1\n \n[Insider\nTrading Policy (incorporated by reference to Exhibit 19.1 of the Company’s registration statement on Form F-1 filed with the\nSEC on April 1, 2025)](https://www.sec.gov/Archives/edgar/data/2041829/000164117225001938/ex19-1.htm)\n\n12.1*\n \n[Certificate of Principal Executive Officer pursuant to Rule 13a-14(a) of the Exchange Act](ex12-1.htm)\n\n12.2*\n \n[Certificate of Principal Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act](ex12-2.htm)\n\n13.1**\n \n[Certificate of Principal Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](ex13-1.htm)\n\n13.2**\n \n[Certificate of Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](ex13-2.htm)\n\n14.1\n \n[Code\nof Business Conduct and Ethics (incorporated by reference to Exhibit 14.1 of the Company’s registration statement on Form F-1\nfiled with the SEC on April 1, 2025)](https://www.sec.gov/Archives/edgar/data/2041829/000164117225001938/ex14-1.htm)\n\n21.1*\n \n[List of Subsidiaries](ex21-1.htm)\n\n99.1*\n \n[Clawback Policy](ex99-1.htm)\n\n \n\n*\nFiled herewith\n\n**\nFurnished herewith\n\n \n\n88\n\n \n\n \n\n**SIGNATURES**\n\n \n\nThe\nregistrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized\nthe undersigned to sign this report on its behalf.\n\n \n\n \n\n**ChowChow\nCloud International Holdings Limited**\n\n \n \n                        \n\nMay\n15, 2026\nBy:\n*/s/\nYee Kar Wing*\n\n \nName:\nYee\nKar Wing\n\n \nTitle:\nChairman\nof the Board and Chief Executive Officer\n\n** **\n\n89\n\n \n\n** **\n\n** **\n\nREPORT\nOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM\n\n** **\n\nTo\nthe Shareholders and Board of Directors of ChowChow Cloud International Holdings Limited\n\n \n\nOpinion\non the Financial Statements\n\n** **\n\nWe\nhave audited the accompanying consolidated balance sheets of ChowChow Cloud International Holdings Limited and its subsidiaries (collectively,\nthe “Company”) as of December 31, 2025, and 2024, and the related consolidated statements of operation and comprehensive\nincome, consolidated statements of changes in shareholders’ equity, and consolidated statements of cash flows for each of the three\nyears in the period ended December 31, 2025**,**and the related notes (collectively referred to as the “financial statements”).\nIn our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December\n31, 2025, and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31,\n2025, in conformity with accounting principles generally accepted in the United States of America.\n\n \n\nBasis\nfor Opinion\n\n** **\n\nThese\nfinancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s\nfinancial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board\n(United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal\nsecurities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.\n\n \n\nWe\nconducted our audits in accordance with the standards of the PCAOB and in accordance with the auditing standards generally accepted in\nthe United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether\nthe financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were\nwe engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an\nunderstanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the\nCompany’s internal control over financial reporting. Accordingly, we express no such opinion.\n\n \n\nOur\naudits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error\nor fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding\nthe amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant\nestimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits\nprovide a reasonable basis for our opinion.\n\n \n\n/s/\nAssentsure PAC\n\nSingapore\n\nMay\n15, 2026\n\nWe\nhave served as the Company’s auditor since 2024.\n\nPCAOB ID Number 6783\n\n** **\n\nF-1\n\n \n\n** **\n\n**CHOWCHOW CLOUD INTERNATIONAL HOLDINGS\nLIMITED**\n\n**CONSOLIDATED BALANCE SHEETS**\n\n \n\n  \n  \n   \n   \n  \n\n  \n  \nAs of December 31, \n\n  \nNotes \n2024  \n2025  \n2025 \n\n  \n  \nHK$  \nHK$  \nUS$ (Note 2(e)) \n\nASSETS \n  \n   \n   \n  \n\nCurrent assets: \n  \n    \n    \n   \n\nCash and cash equivalents \n  \n 10,522,032  \n 21,614,171  \n 2,771,048 \n\nAccounts receivable, net \n4 \n 17,666,579  \n 45,610,578  \n 5,847,510 \n\nUnbilled receivables (Contract assets) \n5 \n 2,609,173  \n 1,577,855  \n 202,289 \n\nPrepayment and other current assets, net \n6 \n 11,308,236  \n 15,063,070  \n 1,931,162 \n\nDeferred offering costs \n  \n 2,820,149  \n -  \n - \n\nAmount due from related parties – non-trade \n7 \n -  \n 561,328  \n 71,965 \n\nAmount due from related parties - trade \n7 \n 28,575  \n 57,463  \n 7,367 \n\nTotal current assets \n  \n 44,954,744  \n 84,484,465  \n 10,831,341 \n\n  \n  \n    \n    \n   \n\nNon-current assets: \n  \n    \n    \n   \n\nOther non-current assets, net \n6 \n 122,412  \n -  \n - \n\nOperating lease right-of-use assets, net \n8 \n 218,130  \n -  \n - \n\nProperty and equipment, net \n9 \n 42,597  \n 31,960  \n 4,098 \n\nPrepayment for development of intangible assets \n10 \n -  \n 11,123,475  \n 1,426,087 \n\nIntangible asset, net \n10 \n 2,344,427  \n 1,562,952  \n 200,379 \n\nTotal non-current assets \n  \n 2,727,566  \n 12,718,387  \n 1,630,564 \n\nTotal assets \n  \n 47,682,310  \n 97,202,852  \n 12,461,905 \n\n  \n  \n    \n    \n   \n\nLIABILITIES AND EQUITY \n  \n    \n    \n   \n\nCurrent liabilities: \n  \n    \n    \n   \n\nAccounts payable \n11 \n 4,546,960  \n 12,715,835  \n 1,630,236 \n\nAccrued expenses and other current liabilities \n12 \n 838,811  \n 2,938,587  \n 376,744 \n\nAmount due to related parties – non-trade \n7 \n 678,915  \n -  \n - \n\nTax payable \n  \n 4,821,619  \n 4,821,619  \n 618,156 \n\nDeferred revenue (Contract liabilities) \n5 \n 17,401,218  \n 3,581,864  \n 459,213 \n\nOperating lease liabilities, current portion \n8 \n 218,130  \n -  \n - \n\nBank borrowings, current portion \n14 \n 284,404  \n 504,838  \n 64,723 \n\nTotal current liabilities \n  \n 28,790,057  \n 24,562,743  \n 3,149,072 \n\n  \n  \n    \n    \n   \n\nNon-current liabilities: \n  \n    \n    \n   \n\nDeferred revenue (Contract liabilities) \n5 \n -  \n 259,084  \n 33,216 \n\nDeferred tax liabilities \n13 \n 227,530  \n 227,530  \n 29,171 \n\nBank borrowings, non-current portion \n14 \n 4,715,596  \n 4,210,245  \n 539,775 \n\nTotal non-current liabilities \n  \n 4,943,126  \n 4,696,859  \n 602,162 \n\nTotal liabilities \n  \n 33,733,183  \n 29,259,602  \n 3,751,234 \n\n  \n  \n    \n    \n   \n\nShareholders’ equity: \n  \n    \n    \n   \n\nOrdinary share, par value US$0.0001,\n500,000,000 shares authorized; 32,500,000\nand 35,490,000 shares issued and outstanding\nas of December 31, 2024 and 2025 respectively \n15 \n 25,350  \n 27,682  \n 3,549 \n\nAdditional paid in capital \n  \n -  \n 77,542,757  \n 9,941,379 \n\nCapital reserve \n  \n 3,200,000  \n 3,200,000  \n 410,256 \n\nMerger reserve \n  \n (2,647,350) \n (2,647,350) \n (339,404)\n\nRetained earnings / (Accumulated losses) \n  \n 13,371,127  \n (10,179,839) \n (1,305,109)\n\nTotal shareholders’ equity \n  \n 13,949,127  \n 67,943,250  \n 8,710,671 \n\nTotal liabilities and equity \n  \n 47,682,310  \n 97,202,852  \n 12,461,905 \n\n \n\nThe accompanying notes are\nan integral part of these consolidated financial statements.\n\n \n\nF-2\n\n \n\n** **\n\n**CHOWCHOW CLOUD INTERNATIONAL HOLDINGS\nLIMITED**\n\n**CONSOLIDATED STATEMENTS OF OPERATIONS\nAND COMPREHENSIVE INCOME**\n\n****\n\n \n\n  \n  \n \n \n \n \n   \n   \n  \n\n  \n  \n**For the Years Ended December 31,** \n\n  \nNotes \n**2023**\n \n \n2024  \n2025  \n2025 \n\n  \n  \n \n**HK$**\n \n \nHK$  \nHK$  \nUS$ (Note 2(e)) \n\nRevenues: \n  \n \n \n \n \n   \n   \n  \n\n- Revenue from Products \n2(m) \n \n134,379,507\n \n \n 172,472,482  \n 235,007,941  \n 30,129,222 \n\n- Revenue from Services \n2(m) \n \n6,992,851\n \n \n 9,357,644  \n 16,208,708  \n 2,078,040 \n\nTotal revenues \n  \n \n**141,372,358**\n \n \n 181,830,126  \n 251,216,649  \n 32,207,262 \n\nCost of revenues: \n  \n \n \n \n \n    \n    \n   \n\n- Cost of Products \n2(n) \n \n(118,494,715\n)\n \n (150,198,437) \n (209,070,220) \n (26,803,875)\n\n- Cost of Services \n2(n) \n \n(2,968,143\n)\n \n (6,377,354) \n (9,723,029) \n (1,246,542)\n\nTotal cost of revenues \n  \n \n**(121,462,858**\n**)**\n \n (156,575,791) \n (218,793,249) \n (28,050,417)\n\nGross profit \n  \n \n**19,909,500**\n \n \n 25,254,335  \n 32,423,400  \n 4,156,845 \n\n  \n  \n \n \n \n \n    \n    \n   \n\nOperating expenses: \n  \n \n \n \n \n    \n    \n   \n\nSelling and marketing expenses \n  \n \n(1,024,598\n)\n \n (2,776,713) \n (31,627,720) \n (4,054,836)\n\nGeneral and administrative expenses \n  \n \n(4,989,693\n)\n \n (8,527,081) \n (24,332,020) \n (3,119,489)\n\nTotal operating expenses \n  \n \n**(6,014,291**\n**)**\n \n (11,303,794) \n (55,959,740) \n (7,174,325)\n\n  \n  \n \n \n \n \n    \n    \n   \n\nOperating income / (loss) \n  \n \n**13,895,209**\n \n \n 13,950,541  \n (23,536,340) \n (3,017,480)\n\n  \n  \n \n \n \n \n    \n    \n   \n\nInterest income \n  \n \n13,838\n \n \n 47,591  \n 20,860  \n 2,674 \n\nInterest expense \n  \n \n-\n \n \n (100,939) \n (145,289) \n (18,627)\n\nOther income, net \n  \n \n358,441\n \n \n 173,715  \n 109,803  \n 14,077 \n\nIncome / (Loss) before taxes \n  \n \n**14,267,488**\n \n \n 14,070,908  \n (23,550,966) \n (3,019,356)\n\nIncome tax expenses \n13 \n \n(2,161,815\n)\n \n (2,200,654) \n -  \n - \n\nNet income / (loss) \n  \n \n**12,105,673**\n \n \n 11,870,254  \n (23,550,966) \n (3,019,356)\n\n  \n  \n \n \n \n \n    \n    \n   \n\nEarnings / (Loss) per share attributable to ordinary shareholders of the Company’s shareholders \n  \n \n \n \n \n    \n    \n   \n\nBasic and diluted \n16 \n \n0.37\n \n \n 0.37  \n (0.71) \n (0.09)\n\n  \n  \n \n \n \n \n    \n    \n   \n\nWeighted average shares used in calculating basic and diluted net income / loss per share: \n  \n \n**32,500,000**\n \n \n 32,500,000  \n 33,376,521  \n 33,376,521 \n\n \n\nThe accompanying notes are an integral\npart of these consolidated financial statements.\n\n \n\nF-3\n\n \n\n** **\n\n**CHOWCHOW CLOUD INTERNATIONAL HOLDINGS\nLIMITED**\n\n**CONSOLIDATED STATEMENTS OF CHANGES\nIN EQUITY**\n\n****\n\n \n\n  \n   \n   \n   \n   \n   \n   \n  \n\n  \nOrdinary shares  \nAdditional paid in  \nCapital  \nMerger  \nRetained earnings / (Accumulated  \nTotal shareholders’ \n\n  \nShares  \nAmount  \ncapital  \nreserve  \nreserve  \nlosses)  \nequity \n\n  \n   \nHK$  \nHK$  \n**HK$**  \n**HK$**  \nHK$  \nHK$ \n\n**Balance\nas of December 31, 2022**** **\n** ****32,500,000**** **** **\n** ****-**** **** **\n** ****500,000**** **** **\n** ****-**** **** **\n** ****-**** **** **\n** ****6,895,200**** **** **\n** ****7,395,200**** **\n\nIssuance\nof share capital upon incorporation of Vigorous \n -  \n -  \n 780  \n -  \n -  \n -  \n 780 \n\nReserves\narising from reorganization under common control \n -  \n -  \n (500,000) \n 3,200,000  \n (2,700,000) \n -  \n - \n\nNet\nincome \n -  \n -  \n -  \n -  \n -  \n 12,105,673  \n 12,105,673 \n\nDividend declared (Note 7) \n -  \n -  \n -  \n -  \n -  \n (17,500,000) \n (17,500,000)\n\nBalance as of December 31, 2023 \n 32,500,000  \n -  \n 780  \n 3,200,000  \n (2,700,000) \n 1,500,873  \n 2,001,653 \n\nIssuance of share capital of Vigorous \n -  \n -  \n 77,220  \n -  \n -  \n -  \n 77,220 \n\nReserves arising from reorganization under common control \n -  \n 25,350  \n (78,000) \n -  \n 52,650  \n -  \n - \n\nNet income \n -  \n -  \n -  \n -  \n -  \n 11,870,254  \n 11,870,254 \n\nBalance as of December 31, 2024 \n 32,500,000  \n 25,350  \n -  \n 3,200,000  \n (2,647,350) \n 13,371,127  \n 13,949,127 \n\nIssuance of ordinary shares upon initial public offering, net of issuance costs \n 2,990,000  \n 2,332  \n 77,542,757  \n -  \n -  \n -  \n 77,545,089 \n\nNet loss \n -  \n -  \n -  \n -  \n -  \n (23,550,966) \n (23,550,966)\n\nNet income (loss) \n -  \n -  \n -  \n -  \n -  \n (23,550,966) \n (23,550,966)\n\nBalance as of December 31, 2025 \n 35,490,000  \n 27,682  \n 77,542,757  \n 3,200,000  \n (2,647,350) \n (10,179,839) \n 67,943,250 \n\nBalance as of December 31, 2025 in US$ (Note 2(e)) \n 35,490,000  \n 3,549  \n 9,941,379  \n 410,256  \n (339,404) \n (1,305,109) \n 8,710,671 \n\n \n\nThe accompanying notes are an integral\npart of these consolidated financial statements.\n\n \n\nF-4\n\n \n\n** **\n\n**CHOWCHOW CLOUD INTERNATIONAL HOLDINGS\nLIMITED**\n\n**CONSOLIDATED STATEMENTS OF CASH FLOWS**\n\n****\n\n \n\n  \n \n \n \n \n   \n   \n  \n\n  \n**For the Year Ended December 31,** \n\n  \n**2023**\n \n \n2024  \n2025  \n2025 \n\n  \n \n**HK$**\n \n \nHK$  \nHK$  \nUS$ (Note 2(e)) \n\nCASH FLOWS FROM OPERATING ACTIVITIES \n \n \n \n \n    \n    \n   \n\nNet income / (loss) \n \n**12,105,673**\n \n \n 11,870,254  \n (23,550,966) \n (3,019,356)\n\nAdjustments to reconcile net income to net cash used in operating activities: \n \n \n \n \n    \n    \n   \n\nDepreciation of property and equipment \n \n22,940\n \n \n 25,179  \n 20,361  \n 2,610 \n\nAmortization of intangible asset \n \n378,801\n \n \n 681,515  \n 781,475  \n 100,189 \n\nAllowance for credit losses on accounts receivable \n \n(348,954\n)\n \n 507,230  \n 7,726,197  \n 990,538 \n\n(Reversal of allowance) / Allowance for credit losses on amount due from related parties \n \n6,467\n \n \n (5,867) \n 25,112  \n 3,219 \n\nDeferred income tax \n \n151,343\n \n \n 1,063  \n -  \n - \n\nChanges in operating assets and liabilities: \n \n \n \n \n    \n    \n   \n\nAccounts receivable, net \n \n7,035,028\n \n \n (2,478,930) \n (35,670,196) \n (4,573,102)\n\nUnbilled receivables (Contract assets) \n \n(1,427,212\n)\n \n (644,511) \n 1,031,318  \n 132,220 \n\nPrepayment and other current assets, net \n \n(11,571,528\n)\n \n 288,935  \n (3,632,422) \n (465,694)\n\nAmounts due from related parties \n \n(63,800\n)\n \n 45,668  \n (54,000) \n (6,923)\n\nAccounts payable \n \n(11,122,393\n)\n \n (2,532,877) \n 8,168,875  \n 1,047,293 \n\nAccrued expenses and other current liabilities \n \n277,364\n \n \n (684,862) \n 2,099,776  \n 269,202 \n\nDeferred revenue (Contract liabilities) \n \n10,794,962\n \n \n (1,184,574) \n (13,560,270) \n (1,738,495)\n\nTax payable \n \n2,010,472\n \n \n 2,046,213  \n -  \n - \n\nNet cash provided by / (used in) operating activities \n \n**8,249,163**\n \n \n 7,934,436  \n (56,614,740) \n (7,258,299)\n\n  \n \n \n \n \n    \n    \n   \n\nCASH FLOWS FROM INVESTING ACTIVITIES \n \n \n \n \n    \n    \n   \n\nPurchase of property and equipment \n \n(42,291\n)\n \n (15,280) \n (9,724) \n (1,247)\n\nPurchase of intangible asset \n \n(938,516\n)\n \n (1,197,897) \n -  \n - \n\nPrepayment for development of intangible assets \n \n-\n \n \n -  \n (11,123,475) \n (1,426,087)\n\nCash used in investing activities \n \n**(980,807**\n**)**\n \n (1,213,177) \n (11,133,199) \n (1,427,334)\n\n  \n \n \n \n \n    \n    \n   \n\nCASH FLOWS FROM FINANCING ACTIVITIES \n \n \n \n \n    \n    \n   \n\nProceed from / (Repayment of) bank borrowing \n \n-\n \n \n 5,000,000  \n (284,917) \n (36,528)\n\nPayment of deferred offering cost \n \n-\n \n \n (2,820,149) \n (6,392,602) \n (819,564)\n\nNet movement in amount due from / to shareholders \n \n2,083,704\n \n \n 84,495  \n (567,823) \n (72,798)\n\nPayment of underwriting discounts and commissions \n \n-\n \n \n -  \n (6,530,160) \n (837,200)\n\nProceeds from initial public offering \n \n-\n \n \n -  \n 93,288,000  \n 11,960,000 \n\nDividend paid \n \n(8,490,556\n)\n \n (8,337,024) \n (672,420) \n (86,208)\n\nNet cash (used in) / provided by financing activities \n \n**(6,406,852**\n**)**\n \n (6,072,678) \n 78,840,078  \n 10,107,702 \n\n  \n \n \n \n \n    \n    \n   \n\nNet increase in cash and cash equivalents \n \n861,504\n \n \n 648,581  \n 11,092,139  \n 1,422,070 \n\nCash and cash equivalents, beginning of year \n \n**9,011,947**\n \n \n 9,873,451  \n 10,522,032  \n 1,348,978 \n\nCash and cash equivalents, end of year \n \n**9,873,451**\n \n \n 10,522,032  \n 21,614,171  \n 2,771,048 \n\n  \n \n \n \n \n    \n    \n   \n\nSupplemental cash flow information \n \n \n \n \n    \n    \n   \n\nHong\nKong profits tax paid \n \n-\n \n \n (153,378) \n -  \n - \n\nInterest\npaid \n \n-\n \n \n (100,939) \n (145,289) \n (18,627)\n\n  \n \n \n \n \n    \n    \n   \n\nSupplemental disclosure of non-cash information: \n \n \n \n \n    \n    \n   \n\nRight-of-use assets obtained in exchange for new lease liabilities \n \n461,624\n \n \n -  \n -  \n - \n\n \n\nThe accompanying notes are an integral\npart of these consolidated financial statements.\n\n \n\nF-5\n\n \n\n** **\n\n**CHOWCHOW CLOUD INTERNATIONAL HOLDINGS\nLIMITED**\n\n**NOTES TO THE CONSOLIDATED FINANCIAL\nSTATEMENTS**\n\n \n\n**1. BUSINESS OVERVIEW AND BASIS OF\nPRESENTATION**\n\n \n\nChowChow Cloud International\nHoldings Limited (the “Company”) was incorporated in the Cayman Islands on October 8, 2024 as an investment holding\ncompany with authorized share capital of US$50,000\ndivided into 50,000,000\nordinary shares of par value US$0.001\neach. One ordinary share was issued on October 8, 2024. The authorized share capital was changed to 500,000,000\nordinary shares of par value US$0.0001\neach and the one issued share was sub-divided into 10\nordinary shares on October 18, 2024. The reorganization between the Company and Vigorous Elite Holdings Limited was completed on October 24, 2024, 32,500,000\nordinary shares of par value US$0.0001\neach were in issue. The Company conducts its primary operations through its subsidiaries,\nVigorous Elite Holdings Limited (“Vigorous”) and Sereno Cloud Solution HK Limited (“Sereno”) that are\nincorporated and domiciled in Hong Kong (collectively referred to as the “Company”).\n\n \n\n**Reorganization**\n\n \n\nVigorous was\nincorporated in the British Virgin Islands on July 19, 2023 as an exempted company. Vigorous has not commenced its operations and\nhas limited assets or liabilities.\n\n \n\nOn September\n26, 2023, Vigorous acquired 100% equity interest in Sereno from the existing shareholders. Sereno became Vigorous’ wholly owned\nsubsidiary. Vigorous as investing holding company conducts its primary operations through Sereno after the acquisition.\n\n \n\nSereno was incorporated in Hong Kong\non December 3, 2014, under the Companies Ordinance as a company with limited liability. Sereno provides a broad range of IT-related services,\nincluding professional IT services, AI-powered proactive cloud-managed services and IT infrastructure solutions. Sereno’s primary\noperations are based in Hong Kong, serving both local and international clients across various industries, including financial services,\nhealthcare, and retail.\n\n \n\nThe Company completed a reorganization on October 24, 2024 following which\nVigorous and Sereno came under the control of the Company.\n\n \n\nOn September 17, 2025, the Company closed\nits public offering (the “IPO”) of 2,990,000 ordinary shares, par value $0.0001 per ordinary share at the price of US$4.0\neach, totalling US$11,960,000. All these shares rank pari-passu with the existing shares in all respect.\n\n \n\nThe consolidated financial statements\nare prepared on the basis as if the reorganization became effective as of the beginning of the first period presented in the accompanying\nconsolidated financial statements of the Company.\n\n \n\nDescription of subsidiaries incorporated\nand controlled by the Company\n\n SCHEDULE OF DESCRIPTION OF SUBSIDIARIES INCORPORATED\n\nName\n \nBackground\n \nEffective\nownership\n\n \n \n \n \n \n\nVigorous Elite Holdings Limited\n \nInvestment holding\n \n100%\n\n \n \n \n \n \n\nSereno Cloud Solution HK\nLimited\n \nPrincipally engaged in provision\nof IT-related services\n \n100%\n\n \n\nF-6\n\n \n\n \n\nThe Company’s offerings include:\n\n \n\n**Professional IT Services:**Expertise\nin providing customized IT strategies, project management, and ongoing technical support for digital transformation and innovation. The\nCompany adheres to all applicable regulations and standards in its industry, including data protection and cybersecurity laws in the\njurisdictions in which it operates. maintains its operations under a strong governance framework, ensuring compliance with the relevant\nlegal, regulatory, and contractual obligations across all markets served.\n\n \n\n**AI-Powered\nProactive Cloud Managed Services:**Solutions designed to monitor, manage, and optimize clients’ cloud environments using artificial\nintelligence for improved efficiency and reduced downtime.\n\n \n\n**IT Infrastructure\nSolutions:**Design, implementation, and management of scalable IT infrastructure, including hardware, software, and cloud environments\ntailored to clients’ specific needs.\n\n \n\n**2. SUMMARY OF SIGNIFICANT ACCOUNTING\nPOLICIES**\n\n \n\n**(a) Basis of presentation**\n\n \n\nThe accompanying consolidated financial\nstatements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.\nGAAP”) and in conformity with the requirements of the Securities Exchange Commission (“SEC”). Additionally, these consolidated\nfinancial statements have been audited in accordance with the standards of the Public Company Accounting Oversight Board (United States)\n(“PCAOB”).\n\n \n\n**(b) Principles of consolidation**\n\n \n\nThe consolidated financial statements\ninclude the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated on consolidation.\n\n \n\n**(c) Use of estimates**\n\n \n\nThe preparation of consolidated financial\nstatements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets,\nliabilities, revenues, and expenses, as well as the disclosure of contingent assets and liabilities at the date of the consolidated financial\nstatements. These estimates and assumptions are evaluated regularly based on historical experience, current conditions, and reasonable\nand supportable forecasts of future economic conditions.\n\n \n\n**Significant accounting estimates**\nreflected in the Company’s consolidated financial statements include, but are not limited to:\n\n \n\n \n●\n**Incremental borrowing\nrate** used in the recognition of right-of-use assets and lease liabilities under **ASC 842 (Leases)**, which is determined\nbased on the Company’s cost of borrowing, adjusted for the specific term and the economic environment.\n\n \n●\n**Allowance for credit losses**\non accounts receivable under **ASC 326 (Credit Losses)**, which is determined based on historical collection experience, the creditworthiness\nof individual customers, and expected changes in macroeconomic conditions.\n\n \n●\n**Useful lives of property\nand equipment**, which are determined based on the Company’s experience with similar assets and expected usage patterns.\n\n \n●\n**Valuation allowance for\ndeferred tax assets** under **ASC 740 (Income Taxes)**, which is based on management’s assessment of the likelihood of\nfuture taxable income and the ability to utilize deferred tax assets before expiration.\n\n \n●\n**Estimated progress towards\nthe satisfaction of performance obligations** under **ASC 606 (Revenue from Contracts with Customers)**, which considers the\nnature of the services provided and the terms of customer contracts.\n\n \n\nF-7\n\n \n\n \n\nThese estimates involve significant judgment\nand are subject to uncertainty, particularly in areas affected by market volatility, economic conditions, or customer-specific factors.\nManagement regularly reviews and updates its estimates based on changes in these conditions and other relevant factors.\n\n \n\nGiven the inherent uncertainty in estimating\nfuture outcomes, actual results may differ from these estimates, and such differences could have a material impact on the Company’s\nfinancial position and results of operations. Management performs sensitivity analysis on critical accounting estimates to assess the\npotential impact of changes in assumptions and to ensure that the estimates remain reasonable under a range of possible outcomes.\n\n \n\n**(d) Functional currency and foreign\ncurrency translation**\n\n \n\nThe Company uses the Hong Kong dollar\n(“HK$”) as its reporting currency. The functional currency of the Company and its subsidiaries is the HK$, as determined\nbased on the criteria outlined in Accounting Standards Codification (“ASC”) Topic 830, Foreign Currency Matters. The functional\ncurrency is assessed based on the primary economic environment in which the Company and its subsidiaries operate. The Company periodically\nreviews its functional currency determination to ensure that it continues to reflect the underlying economic conditions of its operations.\n\n \n\nTransactions denominated in currencies\nother than the functional currency are translated into the functional currency using the exchange rates prevailing at the dates of the\ntransactions. At the balance sheet date, monetary assets and liabilities denominated in foreign currencies are remeasured into the functional\ncurrency using the exchange rate at the balance sheet date, while non-monetary items measured at historical cost are translated using\nthe exchange rates in effect on the transaction date. Translation adjustments related to monetary assets and liabilities arising from\nexchange rate fluctuations are recognized as exchange gains or losses in the consolidated statements of comprehensive income.\n\n \n\nThe Company carefully monitors its exposure\nto foreign currency fluctuations and manages foreign currency risk by assessing significant movements in exchange rates, particularly\nin respect of its key trading partners. No material foreign currency translation adjustments were recognized in other comprehensive income\nfor the year ended December 31, 2025, as most transactions and balances were denominated in the functional currency of the Company and\nits subsidiaries. Should the Company engage in material transactions or hold significant balances in currencies other than the functional\ncurrency, foreign currency translation adjustments will be recognized in other comprehensive income.\n\n \n\n**(e) Convenience translation**\n\n \n\nThe Company’s operations are principally\nconducted in Hong Kong, where the Hong Kong dollar (HK$) is the functional currency, and all the revenues are denominated in HK$. For\nthe convenience of the readers of our consolidated financial statements, we have provided translations of balances in the consolidated\nbalance sheets, consolidated statements of operations and comprehensive income, consolidated statements of changes in equity, and consolidated\nstatements of cash flows from HK$ to U.S. dollars (US$) as of and for the year ended December 31, 2025. These translations have been\nmade at a fixed exchange rate of US$1.00 = HK$7.8, which is the pegged rate as determined by the linked exchange rate system in Hong\nKong.\n\n \n\nThese translations are provided solely\nfor informational purposes and should not be construed as representations that the HK$ amounts could be converted into US$ at that or\nany other rate. The exchange rate used may differ from actual exchange rates on the balance sheet date or subsequent dates, and readers\nshould be aware of potential exchange rate fluctuations. We do not intend for these translated amounts to comply with the provisions\nof U.S. GAAP regarding functional currency translation, and they are not intended to be a substitute for the HK$ amounts reported in\naccordance with U.S. GAAP.\n\n \n\nF-8\n\n \n\n \n\nThe convenience translation presented\ndoes not reflect the impact of any fluctuations in foreign exchange rates during the period and should not be relied upon as an accurate\nmeasure of actual exchange effects or a reflection of future trends. All financial information should be interpreted in conjunction with\nthe official HK$ amounts presented in the consolidated financial statements.\n\n \n\n**(f) Fair value of financial instruments**\n\n \n\nFair value is defined as the price that\nwould be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement\ndate, in accordance with ASC 820, Fair Value Measurement. The Company determines fair value measurements for assets and liabilities that\nare either required or permitted to be recorded or disclosed at fair value. These measurements consider the principal or most advantageous\nmarket in which the transaction would occur and use assumptions that market participants would employ in pricing the asset or liability.\n\n \n\nThe Company follows the fair value hierarchy\nestablished under ASC 820, which prioritizes the use of observable inputs and minimizes the use of unobservable inputs when measuring\nfair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that\nis significant to the fair value measurement. The hierarchy consists of three levels:\n\n \n\n \n●\nLevel 1: Observable inputs,\nsuch as quoted prices (unadjusted) for identical assets or liabilities in active markets.\n\n \n●\nLevel 2: Other inputs that\nare directly or indirectly observable in the market place, such as quoted prices for similar assets or liabilities, interest rates,\nand yield curves.\n\n \n●\nLevel 3: Unobservable inputs\nsupported by little or no market activity, which require management’s judgment or estimates.\n\n \n\nThe Company uses market, cost, and income\napproaches to measure the fair value of assets and liabilities depending on the nature of the item and the availability of relevant inputs.\nFor financial instruments classified under Level 2, fair value is typically determined using observable market data, such as interest\nrate curves and credit spreads, in conjunction with internally developed models. For instruments classified under Level 3, the Company\nuses internally developed valuation models that include unobservable inputs, such as discounted cash flows, projected revenue, and assumptions\nregarding market conditions and risk factors.\n\n \n\nThe Company’s financial assets\nand liabilities primarily consist of cash and cash equivalents, accounts receivable, unbilled receivables (contract assets), amounts\ndue from related parties, accounts payable, amounts due to related parties, accrued expenses, deferred revenue (contract liabilities)\nand bank borrowings. As of December 31, 2025, the carrying values of these financial instruments approximate their fair values. This\nis due to their short-term maturities for most instruments, and, in the case of bank borrowings, the use of floating interest rates that\nreset periodically based on observable market benchmarks, aligning the carrying amounts closely with fair value.\n\n \n\nThe Company distinguishes between recurring\nand non-recurring fair value measurements. Recurring measurements are those that are required at each balance sheet date, such as certain\nmarketable securities, while non-recurring measurements are triggered by events such as asset impairments or the sale of significant\nassets.\n\n \n\nManagement reviews its fair value measurements\nregularly and adjusts assumptions as necessary to reflect current market conditions and risks. For Level 3 fair value measurements, management\nperforms sensitivity analysis to evaluate the impact of changes in unobservable inputs on the fair value of assets and liabilities.\n\n \n\n**(g) Cash and cash equivalents**\n\n \n\nCash and cash equivalents include cash\non hand, demand deposits, and highly liquid investments with original maturities of three months or less at the date of purchase. These\ninvestments are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value.\n\n \n\nThe Company’s cash and cash equivalents\nare unrestricted as to withdrawal and use. Management regularly reviews its cash management practices to ensure that the Company’s\nliquidity needs are met and monitors the financial health of the institutions where funds are held.\n\n \n\nF-9\n\n \n\n \n\nIf applicable, the Company discloses\nany significant cash balances held in foreign currencies and evaluates whether the associated foreign exchange risks are material to\nits financial position.\n\n \n\nAs of the balance sheet date, all cash\nand cash equivalents are recorded at their carrying value, which approximates fair value due to their short-term maturities.\n\n \n\n**(h) Accounts receivable, net**\n\n \n\nAccounts receivable primarily consist\nof amounts due from the Company’s customers. These balances are recorded net of an allowance for credit losses, which is established\nin accordance with ASC 326, Financial Instruments—Credit Losses.\n\n \n\nThe Company estimates its allowance for\ncredit losses using a forward-looking model that incorporates historical loss experience, current conditions, and reasonable and supportable\nforecasts of future economic conditions. The allowance is determined through Portfolio-level analysis, which applies a historical loss\nrate to pools of receivables with similar risk characteristics, adjusted for expected changes in the macroeconomic environment and industry\ntrends.\n\n \n\nManagement evaluates receivables based\non factors such as the aging of receivables, historical collection patterns, and the customer’s ability to pay, as well as broader\neconomic factors that may affect the collectability of receivables. Significant judgments include evaluating the impact of economic downturns,\nindustry-specific risks, and other external factors on customer creditworthiness.\n\n \n\nReceivables are written off against the\nallowance when all reasonable collection efforts have been exhausted and management determines that the likelihood of collection is remote.\nThe timing of the write-off is based on specific criteria, including the length of time a receivable has been past due, customer bankruptcy,\nand other significant credit events.\n\n \n\nAs of December 31, 2024 and 2025, the\nCompany had an allowance for credit losses of HK$1,001,086 and HK$8,727,283 (US$1,118,882), respectively. The increase in the allowance\nwas due to a modest rise in receivables aging beyond standard terms observed during the year.\n\n \n\n**(i) Contract Assets and Contract\nLiabilities**\n\n \n\nContract assets represent the Company’s\nright to consideration in exchange for goods or services that have been transferred to the customer, but for which billing has not yet\noccurred under the terms of the contract. Contract assets are recognized when the Company satisfies a performance obligation and has\na right to payment, but the payment is conditional on something other than the passage of time (e.g., future performance or acceptance\nof goods or services by the customer). Contract assets are evaluated for expected credit losses in accordance with ASC 326 and are measured\nat the net realizable value.\n\n \n\nContract liabilities represent the billings\nto date, as allowed under the terms of a contract, but not yet recognized as contract revenue using the Company’s revenue recognition\npolicy. Contract liabilities arise when billings exceed the amount of revenue recognized based on the Company’s revenue recognition\npolicy under ASC 606. Revenue is recognized over time or at a point in time as performance obligations are satisfied, depending on the\nnature of the contract and the specific terms of the agreement.\n\n \n\nContract assets and liabilities are classified\nas current or non-current depending on the timing of when the performance obligations are expected to be satisfied and when the related\nbillings will occur. For contracts with multiple promises, the transaction price is allocated to each performance obligation based on\nrelative stand-alone selling prices. The Company regularly reviews its estimates of transaction prices, performance obligations, and\nthe progress toward satisfaction of those obligations.\n\n \n\nF-10\n\n \n\n \n\nAny significant changes in contract assets\nand liabilities are disclosed separately in the consolidated financial statements and are primarily driven by the timing of the satisfaction\nof performance obligations and the receipt of customer payments.\n\n \n\n**(j) Property and equipment, net**\n\n \n\nProperty and equipment are stated at\ncost less accumulated depreciation and impairment losses, if any. Depreciation is calculated using the straight-line method over the\nestimated useful lives of the respective assets, beginning when the asset is available for use. The estimated useful lives are determined\nbased on the nature and expected use of the asset and are reviewed periodically to ensure they remain appropriate. The estimated useful\nlives for major asset categories are as follows:\n\n \n\nSCHEDULE OF ESTIMATED USEFUL\nLIVES FOR MAJOR ASSET CATEGORIES PROPERTY AND EQUIPMENT, NET\n\n**Category**\n \n**Estimated\nuseful life**\n\nComputer equipment\n \n3 years\n\nOffice furniture and fittings\n \n5 years\n\n \n\nResidual values are estimated based on\nthe expected realizable value of the assets at the end of their useful lives and are considered immaterial for most categories of property\nand equipment. Depreciation methods, useful lives, and residual values are reviewed annually and adjusted prospectively, if appropriate.\n\n \n\nThe Company assesses impairment of property\nand equipment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When\nsuch indicators are present, the Company compares the carrying amount of the asset to the undiscounted future cash flows expected to\nbe generated by the asset. If the carrying amount exceeds the undiscounted cash flows, an impairment loss is recognized for the difference\nbetween the carrying amount and the asset’s fair value, which is generally determined based on discounted cash flows or appraisals.\n\n \n\n**(k) Intangible assets, net**\n\n \n\nIntangible assets are carried at cost\nless accumulated amortization and any recorded impairment. These assets are amortized using the straight-line method over their estimated\nuseful economic lives, which are determined based on the nature of the asset and the period over which the asset is expected to generate\neconomic benefits. The estimated useful lives for major categories of intangible assets are as follows:\n\n \n\nSCHEDULE OF ESTIMATED USEFUL\nLIVES FOR MAJOR ASSET CATEGORIES OF INTANGIBLE ASSETS\n\n**Category**\n \n**Estimated\nuseful life**\n\nInformation technology service\nsystem\n \n5 years\n\n \n\nResidual values are generally considered\nimmaterial for intangible assets and are not factored into the amortization calculation. The Company reviews amortization methods, useful\nlives, and residual values annually to ensure they remain appropriate based on the asset’s continued utility and economic benefit\nto the Company.\n\n \n\nIntangible assets are tested for impairment\nwhenever events or changes in circumstances indicate that the carrying value may not be recoverable. In such cases, the Company compares\nthe carrying value of the intangible asset to its undiscounted future cash flows. If the carrying amount exceeds the undiscounted cash\nflows, an impairment loss is recognized for the difference between the carrying amount and the asset’s fair value, which is typically\ndetermined using a discounted cash flow analysis or market-based approach. The Company also evaluates intangible assets for impairment\nindicators on a regular basis, including changes in technology, market conditions, and regulatory developments.\n\n \n\nF-11\n\n \n\n** **\n\n**(l) Impairment of long-lived assets**\n\n \n\nThe Company evaluates its long-lived\nassets, including property and equipment and right-of-use assets with finite lives, for impairment whenever events or changes in circumstances\nindicate that the carrying amount of an asset group may not be fully recoverable. Indicators of impairment include, but are not limited\nto, significant adverse changes in market conditions, a decline in the operating performance of an asset group, changes in the use of\nthe assets, regulatory or economic changes, or plans to sell or dispose of the assets.\n\n \n\nWhen such events or changes in circumstances\nare identified, the Company performs a recoverability test by comparing the carrying amount of the asset group to the sum of the future\nundiscounted cash flows expected to be generated by the asset group over its remaining useful life. If the carrying amount exceeds the\nsum of the expected undiscounted cash flows, an impairment loss is recognized. The impairment loss is measured as the amount by which\nthe carrying amount exceeds the fair value of the asset group.\n\n \n\nFair value is typically determined by\ndiscounting the expected future cash flows to present value using a rate commensurate with the risk associated with the asset group.\nWhen market prices are not readily available, the Company may also consider appraisals or other market-based valuation techniques.\n\n \n\nThe carrying amount of long-lived\nassets includes any accumulated depreciation and amortization. Impairment losses are recognized in the period in which the\nimpairment occurs and are recorded as part of operating expenses. For the years ended December 31, 2023, 2024 and 2025, the Company did not\nrecognize any impairment of its long-lived assets.\n\n \n\n**(m) Revenue recognition**\n\n \n\nThe Company’s revenues are primarily\ngenerated from (1) Sale of Hardware Product, (2) Sale of Software and IT Application Products, (3) Maintenance and Support Services,\n(4) IT Professional Services, and (5) Contracts with Multiple Promises.\n\n \n\nThe Company accounts for its revenue\nunder ASC Topic 606, Revenue from Contracts with Customers. Revenue is recognized when control of the promised goods or services is transferred\nto customers, in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or\nservices. To achieve this core principle, the Company applies the following five steps:\n\n \n\n \n1.\nIdentification of the contract(s)\nwith the customer;\n\n \n2.\nIdentification of the performance\nobligations in the contract;\n\n \n3.\nDetermination of the transaction\nprice, including any variable consideration;\n\n \n4.\nAllocation of the transaction\nprice to the performance obligations in the contract based on their relative standalone selling prices; and\n\n \n5.\nRecognition of revenue when,\nor as, the Company satisfies a performance obligation.\n\n \n\n**Sale of Hardware Products**\n\n \n\nRevenue from the sale of hardware products\nis recognized at the point in time when control of the hardware is transferred to the customer. This typically occurs upon delivery and\nacceptance of the hardware, when the customer gains the ability to use and benefit from the hardware.\n\n \n\n**Sale of Software and IT Application\nProducts**\n\n \n\nRevenue from the sale of software and\nIT application products, which may include packaged software, customized setup implementation, or integrated hardware and software platforms,\nis recognized at the point in time when control of the software is transferred to the customer.\n\n \n\nF-12\n\n \n\n \n\nThe software or IT application license\nconstitutes a “right to use” intellectual property (IP), as defined in ASC 606-10-55-54, because it provides the customer\nwith control over the software from the point of delivery or activation.\n\n \n\nA right-to-use license grants the customer\na license to the software as it exists at the time the license is granted, with no significant ongoing updates or support that would\nmake it a “right to access” license.\n\n \n\nAs such, revenue for the license is recognized\nat a point in time when control is transferred, typically upon delivery or activation of the software, in accordance with ASC 606.\n\n \n\n**Maintenance and Support Services**\n\n \n\nMaintenance and support services (“M&S”)\nrelated to software products typically consist of unspecified future updates and upgrades, as well as technical support provided over\na period of 1 to 12 months. These services represent stand-alone performance obligations, and revenue is recognized rateably over the\nservice period. Revenue for maintenance and support is deferred and recognized over time as the Company satisfies its obligation to provide\nupdates and technical support.\n\n \n\n**IT Professional Services**\n\n \n\nIT professional services relate to IT\nsystem setup, development, customization or integration services. These services represent stand-alone performance obligations, and revenue\nis recognized upon the completion of the services, when the customer gains the ability to use the system and benefit from the services\nprovided by the Company.\n\n \n\nRevenue from IT professional services\nis recognized at a point in time upon the completion of services. This determination is based on the following considerations under ASC\n606-10-25-27:\n\n \n\n1.\n**Simultaneous Receipt and\nConsumption:**The customer does not simultaneously receive and consume the benefits of the IT professional services as they are\nperformed. The services are delivered as a complete solution, and the customer derives value only upon full completion.\n\n \n \n\n2.\n**Creation or Enhancement\nof Customer-Controlled Asset**: The services provided do not create or enhance an asset that the customer controls as the services\nare performed. The customer does not gain control until the services are completed.\n\n \n \n\n3.\n\n**No Alternative Use and Enforceable\nRight to Payment**: While the deliverables are tailored to customer-specific requirements, they do not meet the “no alternative\nuse” criterion because, in practice, the Company can reconfigure partially completed deliverables for other projects, albeit\nwith additional effort.\n\n \n\nMore importantly, the Company does\nnot have an enforceable right to payment for performance completed to date. Engagement letters typically permit termination at any\ntime without penalty, and payment terms do not obligate the customer to pay for partially completed work.\n\n \n\nAccordingly, control is transferred to\nthe customer at a point in time, and revenue is recognized at that time.\n\n \n\n**Contracts with Multiple Promises**\n\n \n\nThe Company frequently enters into contracts\nwith customers that contain multiple promises, including hardware, software, IT application licenses, and IT professional services. To\ndetermine whether these promises are distinct within the context of the contract, the Company applies the guidance in ASC 606-10-25-19\nthrough 25-22, which requires an assessment of whether:\n\n \n\n \n1.\nThe customer can benefit\nfrom the goods or services on its own or with other readily available resources; and\n\n \n2.\nThe promise to transfer the\ngoods or services is separately identifiable from other promises in the contract.\n\n \n\nA promised good or service is not distinct\nif it is highly interdependent and interrelated with other promises, meaning its function is significantly affected by the other promises\nin the contract. BC32 of ASC 606 states:\n\n \n\n*“An entity should assess whether\ntwo or more promises in a contract are so highly interrelated and interdependent that they cannot be separated.”*\n\n \n\nAdditionally, BC33(a) and (b) explain\nthat if an entity provides a significant service of integrating multiple items into a combined output, those items are not distinct,\nas they serve as inputs to a unified deliverable rather than separate obligations.\n\n \n\nBased on this guidance, the Company has\ndetermined that IT professional services are not distinct from hardware, software, or IT application licenses in certain contracts because\nthey are necessary inputs to delivering a fully integrated IT solution rather than stand-alone deliverables.\n\n \n\nF-13\n\n \n\n** **\n\n**Contract Scenarios and Distinctness\nEvaluation**\n\n \n\n**1. Sale of Hardware Products with\nIT Professional Services (e.g., Setup, Development, Customization, or Integration Services)**\n\n \n\nNature of Promises & Intended\nBenefit to the Customer\n\n \n\nIn contracts where the Company sells\nhardware products, the hardware provides computing capability to the customer. However, the hardware alone does not deliver its full\nintended benefit without installation, configuration, and integration services. IT professional services ensure that the hardware is\nproperly installed, tested, and integrated within the customer’s existing IT infrastructure, making it functional.\n\n \n\nAssessment of Interdependency and\nSignificant Effect on Utility\n\n \n\nThe Company has determined that hardware\nand IT professional services are not separately identifiable because:\n\n \n\n \n●\nThe hardware requires IT\nservices to be installed and configured before it can be used.\n\n \n●\nThe IT professional services\nsignificantly modify and enhance the hardware, making them highly interdependent.\n\n \n●\nPer BC33(a), IT professional\nservices are an input to a combined output, rather than a separate deliverable.\n\n \n\nWhy IT Professional Services Are an\nInput to the Combined Output\n\n \n\nThe Company considered the following\nfactors in concluding that IT professional services are an input to a combined output:\n\n \n\n \n●\n**Level of Integration:**\nIT professional services ensure that the hardware is installed and operational within the customer’s environment.\n\n \n●\n**Modification & Customization:**\nThe services configure the hardware to align with the customer’s operational needs.\n\n \n●\n**Customer Dependency:**\nThe customer does not receive a functional hardware system without the accompanying installation and integration services.\n\n \n\nRevenue Recognition Conclusion\n\n \n\nSince the hardware and IT professional\nservices are highly interdependent and form a single performance obligation, revenue is recognized at a point in time when the fully\nintegrated system is transferred to the customer, typically upon completion of hardware installation and customer acceptance.\n\n \n\n**2. Sale of Software and IT Application\nProducts with IT Professional Services (e.g., Setup, Development, Customization, or Integration Services)**\n\n \n\nNature of Promises & Intended\nBenefit to the Customer\n\n \n\nIn contracts where the Company provides\nsoftware, the software delivers core processing and operational capabilities to the customer. However, in many cases, the software requires\ncustomization, configuration, and integration to be compatible with the customer’s existing IT environment. IT professional services\nensure that the software is properly deployed, customized, and integrated to meet the customer’s specific business processes.\n\n \n\nAssessment of Interdependency and\nSignificant Effect on Utility\n\n \n\nThe Company has determined that software\nand IT professional services are not separately identifiable because:\n\n \n\n \n●\nThe software, on its own,\nmay not provide full functionality without customization and integration.\n\n \n●\nIT professional services\nsignificantly modify the software, ensuring it is operational in the customer’s IT ecosystem.\n\n \n●\nPer BC33(b), IT professional\nservices create a combined deliverable, rather than separate outputs.\n\n \n\nWhy IT Professional Services Are an\nInput to the Combined Output\n\n \n\nThe Company considered the following\nfactors in determining that IT professional services are an input to a combined output:\n\n \n\n \n●\n**Level of Integration:**\nIT professional services ensure that the software is fully functional within the customer’s system.\n\n \n●\n**Modification & Customization:**\nIT professional services tailor the software to meet customer-specific requirements.\n\n \n●\n**Customer Dependency:**\nThe customer cannot deploy or use the software effectively without IT professional services ensuring proper implementation.\n\n \n\nRevenue Recognition Conclusion\n\n \n\nSince the software and IT professional\nservices are highly interdependent and form a single performance obligation, revenue is recognized at a point in time when the fully\ncustomized and integrated software solution is delivered and accepted by the customer.\n\n \n\nF-14\n\n \n\n** **\n\n**3. Sale of Hardware, Software, and\nIT Application Products with IT Professional Services**\n\n \n\nNature of Promises & Intended\nBenefit to the Customer\n\n \n\nIn contracts where the Company provides\na combination of hardware, software, and IT professional services, each element works together to create a fully integrated IT system.\nThe customer expects a turnkey solution, rather than individual components that must be assembled separately.\n\n \n\nAssessment of Interdependency and\nSignificant Effect on Utility\n\n \n\nThe Company has determined that none\nof the promises are distinct from each other, as they are highly interdependent and interrelated because:\n\n \n\n \n●\nHardware requires software\nto operate, and software requires IT services for customization and integration.\n\n \n●\nIT professional services\nconfigure and connect the hardware and software to function as a unified system.\n\n \n●\nPer BC32, the contract’s\nobjective is to deliver an integrated IT system, rather than discrete components.\n\n \n\nWhy IT Professional Services Are an\nInput to the Combined Output\n\n \n\nThe Company considered the following\nfactors in concluding that IT professional services are an input to a combined output:\n\n \n\n \n●\n**Level of Integration:**\nIT professional services configure both hardware and software to function as a single IT system.\n\n \n●\n**Modification & Customization:**\nIT professional services modify the components to meet customer-specific requirements.\n\n \n●\n**Customer Dependency:**\nThe customer does not receive a functional IT system unless all components are integrated.\n\n \n\nRevenue Recognition Conclusion\n\n \n\nSince the hardware, software, and IT\nprofessional services are highly interdependent and form a single performance obligation, revenue is recognized at a point in time when\ncontrol of the fully integrated IT system is transferred to the customer upon completion and acceptance.\n\n \n\n**4. Sale of Software and IT Application\nProducts with Maintenance and Support Services**\n\n \n\nNature of Promises & Intended\nBenefit to the Customer\n\n \n\nIn certain contracts, the Company sells\nsoftware and IT application licenses that grant customers the right to use proprietary software. These software products and licenses\nprovide immediate functionality and enable the customer to operate the software in their IT environment.\n\n \n\nAdditionally, these contracts may include\nmaintenance and support (M&S) services, which typically consist of:\n\n \n\n \n●\nTechnical support to assist\nthe customer with troubleshooting and operational issues.\n\n \n●\nUnspecified software updates\nand patches to enhance security, performance, or compatibility with evolving IT environments.\n\n \n●\nAccess to periodic feature\nupgrades, if applicable.\n\n \n\nThe primary intended benefit to the customer\nis the use of the software license. The maintenance and support services supplement the software usage by ensuring that it continues\nto operate effectively but do not modify or enhance the software’s core functionality at the time of transfer.\n\n \n\nF-15\n\n \n\n \n\nAssessment of Interdependency and\nSignificant Effect on Utility\n\n \n\nTo determine whether the software license\nand M&S services are distinct within the context of the contract, the Company evaluates whether:\n\n \n\n \n●\n**The customer can benefit\nfrom the software license independently** – The software license, upon delivery or activation, provides immediate utility\nand enables the customer to conduct business operations without requiring immediate maintenance or support intervention.\n\n \n●\n**The M&S services does\nnot significantly affect the customer’s ability to benefit from the software license** – The maintenance and support\nservices do not alter the fundamental usability of the software, as the customer can continue to use the software with or without\nreceiving M&S services.\n\n \n●\n**The software license and\nM&S services are not highly interdependent** – While M&S ensures the software remains functional over time, it does\nnot significantly integrate with or modify the software itself. The software retains its core functionality independently, making\nM&S a separately identifiable promise rather than an input to a combined output.\n\n \n\nBased on these factors, the Company concludes\nthat the software license and M&S services are distinct performance obligations because they do not significantly affect each other’s\nstandalone utility. This assessment aligns with ASC 606-10-25-21 and BC32, which emphasize that promises should be considered distinct\nif they do not integrate, modify, or significantly impact each other’s functionality.\n\n \n\nHowever, the Company assessed that the\nM&S services are immaterial to the total transaction price and do not significantly impact the timing or amount of revenue recognized.\nIn these cases, the software license and M&S services are treated as a single performance obligation, consistent with ASC 606 guidance\non immaterial performance obligations.\n\n \n\nWhy Maintenance & Support Services\nAre Not an Input to a Combined Output\n\n \n\nUnlike IT professional services, which\nsignificantly modify or integrate hardware and software to form a single functional solution, maintenance & support services:\n\n \n\n \n●\n**Do not alter or enhance\nthe software at the time of transfer** – The customer receives an operational software license upon delivery, and M&S\nprovides future support rather than modifying the existing software.\n\n \n●\n**Are not required for the\ncustomer to derive initial benefit from the software** – The customer can use the software independently, and the M&S\nservices merely support long-term usability.\n\n \n●\n**Do not significantly integrate\nwith or change the underlying software** – The services are supplementary rather than essential for the initial use of the\nproduct.\n\n \n\nAs such, M&S services do not qualify\nas an input to a combined output under BC33(a) or (b) and are therefore evaluated separately from the software license.\n\n \n\nRevenue Recognition Conclusion\n\n \n\nSince the Company has determined that\nM&S services are immaterial to the total transaction price, the software license and M&S services are treated as a single performance\nobligation for simplicity in revenue recognition.\n\n \n\n \n●\nRevenue for the combined\nperformance obligation is recognized at a point in time when control of the software license is transferred to the customer, typically\nupon delivery or activation.\n\n \n●\nAny revenue associated with\nM&S services is included in the total transaction price of the software license and recognized at the same point in time, as\nthe distinction between the two does not materially impact revenue timing.\n\n \n\nF-16\n\n \n\n** **\n\n**5. Sale of Software and IT Application\nProducts with IT Professional Services (e.g., Setup, Development, Customization, or Integration Services) and with Maintenance and Support\nServices**\n\n \n\nNature of Promises & Intended\nBenefit to the Customer\n\n \n\nIn certain contracts, the Company sells\nsoftware and IT application licenses combined with both IT professional services (e.g., setup, customization, integration) and maintenance\nand support services (M&S). The software license provides core processing capabilities. IT professional services are required to\ncustomize, configure, and integrate the software into the customer’s existing IT environment to make it fully functional. The M&S\nservices consist of technical support, unspecified updates, and patches that help maintain the software’s operation over time.\n\n \n\nThe customer’s primary intended\nbenefit is to obtain a fully deployed and customized software solution that is ready for use, with ongoing support to ensure continued\noperation.\n\n \n\nAssessment of Interdependency and\nSignificant Effect on Utility\n\n \n\nThe Company has determined that the software\nlicense and the IT professional services are highly interdependent and interrelated, and therefore not distinct from each other, because:\n\n \n\n \n●\nThe software license alone\ndoes not deliver its full intended functionality without customization, configuration, and integration into the customer’s\nenvironment.\n\n \n●\nThe IT professional services\nsignificantly modify and tailor the software to meet customer-specific requirements.\n\n \n●\nPer ASC 606-10-25-21 and\nBC33(b), the software and the IT professional services are inputs to a combined output (a fully functional, customized software system),\nrather than separate deliverables.\n\n \n\nIn contrast, the M&S services do\nnot significantly affect the customer’s ability to benefit from the customized software system at the time of transfer. The customer\ncan use the deployed and customized software immediately upon completion of the IT professional services, regardless of whether M&S\nis provided. However, the Company has assessed that the M&S services are immaterial relative to the total transaction price of these\ncontracts. Furthermore, the M&S services do not fundamentally alter the software or the integrated solution – they merely provide\nfuture support.\n\n \n\nWhy Maintenance & Support Services\nAre Not an Input to a Combined Output\n\n \n\nUnlike IT professional services, which\nsignificantly modify or integrate hardware and software to form a single functional solution, maintenance & support services:\n\n \n\n \n●\n**Do not alter or enhance\nthe software at the time of transfer** – The customer receives an operational software license upon delivery, and M&S\nprovides future support rather than modifying the existing software.\n\n \n●\n**Are not required for the\ncustomer to derive initial benefit from the software** – The customer can use the software independently, and the M&S\nservices merely support long-term usability.\n\n \n●\n**Do not significantly integrate\nwith or change the underlying software** – The services are supplementary rather than essential for the initial use of the\nproduct.\n\n \n\nBecause the M&S services are immaterial\nto the total transaction price, the Company treats the entire contract (software + IT professional services + M&S) as a single performance\nobligation for revenue recognition purposes.\n\n \n\nRevenue Recognition Conclusion\n\n \n\nRevenue is recognized at a point in time\nwhen the fully customized and integrated software solution is delivered and accepted by the customer. At that moment, control of the\ncombined deliverable (including the software as customized) is transferred to the customer. The immaterial M&S component does not\nchange the timing of revenue recognition.\n\n \n\nF-17\n\n \n\n \n\n**Variable Consideration**\n\n \n\nThe Company estimates variable\nconsideration, including potential refunds, penalties, or performance bonuses, using the expected value or most likely amount\nmethod, depending on which better predicts the amount of consideration to which the Company will be entitled. The Company recognizes\nrevenue only to the extent that it is probable that a significant reversal of cumulative revenue will not occur. For the year ended\nDecember 31, 2023, 2024 and 2025, the Company did not have any contracts with variable consideration, and no adjustments to the\ntransaction price were necessary after initial recognition.\n\n \n\n**Principal versus Agent Considerations**\n\n \n\nIn evaluating whether the Company is\nacting as a principal or an agent in its contracts, we considered the guidance in ASC 606-10-55-36 through 55-40. This evaluation focused\non identifying the specified goods or services promised to the customer and assessing whether the Company obtains control of these goods\nor services before they are transferred to the customer.\n\n \n\nThe Company’s IT solutions involve\nservices, hardware, software, and IT application products. In these contracts, the Company provides a bundle of goods and services necessary\nto fulfil the performance obligations. While certain components of the solution, such as hardware and software, may be sourced from third-party\nproviders, the Company directs and integrates these inputs into a cohesive IT solution that meets the customer’s needs.\n\n \n\nSpecifically:\n\n \n\n**1. Control of Goods and Services:**\n\n \n\nThe Company takes control of the services,\nhardware, software, and IT application products prior to their delivery to the customer. This is evidenced by the Company’s ability\nto direct the use of these goods and services and to obtain the benefits from them before transfer.\n\n \n\nThe Company assumes inventory risk\nfor these goods, either upon receipt from the third-party provider or during their customization or bundling into the overall IT solution.\n\n \n\n**2. Primary Responsibility for Fulfilment:**\n\n \n\nThe Company is responsible for ensuring\nthe customer receives the specified solution, including resolving any issues with the delivery or functionality of the underlying services,\nhardware, software, and applications. This indicates that the Company is accountable for the overall performance of the arrangement.\n\n \n\n**3. Pricing Discretion:**\n\n \n\nThe Company determines the pricing\nfor the bundled solution, further supporting its role as principal.\n\n \n\nAlthough the Company partners with cloud\nand technology service providers and outsources certain components to third-party providers, these third parties act as subcontractors\nor suppliers within the Company’s broader performance obligation. The Company does not merely arrange for the third parties to\nprovide goods or services directly to the customer.\n\n \n\nBased on the above, the Company concluded\nthat it acts as the principal in these transactions because it controls the specified goods and services before transferring them to\nthe customer.\n\n \n\nF-18\n\n \n\n \n\nThe following table sets forth a breakdown\nof our revenues, in absolute amounts and percentages of total revenues for the years ended December 31, 2023, 2024 and 2025:\n\n \n\nSCHEDULE OF ABSOLUTE\nAMOUNTS AND PERCENTAGES OF TOTAL REVENUES\n\n \n \n**For the Years Ended December 31,** \n\n \n \n**2023**\n  \n2024  \n2025 \n\n \n \n**HK$**\n \n \n**%**\n  \nHK$  \n%  \nHK$  \nUS$ (Note 2(e))  \n% \n\nRevenue from Products:\n \n \n     \n \n \n \n      \n  \n    \n    \n    \n    \n   \n\nContracts with Multiple Promises*:\n \n \n \n \n \n \n \n  \n    \n    \n    \n    \n   \n\n- Sale of Hardware with IT Professional Services\n \n \n58,250,642\n \n \n \n41.2\n  \n 70,398,140  \n 38.7  \n 66,224,103  \n 8,490,270  \n 26.4 \n\n- Sale of Software and IT Application products with IT Professional Services\n \n \n52,958,769\n \n \n \n37.5\n  \n 79,469,485  \n 43.7  \n 32,730,302  \n 4,196,192  \n 13.0 \n\n- Sale of Hardware, Software and IT Application Products with IT Professional Services\n \n \n5,095,674\n \n \n \n3.6\n  \n -  \n -  \n 7,993,333  \n 1,024,786  \n 3.2 \n\n- Sale of Software and IT Application Products with IT Professional Services and Maintenance and Support Services\n \n \n-\n \n \n \n-\n  \n -  \n -  \n 12,932,244  \n 1,657,980  \n 5.1 \n\n- Sale of Software and IT Application Products with Maintenance and Support Services\n \n \n17,239,574\n \n \n \n12.2\n  \n 22,112,152  \n 12.2  \n 114,489,700  \n 14,678,166  \n 45.6 \n\nSale of Hardware Products\n \n \n834,848\n \n \n \n0.6\n  \n 492,705  \n 0.3  \n 638,259  \n 81,828  \n 0.3 \n\n \n \n \n**134,379,507**\n \n \n \n**95.1**\n  \n 172,472,482  \n 94.9  \n 235,007,941  \n 30,129,222  \n 93.5 \n\nRevenue from Services:\n \n \n \n \n \n \n \n  \n    \n    \n    \n    \n   \n\nIT Professional Services\n \n \n4,848,321\n \n \n \n3.4\n  \n 4,779,716  \n 2.6  \n 6,336,954  \n 812,430  \n 2.5 \n\nMaintenance and Support Services\n \n \n2,144,530\n \n \n \n1.5\n  \n 4,577,928  \n 2.5  \n 9,871,754  \n 1,265,610  \n 3.9 \n\n \n \n \n**6,992,851**\n \n \n \n**4.9**\n  \n 9,357,644  \n 5.1  \n 16,208,708  \n 2,078,040  \n 6.5 \n\nTotal revenues\n \n \n**141,372,358**\n \n \n \n**100**\n  \n 181,830,126  \n 100  \n 251,216,649  \n 32,207,262  \n 100 \n\n \n\n***Revenue Recognition for Contracts with Non-Distinct Obligations**\n\n \n\nThe Company enters into contracts that\ninclude a combination of goods (e.g., hardware, software) and services (e.g., IT professional services, integration, and maintenance).\nWhen these elements are highly interdependent and interrelated, they are treated as a single performance obligation under ASC 606-10-25-21,\nand revenue is recognized at a point in time when control transfers to the customer, typically upon customer acceptance.\n\n \n\nBecause these contracts represent an\nintegrated solution, the Company does not allocate revenue to individual components (hardware, software, or services). Instead, revenue\nis categorized as product revenue, as the predominant characteristic of the combined deliverable is the hardware and software provided\nto the customer.\n\n \n\nIn determining the predominant characteristic,\nthe Company considers:\n\n \n\n \n●\nThe primary benefit to the\ncustomer, which is the acquisition of a functional IT system.\n\n \n●\nThe relative significance\nof each component, including the cost composition of hardware, software, and services within the contract.\n\n \n●\nThe customer’s primary\nreason for entering into the arrangement, which is to obtain a fully integrated IT solution rather than standalone services.\n\n \n\nThis classification reflects the nature\nof the Company’s contracts and ensures consistency with how control is transferred to the customer.\n\n \n\nF-19\n\n \n\n \n\nThe following table summarizes disaggregated\nrevenue from contracts with customers by timing of revenue:\n\n \n\nSCHEDULE OF\nDISAGGREGATED REVENUE FROM CONTRACT WITH CUSTOMERS\n\n \n \n**For the Years Ended December 31,** \n\n \n \n**2023**\n  \n2024  \n2025 \n\n \n \n**HK$**\n \n \n****\n**%**\n  \nHK$  \n%  \nHK$  \nUS$ (Note 2(e))  \n% \n\nRevenue recognized at point in time\n \n \n \n \n \n \n \n  \n    \n    \n    \n    \n   \n\nSale of Hardware Products\n \n \n834,848\n \n \n \n0.6\n  \n 492,705  \n 0.3  \n 638,259  \n 81,828  \n 0.2 \n\nIT Professional Services\n \n \n3,600,962\n \n \n \n2.5\n  \n 3,860,692  \n 2.1  \n 1,922,094  \n 246,422  \n 0.8 \n\nContracts with Multiple Promises\n \n \n133,544,659\n \n \n \n94.5\n  \n 171,979,777  \n 94.6  \n 234,369,682  \n 30,047,395  \n 93.3 \n\n \n \n \n**137,980,469**\n \n \n \n**97.6**\n  \n 176,333,174  \n 97.0  \n 236,930,035  \n 30,375,645  \n 94.3 \n\nRevenue recognized over-time\n \n \n \n \n \n \n \n  \n    \n    \n    \n    \n   \n\nMaintenance and Support Services\n \n \n2,144,530\n \n \n \n1.5\n  \n 4,577,928  \n 2.5  \n 9,871,754  \n 1,265,610  \n 3.9 \n\nIT Professional Services\n \n \n1,247,359\n \n \n \n0.9\n  \n 919,024  \n 0.5  \n 4,414,860  \n 566,007  \n 1.8 \n\n \n \n \n**3,391,889**\n \n \n \n**2.4**\n  \n 5,496,952  \n 3.0  \n 14,286,614  \n 1,831,617  \n 5.7 \n\nTotal revenues\n \n \n**141,372,358**\n \n \n \n**100**\n  \n 181,830,126  \n 100  \n 251,216,649  \n 32,207,262  \n 100 \n\n \n\nThe details of deferred revenue (contract\nliabilities) are as follows:\n\n \n\nSCHEDULE\nOF DEFERRED REVENUE (CONTRACT\nLIABILITIES)\n\n  \n**As of December 31,** \n\n  \n**2023**\n \n \n2024  \n2025 \n\n  \n**HK$**\n \n \n**%**\n \n \nHK$  \n%  \nHK$  \nUS$ (Note 2(e))  \n% \n\nSale of Hardware Products \n \n-\n \n \n \n0.0\n \n \n 62,716  \n 0.4  \n -  \n -  \n - \n\nMaintenance and Support Services \n \n151,973\n \n \n \n0.8\n \n \n 218,300  \n 1.3  \n 1,464,387  \n 187,742  \n 38.1 \n\nIT Professional Services \n \n2,416,233\n \n \n \n13.0\n \n \n 373,061  \n 2.1  \n 308,954  \n 39,610  \n 8.1 \n\nContracts with Multiple Promises \n \n16,017,586\n \n \n \n86.2\n \n \n 16,747,141  \n 96.2  \n 2,067,607  \n 265,078  \n 53.8 \n\n  \n \n**18,585,792**\n \n \n \n**100**\n \n \n 17,401,218  \n 100  \n 3,840,948  \n 492,429  \n 100 \n\n \n\nThe details of unbilled receivables (contract\nassets) are as follows:\n\nSCHEDULE OF UNBILLED RECEIVABLES (CONTRACT\nASSETS)\n\n  \n**As of December 31,** \n\n  \n**2023**\n \n \n2024  \n2025 \n\n  \n**HK$**\n \n \n**%**\n \n \nHK$  \n%  \nHK$  \nUS$ (Note 2(e))  \n% \n\nMaintenance and Support Services \n \n1,878,008\n \n \n \n95.6\n \n \n 172,413  \n 6.6  \n 175,340  \n 22,479  \n 11.1 \n\nIT Professional Services \n \n76,948\n \n \n \n3.9\n \n \n -  \n -  \n 51,866  \n 6,650  \n 3.3 \n\nContracts with Multiple Promises \n \n9,706\n \n \n \n0.5\n \n \n 2,436,760  \n 93.4  \n 1,350,649  \n 173,160  \n 85.6 \n\n  \n \n**1,964,662**\n \n \n \n**100**\n \n \n 2,609,173  \n 100  \n 1,577,855  \n 202,289  \n 100 \n\n \n\nF-20\n\n \n\n** **\n\n**(n) Cost of revenues**\n\n \n\nCost of revenues includes all direct\ncosts associated with fulfilling the Company’s performance obligations for services and products. These costs primarily consist\nof:\n\n \n\n \n●\n**Subcontracting fees**,\nwhich include amounts paid to third-party vendors and service providers for project-related services.\n\n \n●\n**Hardware costs**, which\nrepresent the direct cost of hardware sold to customers as part of the Company’s service offerings.\n\n \n**●**\n**Software licenses and\nIT application licenses**, which include the costs of licenses procured from third-party vendors and resold or utilized in providing\nservices to customers.\n\n \n\nCosts are recognized as incurred in the\nsame period as the related revenues, in accordance with ASC 606. The Company does not maintain inventory but purchases hardware and software\nupon receiving customer orders. Since the setup and delivery are typically completed within a short period, costs are classified as cost\nof revenues and expensed as incurred when control of the related products or services is transferred to the customer.\n\n \n\nThe Company has considered ASC 340-40\nand determined that no costs meet the criteria for capitalization, as all costs are directly tied to performance obligations that are\nsatisfied within the same reporting period.\n\n \n\n**Cost of Revenues Classification**\n\n \n\nThe Company categorizes cost of revenues\ninto cost of products and cost of services based on the final deliverable of the contract. Costs are tracked at the contract level and\nassigned to the appropriate category at the time of incurrence, ensuring they are directly attributed to either product or service costs\nbased on the final deliverable.\n\n \n\nThe Company utilizes a direct cost assignment\nmethodology, recording each cost in the relevant category as incurred, rather than aggregating all costs of revenue and allocating them\nproportionally based on revenue presentation methodology. This approach ensures that costs align with their respective performance obligations\nunder each contract and accurately reflect the economic substance of the transaction.\n\n \n\nThe\nfollowing table sets forth a breakdown of our costs of revenues, in absolute amounts and percentages of total revenues for the years\nended December 31, 2023, 2024 and 2025:\n\n \n\nSCHEDULE OF COSTS OF REVENUES IN ABSOLUTE AMOUNTS AND PERCENTAGES OF TOTAL REVENUES\n\n  \n**For the Years Ended December 31,** \n\n  \n**2023**\n \n \n2024  \n2025 \n\n  \n**HK$**\n \n \n \n**%**\n \n \nHK$  \n%  \nHK$  \nUS$ (Note 2(e))  \n% \n\nCost of Products: \n \n \n \n \n \n \n \n \n   \n   \n   \n   \n  \n\nContracts with Multiple Promises: \n \n \n \n \n \n \n \n \n    \n    \n    \n    \n   \n\n- Sale of Hardware with IT Professional Services \n \n52,158,964\n \n \n \n43.0\n \n \n 65,259,321  \n 41.7  \n 59,880,675  \n 7,677,010  \n 27.4 \n\n- Sale of Software and IT Application products with IT Professional Services \n \n46,521,405\n \n \n \n38.3\n \n \n 66,764,480  \n 42.6  \n 25,453,232  \n 3,263,235  \n 11.6 \n\n- Sale of Hardware, Software and IT Application Products with IT Professional Services \n \n4,098,581\n \n \n \n3.4\n \n \n -  \n -  \n 5,778,437  \n 740,825  \n 2.7 \n\n- Sale of Software and IT Application Products with IT Professional Services and Maintenance and Support Services \n \n-\n \n \n \n-\n \n \n -  \n -  \n 10,552,321  \n 1,352,862  \n 4.8 \n\n- Sale of Software and IT Application Products with Maintenance and Support Services \n \n14,996,495\n \n \n \n12.3\n \n \n 17,827,166  \n 11.4  \n 106,856,111  \n 13,699,501  \n 48.8 \n\nSale of Hardware Products \n \n719,270\n \n \n \n0.6\n \n \n 347,470  \n 0.2  \n 549,444  \n 70,442  \n 0.3 \n\n  \n \n**118,494,715**\n \n \n \n**97.6**\n \n \n 150,198,437  \n 95.9  \n 209,070,220  \n 26,803,875  \n 95.6 \n\nCost of Services: \n \n \n \n \n \n \n \n \n    \n    \n    \n    \n   \n\nIT Professional Services \n \n2,335,938\n \n \n \n1.9\n \n \n 3,312,547  \n 2.1  \n 3,283,943  \n 421,018  \n 1.5 \n\nMaintenance and Support Services \n \n632,205\n \n \n \n0.5\n \n \n 3,064,807  \n 2.0  \n 6,439,086  \n 825,524  \n 2.9 \n\n  \n \n**2,968,143**\n \n \n \n**2.4**\n \n \n 6,377,354  \n 4.1  \n 9,723,029  \n 1,246,542  \n 4.4 \n\nTotal cost of revenues \n \n**121,462,858**\n \n \n \n**100**\n \n \n 156,575,791  \n 100  \n 218,793,249  \n 28,050,417  \n 100 \n\n \n\n**(o) Selling and marketing expenses**\n\n \n\nSelling and marketing expenses include\ndirect and indirect costs incurred in connection with promoting and selling the Company’s products and services. These expenses\nprimarily consist of:\n\n \n\n \n●\nMarketing service fees paid\nto third-party vendors for advertising, promotions, and other marketing activities;\n\n \n●\nCommissions paid to staffs\nand third parties based on sales performance and achievement of sales targets;\n\n \n●\nSalaries, benefits, and bonuses\nfor in-house sales and marketing personnel involved in selling the Company’s products and services;\n\n \n●\nAdvertising and promotional\ncosts, including media buys, events, and sponsorships.\n\n \n\nSelling and marketing expenses are recognized\nas incurred, consistent with the period in which the related services are rendered or the corresponding revenue is recognized. Commissions\npaid to staff and third parties are recognized as an expense when the related revenue is recognized unless they qualify for capitalization\nunder ASC 340-40.\n\n \n\nIf commissions are capitalized, they\nare amortized over the period in which the related performance obligations are satisfied, reflecting the estimated benefit period of\nthe related contract. For the years ended December 31, 2023, 2024 and 2025, the Company did not pay any renewal commissions.\n\n \n\nIf renewal commissions are paid in the\nfuture, they will be assessed to determine whether they are commensurate with the initial commissions. If they are commensurate, they\nwill be capitalized and amortized over the renewal period. If they are not commensurate, the amortization period for initial commissions\nwill reflect the combined benefit period of the initial contract and the expected renewals, consistent with ASC 340-40-35-1.\n\n \n\nThe Company regularly evaluates the effectiveness\nof its marketing strategies and sales channels, ensuring that selling and marketing expenses are aligned with the Company’s overall\nbusiness objectives.\n\n \n\nF-21\n\n \n\n** **\n\n**(p) General and administrative\nexpenses**\n\n \n\nGeneral and administrative expenses primarily\nconsist of salaries, bonuses, and benefits for employees involved in general corporate functions, such as finance, human resources, legal,\nand executive management. These expenses also include depreciation and amortization related to assets used in corporate activities, legal\nand professional service fees, office expenses, insurance premiums, short-term rental costs for office spaces, and other administrative\ncosts.\n\n \n\nGeneral and administrative expenses are\nrecognized as incurred, in accordance with the matching principle, ensuring that expenses are recorded in the same period as the related\nrevenues or activities. Depreciation and amortization expenses are recognized based on the estimated useful lives of the related assets\nand in accordance with the Company’s depreciation and amortization policies.\n\n \n\nOther costs classified as general and\nadministrative expenses include:\n\n \n\n \n●\nOffice supplies\n\n \n●\nUtilities\n\n \n●\nTravel and entertainment\nexpenses related to corporate functions\n\n \n●\nInsurance premiums\n\n \n●\nSoftware subscriptions used\nfor general corporate purposes\n\n \n\nShort-term rental costs are accounted\nfor in accordance with ASC 842 (Leases). All general and administrative expenses are reviewed periodically to ensure they reflect the\ncurrent needs and activities of the Company.\n\n \n\n**(q) Employee benefits**\n\n \n\nThe Company’s full-time employees\nin Hong Kong participate in a government-mandated defined contribution plan, known as the Mandatory Provident Fund (“MPF”).\nUnder the MPF system, the Company makes contributions based on a statutory percentage of the employees’ salaries, up to a maximum\ncontribution of HK$1,500 (US$192) per month per employee. Employees are also required to make matching contributions to their MPF accounts.\n\n \n\nThe Company recognizes MPF contributions\nas an expense in the period in which the related employee services are rendered, in accordance with ASC 715 (Compensation—Retirement\nBenefits). Contributions are made monthly and are fully vested to the employees at the time of contribution. The Company has no further\nlegal or constructive obligations beyond the contributions made under this defined contribution plan.\n\n \n\nAll full-time employees are eligible\nto participate in the MPF plan upon commencing employment. The Company regularly reviews its compliance with the applicable Hong Kong\nlaws and regulations regarding employee retirement benefits.\n\n \n\n**(r) Taxation**\n\n \n\nIncome Taxes\n\n \n\nCurrent income taxes are provided on\nthe basis of income/(loss) for financial reporting purposes, adjusted for income and expense items which are not assessable or deductible\nfor income tax purposes, in accordance with the regulations of the relevant tax jurisdictions. Deferred income taxes are provided using\nthe assets and liabilities method. Under this method, deferred income taxes are recognized for the tax consequences of temporary differences\nby applying enacted statutory rates applicable to future years to differences between the financial statement carrying amounts and the\ntax bases of existing assets and liabilities. The tax base of an asset or liability is the amount attributed to that asset or liability\nfor tax purposes. The effect on deferred taxes of a change in tax rates is recognized in the consolidated statement of operations and\ncomprehensive income in the period of change. A valuation allowance is provided to reduce the amount of deferred tax assets if it is\nconsidered more-likely-than-not that some portion of, or all of the deferred tax assets will not be realized.\n\n \n\nF-22\n\n \n\n \n\nDeferred tax assets are reduced by a\nvaluation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets\nwill not be realized. The Company considers positive and negative evidence when determining whether a portion or all of its deferred\ntax assets will more likely than not be realized. This assessment considers, among other matters, the nature, frequency and severity\nof current and cumulative losses, forecasts of future profitability, the duration of statutory carry-forward periods, its experience\nwith tax attributes expiring unused, and its tax planning strategies. The ultimate realization of deferred tax assets is dependent upon\nits ability to generate sufficient future taxable income within the carry-forward periods provided for in the tax law and during the\nperiods in which the temporary differences become deductible. When assessing the realization of deferred tax assets, the Company considers\npossible sources of taxable income including (i) future reversals of existing taxable temporary differences, (ii) future taxable income\nexclusive of reversing temporary differences and carry-forwards, (iii) future taxable income arising from implementing tax planning strategies,\nand (iv) specific known trend of profits expected to be reflected within the industry.\n\n \n\n*Uncertain tax positions*\n\n \n\nThe Company applies the provisions of\nASC topic 740 (“ASC 740”), Accounting for Income Taxes, to account for uncertainty in income taxes. ASC 740 prescribes a\nrecognition threshold a tax position is required to meet before being recognized in the consolidated financial statements. The benefit\nof a tax position is recognized if a tax return position or future tax position is “more likely than not” to be sustained\nunder examination based solely on the technical merits of the position. Tax positions that meet the “more likely than not”\nrecognition threshold is measured, using a cumulative probability approach, at the largest amount of tax benefit that has a greater than\nfifty percent likelihood of being realized upon settlement. The estimated liability for unrecognized tax benefits is periodically assessed\nfor adequacy and may be affected by changing interpretations of laws, rulings by tax authorities, changes and or developments with respect\nto tax audits, and the expiration of the statute of limitations. Additionally, in future periods, changes in facts and circumstances,\nand new information may require the Company to adjust the recognition and measurement of estimates with regards to changes in individual\ntax position. Changes in recognition and measurement of estimates are recognized in the period in which the change occurs.\n\n \n\nThe Company did not accrue any liability,\ninterest or penalties related to uncertain tax positions in its provision for income taxes line of its statements of operations and comprehensive\nincome for the year ended December 31, 2025. The Company does not expect that its assessment regarding unrecognized tax\npositions will materially change over the next 12 months.\n\n \n\n**(s) Comprehensive income**\n\n \n\nThe Company has adopted FASB Accounting\nStandard Codification Topic 220 (“ASC 220”) “Comprehensive income”, which establishes standards for reporting\nand the presentation of comprehensive income (loss), its components and accumulated balances.\n\n \n\nThere was no other comprehensive loss\nfor the year ended December 31, 2025.\n\n \n\n**(t) Leases**\n\n \n\nThe Company accounts for leases under\nASC Topic 842, Leases. At the inception of a contract, the Company determines whether the arrangement contains a lease by evaluating\nwhether the Company obtains the right to control the use of an identified asset for a period in exchange for consideration.\n\n \n\nRight-of-use assets and lease liabilities\nare recognized at the commencement date of the lease. Lease liabilities are initially measured at the present value of the unpaid lease\npayments, discounted using the interest rate implicit in the lease, if readily determinable. If the implicit rate is not available, the\nCompany uses its incremental borrowing rate, which is determined based on the rate of interest that the Company would have to pay to\nborrow on a collateralized basis over a similar term for an amount equal to the lease payments in a similar economic environment.\n\n \n\nThe right-of-use asset is initially measured\nat cost, which includes the amount of the initial lease liability, adjusted for any lease incentives received, initial direct costs incurred,\nand lease payments made prior to commencement. Right-of-use assets are recognized in the Company’s consolidated balance sheet within\n“right-of-use assets,” and operating lease liabilities are included within “lease liabilities.”\n\n \n\nF-23\n\n \n\n \n\nThe Company reviews right-of-use assets\nfor impairment in accordance with the impairment guidance under ASC 360, *Property, Plant, and Equipment* (“ASC 360”).\nAll right-of-use assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of\nthe assets may not be recoverable. No impairment was recognized for the year ended December 31, 2025.\n\n \n\nThe Company classifies leases as either\noperating or finance leases at lease inception. Operating leases are recognized in the consolidated balance sheet and expensed over the\nlease term on a straight-line basis. Finance leases result in the recognition of both interest expense and amortization of the right-of-use\nasset over the lease term.\n\n \n\nLease liabilities are remeasured when\nthere is a change in the lease term, a change in the assessment of an option to purchase the underlying asset, or if there is a modification\nto the terms of the lease. Adjustments to lease liabilities are reflected in corresponding changes to the right-of-use asset.\n\n \n\nShort-term leases (with lease terms of\n12 months or less) and leases with variable payments are not recognized as lease liabilities. Instead, lease expenses for these leases\nare recognized on a straight-line basis over the lease term.\n\n \n\nThe Company discloses the terms and assumptions\nrelated to leases, including lease maturities, discount rates, and the timing of lease payments, in the notes to the consolidated financial\nstatements, in accordance with ASC 842.\n\n \n\n**(u) Related party transaction**\n\n \n\nA related party is generally defined\nas (i) any person and or their immediate family hold 10% or more of the company’s securities (ii) the Company’s management\nand or their immediate family, (iii) someone that directly or indirectly controls, is controlled by or is under common control with the\nCompany, or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered\nto be a related party transaction when there is a transfer of resources or obligations between related parties. Related parties may be\nindividuals or corporate entities.\n\n \n\nTransactions involving related parties\ncannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free market dealings\nmay not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions\nwere consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated.\n\n \n\n**(v) Segment reporting**\n\n \n\nASC 280, *Segment Reporting*, (“ASC\n280”), establishes standards for companies to report in their financial statement information about operating segments, products,\nservices, geographic areas, and major customers.\n\n \n\nThe Company operates\nas a single reportable segment as defined by ASC 280, with the Chief Operating Decision Maker (CODM), identified as the Chief Executive\nOfficer, reviewing consolidated results for the purpose of allocating resources and assessing performance. The Company’s revenue\nfor the years ended December 31, 2023, 2024 and 2025 were generated from provision of IT-related services.\n\n \n\nThe CODM reviews\nfinancial information on a consolidated basis, using Operating Income as the primary measure of segment performance. Operating Income\nis defined as revenue less operating expenses, excluding interest income and income taxes.\n\n \n\nThe CODM regularly receives and reviews\nthe following expense categories, which are included in the segment’s measure of profit or loss.\n\n \n\nSCHEDULE OF SEGMENT’S MEASURE OF PROFIT OR LOSS\n\n  \n \n2023\n \n \n2024  \n2025  \n2025 \n\n  \n**For the Years Ended December 31,** \n\n  \n**2023**\n \n \n2024  \n2025  \n2025 \n\n  \n**HK$**\n \n \nHK$  \nHK$  \nUS$ (Note 2(e)) \n\n**Revenues – IT related services**** **\n** **\n**141,372,358**\n** **\n** **\n** ****181,830,126**** **** **\n** ****251,216,649**** **** **\n** ****32,207,262**** **\n\n**Cost of revenues**** **\n** **\n**(121,462,858**\n**)**\n** **\n** ****(156,575,791****)**** **\n** ****(218,793,249****)**** **\n** ****(28,050,417****)**\n\n**Gross profit**** **\n** **\n**19,909,500**\n** **\n** **\n** ****25,254,335**** **** **\n** ****32,423,400**** **** **\n** ****4,156,845**** **\n\n  \n \n \n \n \n    \n    \n   \n\nOperating expenses: \n \n \n \n \n    \n    \n   \n\nSelling and marketing expenses \n \n(1,024,598\n)\n \n (2,776,713) \n (31,627,720) \n (2,444,836)\n\nGeneral and administrative expenses \n \n(4,989,693\n)\n \n (8,527,081) \n (24,332,020) \n (3,119,489)\n\n**Total operating expenses**** **\n** **\n**(6,014,291**\n**)**\n** **\n** ****(11,303,794****)**** **\n** ****(55,959,740****)**** **\n** ****(7,174,325****)**\n\n  \n \n \n \n \n    \n    \n   \n\n**Operating income / (loss)**** **\n** **\n**13,895,209**\n** **\n** **\n** ****13,950,541**** **** **\n** ****(23,536,340****)**** **\n** ****(3,017,480****)**\n\n** **\n\n**Geographic Information**\n\n \n\nThe Company generates revenue from customers\nlocated in its country of domicile, Hong Kong, and from customers in other regions. Revenues are attributed to geographic regions based\non the location of the customers.\n\n \n\nThe following table presents revenues\nfrom external customers by geographic area for the years ended December 31, 2024, and 2025:\n\n \n\nSCHEDULE OF CUSTOMERS BY GEOGRAPHIC AREA\n\n \n \n**For the Years Ended December 31,** \n\n \n \n**2023**\n  \n2024  \n2025 \n\n \n \n**HK$**\n \n \n \n**%**\n  \nHK$  \n%  \nHK$  \nUS$ (Note 2(e))  \n% \n\nHong Kong\n \n \n128,519,292\n \n \n \n90.9\n  \n 144,495,457  \n 79.5  \n 225,302,675  \n 28,884,958  \n 89.7 \n\nSingapore\n \n \n10,090,715\n \n \n \n7.1\n  \n 33,751,584  \n 18.5  \n 21,777,817  \n 2,792,028  \n 8.7 \n\nOthers, including Philippines, Macau, Japan, Malaysia and Indonesia\n \n \n2,762,351\n \n \n \n2.0\n  \n 3,583,085  \n 2.0  \n 4,136,156  \n 530,276  \n 1.6 \n\n** **\n** **\n** **\n**141,372,358**\n** **\n** **\n** **\n**100**\n** **** **\n** ****181,830,126**** **** **\n** ****100**** **** **\n** ****251,216,649**** **** **\n** ****32,207,262**** **** **\n** ****100**** **\n\n \n\n**(w) Deferred offering costs**\n\n \n\nThe Company complies with the requirement\nof the ASC 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A “Expenses of Offering”. Deferred offering costs consist\nof corporate secretarial, industry research, legal and other expenses incurred through the balance sheet date that are directly related\nto the intended initial public offer (“IPO”). Deferred offering costs will be charged to shareholders’ equity upon\nthe completion of the IPO. Should the IPO prove to be unsuccessful, these deferred costs, as well as additional expenses to be incurred,\nwill be charged to operations. As of December 31, 2025, the Company capitalized HK$15,721,911 (US$2,018,322) of deferred offering costs,\nsuch deferred costs have been offset against the offering proceeds at the closing of the IPO on September 17, 2025.\n\n** **\n\nF-24\n\n \n\n** **\n\n**(w) Recent accounting pronouncements**\n\n \n\nASC 740 (Income Taxes): In December 2023,\nFASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” This update requires additional\nquantitative and qualitative disclosures about income taxes to provide financial statement users with greater transparency regarding\nan entity’s tax risk and tax planning strategies. The ASU is effective for fiscal years beginning after December 15, 2024. Early\nadoption is permitted. The Company adopted this guidance effective January 1, 2025, and does not anticipate any material impact on its\nconsolidated financial statements.\n\n \n\nIn July 2023, the FASB issued ASU 2023-07,\nSegment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments in ASU 2023-07 improve reportable segment\ndisclosure requirements, primarily through enhanced disclosures about significant segment expenses, The amendments in ASU 2023-07 improve\nfinancial reporting by requiring disclosure of incremental segment information on an annual and interim basis for all public entities\nto enable investors to develop more decision-useful financial analyses. The amendments are effective for fiscal years beginning after\nDecember 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The adoption\nof this guidance did not have a material impact on its financial position, results of operations and cash flows.\n\n \n\nIn December 2025, the FASB issued ASU\n2025-12, which is to correct, clarify, and otherwise improve U.S. GAAP. ASU 2025-12 includes 33 improvements that span a wide range\nof topics, including Clarifying diluted earnings per share (EPS) calculation when a loss from continuing operations exists, Clarifying\ndisclosure requirements for lease receivables from sales-type or direct financing leases, Revising the calculation of the reference amount\nfor beneficial interests to prevent double counting credit losses, Clarifying the permissible methods to account for treasury stock retirements,\nand Clarifying the guidance for transfers of receivables from contracts with customers. The amendments in this Update are effective for\nall entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting\nperiods. Early adoption is permitted in both interim and annual reporting periods in which financial statements have not yet been issued\nor made available for issuance. If an entity adopts the amendments in this Update in an interim period, it must adopt them as of the\nbeginning of the annual reporting period that includes that interim reporting period. An entity may elect to early adopt the amendments\non an issue-by-issue basis. For example, an entity may decide to early adopt certain amendments and adopt the remaining amendments at\nthe effective date. An entity should apply the amendments in this Update (except for the amendments to Topic 260, Earnings Per Share,\nrelated to Issue 4) using one of the following transition methods: (i) Prospectively to all transactions recognized on or after the date\nthat the entity first applies the amendments, or (ii) Retrospectively to the beginning of the earliest comparative period presented.\nAn entity should adjust the opening balance of retained earnings (or other appropriate components of equity or net assets in the statement\nof financial position) as of the beginning of the earliest comparative period presented. The Company is currently evaluating these new\ndisclosure requirements and does not expect the adoption to have a material impact.\n\n \n\nIn July 2025, the FASB issued ASU 2025-05\n“Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets”.\nThis ASU provides a practical expedient that allows companies to assume that current conditions as of the balance sheet date do not change\nfor the remaining life of the asset. This ASU is effective for annual reporting periods beginning after December 15, 2025, and interim\nreporting periods within annual reporting periods. Early adoption is permitted. The Company is currently evaluating the effect of adopting\nof this ASU.\n\n \n\nF-25\n\n \n\n \n\nExcept as mentioned above, the Company\ndoes not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect\non the Company’s consolidated balance sheets, statements of income and comprehensive income and statements of cash flows.\n\n \n\n**3. CONCENTRATION OF RISKS**\n\n \n\n**(a) Political,\nsocial and economic risks**\n\n \n\nThe main operations of the Company are\nlocated in Hong Kong. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by\npolitical, economic, and legal environments in Hong Kong, as well as by the general state of the economy in Hong Kong. The Company’s\nresults may be adversely affected by changes in the political, regulatory and social conditions in Hong Kong. Although the Company has\nnot experienced losses from these situations and believes that it is in compliance with existing laws and regulations including its organization\nand structure disclosed in Note 1, such experience may not be indicative of future results.\n\n \n\nThe Company’s business, financial\ncondition and results of operations may also be negatively impacted by risks related to natural disasters, extreme weather conditions,\nhealth epidemics and other catastrophic incidents, which could significantly disrupt the Company’s operations.\n\n \n\n**(b) Interest\nrate risk**\n\n \n\nThe Company is exposed to interest rate\nrisk on its interest-bearing assets and liabilities. As part of its asset and liability risk management, the Company reviews and takes\nappropriate steps to manage its interest rate exposure on its interest-bearing assets and liabilities. The Company has not been exposed\nto material risks due to changes in market interest rates and has not used any derivative financial instruments to manage the interest\nrisk exposure during the years presented.\n\n \n\n**(c) Credit\nrisk**\n\n \n\nFinancial instruments that potentially\nsubject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents, accounts receivable,\nunbilled receivables, amounts due from related parties and other current assets. As of December 31, 2025, approximately\nHK$21,339,065 (US$2,735,778) were deposited with financial institutions located in Hong Kong, respectively. In accordance with the relevant\nregulations in Hong Kong, the maximum insured bank deposit amount is HK$800,000 for each financial institution. The bank deposit amounts\nof the Company that were not covered by the insurance were approximately HK$19,739,065 (US$2,530,649) as of December 31,\n2025. While the Company believes that these financial institutions are of high credit quality, it also continually monitors\ntheir credit worthiness.\n\n \n\nThe Company is also exposed to risk from\nits accounts receivable, unbilled receivables, amounts due from related companies and other current assets. These assets are subject\nto credit evaluations. An allowance has been made for estimated unrecoverable amounts which have been determined by reference to past\ndefault experience and the current economic environment.\n\n \n\nF-26\n\n \n\n** **\n\n**(d) Concentration\nrisk**\n\n \n\nThere were three, two and two customers\nfrom whom revenues individually represent greater than 10% of the total revenues of the Company for the fiscal years ended December 31,\n2023, 2024 and 2025, respectively. The total sales to these customers accounted for approximately 62.2%,\n28.5%\nand 26.5%\nof total revenues for the fiscal years ended December 31, 2023, 2024 and 2025, respectively. There were three and five customers individually\nrepresenting greater than 10% of the total gross accounts receivable of the Company as of December 31, 2024 and 2025 respectively. The\ntotal receivables from these customers accounted for approximately 56.3%\nand 80.8%\nof the Company’s accounts receivable as of December 31, 2024 and 2025 respectively.\n\n \n\nThe following customers accounted for\n10% or more of revenue for the years ended December 31, 2023, 2024 and 2025:\n\n \n\nSCHEDULE\nOF CUSTOMER AND SUPPLIER ACCOUNTED REVENUE\n\n \n \n \n \n \n \n \n \n  \n   \n   \n   \n  \n\n \n \n**For the Year Ended December 31,** \n\n \n \n**2023**\n  \n2024  \n2025 \n\n \n \n**HK$**\n \n \n \n**%**\n  \nHK$  \n%  \nHK$  \n% \n\nCustomer A\n \n \n16,254,119\n \n \n \n11.5\n  \n \n14,820,196\n  \n 8.2* \n -  \n - \n\nCustomer C\n \n \n-\n \n \n \n-\n  \n 29,888,779  \n 16.4  \n 13,753,584  \n 5.5*\n\nCustomer M\n \n \n46,353,154\n \n \n \n32.8\n  \n 21,959,106  \n 12.1  \n 7,859,280  \n 3.1*\n\nCustomer S\n \n \n25,300,000\n \n \n \n17.9\n  \n 12,825,000  \n 7.1* \n 16,170,100  \n 6.4*\n\nCustomer R\n \n \n-\n \n \n \n-\n  \n -  \n -  \n 39,312,000  \n 15.6 \n\nCustomer Y\n \n \n-\n \n \n \n-\n  \n -  \n -  \n 27,417,000  \n 10.9 \n\n \n\n*Represents less than 10%\n\n \n\nThe following customers accounted for\n10% or more of the Company’s gross accounts receivable as of December 31, 2024 and 2025:\n\n \n\n  \nAs of December 31, 2024  \nAs of December 31, 2025 \n\n  \nHK$  \n%  \nHK$  \n% \n\nCompany H \n 2,973,893  \n 15.9  \n 8,876,390  \n 16.3 \n\nCustomer T \n -  \n -  \n 9,787,854  \n 18.0 \n\nCustomer F \n 1,167,373  \n 6.3* \n 10,274,516  \n 18.9 \n\nCustomer W \n -  \n -  \n 9,285,744  \n 17.1 \n\nCustomer S \n -  \n -  \n 5,715,700  \n 10.5 \n\nCustomer C \n 4,512,144  \n 24.2  \n -  \n - \n\nCustomer M \n 3,014,310  \n 16.2  \n -  \n - \n\n \n\n*Represents less than 10%\n\n \n\nThere were three, three and two\nsuppliers from whom purchases, or service costs individually represent greater than 10% of the total cost of revenue of the Company\nfor the fiscal years ended December 31, 2023, 2024 and 2025, respectively. The total cost of revenue from these suppliers accounted\nfor approximately 80.0%, 81.1%\nand 52.6%\nof the Company’s total cost of revenue for the fiscal years ended December 31, 2023, 2024 and 2025, respectively. There were\nfour and three suppliers from whom payables individually represent greater than 10% of the total accounts payable of the Company as\nof December 31, 2024 and 2025 respectively. The total accounts payable from these suppliers accounted for approximately 86.2%\nand 88.1%\nof the Company’s accounts payable as of December 31, 2024 and 2025 respectively.\n\n \n\nThe following supplier accounted for\n10% or more of cost of revenue for the years ended December 31, 2023, 2024 and 2025:\n\n \n\n  \n \n**For the Year Ended December 31,** \n\n  \n \n**2023**\n \n \n2024  \n2025 \n\n  \n \n**HK$**\n \n \n \n**%**\n \n \nHK$  \n%  \nHK$  \n% \n\nSupplier D \n \n12,255,968\n \n \n \n10.1\n \n \n 29,485,639  \n 18.8  \n 21,584,467  \n 9.9*\n\nSupplier I \n \n42,266,819\n \n \n \n34.8\n \n \n 37,669,105  \n 24.1  \n 28,210,569  \n 12.9 \n\nSupplier T \n \n42,655,527\n \n \n \n35.1\n \n \n 59,812,774  \n 38.2  \n 86,770,342  \n 39.7 \n\n \n\n*Represents less than 10%\n\n \n\nThe following suppliers accounted for\n10% or more of the Company’s accounts payable as of December 31, 2024 and 2025:\n\n \n\n  \nAs of December 31, 2024  \nAs of December 31, 2025 \n\n  \nHK$  \n%  \nHK$  \n% \n\nSupplier D \n 1,143,274  \n 25.1  \n 3,277,601  \n 25.8 \n\nSupplier I \n 1,156,751  \n 25.4  \n 2,414,921  \n 19.0 \n\nSupplier C \n -  \n -  \n 5,500,000  \n 43.3 \n\nSupplier T \n 700,000  \n 15.4  \n 700,000  \n 5.5*\n\nSupplier A \n 923,051  \n 20.3  \n -  \n - \n\n \n\n*Represents less\nthan 10%\n\n \n\nF-27\n\n \n\n** **\n\n**4. ACCOUNTS RECEIVABLE, NET**\n\n \n\nThe following table provides a summary\nof the Company’s accounts receivable and the allowance for credit losses as of December 31, 2024 and 2025:\n\n \n\nSCHEDULE OF ACCOUNTS RECEIVABLE AND\nALLOWANCE FOR CREDIT LOSSES\n\n  \nHK$  \nHK$  \nUS$ (Note 2(e)) \n\n  \nAs of December 31, \n\n  \n2024  \n2025 \n\n  \nHK$  \nHK$  \nUS$ (Note 2(e)) \n\nAccounts receivable \n 18,667,665  \n 54,337,861  \n 6,966,392 \n\nLess: allowance for credit losses \n (1,001,086) \n (8,727,283) \n (1,118,882)\n\nNet accounts receivable \n 17,666,579  \n 45,610,578  \n 5,847,510 \n\n \n\n**Movement in the Allowance for Credit\nLosses**\n\n \n\nThe movement in the allowance for credit\nlosses for the years ended December 31, 2024 and 2025 is as follows:\n\n \n\nSCHEDULE OF ALLOWANCE FOR CREDIT LOSSES\n\n  \nHK$  \nHK$  \nUS$ (Note 2(e)) \n\n  \nAs of December 31, \n\n  \n2024  \n2025 \n\n  \nHK$  \nHK$  \nUS$ (Note 2(e)) \n\nBeginning balance \n 493,720  \n 1,001,086  \n 128,344 \n\nAddition \n 507,230  \n 7,726,197  \n 990,538 \n\nReallocation from credit losses on amount due from a related party (Note 7(ii)) \n 136  \n -  \n - \n\nEnding balance \n 1,001,086  \n 8,727,283  \n 1,118,882 \n\n \n\nThe Company utilizes a portfolio analysis\napproach to estimate the allowance for credit losses, grouping accounts receivable into pools based on shared risk characteristics such\nas customer type, geographic location, industry, and historical payment patterns. The allowance for credit losses is determined using\nhistorical loss rates, adjusted for current conditions and reasonable, supportable forward-looking information, including macroeconomic\nfactors such as industry trends, market volatility, and the broader economic environment.\n\n \n\nThe Company monitors credit risk on a\nportfolio basis and evaluates the adequacy of the allowance for credit losses on a quarterly basis. Any adjustments to the allowance\nare based on the overall risk profile of the portfolios and reflect management’s best estimate of potential credit losses.\n\n \n\n**5. UNBILLED RECEIVABLES (CONTRACT ASSETS)\nAND DEFERRED REVENUE (CONTRACT LIABILITIES)**\n\n \n\nThe following table summarizes the balances\nof contract assets and the movement during the periods presented:\n\n \n\nSCHEDULE OF BALANCES OF CONTRACT ASSETS\n\n  \nHK$  \nHK$  \nUS$ (Note 2(e)) \n\n  \nAs of December 31, \n\n  \n2024  \n2025 \n\n  \nHK$  \nHK$  \nUS$ (Note 2(e)) \n\nUnbilled receivables (Contract assets): \n    \n    \n   \n\nBalance at beginning of the year \n 1,964,662  \n 2,609,173  \n 334,509 \n\nAdditions \n 2,609,173  \n 1,577,855  \n 202,289 \n\nLess: progress billings recognised as revenue \n (1,964,662) \n (2,609,173) \n (334,509)\n\nBalance at end of year \n 2,609,173  \n 1,577,855  \n 202,289 \n\n \n\nF-28\n\n \n\n \n\nContract assets represent the Company’s\nright to consideration for work performed but not yet billed as of the reporting date. Contract assets arise when the Company performs\nservices or delivers goods in advance of billing the customer and are transferred to receivables when the right to consideration becomes\nunconditional, typically upon reaching specified milestones or the billing phase stipulated in the contract.\n\n \n\nAs of December 31, 2024, the Company’s\ncontract assets totaled HK$2,609,173, all of which were transferred to accounts receivable during the year ended December 31, 2025. As\nof December 31, 2025, contract assets totaled HK$1,577,855 (US$202,289). The Company expects that this balance will be transferred to\naccounts receivable in the next financial year, once the associated performance obligations are completed and billing milestones are\nreached.\n\n \n\nSCHEDULE\nOF DEFERRED REVENUE CONTRACT LIABILITIES\n\n  \nHK$  \nHK$  \nUS$ (Note 2(e)) \n\n  \nAs of December 31, \n\n  \n2024  \n2025 \n\n  \nHK$  \nHK$  \nUS$ (Note 2(e)) \n\nDeferred revenue (Contract liabilities): \n    \n    \n   \n\nBalance at beginning of the year \n 18,585,792  \n 17,401,218  \n 2,230,925 \n\nAdditions \n 178,036,379  \n 3,840,948  \n 492,429 \n\nRevenue recognized during the year \n (179,220,953) \n (17,401,218) \n (2,230,925)\n\nBalance at end of year \n 17,401,218  \n 3,840,948  \n 492,429 \n\n \n\nSCHEDULE OF DEFERRED REVENUE\n\n  \nHK$  \nHK$  \nUS$ (Note 2(e)) \n\n  \nAs of December 31, \n\n  \n2024  \n2025 \n\n  \nHK$  \nHK$  \nUS$ (Note 2(e)) \n\nDeferred revenue (Contract liabilities), current portion \n 17,401,218  \n 3,581,864  \n 459,213 \n\nDeferred revenue (Contract liabilities), non-current portion \n -  \n 259,084  \n 33,216 \n\nDeferred\nrevenue \n 17,401,218  \n 3,840,948  \n 492,429 \n\n \n\nContract liabilities consist of deferred\nrevenue, which represents billings or cash received in advance of revenue recognition for services that have yet to be performed or for\nperformance obligations that have yet to be satisfied. Deferred revenue is recognized as revenue once the Company satisfies the performance\nobligations under the contract, which typically involves the delivery of services, or the achievement of specific milestones outlined\nin the contract.\n\n \n\nAs of December 31, 2024, the contract\nliabilities balance was HK$17,401,218, which was fully recognized as revenue during the year ended December 31, 2025. As of December\n31, 2025, contract liabilities totaled HK$3,840,948 (US$492,429). HK$3,581,864 out of the HK$3,840,948 is expected to be recognized as\nrevenue in the next financial year, upon the satisfaction of the associated performance obligations.\n\n \n\nThe Company’s contract liabilities\nprimarily relate to advance billings for ongoing service contracts, including managed IT services, support and maintenance, and IT infrastructure\nsolutions, where payment is received before services are rendered. For these contracts, the Company recognizes revenue over time as performance\nobligations are satisfied, typically based on either the passage of time or milestones achieved.\n\n \n\nF-29\n\n \n\n \n\nDeferred revenue is recognized as revenue\nwhen the following criteria are met:\n\n \n\n \n1.\nPerformance obligations are\nsatisfied over time or upon the achievement of defined milestones.\n\n \n2.\nRevenue is recognized over\nthe contract term for service contracts, or at a point in time when a significant milestone is reached.\n\n \n\nThe timing of revenue recognition depends\non the specific contract terms and may vary based on the type of service provided and the method of measuring progress, such as output\nmethods (e.g., deliverables completed).\n\n \n\n**Revenue to be Recognized in Future\nPeriods**\n\n \n\nAs of December 31, 2025, the Company\nexpects to recognize most of its contract liabilities as revenue in the next financial year, as performance obligations are fulfilled.\nHowever, the actual timing of revenue recognition may be impacted by factors such as changes in customer requirements, delays in project\nexecution, or other uncertainties. The Company regularly assesses its contract liabilities and adjusts revenue recognition estimates\nas necessary.\n\n \n\n**6. PREPAYMENT AND OTHER CURRENT ASSETS,\nNET AND OTHER NON-CURRENT ASSETS, NET**\n\n \n\nPrepayment and other current assets,\nnet consisted of the following as of December 31, 2024 and 2025:\n\n \n\nSCHEDULE OF PREPAYMENT AND OTHER\nCURRENT AND NON-CURRENT ASSETS, NET\n\n  \nHK$  \nHK$  \nUS$ (Note 2(e)) \n\n  \nAs of December 31, \n\n  \n2024  \n2025 \n\n  \nHK$  \nHK$  \nUS$ (Note 2(e)) \n\nPrepayment and other current assets, net \n    \n    \n   \n\nAdvances to suppliers \n 10,585,100  \n -  \n - \n\nPrepaid marketing and business development expenses (i) \n 719,286  \n 12,450,100  \n 1,596,166 \n\nPrepaid professional fees (ii) \n -  \n 2,598,468  \n 333,137 \n\nOther receivable \n -  \n 14,502  \n 1,859 \n\nOther deposit \n 3,850  \n -  \n - \n\nPrepayment\nand other current assets, net \n 11,308,236  \n 15,063,070  \n 1,931,162 \n\n \n\nOther non-current assets, net consisted\nof the following as of December 31, 2024, and December 31, 2025:\n\n \n\n  \nHK$  \nHK$  \nUS$ (Note 2(e)) \n\n  \nAs of December 31, \n\n  \n2024  \n2025 \n\n  \nHK$  \nHK$  \nUS$ (Note 2(e)) \n\nOther non-current assets, net \n    \n    \n   \n\nRental deposits \n 122,412  \n -  \n - \n\n \n\ni.\nPrepaid marketing and business development expenses represent prepayments made by the Company for marketing and business development\nactivities. As of December 31, 2025, the Company’s prepaid marketing and business development expenses totalling HK$12,450,100. These\namounts are expected to be recognized as selling and marketing expenses in the next financial year, as the associated performance obligations\nare satisfied and services are received.\n\n \n\nii.\nPrepaid\nprofessional fees represent prepayments made by the Company driven by post-IPO strategic initiatives. As of December 31,\n2025, the Company’s prepaid professional fees totaled HK$2,598,468.\nThese amounts are expected to be recognized as general and administrative expenses in the next financial year, as the associated\nperformance obligations are satisfied and services are received.\n\n \n\nF-30\n\n \n\n \n\n**7. RELATED PARTY TRANSACTIONS**\n\n \n\nThe table below sets forth the major\nrelated parties and their relationships with the Company as of December 31, 2024 and 2025:\n\n \n\nSCHEDULE\nOF RELATED PARTIES AND THEIR RELATIONSHIPS\n\n**Names\nof the related parties**\n \n**Relationship\nwith the Company**\n\nLeading Digital Supply Limited\n \n50% owned by Yee Kar Wing; Director until July\n4, 2024\n\nPrimex Technology Limited\n \n50% owned by Yee Kar Wing; Director\n\nGMS Enterprise (Hong Kong) Limited\n \n100% owned by Primex Technology Limited; Director: Yee Kar Wing\n\nYee Kar Wing\n \nShareholder, Director, and CEO of the Company\n\nHui Wai Ming\n \nShareholder and COO of the Company\n\n \n\n**(a) Amounts due\nfrom / (to) related parties**\n\n** **\n\nSCHEDULE OF AMOUNTS\nDUE FROM / (TO) RELATED PARTIES\n\n  \nHK$  \nHK$  \nUS$ (Note 2(e)) \n\n  \nAs of December 31, \n\n  \n2024  \n2025 \n\n  \nHK$  \nHK$  \nUS$ (Note 2(e)) \n\nPrimex Technology Limited(i) \n 30,256  \n 84,256  \n 10,802 \n\nTotal amounts due from related parties - trade \n 30,256  \n 84,256  \n 10,802 \n\nLess: Allowance for credit losses \n (1,681) \n (26,793) \n (3,435)\n\nTotal amounts due from related parties – trade, net \n 28,575  \n 57,463  \n 7,367 \n\n  \n    \n    \n   \n\nYee Kar Wing(ii)  \n (33,795) \n 534,028  \n 68,465 \n\nHui Wai Ming(ii)  \n (645,120) \n 27,300  \n 3,500 \n\nTotal amounts due (to) / from related parties – non trade \n (678,915) \n 561,328  \n 71,965 \n\n \n\n**(b) Related party\ntransactions**\n\n** **\n\nSCHEDULE OF\nRELATED PARTY TRANSACTIONS\n\n \n \n \nHK$\n  \nHK$  \nHK$  \nUS$ (Note 2(e)) \n\n \n \n \n**For the year ended December 31,** \n\n \n \n \n**2023**\n  \n2024  \n2025 \n\n \n \n \n**HK$**\n  \nHK$  \nHK$  \nUS$ (Note 2(e)) \n\nPurchase from GMS Enterprise (Hong Kong) Limited\n \n \n21,551\n  \n -  \n -  \n - \n\nService rendered to Leading Digital Supply Limited\n \n \n540,200\n  \n 240,500  \n -  \n - \n\nService rendered to Primex Technology Limited\n \n \n54,000\n  \n 54,000  \n 54,000  \n 6,923 \n\nSales commission paid to Hui Wai Ming\n \n \n-\n  \n 12,500  \n -  \n - \n\nLoan advance to Yee Kar Wing\n \n \n11,978,398\n  \n 6,027,096  \n 9,772,820  \n 1,252,926 \n\nPayment on behalf of the Company by Yee Kar Wing\n \n \n6,255,052\n  \n 6,111,591  \n 8,784,275  \n 1,126,189 \n\nSales proceeds received by Yee Kar Wing on behalf of the Company\n \n \n309,106\n  \n -  \n -  \n - \n\nDividend paid to Yee Kar Wing(iii)\n \n \n6,097,976\n  \n 5,277,024  \n -  \n - \n\nDividend paid to Hui Wai Ming(iii)\n \n \n2,392,580\n  \n 3,060,000  \n 672,420  \n 86,206 \n\n \n\n**Terms of Transactions with Related\nParties**\n\n \n\nThe transactions with related parties\nare conducted on terms that, in management’s opinion, approximate arm’s length transactions. The pricing for services provided\nand goods sold to related parties is based on market rates for similar transactions with third parties. However, due to the nature of\nrelated party relationships, these transactions may not be at the same terms that would be available in an open market.\n\n \n\n(i)\n\nThe\namounts due from Primex Technology Limited represent receivables for IT infrastructure solutions and managed support services\nprovided by the Company. This balance is subject to credit risk, and allowances for credit losses / (reversal\nof allowances) of HK$6,331, (HK$5,867)\nand HK$25,112\n(US$3,219)\nwere recognized for the years ended December 31, 2023, 2024, and 2025, respectively.\n\n \n\n(ii)\n\nThese balances are unsecured, interest-free,\nand without a fixed repayment term.\n\n \n\n(iii)\nOn December 31, 2023, Sereno\ndeclared a dividend of HK$17,500,000\nto Vigorous. In accordance with a written instruction of the Vigorous, the dividend will be paid directly to Yee Kar Wing and Hui\nWai Ming, the ultimate shareholders of Vigorous. The transaction was fully authorized by the Board of Directors and documented in a\nboard resolution. During the years ended December 31, 2023, 2024, and 2025, dividends of HK$8,490,556, HK$8,337,024, and HK$672,420\nwere paid, respectively. As of December 31, 2025, the declared dividend was fully settled. No dividend was declared during the year\nended December 31, 2025.\n\n \n\n**8. LEASES**\n\n \n\nThe Company previously leased office\nspace under a non-cancellable operating lease agreement, which expired on December 6, 2025. Upon the expiration of this lease, the corresponding\nright-of-use (“ROU”) assets and lease liabilities were fully derecognized. As of December 31, 2025, the Company had no recognized\nROU assets or lease liabilities on the consolidated balance sheets.\n\n \n\nF-31\n\n \n\n \n\nThe Company has elected the short-term\nlease exemption under ASC 842 for all lease arrangements with a lease term of 12 months or less and which do not contain purchase options.\nFor these leases, the Company recognizes lease payments as an expense on a straight-line basis over the lease term and does not recognize\nROU assets or lease liabilities.\n\n \n\nThe Company’s current office\narrangement is a short-term lease without a formal contract or a specific end date, carrying a monthly expense of HK$15,000.\nThe total short-term lease expense for the years ended December 31, 2023, 2024 and 2025, was HK$180,000,\nHK$180,000\nand HK$180,000\n(US$23,077),\nrespectively, which was recorded in general and administrative expenses.\n\n \n\nThe following\ntable summarizes the supplemental consolidated balance sheet information related to operating leases as of December 31, 2024 and 2025:\n\n \n\nSCHEDULE OF SUPPLEMENTAL CONSOLIDATED BALANCE SHEET INFORMATION RELATED TO OPERATING LEASES\n\n \n \nHK$  \nHK$  \nUS$ (Note 2(e)) \n\n \n \nAs of December 31, \n\n \n \n2024  \n2025 \n\n \n \nHK$  \nHK$  \nUS$ (Note 2(e)) \n\nOperating lease right-of-use assets, net\n \n 218,130  \n -  \n - \n\nOperating lease liabilities, current\n \n 218,130  \n -  \n - \n\nOperating lease liabilities, non-current\n \n -  \n -  \n - \n\nWeighted average remaining lease terms – operating lease (months)\n \n 11  \n -  \n - \n\nWeighted average discount rate – operating lease\n \n 5.875% \n -  \n - \n\n \n\nThe following table summarizes the cash\nflow and expense information related to operating leases for the years ended December 31, 2023, 2024 and 2025:\n\n \n\nSCHEDULE OF CASH FLOW AND EXPENSE\nINFORMATION RELATED TO OPERATING LEASES\n\n  \n \n**HK$**\n \n \nHK$  \nHK$  \nUS$ (Note 2(e)) \n\n  \n \n**Year ended December 31,** \n\n  \n \n**2023**\n \n \n2024  \n2025 \n\n  \n \n**HK$**\n \n \nHK$  \nHK$  \nUS$ (Note 2(e)) \n\nCash paid for amounts included in the measurement of lease liabilities: \n \n\n \n \n    \n    \n   \n\nOperating cashflows used in operating lease \n \n235,604\n \n \n 225,293  \n 218,130  \n 27,965 \n\nRight-of-use assets obtained in exchange for new operating lease \n \n461,624\n \n \n -  \n -  \n - \n\nOperating lease expense \n \n243,006\n \n \n 244,824  \n 224,422  \n 28,772 \n\n \n\nF-32\n\n \n\n** **\n\n**9. PROPERTY AND EQUIPMENT, NET**\n\n \n\nProperty and equipment, net consisted\nof the following as of December 31, 2024 and 2025:\n\n \n\nSCHEDULE\nOF PROPERTY AND EQUIPMENT NET\n\n  \nHK$  \nHK$  \nUS$ (Note 2(e)) \n\n  \nAs of December 31, \n\n  \n2024  \n2025 \n\n  \nHK$  \nHK$  \nUS$ (Note 2(e)) \n\nComputer equipment \n 84,892  \n 94,616  \n 12,130 \n\nOffice furniture and fittings \n 22,095  \n 22,095  \n 2,833 \n\nProperty and equipment, gross \n 106,987  \n 116,711  \n 14,963 \n\n  \n    \n    \n   \n\nLess: Accumulated depreciation \n (64,390) \n (84,751) \n (10,865)\n\nProperty and equipment, net \n 42,597  \n 31,960  \n 4,098 \n\n \n\nFor the years ended December 31,\n2023, 2024, and 2025, the Company recorded depreciation expenses of HK$22,940, HK$25,179\nand HK$20,361\n(US$2,610),\nrespectively. No impairment loss was recognized for property and equipment for the years ended December 31, 2023, 2024, and\n2025.\n\n \n\nDepreciation policy: Property and equipment\nare stated at cost, less accumulated depreciation and impairment losses (if any). Depreciation is calculated using the straight-line\nmethod over the estimated useful lives of the assets as follows:\n\n \n\n \n●\nComputer equipment: 3 years\n\n \n●\nOffice furniture and fittings: 5 years\n\n \n\nThe estimated useful lives of the assets\nare reviewed periodically to determine whether adjustments are necessary. Depreciation commences once the asset is placed in service\nand continues until the asset is either fully depreciated or retired.\n\n \n\nImpairment considerations: The\nCompany evaluates its property and equipment for impairment whenever events or changes in circumstances indicate that the carrying\nvalue of the assets may not be fully recoverable. The impairment test compares the carrying value of the asset to its estimated\nfuture undiscounted cash flows. If the carrying value exceeds the cash flows, an impairment loss is recognized based on the\ndifference between the carrying value and the fair value of the asset. For the years ended December 31, 2023, 2024, and 2025, no\nimpairment indicators were identified, and no impairment losses were recognized.\n\n \n\nF-33\n\n \n\n** **\n\n**10. PREPAYMENT FOR DEVELOPMENT OF\nINTANGIBLE ASSETS / INTANGIBLE ASSET, NET**\n\n \n\nThe Company’s intangible asset\nconsists of an information technology service management system, a computer software platform that is not an integral part of a computer-controlled\nmachine. The intangible asset is capitalized at cost, which includes development costs paid to the system developer and other directly\nattributable costs of preparing the asset for its intended use.\n\n \n\nCapitalization Criteria: Development\ncosts are capitalized when they meet the criteria for recognition as an intangible asset under ASC 350. Specifically, only costs incurred\nduring the application development stage are capitalized. Costs incurred to enhance or extend the performance of the asset beyond its\noriginal specifications are also capitalized if they meet the recognition criteria. Maintenance costs or costs incurred during the preliminary\nproject stage are expensed as incurred.\n\n \n\nAs of December 31, 2025, the Company\nincurred a payment of HK$11,123,475 in advance to third-party developers for the development of AI-powered corporate management decision platforms and\nthe deployment of Cloud’s enterprise-grade infrastructure that meets the capitalization criteria which was recognized\nas “Prepayment for development of intangible assets” within non-current assets. Such prepayment will be subsequently transferred\nto the cost of intangible asset upon the Company’s acceptance of the related deliverables or milestones, as control of the asset\nis obtained, in the next financial year. The expected date of the usability of those platforms and infrastructure will be in the 4th quarter of 2026.\n\n \n\nFollowing initial recognition, the intangible\nasset is carried at cost less accumulated amortization and any accumulated impairment losses. The asset is amortized on a straight-line\nbasis over its estimated useful life of 5 years, reflecting the period over which the Company expects to derive economic benefits from\nthe asset.\n\n \n\nAs of December 31, 2024 and 2025, the\nbalances of the intangible asset are as follows:\n\n \n\nSCHEDULE OF BALANCES OF THE\nINTANGIBLE ASSETS\n\n  \n   \n   \n  \n\n  \nAs of December 31, \n\n  \n2024  \n2025 \n\n  \nHK$  \nHK$  \nUS$ (Note 2(e)) \n\nInformation technology service management system \n 3,404,743  \n 3,404,743  \n 436,506 \n\nLess: accumulated amortization \n (1,060,316) \n (1,841,791) \n (236,127)\n\nIntangible asset, net \n 2,344,427  \n 1,562,952  \n 200,379 \n\n \n\nAmortization: Amortization of the\nintangible asset began in 2023 when the asset was ready for its intended use. The timing of amortization reflects the asset’s\nreadiness for economic use, regardless of its actual deployment or operational use. Amortization expenses for the years ended\nDecember 31, 2023, 2024, and 2025, were HK$378,801, HK$681,515\nand HK$781,475\n(US$100,189),\nrespectively. Amortization is calculated on a straight-line basis over the asset’s useful life of 5\nyears.\n\n \n\nF-34\n\n \n\n \n\nImpairment Considerations: The\nCompany reviews its intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount\nmay not be fully recoverable. The impairment test compares the carrying amount to the undiscounted future cash flows expected to\nresult from the use of the asset. If the carrying amount exceeds the undiscounted cash flows, an impairment loss is recognized for\nthe difference between the carrying amount and the fair value of the asset. For the years ended December 31, 2023, 2024, and 2025,\nno impairment indicators were identified, and no impairment losses were recognized.\n\n \n\n**11. ACCOUNTS PAYABLE**\n\n \n\nThe following table presents the balances\nof accounts payable as of December 31, 2024 and 2025:\n\n \n\nSCHEDULE\nOF ACCOUNTS PAYABLE\n\n  \n   \n   \n  \n\n  \nAs of December 31, \n\n  \n2024  \n2025 \n\n  \nHK$  \nHK$  \nUS$ (Note 2(e)) \n\nAccounts payable \n 4,546,960  \n 12,715,835  \n 1,630,236 \n\n \n\nAccounts payable represent amounts due\nto suppliers for subcontracting fees, hardware costs, software license costs, and IT application license costs.\n\n \n\n**Payment Terms**\n\n \n\nThe Company’s accounts payable\nare current liabilities, typically due within 30 to 90 days of the invoice date, depending on the terms negotiated with each supplier.\nThe Company’s payment practices aim to align with standard industry terms and cash flow management practices.\n\n \n\n**Liquidity and Risk Management**\n\n \n\nThe Company regularly assesses its liquidity\nneeds and monitors its ability to meet short-term obligations. As of December 31, 2025, the Company has sufficient cash and cash equivalents\nto settle its current liabilities, including accounts payable, as they become due.\n\n \n\nThe Company does not anticipate any liquidity\nconstraints in settling remaining payables and maintains adequate working capital reserves to ensure the timely settlement of all liabilities.\n\n \n\n**12. ACCRUED EXPENSES AND OTHER CURRENT\nLIABILITIES**\n\n \n\nThe\nfollowing table presents the balances of payroll and welfare payables and accrued expenses as of\nDecember 31, 2024 and 2025:\n\n \n\nSCHEDULE OF ACCRUED EXPENSES AND OTHER CURRENT\nLIABILITIES\n\n  \n   \n   \n  \n\n  \nAs of December 31, \n\n  \n2024  \n2025 \n\n  \nHK$  \nHK$  \nUS$ (Note 2(e)) \n\nPayroll and welfare payables \n 798,023  \n 1,229,231  \n 157,595 \n\nAccrued expenses \n 40,788  \n 1,709,356  \n 219,149 \n\nAccrued\nexpenses and other current liabilities \n 838,811  \n 2,938,587  \n 376,744 \n\n \n\nF-35\n\n \n\n** **\n\n**Payroll and Welfare Payables**:\nThe payroll and welfare payables represent amounts owed to employees for services rendered and the associated mandatory provident\nfund (MPF) contributions. Under the Hong Kong MPF Scheme, the Company is required to make contributions based on a percentage of\nqualified employees’ salaries. The Company recognized employee benefit expenses, including independent directors’ fees of HK$3,513,248,\nHK$5,738,353\nand HK$8,010,861\n(US$1,027,033)\nfor the years ended December 31, 2023, 2024, and 2025, respectively.\n\n \n\n**Composition of Accrued Expenses**\n\n \n\nAccrued expenses primarily consist of\namounts due for office operating expenses related to ongoing operational activities. These expenses are recognized as liabilities when\nthe Company has received the services but has not yet paid for them as of the balance sheet date.\n\n \n\n**Timing and Classification**\n\n \n\nAll amounts recorded in accrued expenses\nand other current liabilities are classified as current liabilities and are expected to be settled within 12 months of the balance sheet\ndate. These liabilities represent the Company’s short-term obligations and are due in the normal course of business operations.\n\n \n\n**Employee Benefit Accrual Methodology**\n\n \n\nThe Company calculates its employee benefit\nliabilities, including MPF contributions, based on statutory requirements and internal compensation policies. Contributions are calculated\nas a percentage of each eligible employee’s gross salary and are accrued monthly in accordance with ASC 710 (Compensation). The\ncontributions are made to the MPF on behalf of employees as required under the Hong Kong Legislative Council’s regulations.\n\n \n\n**Liquidity Management**\n\n \n\nThe Company continually monitors its\ncash flow and liquidity to ensure that it can meet its short-term obligations, including accrued expenses and employee benefits. As of\nDecember 31, 2025, the Company has sufficient cash reserves to settle these liabilities as they become due. The Company does not anticipate\nany liquidity constraints that would impact its ability to meet these obligations in a timely manner.\n\n \n\n**13. INCOME TAXES**\n\n \n\n**Cayman Islands**\n\n \n\nThe Company is incorporated in the Cayman\nIslands. Under the current laws of the Cayman Islands, the Company is not subject to income or capital gains taxes. In addition, dividend\npayments are not subject to withholdings tax in the Cayman Islands.\n\n \n\nF-36\n\n \n\n** **\n\n**British Virgin Islands**\n\n \n\nVigorous is incorporated in British Virgin\nIslands and conducts its primary business operations through the subsidiary in Hong Kong. Under the current laws of British Virgin Islands,\nBritish Virgin Islands levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and the Company\nis therefore not subject to tax on income or capital gains arising in British Virgin Islands. Additionally, upon payments of dividends\nby the Company to its shareholders, no British Virgin Islands withholding tax will be imposed.\n\n \n\n**Hong Kong**\n\n \n\nSereno is subject to a two-tiered income\ntax rate in Hong Kong. The first HK$2,000,000 of profits are taxed at a rate of 8.25%, while any remaining profits are taxed at the standard\nrate of 16.5%.\n\n \n\nThe following table summarizes the composition\nof income tax expense for the years ended December 31, 2023, 2024 and 2025:\n\n \n\nSCHEDULE OF SUMMARIZES THE\nCOMPOSITION OF INCOME TAX EXPENSE\n\n \n \n \n \n  \n   \n   \n  \n\n \n \n**For the years ended December 31,** \n\n \n \n**2023**\n  \n2024  \n2025 \n\n \n \n**HK$**\n  \nHK$  \nHK$  \nUS$ (Note 2(e)) \n\nCurrent income tax expense\n \n \n2,010,472\n  \n 2,199,591  \n -  \n - \n\nDeferred tax expenses\n \n \n151,343\n  \n 1,063  \n -  \n - \n\nIncome\ntax expense\n \n \n2,161,815\n  \n 2,200,654  \n -  \n - \n\n \n\n**Tax Rate Reconciliation**\n\n \n\nThe reconciliation between the Hong Kong\nstatutory income tax rate applicable to the Company’s profits and the income tax expense is presented below:\n\n \n\nSCHEDULE OF RECONCILIATION INCOME\nTAX RATE\n\n  \n \n \n \n \n   \n   \n  \n\n  \n**For the years ended December 31,** \n\n  \n**2023**\n \n \n2024  \n2025 \n\n  \n**HK$**\n \n \nHK$  \nHK$  \nUS$ (Note 2(e)) \n\nProfit / (Loss) before provision for income taxes \n \n14,267,488\n \n \n 14,070,908  \n (23,550,966) \n (3,019,356)\n\n  \n \n \n \n \n    \n    \n   \n\nIncome tax expenses computed at statutory rate \n \n2,354,135\n \n \n 2,321,699  \n (3,885,909) \n (498,193)\n\nTax effect of preferential tax rate \n \n(165,000\n)\n \n (165,000) \n -  \n - \n\nTax effect of expenses not deductible for tax purpose \n \n-\n \n \n 53,307  \n 1,407,274  \n 180,419 \n\nTax effect of income not subject to tax \n \n(26,795\n)\n \n (7,852) \n (1,560) \n (200)\n\nTax effect on temporary difference not recognized in previous period \n \n2,475\n \n \n -  \n -  \n - \n\nChanges in valuation allowance \n \n-\n \n \n -  \n 2,480,195  \n 317,974 \n\nTax effect of tax deduction \n \n(3,000\n)\n \n (1,500) \n -  \n - \n\nTotal income tax expense \n \n2,161,815\n \n \n 2,200,654  \n -  \n - \n\n \n\nF-37\n\n \n\n** **\n\n**Deferred Taxes**\n\n \n\nDeferred income taxes reflect the net\ntax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts\nused for income tax purposes. The components of the Company’s deferred tax liabilities were as follows:\n\n \n\nSCHEDULE OF DEFERRED TAXES ASSETS\nAND LIABILITIES\n\n  \n   \n   \n  \n\n  \nAs of December 31, \n\n  \n2024  \n2025 \n\n  \nHK$  \nHK$  \nUS$ (Note 2(e)) \n\nDeferred tax liabilities, net, beginning balance: \n    \n    \n   \n\nAccelerated tax depreciation \n (309,198) \n (392,986) \n (50,383)\n\nAllowance for credit losses on accounts receivable \n 81,463  \n 165,178  \n 21,177 \n\nAllowance for credit losses on amount due from related companies \n 1,268  \n 278  \n 36 \n\nTotal deferred tax liabilities \n (226,467) \n (227,530) \n (29,170)\n\nCharged to consolidated statement of operations: \n    \n    \n   \n\nAccelerated tax depreciation \n (83,788) \n -  \n - \n\nAllowance for credit losses on accounts receivable \n 83,715  \n -  \n - \n\nReversal of allowance for credit losses on amount due from related company \n (990) \n -  \n - \n\nTax loss \n -  \n -  \n - \n\nDeferred tax liabilities, net, ending balance \n (227,530) \n (227,530) \n (29,170)\n\n \n\n**Realization of Deferred Tax Assets**\n\n \n\nThe realization of the net deferred tax\nassets is dependent upon several factors, including future reversals of existing taxable temporary differences and the generation of\nadequate future taxable income. The Company evaluates the potential realization of deferred tax assets on an entity-by-entity basis,\nconsidering both positive and negative evidence.\n\n \n\nThe Company assesses deferred tax assets\nunder the “more-likely-than-not” criteria, based on recurring profitability and the expected availability of future taxable\nincome to offset temporary differences and tax loss carry forwards. Tax loss carry forwards are assessed with respect to their expiration\nperiods and the probability of future taxable income sufficient to utilize these losses.\n\n \n\nFor the year ended December 31, 2025, the Company did not recognize any\ndeferred tax assets as management determined that it is **not** more likely than not that such assets will be realized. This determination\nwas based on the operating loss incurred during the current year and the uncertainty regarding future taxable income, taking into account\nhistorical performance and financial projections.\n\n \n\nThe unutilized tax losses carried forward\nas of December 31 2025 amounted to HK$6,489,126\n(US$831,939).\nThe use of these tax losses is subject to the agreement of the tax authorities and compliance with certain provisions of the tax legislation\nof the jurisdiction in which the entity operates. These tax losses have no expiry date.\n\n \n\nF-38\n\n \n\n** **\n\n**Uncertain Tax Positions**\n\n \n\nIn accordance with ASC 740-10, the Company\nevaluates each uncertain tax position based on its technical merits, and measures any unrecognized benefits associated with tax positions.\nEach position is reviewed individually, considering past audits, interpretations of tax law, and developments in tax regulations. The\nCompany assesses whether it is more likely than not that a tax position will be sustained upon examination by the relevant tax authorities,\nbased solely on the technical merits of the position.\n\n \n\nAs of December 31, 2024 and 2025, the\nCompany did not have any significant unrecognized uncertain tax positions. The Company also did not accrue any liability, interest, or\npenalties related to uncertain tax positions, as there were no positions where it was determined that an unfavourable outcome was probable.\n\n \n\nThe Company continues to monitor developments\nin tax law and evaluates any changes in its tax positions on a quarterly basis. Should any uncertain tax positions arise in the future,\nthe Company will measure and record any potential liabilities in accordance with ASC 740.\n\n \n\n**14. BANK BORROWINGS**\n\n \n\nThe following table presents the balances\nof bank borrowings as of December 31, 2024 and 2025:\n\n \n\nSCHEDULE OF BANK BORROWINGS\n\n  \n   \n   \n  \n\n  \nAs of December 31, \n\n  \n2024  \n2025 \n\n  \nHK$  \nHK$  \nUS$ (Note 2(e)) \n\nBank borrowings, current portion \n 284,404  \n 504,838  \n 64,723 \n\nBank borrowings, non-current portion \n 4,715,596  \n 4,210,245  \n 539,775 \n\nBank\nborrowings \n 5,000,000  \n 4,715,083  \n 604,498 \n\n \n\nOn May 27, 2024, Sereno secured an\ninstalment bank loan of HK$5,000,000\n(US$641,026)\nunder the SME Financing Guarantee Scheme with a 100% guarantee provided by HKMC Insurance Limited. The\nloan is backed by an unlimited personal guarantee from Yee Kar Wing and Hui Wai Ming, the Company’s shareholders. The interest\nof the loan shall be calculated at the prime rate quoted by the bank from time to time minus 2.25% per annum, i.e. 3.625% per annum\nat the first drawdown date of the loan. The loan is scheduled to be repaid over 120 monthly instalments, starting from June 26,\n2024, and continuing through May 26, 2034. The first 12 months shall be of interest payment only and the remaining instalments after\nthe first 12 months shall be equal instalment payments comprising principal and interest payment. The annual interest rate of the\nloan has been reduced to 2.75% in December 2025.\n\n \n\nInterest related to the bank\nborrowings were Nil, HK$100,939\nand HK$145,289\n(US$18,627)\nfor the years ended December 31, 2023, 2024, and 2025 respectively.\n\n \n\nAs of December 31, 2025, the borrowing\nwill be due according to the following schedule:\n\n \n\nSCHEDULE OF BORROWING\n\n  \n\n**As of**\n\n**December 31, 2025**\n \n\n  \nHK$ \n\nWithin 1 Year \n 504,838 \n\nBetween 1 to 2 Years \n 518,898 \n\nBetween 2 to 3 Years \n 533,328 \n\nBetween 3 to 4 Years \n 548,207 \n\nBetween 4 to 5 Years \n 563,468 \n\nBetween 5 to 6 Years \n 579,161 \n\nBetween 6 to 7 Years \n 595,273 \n\nBetween 7 to 8 Years \n 611,869 \n\nBetween 8 to 9 Years \n 260,041 \n\nTotal \n 4,715,083 \n\n** **\n\nF-39\n\n \n\n** **\n\n**15. EQUITY**\n\n \n\n*Ordinary shares*\n\n \n\nThe Company\nwas incorporated in the Cayman Islands on October 8, 2024 as an investment holding company with authorized share capital of US$50,000\ndivided into 50,000,000 ordinary shares of par value US$0.001 each. One ordinary share was issued on October 8, 2024. The authorized\nshare capital was changed to 500,000,000 ordinary shares of par value US$0.0001 each and the one issued share was sub-divided into 10\nordinary shares on October 18, 2024. The Company completed a reorganization on October 24, 2024 following which Vigorous and Sereno came\nunder the control of the Company. 32,500,000 ordinary shares of par value US$0.0001 each was in issue on October 24, 2024.\n\n \n\nOn September 17, 2025, the Company closed\nits IPO of 2,990,000 ordinary shares, par value $0.0001 per ordinary share at the price of US$4.0 each, totalling US$11,960,000. All these\nshares rank pari-passu with the existing shares in all respect. Upon completion of the IPO, the Company had 35,490,000 Ordinary Shares\nand issued and outstanding.\n\n \n\n**16. EARNINGS / (LOSS) PER SHARE**\n\n \n\nThe following table sets forth the computation\nof basic and diluted earnings per share for the years ended December 31, 2023, 2024 and 2025:\n\n \n\nSCHEDULE OF COMPUTATION OF BASIC AND\nDILUTED EARNINGS\n\n  \n**For the years ended December 31,** \n\n  \n**2023**\n \n \n2024  \n2025 \n\n  \n**HK$**\n \n \nHK$  \nHK$  \nUS$ (Note 2(e)) \n\nNumerator: \n \n         \n \n \n   \n   \n  \n\nNumerator for basic and diluted earnings / (loss) per share – Net income / (loss) attributable to the Company’s shareholders \n \n12,105,673\n \n \n 11,870,254  \n (23,550,966) \n (3,019,356)\n\n  \n \n \n \n \n    \n    \n   \n\nDenominator: \n \n \n \n \n    \n    \n   \n\nDenominator for basic and diluted net income per share – weighted average number of shares \n \n32,500,000\n \n \n 32,500,000  \n 33,376,521  \n 33,376,521 \n\n  \n \n \n \n \n    \n    \n   \n\nBasic and diluted earnings / (loss) per share: \n \n**0.37**\n \n \n 0.37  \n (0.71) \n (0.09)\n\n \n\n**Explanation of EPS / (LPS) Calculation**\n\n \n\nBasic earnings / (loss) per share is\ncalculated by dividing the net income attributable to the Company’s shareholders by the weighted average number of ordinary shares\noutstanding during the period.\n\n \n\nFor the years ended December 31,\n2023 and 2024, the Company had 32,500,000\nordinary shares outstanding, with no changes in the number of shares during the periods.\n\n \n\nFor the year ended December 31,\n2025, the Company’s ordinary shares increased from 32,500,000\nto 35,490,000\non September 16, 2025, following the issuance of 2,990,000\nordinary shares from its public offering. Accordingly, the weighted average number of ordinary shares outstanding used in the\ncalculation of basic earnings / (loss) per share was 32,500,000, 32,500,000\nand 33,376,521\nfor the years ended December 31, 2023, 2024 and 2025, respectively.\n\n \n\nF-40\n\n \n\n \n\nDiluted earnings / (loss) per share\nis calculated by dividing net income attributable to the Company’s shareholders by the weighted average number of shares\noutstanding during the period, including the effect of all potentially dilutive securities, if any. For the years ended December 31,\n2023, 2024, and 2025, the Company had no dilutive securities outstanding, resulting in basic and diluted earnings / (loss) per share\nbeing the same.\n\n \n\n**No Potential Dilutive or Anti-Dilutive\nSecurities**\n\n \n\nAs of December 31, 2024 and 2025, the\nCompany did not have any options, warrants, convertible securities, or other instruments that could potentially dilute the earnings per\nshare calculation. Therefore, the Company’s basic earnings / (loss) per share and diluted earnings / (loss) per share are the same\nfor both years.\n\n \n\n**17. COMMITMENTS AND CONTINGENCIES**\n\n \n\n**(a) Commitments**\n\n \n\nAs of December 31, 2024 and 2025, the\nCompany had no capital expenditure commitments or other significant contractual obligations. The Company continuously monitors its capital\nneeds and has the financial flexibility to adjust to future investment requirements. The Company has no plans for material capital expenditures\nat this time.\n\n \n\n**(b) Contingencies**\n\n \n\nThe Company may become involved in legal\nproceedings, investigations, and regulatory actions arising in the ordinary course of business. These proceedings could include disputes\nwith vendors, customers, or regulatory bodies. The outcomes of such proceedings are inherently uncertain, and while the Company does\nnot currently anticipate that any such matters will have a material adverse effect on its financial position, results of operations,\nor cash flows, it continues to assess legal risks on an ongoing basis.\n\n \n\nOn July 2, 2025, a multinational OEM\ncompany (through its Hong Kong subsidiary, the “Plaintiff”)\ncommenced legal proceedings in the High Court of Hong Kong, Court of First Instance against our Chief Executive Officer and one of\nour subsidiaries, Sereno Cloud Solution HK Limited (“collectively referred to as Defendants”), in connection with a\nprior commercial dispute. The complaint alleges, as a threshold matter, that the subsidiary induced the Plaintiff to enter into a\nsettlement agreement dated October 21, 2022 through fraudulent misrepresentations and unlawful means conspiracy, and seeks\nrescission of that settlement agreement. The Plaintiff further alleges, contingent upon the success of the rescission claim,\nhistorical breaches of an original equipment manufacturer agreement entered into in 2018 and a subsequent undertaking agreement.\n\n \n\nThe Company\nintends to vigorously defend the action. The proceedings are at a preliminary stage; the Defendants have filed their Defence\nrecently denying the allegations and discovery has not yet commenced. At this stage, the Company is unable to reasonably\nestimate the possible loss, if any. Accordingly, no provision has been recognized in the consolidated financial statements.\n\n \n\nExcept as disclosed above, as of December\n31, 2024 and 2025, the Company was not a party to any material legal or administrative proceedings that would require disclosure under\nASC 450 (Contingencies). The Company has established internal controls to monitor and assess the potential impact of legal and regulatory\nrisks, and regularly consults with external legal counsel to ensure that any developments are accounted for in accordance with U.S. GAAP.\n\n \n\nThe Company continually monitors developments\nin its legal environment and updates its assessments regularly. If any legal proceedings are anticipated to result in a loss that is\nboth probable and reasonably estimable, the Company will recognize a provision for that loss in accordance with ASC 450. However, as\nof December 31, 2024 and 2025, no such provisions have been recognized.\n\n \n\nAdditionally, the Company does not expect\nany significant contingencies in the near term that would materially impact its financial position or operations.\n\n \n\n**18. SUBSEQUENT EVENTS**\n\n \n\nThe Company evaluated all subsequent\nevents and transactions that occurred after the balance sheet date through the date of this report, which is the date the consolidated\nfinancial statements were available to be issued. This evaluation was performed in accordance with the requirements of ASC 855 (Subsequent\nEvents).\n\n \n\nAs part of this evaluation, the Company\nreviewed all significant events occurring between the balance sheet date and the issuance date of the consolidated financial statements\nto determine whether any recognized subsequent events (events that provide additional evidence about conditions that existed at the balance\nsheet date) or non-recognized subsequent events (events that provide evidence about conditions that arose after the balance sheet date)\nrequired adjustment or disclosure in the consolidated financial statements.\n\n \n\nBased on this evaluation, the Company\ndetermined that no subsequent events required adjustment or disclosure in the consolidated financial statements except the\nfollowing:\n\n \n\nOn March 13, 2026, certain\nshareholders filed a class action in the United States District Court for the Southern District of New York (the “Southern\nDistrict of New York”) against the Company and some of its executive officers. The aforementioned complaint filed in the\nSouthern District of New York on behalf of persons or entities who purchased or otherwise acquired publicly traded securities of the\nCompany during the class period assert claims that plaintiffs were economically damaged, and alleged generally that the referenced\ndefendants violated sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated\nthereunder, by making allegedly false and misleading statements regarding, among other matters, the Company’s business,\noperations, and true nature of the trading activity in the securities. Plaintiff and the Company have stipulated to, and the\nCourt has ordered that following the appointment of Lead Plaintiff and Lead Counsel, the parties will further agree on a briefing\nschedule for the Lead Plaintiff to file an amended complaint and for the Company to respond to the newly amended complaint. Motions\nfor Lead Plaintiff and Lead Counsel are currently pending with the Court. The Company intends to file a motion to dismiss the\namended complaint when filed, and vigorously defend the action. At this stage, the Company is unable to predict the outcome of this\nlawsuit or reasonably estimate any potential loss or range of loss, and no provision has been recognized in these consolidated\nfinancial statements.\n\n \n\nF-41"}