Annual Report for Fiscal Year Ending June 30, 2026 (Form 20-F)

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes included elsewhere in this Report. This discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties. See "Cautionary Note Regarding Forward-Looking Statements" for a discussion of the uncertainties, risks, and assumptions associated with these statements. Actual results and the timing of events could differ materially from those discussed in our forward-looking statements as a result of many factors, including those set forth under "Item 3.D. Key Information-Risk Factors" and elsewhere in this Report.

A. Operating Results

Key Factors Affecting Business and Financial Results

A number of factors may affect the performance of our business and the comparability of our results from period to period, including:

	●	Connections to Game Content Providers. Our business relies heavily on our relationships with our developer partners, who are third-party game content providers. See "Item 4-Information on the Company-B. Business Overview-Developer Partners." These connections enable us to offer a diverse and engaging portfolio of games to our customers. Any disruption in these relationships, whether due to contractual issues, changes in business strategies of our partners, or other reasons, could limit our access to high-quality game content, which would adversely affect our user engagement and revenue.
	●	User Acquisition. Establishing and maintaining a loyal and growing user base is critical to our success. We invest significantly in marketing and advertising campaigns, including ad network and demand-side platform ("DSP") marketing, social media marketing, and influencer partnerships, to attract new players to its games. The effectiveness of these campaigns, as well as the cost per acquisition of new users, is a key determinant of our future growth and profitability. Changes in advertising costs, platform algorithms, or competition for user attention can significantly impact our user acquisition efforts and results.
	●	New Game Content and Features. Our ability to retain existing players and attract new ones is heavily dependent on our capacity to continually innovate and offer new, engaging content and features within our games. This includes the development of new game titles, updates to existing games, and the launch of new in-app events or features that encourage player engagement and monetization. These initiatives require substantial investments in creative and technical resources, and their success is not guaranteed. Delays or failures in launching appealing new content or features could result in decreased player engagement and revenue.
	●	Monetization. Our revenue is primarily generated through in-app purchases of virtual items and currency, as well as in-app advertising. The effectiveness of our monetization strategies, including pricing, promotional offers, and advertising partnerships, is critical to our financial performance. Changes in player spending behavior, competition, regulatory restrictions on in-app purchases or advertising, and shifts in the broader digital advertising market can significantly impact our ability to monetize our user base effectively. Managing the balance between player engagement and monetization is a complex challenge that requires careful strategic planning and execution.
	●	Investment in Technology. To maintain competitive, we continually invest in technology, including game development tools, data analytics, cloud infrastructure, and security measures. These investments enable us to improve the performance and security of our games, personalize player experiences, and operate more efficiently. However, technology investments are often capital-intensive and may not always yield expected returns. Additionally, the rapid pace of technological change in the mobile gaming industry requires us to adapt continuously, which can result in significant ongoing expenses.

Key performance indicators

We manage our business by tracking several key performance indicators, each of which is tracked by its internal analytics systems and more fully described below and referred to in our discussion of operating results. Our key performance indicators are impacted by several factors that could cause our performance to fluctuate on a periodical basis, such as platform providers' policies, restrictions, seasonality, user connectivity and the addition of new content to certain portfolios of games. Future growth in the number of players and engagement time will depend on our ability to retain current players, attract new players, launch new games and features, and expand into new markets and distribution platforms.

●

Average Daily Active Users. DAU is defined as the number of individual users who play a game on a particular day. We track DAU based on device activities. Thus, an individual who plays multiple games or on multiple devices is counted more than once. Average DAU for a period is the average of the monthly average DAUs for the period presented. We believe this indicator provides useful information in understanding the number of users reached across our portfolio of games on a daily basis.

	●	Average Monthly Active Users. MAU is defined as the number of individual users who play a game during a particular month. We track MAU based on device activities. Thus, an individual who plays multiple games or on multiple devices is counted more than once. Average MAU for a period is the average of MAUs for each month for the period presented. We believe this indicator provides useful information in understanding the number of users reached across our portfolio of games on a monthly basis.
	●	Average Daily Paying Users. DPU is defined as the number of individuals who made a purchase in a game during a particular day. We track DPU based on device activities. As such, an individual who makes a purchase in two different games in a particular day is counted as two DPUs and an individual who makes purchases in the same game on two different devices is also counted as two DPUs. The term "Average DPU" for a period is defined as the average of DPU for each day during the period presented. We use DPU and Average DPU to better understand the size of our active player base that makes in-app purchases, thus enabling us to steer its strategic goals in setting player acquisition and pricing strategies.
	●	Average Monthly Paying Users. MPU is defined as the number of individual users who make an in-app purchase during a particular month. An individual who makes purchases in multiple games or on multiple devices may, in certain circumstances, be counted more than once. However, we use third-party data to limit the occurrence of multiple counting. Average MPU for a period is the average of MPUs for each month for the period presented. We believe this indicator provides useful information in understanding the number of users reached across our portfolio of games who make in-app purchases on a monthly basis.
	●	Average Revenue Per Daily Active User. Average RPDAU is calculated by dividing revenue generated during a specific period by the Average DAU for that period, then further dividing by the number of days in the period. We believe this indicator provides useful information reflecting game monetization.
	●	Average Monthly Payer Conversion Rate. Average MPCR is calculated by dividing average MPU for a specific period by the average MAU for the same period. We believe this indicator provides useful information about game monetization.
	●	Average Daily Payer Conversion Rate. Average DPCR is calculated by dividing Average DPU for a specific period by the Average DAU for that period. We believe this indicator provides useful information reflecting game monetization.
	●	Average Day Seven Retention Rate. Average 7D Retention Rate is calculated by dividing the number of new users who continue to with the app on the seventh day after installing for a specific period by the total number of new users for that period. We believe this indicator provides useful information reflecting user engagement.

Key Components of Financial Results

Revenue

We primarily generate our revenue from the sale of virtual items associated with mobile games. We also generate a portion of revenue from advertisements within mobile games. The following table presents the breakdown of our total revenue, both in absolute amount and as a percentage of our total revenue, for the fiscal years indicated.

		For the Fiscal Year Ended June 30,
		2026				%				2025				%				2024				%
Revenue from In-app purchases		$	94,424,013				90.2	%		$	106,343,226				90.1	%		$	131,638,895				90.6	%
Revenue from advertisements			10,227,577				9.8	%			11,705,656				9.9	%			13,597,854				9.4	%
Total revenue		$	104,651,590				100.0	%		$	118,048,882				100.0	%		$	145,236,749				100.0	%

We distribute our games to game players/users through various mobile platforms, such as Apple App Store, Google Play, Amazon, and other mobile platforms. Through these platforms, users can download our free-to-play games and purchase virtual items to enhance their game-playing experience. Players can purchase virtual items through various widely accepted payment methods offered in the games. The games are distributed on various third-party platforms for which the platform providers collect proceeds from the game players and pay us an amount after deducting platform fees. For purchases made through such third-party platforms, the company is primarily responsible for fulfilling the virtual items, has control over the content and functionality of games, and has the discretion to establish the virtual items' prices. Therefore, the company is the principal and, accordingly, revenue is recorded on a gross basis. Payment processing fees paid to platform providers are recorded within the cost of revenue.

Operating costs and expenses

The following table sets forth our operating costs and expenses, both in absolute amount and as a percentage of total operating costs and expenses, for the fiscal years indicated.

		For the Fiscal Year Ended June 30,
		2026				%				2025				%				2024				%
Cost of revenue		$	49,480,191				47.9	%		$	55,860,712				48.7	%		$	70,658,025				51.7	%
Research and development expenses			6,343,012				6.1	%			5,694,010				5.0	%			4,788,467				3.5	%
Selling and marketing expenses			41,020,636				39.8	%			48,393,515				42.2	%			57,685,521				42.1	%
General and administrative expenses			6,431,723				6.2	%			4,710,537				4.1	%			3,756,679				2.7	%
Total operating costs and expenses		$	103,275,562				100.0	%		$	114,658,774				100.0	%		$	136,888,692				100.0	%

Cost of revenue

Cost of revenue primarily consists of payment processing fees, royalties, customized design fees paid to related parties and third parties, hosting fees, and other direct expenses incurred to generate revenue. Platform providers, such as Apple, Google, and Amazon, charge transactional payment processing fees, which generally represent approximately 30% of our revenue, for accepting payments from players for in-app consumable virtual items. Royalties are incurred and paid by us in accordance with licensing agreements for the relevant intellectual property, to both affiliated and unaffiliated third parties. Customized design fees are incurred in accordance with the design agreements for our design requests, and payment is made by us as the project progresses and upon its completion.

We expect cost of revenue to fluctuate proportionately with revenue, and such proportionality may vary as a percentage of revenue based on our mix of games with different royalties and profit-sharing arrangements.

Research and development expenses

Research and development expenses consist of (i) salaries, bonuses, benefits, and other compensations related to research and development; (ii) outsourced professional services related to the development of game and software; and (iii) depreciation expenses associated with assets associated with our research and development efforts. We expect research and development expenses to increase in absolute dollars as we expand our business and hire more employees to support our technical development and operating activities. We also expect research and development expenses specifically associated with new game development to fluctuate over time primarily because we capitalize development costs incurred during the application development stage, but expenses development costs incurred during the preliminary project stage.

Selling and marketing expenses

Selling and marketing expenses primarily consist of (i) advertisement expenses paid to third parties related to advertising and user acquisition; (ii) salaries, bonus, benefits, and other compensations for employees who work in service lines; and (iii) depreciation expenses associated with assets related to our selling and marketing efforts.

General and administrative expenses

General and administrative expenses primarily consist of (i) staff costs including salaries, bonuses, and other direct labor expenses related to general and administrative personnel; (ii) expenses related to outsourced professional services such as consulting, legal, and accounting services and insurance premiums; and (iii) rent, depreciation expenses, travel and communication expense, and other corporate expenses related to general and administrative personnel.

Performance Results of Operations

The table below shows the results of our key operating metrics for the periods indicated. Unless otherwise indicated, the operating metrics are presented in thousands, except percentages.

We measure the performance of our business using several key operating metrics, including Average DAUs, Average MAUs, Average DPUs, Average MPUs, Average RPDAU, Average MPCP, and Average DPCR. These operating metrics can help our management understand and measure the player engagement level of our players, and the size and reach of our audience.

		For the Fiscal Year Ended June 30,
(In thousands, except percentages)		2026				2025				2024
Non-financial performance metrics
Average DAUs			509				693				878
Average MAUs			3,008				3,771				4,465
Average DPUs			12				15				19
Average MPUs			117				145				175
Average RPDAU			0.547				0.463				0.459
Average MPCR			3.9	%			3.9	%			3.9	%
Average DPCR			2.4	%			2.2	%			2.2	%
Average 7D Retention Rate			8.7	%			10.1	%			10.9	%

The Average DAUs decreased by 26.6%, or 184,000, to 509,000 for the fiscal year ended June 30, 2026 from 693,000 for the fiscal year ended June 30, 2025. The Average MAUs decreased by 20.2%, or 763,000, to 3,008,000 for the fiscal year ended June 30, 2026 from 3,771,000 for the fiscal year ended June 30, 2025.

The Average DAUs decreased by 21.1%, or 185,000, to 693,000 for the fiscal year ended June 30, 2025 from 878,000 for the fiscal year ended June 30, 2024. The Average MAUs decreased by 15.5%, or 694,000, to 3,771,000 for the fiscal year ended June 30, 2025 from 4,465,000 for the fiscal year ended June 30, 2024.

The Average DPUs decreased by 20.0%, or 3,000, to 12,000 for the fiscal year ended June 30, 2026 from 15,000 for the fiscal year ended June 30, 2025. The Average MPUs decreased by 19.3%, or 28,000, to 117,000 for the fiscal year ended June 30, 2026 from 145,000 for the fiscal year ended June 30, 2025.

The Average DPUs decreased by 21.1%, or 4,000, to 15,000 for the fiscal year ended June 30, 2025, from 19,000 for the fiscal year ended June 30, 2024. The Average MPUs decreased by 17.1%, or 30,000, to 145,000 for the fiscal year ended June 30, 2025, from 175,000 for the fiscal year ended June 30, 2024.

The decrease in Average DAUs, MAUs, DPUs and MPUs was primarily due to the loss of game players, as the company reduced advertising costs by 15.8%, or 7.3 million, to US$38.8 million for the fiscal year ended June 30, 2026, compared to US$46.1 million for the fiscal year ended June 30, 2025.

The decrease in Average DAUs, MAUs, DPUs and MPUs was primarily due to the loss of game players, as the company reduced advertising costs by 16.3%, or US$9.0 million, to US$46.1 million for the fiscal year ended June 30, 2025, compared to US$55.1 million for the fiscal year ended June 30, 2024.

The Average MPCR remained steady at 3.9%, for the fiscal year ended June 30, 2026, unchanged from the fiscal year ended June 30, 2025. The Average DPCR increased to 2.4% for the fiscal year ended June 30, 2026 from 2.2% for the fiscal year ended June 30, 2025. The Average RPDAU increased to 0.547 for the fiscal year ended June 30, 2026 from 0.463 for the fiscal year ended June 30, 2025. The increase of payer conversion rates and payment rates was primarily driven by our continued focus on live operations to enhance gameplay and monetization.

The Average MPCR and Average DPCR remain steady at 3.9% and 2.2%, respectively, for the fiscal year ended June 30, 2025,unchanged from the fiscal year ended June 30, 2024. The Average RPDAU increased to 0.463 for the fiscal year ended June 30, 2025, from 0.459 for the fiscal year ended June 30, 2024. The stability of payer conversion rates and payment rates, including the slight increase in Average RPDAU and the unchanged Average DPCR was primarily driven by our continued focus on live operations to enhance gameplay and monetization.

The Average 7D Retention Rate decreased by 13.5%, or 136 basis points, to 8.7% for the fiscal year ended June 30, 2026 from 10.1% for the fiscal year ended June 30, 2025. During the fiscal year ended June 30, 2026, the company adopted a more active monetization strategy, which increased the payment conversion rate and Average RPDAU. However, it had a negative impact on the initial experience of free users, causing some non-paying users to leave and consequently leading to a decrease in the D7 retention rate.

The Average 7D Retention Rate decreased by 7.9%, or 86 basis points, to 10.1% for the fiscal year ended June 30, 2025 from 10.9% for the fiscal year ended June 30, 2024. During the fiscal year ended June 30, 2025, the company adopted a more active monetization strategy, which increased the payment conversion rate and Average RPDAU. However, it had a negative impact on the initial experience of free users, causing some non-paying users to leave and consequently leading to a decrease in the D7 retention rate.

Fiscal Year Ended June 30, 2026 Compared to Fiscal Year Ended June 30, 2025

The following table sets forth a summary of audited consolidated results of operations for the fiscal years indicated. This information should be read together with our audited consolidated financial statements and related notes included elsewhere in this Report. The operating results in any period are not necessarily indicative of the results that may be expected for any future period.

		For the Fiscal Year Ended June 30,								Change
		2026				2025				Amount				%
Revenue
Revenue from in-app purchases		$	94,424,013				106,343,226				(11,919,213	)			(11.2	)%
Revenue from advertisements			10,227,577				11,705,656				(1,478,079	)			(12.6	)%
Total revenue			104,651,590				118,048,882				(13,397,292	)			(11.3	)%
Operating costs and expenses
Cost of revenue			(49,480,191	)			(55,860,712	)			6,380,521				(11.4	)%
Research and development expenses			(6,343,012	)			(5,694,010	)			(649,002	)			11.4	%
Selling and marketing expenses			(41,020,636	)			(48,393,515	)			7,372,879				(15.2	)%
General and administrative expenses			(6,431,723	)			(4,710,537	)			(1,721,186	)			36.5	%
Total operating costs and expenses			(103,275,562	)			(114,658,774	)			(11,383,212	)			(9.9	)%
Income from operations			1,376,028				3,390,108				(2,014,080	)			(59.4	)%
Total other income, net			2,494,557				595,295				1,899,262				319.1	%
Income before income tax			3,870,585				3,985,403				(114,818	)			(2.9	)%
Income tax expenses			(18,540	)			(165,590	)			147,050				(88.8	)%
Net income			3,852,045				3,819,813				32,232				0.8	%
Other comprehensive income (loss)
Foreign currency translation difference			1,961,136				492,187				1,468,949				298.5	%
Total comprehensive income		$	5,813,181			$	4,312,000				1,501,181				34.8	%

Revenue

Our total revenue decreased by 11.3%, or US$13.4 million, to US$104.7 million for the fiscal year ended June 30, 2026, from US$118.0 million for the fiscal year ended June 30, 2025. In-app purchase revenue decreased by 11.2% to US$94.4 million for the fiscal year ended June 30, 2026, from US$106.3 million for the fiscal year ended June 30, 2025, while advertising revenue decreased by 12.6%, or $1.5 million to US$10.2 million for the fiscal year ended June 30, 2026, compared to US$11.7 million for the fiscal year ended June 30, 2025. The decrease was primarily driven by a strategic reduction in user acquisition spending and a deliberate adjustment of our marketing approach in response to evolving platform dynamics and competitive market conditions, which resulted in lower user acquisition levels.

As user acquisition has become increasingly challenging due to the contraction of addressable audiences in mature markets, reduced attribution and targeting signals available to advertisers, and sustained competition for paid media inventory, we recently announced a shift in our strategic focus toward AI-generated content. Under the new strategy, we will progressively optimize our third-party publishing business in casual genre, in particular in the social casino category, and will direct our resources toward the development and distribution of AI-generated content. As of the date of this Report, we have started to manage our existing portfolio of casual and social casino titles with a focus on cash flow generation and profitability. User acquisition spending and operating expenditures are being allocated based on expected return on investment rather than the size of the installed user base.

Operating costs and expenses

Operating costs and expenses decreased by 9.9%, or US$11.4 million, to US$103.3 million for the fiscal year ended June 30, 2026, from US$114.7 million for the fiscal year ended June 30, 2025.

Cost of revenue

Cost of revenue decreased by 11.4%, or US$6.4 million, to US$49.5 million for the fiscal year ended June 30, 2026, from US$55.9 million for the fiscal year ended June 30, 2025, reflecting our lower platform commission costs, as well as adjustments to developer profit-sharing arrangements as certain titles advanced through their lifecycle and generated lower levels of player activity and monetization.

Research and development expenses

Research and development expenses increased by 11.4%, or US$0.6 million, to US$6.3 million for the fiscal year ended June 30, 2026, from US$5.7 million for the fiscal year ended June 30, 2025. The increase was primarily attributable to our continued investment in game development, and related research and development initiatives.

Selling and marketing expenses

Selling and marketing expenses decreased by 15.2%, or US$7.4 million, to US$41.0 million for the fiscal year ended June 30, 2026, from US$48.4 million for the fiscal year ended June 30, 2025, primarily attributable to the reduction in advertising spend on player acquisition and retention, as we maintained a structured approach to reduce marketing investment amid uneven ad performance across major platforms, including Apple App Store and Google Play, through which we distribute games to game players or users, while continuing to optimize spend efficiency on mature titles. See "-Results of Operations-Revenue."

General and administrative expenses

General and administrative expenses increased by 36.5%, or US$1.7 million, to US$6.4 million for the fiscal year ended June 30, 2026, from US$4.7 million for the fiscal year ended June 30, 2025. The increase was primarily due to higher personnel costs associated with the continued build-out of our public company infrastructure, including corporate governance, and investor relations functions, as well as selective hiring to strengthen management capacity and key operational roles in support of our expanding business. This increase was partially offset in the fourth quarter of the fiscal year by headcount reductions and enhanced operating efficiency resulting from the increased adoption of AI-enabled tools across our administrative functions.

Other income, net

Other income (expenses), net, is used to record our non-operating income and expenses, interest income and expenses, investment income, and other income and expenses. For the fiscal year ended June 30, 2026, we had net other income of US$2.5 million, representing an increase of US$1.9 million, compared to net other income of US$0.6 million for the fiscal year ended June 30, 2025. The increase was primarily due to $1.9 million of investment income on short-term investment.

Income tax expenses

The provision for income taxes consists of current income taxes in the various jurisdictions where we are subject to taxation, primarily in mainland China and Hong Kong, as well as deferred income taxes reflecting the net tax effects of temporary differences between the carrying amounts of assets and liabilities in each of these jurisdictions for financial reporting purposes and the amounts used for income tax purposes.

Cayman

The Parent and Gamehaus Inc. are incorporated in the Cayman Islands and are not subject to income taxes under the current laws of the Cayman Islands.

BVI

Gamehaus BVI is incorporated in the BVI and is not subject to income taxes under the current laws of the BVI.

Singapore

Gamehaus SG is incorporated in Singapore and is subject to Singapore Corporate Tax. Nil pretax income was generated in Singapore for the fiscal years ended June 30, 2026, 2025 and 2024.

Hong Kong

Gamehaus HK, Gamepromo, and Dataverse are companies registered in Hong Kong and subject to the following corporate income tax rate. Under Hong Kong tax law, profits arising in or derived from Hong Kong are subject to profit tax: the first HK$2 million of profits earned will be taxed at half the current rate (i.e., 8.25%), while the remaining profits will continue to be taxed at the existing 16.5%. According to the relevant provisions of the Hong Kong tax law, a HK Company is exempt from profit tax on income derived from outside Hong Kong.

PRC

Under the EIT Law, the standard enterprise income tax rate for domestic enterprises and foreign invested enterprises is 25%. Starting from the tax year ended November 28, 2024, Chongqing Haohan is qualified as a High and New Technology Enterprise ("HNTE") and is subject to a favorable income tax rate of 15%. Chongqing Haohan 's HNTE certification is valid for three years starting from November 2024 and subject to renewal. In accordance with the implementation rules of the Income Tax Law of the PRC, enterprises newly established in the Western Development Zone within the scope of "preferential catalogue of income tax for key industries encouraged to develop in West area" shall be subject to a favorable income tax rate of 15% from January 1, 2021, to December 31, 2030. Chongqing Haohan and Chongqing Fanfengjian are established in the Western Development Zone and they are subject to a favorable income tax rate of 15% to December 31, 2030. Xi'an Ruojintang and Guangzhong Octopus Cat Network Technology Co., Ltd. are eligible for the preferential tax policies as small-scale taxpayers for the fiscal year ended June 30, 2026. As small-scale taxpayers, 25% of the annual taxable income of RMB 3 million or less will be included in the taxable income, and the enterprise income tax will be paid at the rate of 20%, which is essentially resulting in a favorable income tax rate of 5%. This preferential treatment is effective until December 31, 2027. Our remaining subsidiaries are subject to corporate income tax at the PRC unified rate of 25%.

For the fiscal year ended June 30, 2026, our income tax expense was US$0.02 million, compared to US$0.17 million of income tax expenses for the fiscal year ended June 30, 2025, primarily due to a greater proportion of income being generated by entities with preferential income tax rates.

Net income

As a result of the foregoing, our net income for the fiscal year ended June 30, 2026, increased by 0.8%, to US$3.9 million from US$3.8 million when compared with the fiscal year ended June 30, 2025. The increase in net income was primarily attributable to $1.9 million of investment income on short-term investment.

Net income per share

Our net income per ordinary share remained unchanged at US$0.08 for the fiscal years ended June 30, 2026 and 2025.

Fiscal Year Ended June 30, 2025 Compared to Fiscal Year Ended June 30, 2024

The following table sets forth a summary of audited consolidated results of operations for the fiscal year indicated. This information should be read together with our audited consolidated financial statements and related notes included elsewhere in this Report. The operating results in any period are not necessarily indicative of the results that may be expected for any future period.

		For the Fiscal Year Ended June 30,								Change
		2025				2024				Amount				%
Revenue
Revenue from in-app purchases		$	106,343,226				131,638,895				(25,295,669	)			(19.2	)%
Revenue from advertisements			11,705,656				13,597,854				(1,892,198	)			(13.9	)%
Total revenue			118,048,882				145,236,749				(27,187,867	)			(18.7	)%
Operating costs and expenses
Cost of revenue			(55,860,712	)			(70,658,025	)			14,797,313				(20.9	)%
Research and development expenses			(5,694,010	)			(4,788,467	)			(905,543	)			18.9	%
Selling and marketing expenses			(48,393,515	)			(57,685,521	)			9,292,006				(16.1	)%
General and administrative expenses			(4,710,537	)			(3,756,679	)			(953,858	)			25.4	%
Total operating costs and expenses			(114,658,774	)			(136,888,692	)			22,229,918				(16.2	)%
Income from operations			3,390,108				8,348,057				(4,957,949	)			(59.4	)%
Total other income, net			595,295				373,011				222,284				59.6	%
Income before income tax			3,985,403				8,721,068				(4,735,665	)			(54.3	)%
Income tax expenses			(165,590	)			(130,307	)			(35,283	)			27.1	%
Net income			3,819,813				8,590,761				(4,770,948	)			(55.5	)%
Other comprehensive income (loss)
Foreign currency translation difference			492,187				(106,429	)			598,616				(562.5	)%
Total comprehensive income		$	4,312,000			$	8,484,332				(4,172,332	)			(49.2	)%

Revenue

Our total revenue decreased by 18.7%, or US$27.2 million, to US$118.0 million for the fiscal year ended June 30, 2025 from US$145.2 million for the fiscal year ended June 30, 2024. The decrease in total revenue was primarily due to a decrease of US$9.0 million, or 16.3%, in advertising costs related to user acquisition to US$46.1 million for the fiscal year ended June 30, 2025, compared to US$55.1 million for the fiscal year ended June 30, 2024. The reduction in advertising costs was primarily attributable to: (i) we shifted from broad-based user acquisition to targeted efficiency improvements, focusing on direct-to-consumer (DTC) and VIP user management to enhance retention and monetization without compromising long-term product viability; and (ii) we are actively expanding its content pipeline, with new titles in the Puzzle and RPG genres currently in the testing phase. We allocated meaningful marketing budgets to support these products and intend to launch extensive promotional campaigns upon their commercial release.

The decrease in advertising costs led to lower traffic and user acquisition volumes and impacted both revenue streams. In-app purchase revenue decreased by 19.2% to US$106.3 million for fiscal year ended June 30, 2025, from US$131.6 million for the fiscal year ended June 30, 2024, while advertising revenue was US$11.7 million for the fiscal year 2025, compared to US$13.6 million in the prior fiscal year. These declines were partially offset by enhanced in-game content and features, which contributed to sustained engagement and retention among our existing user base.

Operating costs and expenses

Operating costs and expenses decreased by 16.2%, or US$22.2 million, to US$114.7 million for the fiscal year ended June 30, 2025 from US$136.9 million for the fiscal year ended June 30, 2024.

Cost of revenue

Cost of revenue decreased by 20.9%, or US$14.8 million, to US$55.9 million for the fiscal year ended June 30, 2025, from US$70.7 million for the fiscal year ended June 30, 2024. The decrease in cost of revenue was primarily due to the decrease of US$8.3 million in platform fees, US$5.6 million decrease in profit sharing arrangement paid to the game developers, and US$1.3 million decrease in customized design fees. Specifically, the platform fees decreased by 20.3%, or US$8.3 million, to US$32.8 million for the fiscal year ended June 30, 2025, from US$41.2 million for the fiscal year ended June 30, 2024. The profit-sharing arrangements paid to game developers decreased by 22.0%, or US$5.6 million, to US$20.0 million for the fiscal year ended June 30, 2025, from US$25.7 million for the fiscal year ended June 30, 2024. The decrease in customized design fees was primarily due to our strategic reduction in spending on updates for several mature-stage. Management expects customized design expenses to fluctuate as updates to existing games continue.

Research and development expenses

Research and development expenses increased by 18.9%, or US$0.9 million, to US$5.7 million for the fiscal year ended June 30, 2025, from US$4.8 million for the fiscal year ended June 30, 2024. The increase was primarily attributable to our strategic collaboration with several game developers during the early stages of game development.

Selling and marketing expenses

Selling and marketing expenses decreased by 16.1%, or US$9.3 million, to US$48.4 million for the fiscal year ended June 30, 2025, from US$57.7 million for the fiscal year ended June 30, 2024, primarily due to the decrease of US$9.0 million in advertising costs related to marketing and player acquisition and retention, as discussed in detail above. See "-Results of Operations-Revenue."

General and administrative expenses

General and administrative expenses increased by 25.4%, or US$0.9 million, to US$4.7 million for the fiscal year ended June 30, 2025, from US$3.8 million for the fiscal year ended June 30, 2024. The increase was mainly attributable to higher salary expenses and professional service fees, largely associated with activities related to our public listing, including enhancements to corporate governance, financial reporting, and investor relations functions.

Other income, net

Other income (expenses), net, is used to record our non-operating income and expenses, interest income and expenses, investment income, and other income and expenses. For the fiscal year ended June 30, 2025, we had net other income of US$0.6 million, representing an increase of US$0.2 million, compared to net other income of US$0.4 million for the fiscal year ended June 30, 2024. The increase was primarily due to the increase of US$0.2 million in interest income.

Income tax expenses (benefit)

The provision for income taxes consists of current income taxes in the various jurisdictions where we are subject to taxation, primarily in mainland China and Hong Kong, as well as deferred income taxes reflecting the net tax effects of temporary differences between the carrying amounts of assets and liabilities in each of these jurisdictions for financial reporting purposes and the amounts used for income tax purposes.

Cayman

Gamehaus Inc. is incorporated in the Cayman Islands and is not subject to income taxes under the current laws of the Cayman Islands.

BVI

Gamehaus BVI is incorporated in the BVI and is not subject to income taxes under the current laws of the BVI.

Singapore

Gamehaus SG is incorporated in Singapore and is subject to Singapore Corporate Tax. Nil pretax income was generated in Singapore for the fiscal years ended June 30, 2025, and 2024.

Hong Kong

Gamehaus HK, Gamepromo, and Dataverse are companies registered in Hong Kong and subject to the following corporate income tax rate. Under Hong Kong tax law, profits arising in or derived from Hong Kong are subject to profit tax: the first HK$2 million of profits earned will be taxed at half the current rate (i.e., 8.25%), while the remaining profits will continue to be taxed at the existing 16.5%. According to the relevant provisions of the Hong Kong tax law, a HK Company is exempt from profit tax on income derived from outside Hong Kong.

PRC

Under the EIT Law, the standard enterprise income tax rate for domestic enterprises and foreign invested enterprises is 25%. Starting from the tax year ended December 23, 2021, Shanghai Kuangre is qualified as a High and New Technology Enterprise ("HNTE") and is subject to a favorable income tax rate of 15%. Shanghai Kuangre's HNTE certification is valid for three years starting from December 2024. Starting from the tax year ended November 28, 2024, Chongqing Haohan is qualified as a High and New Technology Enterprise ("HNTE") and is subject to a favorable income tax rate of 15%. Chongqing Haohan 's HNTE certification is valid for three years starting from November 2024 and subject to renew. In accordance with the implementation rules of the Income Tax Law of the PRC, enterprises newly established in the Western Development Zone within the scope of "preferential catalogue of income tax for key industries encouraged to develop in West area" shall be subject to a favorable income tax rate of 15% from January 1, 2021 to December 31, 2030. Chongqing Haohan and Chongqing Fanfengjian are established in the Western Development Zone and they are subject to a favorable income tax rate of 15% until December 31, 2030. Our remaining subsidiaries are subject to corporate income tax at the PRC unified rate of 25%.

For the fiscal year ended June 30, 2025, income tax expense was US$0.17 million, compared to US$0.13 million of income tax expenses for the fiscal year ended June 30, 2024, primarily due to less preference income tax rate applicable to certain entities in PRC.

Net income

As a result of the foregoing, our net income for the fiscal year ended June 30, 2025, decreased by 55.5%, or US$4.8 million, to US$3.8 million from US$8.6 million when compared with the fiscal year ended June 30, 2024. The decrease in net income was primarily attributable to the decrease in revenue, which resulted from our strategically reduced advertising costs related to user acquisition, as previously discussed. However, we remain committed to our strategic focus on enhancing gameplay experiences and improving payer conversion rates, which are expected to contribute to long-term growth and profitability.

Net income per share

For the fiscal year ended June 30, 2025, the net income per ordinary share decreased to US$0.08, a decrease from net income per share of US$0.16 for the fiscal year ended June 30, 2024.

B. Liquidity and Capital Resources

In assessing our liquidity, management monitors and analyzes the cash on-hand, our ability to generate sufficient revenue sources in the future, and our operating and capital expenditure commitments. For the fiscal years ended June 30, 2026, 2025 and 2024, we recognized net income of approximately US$3.9 million, US$3.8 million and US$8.6 million, respectively. For the fiscal years ended June 30, 2026, 2025 and 2024, cash provided by operating activities was US$6.0 million, US$2.2 million and US$4.5 million, respectively. As of June 30, 2026 and 2025, the Company had US$17.6 million and US$15.2 million in cash and cash equivalent, respectively. The increase was primarily attributable to US$6.0 million provided from operating activities and US$0.1 million provided from financing activities, against US$4.7 million used in investing activities.

Our liquidity needs are to meet its working capital requirements, operating expenses, and capital expenditure obligations. We believe that its current cash on hand will be sufficient to meet the current and anticipated needs for general corporate purposes for at least the next 12 months from the date of this Report. We may, however, need additional cash resources in the future if we experience changes in business conditions or other developments. We may also need additional cash resources in the future if we find and wish to pursue opportunities for investment, acquisition, capital expenditure, or similar actions. If we determine that the cash requirements exceed the amount of cash on hand, we may seek to issue equity or equity linked securities or obtain debt financing. The issuance and sale of additional equity would result in further dilution to our shareholders. The incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that would restrict our operations. Our current contractual obligations consist primarily of operating lease payments and the operating lease commitments for property management expenses under lease agreements. Therefore, we believe that we have sufficient cash reserves to pay short-term debts in order to maintain our liquidity.

On April 23, 2024, Shanghai Kuangre and Chongqing Haohan entered into a line of credit agreement with China Merchants Bank Co., Ltd., Shanghai Branch ("CMB"), pursuant to which CMB provided a revolving credit facility in an aggregate principal amount of RMB30 million for the period from April 28, 2024 to April 27, 2025. On July 14, 2025, the parties renewed the facility for an additional one-year term ending on July 13, 2026. As of June 30, 2026, US$764,281 was outstanding under the facility. The facility is guaranteed by Shanghai Kuangre pursuant to an irrevocable maximum amount guarantee agreement entered into among Shanghai Kuangre, Chongqing Haohan and CMB, under which Shanghai Kuangre has agreed to assume joint and several guarantee responsibilities for all debts of Chongqing Haohan under the line of credit agreement. As of the date of this Report, Shanghai Kuangre and Chongqing Haohan are in discussions with CMB regarding a further extension of the credit facility.

Cash flows for the Fiscal Years Ended June 30, 2026, 2025 and 2024

The following table presents a summary of our cash flows for the fiscal years indicated:

		For the Fiscal Year Ended June 30,
		2026				2025				2024
Net cash provided by operating activities		$	5,992,291			$	2,215,358			$	4,462,178
Net cash used in investing activities			(4,690,750	)			(2,279,711	)			(407,345	)
Net cash provided by (used in) financing activities			141,468				(3,714,884	)			(1,200,612	)
Effect of exchange rate changes on cash			892,637				193,842				(52,073	)
Net change in cash and restricted cash		$	2,335,646			$	(3,585,395	)		$	2,802,148

Operating activities

Net cash provided by operating activities for the fiscal year ended June 30, 2026, was approximately US$6.0 million, which was primarily attributable to net income of approximately US$3.9 million, adjusted for non-cash items of approximately US$2.9 million and for changes in working capital of approximately negative US$0.8 million. The adjustments for changes in working capital mainly included an increase in advances to suppliers of US$1.5 million, an increase in prepaid expenses and other current assets of US$1.2 million, a decrease in contract liabilities of US$0.5 million and a decrease in operating lease liabilities of US$0.5 million, offset by a decrease in accounts receivable of US$2.9 million.

Net cash provided by operating activities for the fiscal year ended June 30, 2025, was approximately US$2.2 million, which was primarily attributable to net income of approximately US$3.8 million, adjusted for non-cash items of approximately US$1.8 million and for changes in working capital of approximately negative US$3.4 million. The adjustments for changes in working capital mainly included (i) a decrease in account payable of US$2.5 million, and (ii) an increase in prepaid expenses and other current assets of US$1.1 million, (iii) a decrease in contract liabilities of US$1.0 million, offset by (iii) a decrease in account receivable of US$0.8 million, and (iv) a decrease in advances to suppliers of US$0.4 million. The decreases were primarily due to the reduced advertising costs and the decrease in revenue.

Net cash provided by operating activities for the fiscal year ended June 30, 2024, was approximately US$4.5 million, which was primarily attributable to net income of approximately US$8.6 million, adjusted for non-cash items of approximately US$0.9 million and for changes in working capital of approximately negative US$6.3 million. The adjustments for changes in working capital mainly included (ii) a decrease in account payable of US$12.8 million, offset by (iii) a decrease in account receivable of US$5.5 million, and (iv) a decrease in advances to suppliers of US$2.1 million. The decreases were primarily due to the reduced advertising costs and the decrease in revenue. The increase in deferred offering cost was primarily due to the public listing.

Investing activities

Net cash used in investing activities was US$4.7 million for the fiscal year ended June 30, 2026, primarily attributable to US$3.7 million net purchases of trading securities, capital expenditures of US$0.8 million for leasehold improvements and computer equipment, and US$0.5 million investment in long-term investments, partially offset by $0.4 million return of capital contribution from long-term investments.

Net cash used in investing activities was US$2.3 million for the fiscal year ended June 30, 2025, primarily attributable to US$1.3 million net increase in investments in trading securities and US$0.9 million investment in intangible assets.

Net cash used in investing activities was US$0.4 million for the fiscal year ended June 30, 2024, primarily attributable to investments in intangible assets of US$0.3 million and investment in transportation equipment of US$0.1 million.

Financing activities

Net cash provided by financing activities was US$0.1 million for the fiscal year ended June 30, 2026, primarily attributable to $0.7 million proceeds from short-term loans, partially offset by US$0.6 million used for share repurchases.

Net cash used in financing activities was US$3.7 million for the fiscal year ended June 30, 2025, primarily attributable to US$2.5 million in payment on reverse recapitalization, US$1.1 million in payments for public listing offering costs and US$0.1 million in payment to the controlling shareholder, Feng Xie.

Net cash used in financing activities was US$1.2 million for the fiscal year ended June 30, 2024. This was primarily due to US$1.3 million in payments for public listing offering costs, partially offset by US$0.1 million in proceeds from a contribution by the controlling shareholder, Feng Xie.

Capital Expenditures

Our capital expenditures are primarily incurred for purchase of royalty rights from game developers and for expenditures on the capitalized game development associated with infrastructure and new games or significant updates to existing games. Our capital expenditures were nil, US$0.9 million and US$0.3 million for the fiscal years ended June 30, 2026, 2025 and 2024, respectively. We intend to fund our future capital expenditures with existing cash balance. We will continue to incur capital expenditures as needed to meet the expected growth of our business. We had commitments for capital expenditure totaling $1,995,508 as of June 30, 2026. These commitments were primarily related to our acquisition of royalty rights and developed games.

Lease commitments

The following table sets forth our contractual obligations as of June 30, 2026:

		As of June 30, 2026
Within one year		$	179,996
Two - five years			637,079
More than five years			39,622
Total		$	856,697

We recorded lease costs of US$428,340, US$434,874 and US$442,119 for the fiscal years ended June 30, 2026, 2025 and 2024, respectively. Except for otherwise disclosed above, we did not have other significant commitments, long-term obligations, or guarantees as of June 30, 2026.

Off-Balance Sheet Commitments and Arrangements

We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. In addition, we have not entered into any derivative contracts that are indexed to our shares and classified as shareholders' equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to such entity or engages in leasing, hedging or product development services with us.

C. Research and Development, Patents and Licenses, etc.

See "Item 4. Information on the Company-B. Business Overview- Research and Development" and "Item 4. Information on the Company-B. Business Overview-Intellectual Property."

D. Trend Information

Other than as disclosed in this Report, we are not aware of any trends, uncertainties, demands, commitments or events for the current fiscal year that are reasonably likely to have a material effect on our revenues, income, profitability, liquidity or capital reserves, or that caused the disclosed financial information to be not necessarily indicative of future results of operations or financial conditions.

E. Critical Accounting Policies and Estimates

In preparing the company's consolidated financial statements in conformity with U.S. GAAP, the company's management makes estimates and assumptions that affect amounts reported in the company's consolidated financial statements and accompanying notes. Such estimates include, but are not limited to, revenue recognition, the allowance for credit losses, realizability of deferred tax assets, estimated useful lives of fixed assets, intangible assets and operating lease right-of-use assets, and accruals for income tax uncertainties. Actual amounts may differ from these estimated amounts.

The company considers accounting estimates critical accounting policies when: (i) the estimates involve matters that are highly uncertain at the time the accounting estimate is made, and (ii) different estimates or changes to estimates could have a material impact on the company's reported financial position, changes in financial position, or results of operations.

When more than one accounting principle, or method of its application, is generally accepted, the company selects the principle or method that it considers the most appropriate based on the specific circumstances. Application of these accounting principles requires the company to make estimates about the future resolution of existing uncertainties. Due to the inherent uncertainty involving estimates, actual results reported in the future may differ from such estimates. For additional information on its significant accounting policies, please refer to Note 2 - Summary of Significant Accounting Policies to our consolidated financial statements included elsewhere in this Report.

Software development costs

The company adopted ASC 985-20-25 on July 1, 2021. The company reviews software development costs associated with infrastructure and new games or significant updates to existing games to determine if the costs qualify for capitalizing. Development costs primarily consist primarily of compensation and payroll-related expenses for employees and third-party consultants who devote time to the company's internal-use software projects. The development costs incurred during the application development stage are capitalized. Capitalization of such costs begins when the preliminary project stage is completed and ceases at the point in which the project is substantially complete and is ready for its intended purpose. The capitalization of development costs is recognized if, and only if, all of the following conditions are met: (i) technical feasibility to complete the games or internal use software so they will be available for use or sale; (ii) the intention to complete the games or internal use software and use them or sell them; (iii) ability to use or sell the games or internal use software, (iv) how the games or internal use software will generate probable future economic benefits; (v) the availability of proper technical, financial, and other resources to complete the development of the games or internal use software and to use them or sell them, and (vi) the ability to measure reliably the expenditure attributable to the games or internal use software during the development. With respect to new games or updates to existing games, the preliminary project stage remains ongoing until just prior to worldwide launch. The development costs of new games or updates to existing games are expensed as incurred to research and development in the consolidated statements of comprehensive income.

As of June 30, 2026 and 2025, we capitalized $3,459,100 and $3,459,100 of game development costs, respectively.

Game Development costs of approximately nil, $0.9 million and $0.3 million were capitalized during the years ended June 30, 2026, 2025 and 2024, respectively. The estimated useful life of costs capitalized is generally three to seven years. During the years ended June 30, 2026, 2025 and 2024, the amortization of capitalized software costs totaled $911,958, $294,078 and $39,167, respectively.

Impairment of long-lived assets

Long-lived assets are evaluated for impairment whenever events or changes in circumstances (such as significant adverse changes to market conditions that will impact the future use of the assets) indicate that the carrying amount may not be fully recoverable or that the remaining useful life is shorter than the company had originally estimated. When these events occur, the company evaluates the impairment by comparing the carrying value of the assets to an estimate of future undiscounted cash flows expected to be generated from the use of the assets and their eventual disposition. If the sum of the expected future undiscounted cash flows is less than the carrying value of the assets, the company recognizes an impairment loss based on the excess of the carrying value of the assets over the fair value of the assets. No impairment charge was recognized for the fiscal years ended June 30, 2026, 2025 and 2024.

Revenue recognition

The company's revenue is primarily generated from the sale of virtual currency associated with online games and advertisements within the company's games.

The company recognizes revenue pursuant to ASC 606, Revenue from Contracts with Customers ("ASC 606"). In accordance with ASC 606, revenue from contracts with customers is recognized when control of the promised goods or services is transferred to the company's customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. To achieve the core principle of this standard, the Company applied the following five steps:

	1.	identification of the contract, or contracts, with the customer;
	2.	identification of the performance obligations in the contract;
	3.	determination of the transaction price;
	4.	allocation of the transaction price to the performance obligations in the contract; and
	5.	recognition of the revenue when, or as, a performance obligation is satisfied.

Revenue from In-app Purchases

The company primarily derives revenue from the sale of virtual currency associated with online games. The company distributes its games to game players/users through various web and mobile platforms such as Apple App Store, Google Play, and other mobile platforms. Through these platforms, users can download the Company's free-to-play games and can purchase virtual currency which can be redeemed in the game for virtual goods.

The initial download of the games does not create a contract under ASC 606; however, the separate election by the player to make an in-app purchase satisfies the ASC 606 criterion for creating a contract. Players can pay for their virtual items through various widely accepted payment methods offered in the games. Payments from players for virtual currency are required at the time of purchase, are non-refundable and relate to non-cancellable contracts that specify the company's obligations, and cannot be redeemed for cash or exchanged for anything other than virtual currency within the company's games. The purchase price is a fixed amount that reflects the consideration that the company expects to be entitled to receive in exchange for the use of virtual currency by its customers. The platform providers collect proceeds from the game players and remit the proceeds to the Company after deducting their respective platform fees.

The company is primarily responsible for providing the virtual currency, has control over the content and functionality of games, and has the discretion to establish the virtual currency prices. Therefore, the company is the principal and revenue is recorded on a gross basis. Payment processing fees paid to platform providers are recorded within cost of revenue. The company's performance obligation is to display the virtual currency within the game over the estimated life of the paying player or until the virtual item is consumed in game play based upon the nature of the virtual item.

Substantially all of the Company's games sell only consumable virtual currency instead of durable virtual currency. Consumable virtual currencies represent items that can be consumed by a specific player action without any timeframe restriction and do not provide the player with any continuing additional or enhanced benefit following consumption. Proceeds from these sales of virtual currencies are initially recorded in contract liabilities. Proceeds from the sales of virtual currencies are recognized as revenue when a player consumes the virtual currency in the game at that point of time. When virtual currency is consumed within the games, the player could "win" and would be awarded additional virtual currency. As the player does not receive any additional benefit from the Company's games, nor is the player entitled to any additional rights once the player's virtual currency is substantially consumed, the Company has concluded that the virtual currency represents consumable goods. For the sale of consumable virtual currency, the Company considers the control transferred, performance obligation is satisfied and recognizes revenue at the point upon consumption of virtual currencies for gameplay.

The Company monitors the amount of outstanding purchased and free virtual currency at each reporting date based on player behavior. This review, performed on a game-by-game basis, includes an analysis of game players' historical play behavior, purchase behavior, and the amount of virtual currency outstanding. Accordingly, revenue is recognized using weighted average consumption rates.

Deferred revenue, which represents a contract liability, represents mostly unrecognized fees collected for virtual currency which are not consumed at the balance sheets date, or for players that are still active in the games.

Sales and other taxes collected from customers on behalf of governmental authorities are accounted for on a net basis and are not included in revenue or operating expenses.

Revenue from Advertisements

The company also has relationships with certain advertising service providers for advertisements within its games and revenue from these advertising providers is generated through impressions, click-throughs, and banner ads. The company has determined that displaying the advertisements within the mobile games is identified as a single performance obligation. The transaction price in advertising arrangements is established by its advertising service providers and is generally the product of the number of advertising units delivered (such as impressions and offers completed) and the contractually agreed-upon price per unit.The revenue from advertisements was recognized at the point the advertising unit delivered. The company has determined that it is generally acting as an agent in its advertising arrangements, because the advertising service providers (i) maintain the relationship with the customers, (ii) control the pricing of the advertising such that the Company does not know the total price paid by the customer to the service providers, and (iii) control the advertising product through the time the advertisements are displayed in its games.

Disaggregation of Revenue

All the company's revenue from the sale of In-app purchases and from advertisements were recognized at a point in time.

The company disaggregates its revenue by geographic region as follows:

		For the Fiscal Year Ended June 30,
		2026				%				2025				%				2024				%
Players located in the United States		$	65,093,289				62.2	%		$	74,134,697.00				62.8	%		$	93,241,993				64.2	%
Players located in Europe			17,790,770				17.0	%			18,415,626				15.6	%			21,349,802				14.7	%
Players located in other regions			21,767,531				20.8	%			25,498,559				21.6	%			30,644,954				21.1	%
Total revenue		$	104,651,590				100.0	%		$	118,048,882				100.0	%		$	145,236,749				100.0	%

Contract Liabilities and Other Disclosures

The company receives customer payments based on the payment terms established in the company's contracts. Payment for the purchase of virtual currency, such as coins, chips, and cards, is made at purchase, and such payments are non-refundable in accordance with the company's standard terms of service. Such payments are initially recorded as a contract liability, and revenue is subsequently recognized as the company satisfies its performance obligations.

The following table summarizes the company's opening and closing balances in contract liabilities and accounts receivable:

		Accounts Receivable				Contract Liabilities
Balance as of June 30, 2025			10,423,418				1,871,120
Balance as of June 30, 2026			8,042,595				1,471,074

Substantially all of the company's unsatisfied performance obligations relate to contracts with an original expected length of one year or less.

The table below presents the activity of contract liabilities during the fiscal years ended June 30, 2026 and 2025, respectively.

		As of June 30,
		2026				2025
Balance at the beginning of the year		$	1,871,120			$	2,830,068
Cash received			93,934,483				105,350,306
Revenue recognized			94,424,013				106,343,226
Foreign currency translation			89,484				33,972
Balance at the end of the year		$	1,471,074			$	1,871,120

Cost of Revenue

Amounts recorded as cost of revenue relate to direct expenses incurred in order to generate in-app purchase revenue. Such costs are recorded as incurred, and primarily consist of fees withheld by the company's platform providers from the player proceeds received by the platform providers on the company's behalf, amortization of licensing and royalty fees, profit sharing arrangement paid to the game developers, customized design fees, and third-party service fees paid that are directly related to game publishing.

Advertising Costs

The cost of advertising is expensed as incurred, and totaled US$38.8 million, US$46.1 million and US$55.1 million for the fiscal years ended June 30, 2026, 2025 and 2024, respectively. Advertising costs primarily consist of marketing and player acquisition and retention costs and are included in sales and marketing expenses.

Recently issued and adopted accounting pronouncements

On September 18, 2025, the FASB issued Accounting Standards Update (ASU) 2025-06, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. ASU 2025-06 modernizes the accounting for internal-use software (the existing internal-use software guidance does not contemplate more current methods of software development). The amendments in ASU 2025-06 are limited and focused on the key challenge that entities face in applying FASB Accounting Standards Codification (FASB ASC) 350-40-applying that guidance to software that is developed using modern, iterative approaches such as Agile, DevOps, and continuous-deployment models that do not fit neatly into the legacy "preliminary-project / application-development / post-implementation" stages described in today's Subtopic 350-40.The amendments in this Update are effective for all entities for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted as of the beginning of an annual reporting period. The Company expects the adoption on this ASU will not have a material effect on the Company's consolidated financial statements.

In November 2025, the FASB issued ASU 2025-08, Financial Instruments-Credit Losses ("Topic 326"): Purchased Loans ("ASU 2025-08"). The amendments expand the population of acquired loans subject to the gross-up approach, treating non-credit-deteriorated loans (excluding credit cards) as "seasoned" if purchased at least 90 days after origination or acquired in a business combination. ASU 2025-08 is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the impact that this update will have on the consolidated financial statements.

In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities. This update establishes the accounting for a government grant received by a business entity, including guidance for (1) a grant related to an asset and (2) a grant related to income. The amendments in this Update are effective for annual reporting periods beginning after December 15, 2028, and interim reporting periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2025-10.

In December 2025, the FASB issued ASU 2025-11, which is intended to improve the navigability of the guidance in ASC 270 and clarify when it applies. Under the amendments, an entity is subject to ASC 270 if it provides interim financial statements and notes in accordance with GAAP. The ASU also addresses the form and content of such financial statements, adds lists to ASC 270 of the interim disclosures required by all other Codification topics, and establishes a principle under which an entity must disclose events since the end of the last annual reporting period that have a material impact on the entity. As the Board stated in the proposed guidance and reiterates in the ASU, the amendments are not intended to change the fundamental nature of interim reporting or expand or reduce current interim disclosure requirements. For public business entities, the amendments in ASU 2025-11 are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. For entities other than public business entities, for interim reporting periods within annual reporting periods beginning after December 15, 2028. Early adoption is permitted for all entities. The Company is currently evaluating these new disclosure requirements and does not expect the adoption to have a material impact.

In December 2025, the FASB issued ASU 2025-12, Codification Improvements ("ASU 2025-12"). ASU 2025-12 addresses suggestions received from stakeholders regarding the Accounting Standards Codification and makes other incremental improvements to U.S. GAAP. The update represents changes to the Codification that clarify, correct errors in or make other improvements to a variety of topics that are intended to make it easier to understand and apply. ASU 2025-12 is effective for fiscal years beginning after December 15, 2026 and interim periods within those fiscal years. Entities are required to apply the amendments to ASC 260 retrospectively. All other amendments may be applied prospectively or retrospectively. Early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2025-12.

In April 2026, the FASB issued ASU 2026-01, Equity (Topic 505): Initial Measurement of Paid-in-Kind Dividends on Equity-Classified Preferred Stock. The ASU requires PIK dividends on equity-classified preferred stock to be initially measured based on the stated PIK dividend rate in the preferred stock agreement. This ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements.

In May 2026, the FASB issued ASU 2026-02, Environmental Credits and Environmental Credit Obligations (Topic 818). This standard provides guidance on the accounting for environmental credits (such as renewable energy credits, carbon credits) and related obligations. The ASU is effective for annual reporting periods beginning after December 15, 2026, and interim periods within those annual periods. The Company is currently evaluating the impact of this standard on its consolidated financial statements.

Other accounting standards that have been issued by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The company does not discuss recent standards that are not anticipated to have an impact on or are unrelated to its consolidated financial condition, results of operations, cash flows or disclosures.