Annual Report for Fiscal Year Ending June 30, 2025 (Form 20-F)

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion of our financial condition and results of operations is based upon and should be read in conjunction with our consolidated financial statements and their related notes included in this annual report. This report contains forward-looking statements. In evaluating our business, you should carefully consider the information provided under the caption "Item 3. Key Information-D. Risk Factors" in this annual report. We caution you that our businesses and financial performance are subject to substantial risks and uncertainties.

A.	Operating Results

Results of Operations

The following table sets forth our results of operations with line items in absolute amounts and as a percentage of our net revenues for the periods indicated:

Key Components of Results of Operations

Net Revenues

Net revenues consist of revenues from premium business solutions service, online promotion services, value-added services, and shared office rental and management. The following table sets forth a breakdown of our net revenues by type in absolute amounts and as a percentage of our net revenues for the periods indicated:

		For the years ended June 30,
		2025				%				2024				%				2023				%
Online Promotion revenue		$	3,099,321				11.1	%		$	3,587,564				17.8	%		$	4,512,432				22.8	%
Premium business solutions revenue			12,519,123				45.0	%			13,916,977				68.8	%			11,884,095				60.0	%
Value-Added Services revenue			475,496				1.7	%			1,498,683				7.4	%			2,150,566				10.9	%
Shared office rental and management revenue			910,317				3.3	%			1,212,500				6.0	%			1,253,781				6.3	%
Digital marketing revenue			10,837,350				38.9	%			-				-				-				-
Total		$	27,841,607				100.0	%		$	20,215,724				100	%		$	19,800,874				100	%

Premium Business Solutions revenue. The Company offers premium business solutions to corporate clients, including the design and development of tailor-made systems or software such as BI platforms, ERP systems, and cybersecurity software. Each custom service is considered a distinct performance obligation, fulfilled upon customer acceptance. Revenue from these premium business solutions is recognized at the point in time when services are verified and approved by the clients. Typically, service fees are paid within one month after fulfilling the performance obligation, and once determined, they are not subject to clawback. The Company records revenue on a gross basis as the Company is acting as a principal in these transactions and is responsible for fulfilling the promise to provide the specified services.

Online Promotion revenue. The Company provides services to our seller users to promote their services to our buyer users. The Company recognizes the revenues on a gross basis as the Company is acting as a principal in these transactions and is responsible for fulfilling the promise to provide the specified services. The Company recognizes revenue when services are rendered. Most of the payments are made from sellers' subscription payment. Therefore, the online promotion revenues are amortized over the subscription period on a straight line basis.

Value-Added Services revenue. The Company provides various value-added services to our users, such as bookkeeping services, tax filing services, IP application and registration services and qualification certification services. The Company recognizes revenue when the service is performed. Revenues from value-added services are recognized on a gross basis, as the Company is responsible to provide the specified services, and it also has the discretion to set service fee charged to the customers.

Shared office rental and management revenue. The Company provides shared office space to startup companies or small companies, and it also provides property management services to these companies using shared office. The Company recognizes the revenues on a gross basis as the Company is acting as a principal in the rented offices and bears the full rental costs regardless whether the offices are sublet or not. The Company recognizes revenue over time when the shared space is sublet to these companies.

Digital marketing revenue: The Company offers to corporate clients digital marketing services, including designing the advertising content or idea and posting the advertisement on varied online platforms. The packaged service is considered a distinct performance obligation, fulfilled upon advertisement was posted in varied online platforms. Revenue from digital marketing is recognized in time when the advertisement was posted in varied online platforms. Typically, service fees are paid before the advertisement is posted. The Company records revenue on a gross basis as the Company is acting as a principal in digital marketing service and is responsible for fulfilling the promise to provide the specified services. In contracts involving third-party vendors, the Company is regarded as the service provider as it has control of the specified services at any time before it is transferred to customers which is evidenced by i) the Company selects the vendors and establishes the pricing; ii) the Company assumes primary responsibility for the customized services rendered; and iii) the Company carries both commercial and market risk.

Cost of revenues

The following table sets forth a breakdown of our cost of revenues by type in absolute amounts and as a percentage of total cost of revenues for the periods indicated:

		For the years ended June 30,
		2025				%				2024				%				2023				%
Cost of Online Promotion		$	2,334,956				9.5	%		$	1,769,744				10.8	%		$	2,054,523				13.9	%
Cost of premium business solutions			10,746,437				44.0	%			12,691,063				77.2	%			10,896,349				73.9	%
Cost of Value-Added Services			337,745				1.4	%			981,849				6.0	%			775,928				5.3	%
Cost of Shared office rental and management			843,082				3.4	%			994,480				6.0	%			1,019,167				6.9	%
Cost of Digital marketing			10,190,371				41.7	%			-				-				-				-
Total		$	24,452,591				100.0	%		$	16,437,136				100.0	%		$	14,745,967				100	%

Gross Profit

The following table sets forth of our gross profit and gross margin, for the periods indicated:

		For the years ended June 30,
		2025				2024				2023
Total net revenue		$	27,841,607			$	20,215,724			$	19,800,874
Cost of revenue		$	24,452,591			$	16,437,136			$	14,745,967
Gross Profit		$	3,389,016			$	3,778,588			$	5,054,907
Gross Margin			12.17	%			18.69	%			25.53	%

Operating expenses

The following table sets forth a breakdown of our operating costs and expenses both in absolute amounts and as a percentage of total operating expenses for the periods indicated:

		For the years ended June 30,
		2025				%				2024				%				2023				%
Sales and marketing expenses		$	7,484,798				52.9	%		$	2,739,806				50.0	%		$	3,072,609				43.8	%
G&A Expenses			6,253,235				44.1	%			1,709,225				31.1	%			2,262,928				32.2	%
R&D Expense			426,130				3.0	%			1,035,584				18.9	%			1,687,650				24.0	%
Total Operating Expenses		$	14,164,163				100	%		$	5,484,615				100	%		$	7,023,187				100	%

Sales and marketing expenses. Sales and marketing expenses consist primarily of labor costs for sales personnel, marketing expense for the production and dissemination of marketing materials, search engines optimizations, and media collaborations, and other miscellaneous Sales and marketing expenses.

		For the years ended June 30,
		2025				%				2024				%				2023				%
Labor expenses		$	1,489,003				19.9	%		$	1,495,813				54.6	%		$	1,770,549				57.6	%
Marketing expenses			5,887,115				78.7	%			1,166,008				42.6	%			1,166,233				38.0	%
Other Expenses			108,680				1.4	%			77,985				2.8	%			135,827				4.4	%
Total Sales and marketing expenses		$	7,484,798				100	%		$	2,739,806				100	%		$	3,072,609				100	%

General and administrative expenses. General and administrative expenses consist primarily of labor costs for management and administrative personnel, professional service fees, real estate expenses (such as rental cost, utility cost), and other miscellaneous administrative expenses.

		For the years ended June 30,
		2025				%				2024				%				2023				%
Labor Expenses		$	1,026,766				16.4	%		$	858,893				50.3	%		$	768,588				34.0	%
Professional service fees			4,817,386				77.0	%			509,877				29.8	%			872,241				38.5	%
Real estate expenses			116,499				1.9	%			187,590				11.0	%			244,218				10.8	%
Other expenses			292,584				4.7	%			152,865				8.9	%			377,881				16.7	%
Total G&A Expenses		$	6,253,235				100.0	%		$	1,709,225				100	%		$	2,262,928				100	%

Research and development expenses. Research and development expenses consist primarily of salaries and benefits of employees and related expenses for IT professionals involved in developing technology platforms, server and other equipment depreciation, bandwidth and data center costs, and rental fees. Besides, there was entrusted development cost for entrust professional institutions to assist our company in upgrading the platform's functions, improve development efficiency etc. All research and development costs have been expensed as incurred as the costs qualifying for capitalization have been insignificant.

		For the years ended June 30,
		2025				%				2024				%				2023				%
Labor Expenses		$	249,193				58.5	%		$	551,220				53.2	%		$	938,349				55.6	%
Material Cost			2,223				0.5	%			79,754				7.7	%			39,444				2.3	%
Equipment modification and lease fee			82,384				19.3	%			86,919				8.4	%			141,106				8.4	%
Utility cost			906				0.2	%			12,132				1.2	%			30,219				1.8	%
Travel expenses			660				0.2	%			20,304				2.0	%			4,118				0.2	%
Professional service fees			347				0.1	%			21,693				2.1	%			9,653				0.6	%
Rental cost			72,852				17.1	%			69,399				6.7	%			49,387				2.9	%
Depreciation expense			7,204				1.7	%			7,346				0.7	%			8,422				0.5	%
Amortization of intangible assets			2,707				0.6	%			2,703				0.2	%			2,809				0.2	%
Entrusted development cost			-				-	%			78,346				7.6	%			390,789				23.2	%
Other expense			7,654				1.8	%			105,768				10.2	%			73,354				4.3	%
Total R&D Expenses		$	426,130				100.0	%		$	1,035,584				100	%		$	1,687,650				100	%

Other income (expense), net

Other income (expense), net consist primarily of subsidy income (for business incubator service and for research & development), interest income and expenses, other income and expenses (such as tax penalties, law suits related costs), and loss on disposal of property, plants and equipment.

		For the years ended June 30,
		2025				%				2024				%				2023				%
Other Income		$	24,751				7.2	%		$	7,628				1.5	%		$	33,094				3.7	%
Other Expenses			(18,348	)			-5.3	%			(49,339	)			-9.7	%			(20,332	)			-2.3	%
Interest Income			247				0.1	%			501				0.1	%			1,147				0.1	%
Interest Expenses			(139,081	)			-40.2	%			(145,623	)			-28.6	%			(109,771	)			-12.4	%
Subsidy income			478,579				138.2	%			695,948				136.7	%			979,176				110.9	%
Total Other Income - net		$	346,148				100.0	%		$	509,115				100	%		$	883,314				100	%

Taxation

Cayman Islands

The Company was incorporated in the Cayman Islands. Under the current laws of the Cayman Islands, the Company is not subject to income or capital gains taxes. In addition, dividend payments are not subject to withholdings tax in the Cayman Islands.

British Virgin Islands

EPWK BVI was incorporated in the British Virgin Islands and is not subject to tax on income or capital gains under current British Virgin Islands law. In addition, upon payments of dividends by these entities to their shareholders, no British Virgin Islands withholding tax will be imposed.

Hong Kong

According to Tax (Amendment) (No. 3) Ordinance 2018 published by Hong Kong government, from April 1, 2018, under the two-tiered profits tax rates regime, the profits tax rate for the first HKD2 million of assessable profits will be lowered to 8.25% (half of the rate specified in Schedule 8 to the Inland Revenue Ordinance (IRO)) for corporations. EPWK HK was not subject to Hong Kong profit tax for any period presented as it did not have assessable profit during the periods presented.

PRC

Generally, the Company's WFOE, VIE and subsidiaries of VIE, which are considered PRC resident enterprises under PRC tax law, are subject to enterprise income tax on their worldwide taxable income as determined under PRC tax laws and accounting standards at a rate of 25%, and for High-tech enterprises the tax is 15%.

The income tax provision consists of the following components:

		For the years ended June 30,
		2025				2024				2023
Current income tax expenses
PRC		$	9,865			$	13			$	2,722
Hong Kong			-				-				-
Cayman and BVI			-				-				-
Total current income tax expense			9,865				13				2,722
Deferred income tax expenses (benefit)
PRC			1,395				5,991				(7,672	)
Hong Kong			-				-				-
Cayman and BVI			-				-				-
Total deferred income tax expense (benefit)			1,395				5,991				(7,672	)
Total income tax expense (benefit)		$	11,260			$	6,004			$	(4,950	)

The reconciliation of tax computed by applying the statutory income tax rate of 25% for the years ended June 30, 2025 2024 and 2023 applicable to the PRC operations to income tax expense were as follows:

		For the years ended June 30,
		2025				2024				2023
Statutory income tax rate			25.00	%			25.00	%			25.00	%
Impact of different tax rates in other jurisdictions			(23.19	)%			-				-
Tax effect of preferential tax treatments			(1.67	)%			(7.74	)%			(14.28	)%
R&D credit			0.61	%			12.52	%			19.11	%
Change in valuation allowance			(0.74	)%			(28.27	)%			(26.98	)%
Permanent difference			(0.03	)%			(2.00	)%			(2.39	)%
Tax adjustments *			(0.09	)%			-				-
Effective income tax rate			(0.11	)%			(0.49	)%			0.46	%

*	Tax adjustments represent an adjustment to prior years' income tax filing due to improper official invoice used to deduct taxable income.

The tax effects of temporary differences that give rise to the deferred tax balances as of June 30, 2025 and 2024 are as follows:

		As of June 30,
		2025				2024
Deferred tax assets:
Credit loss		$	2,422			$	1,384
Net operating losses carried forward			2,442,931				2,080,534
Subtotal			2,442,931				2,081,918
Less: valuation allowance			(2,442,931	)			(2,080,534	)
Total		$	-			$	1,384

Valuation allowance movement is as follows:

		For the years ended June 30,
		2025				2024				2023
Beginning balance			2,080,534				2,922,233				2,715,479
Additions			364,819				-				206,754
Reversals			-				(841,699	)			-
Ending balance			2,445,353				2,080,534				2,922,233

As of June 30, 2025 and 2024, the Company had tax deductible net operating loss carry forwards of approximately $19,725,595 and $21,846,331, respectively, which arose from the Company's subsidiaries, VIE and the VIE's subsidiaries established in the PRC and Hong Kong.

Results of Operations

Year ended June 30, 2025 compared to year ended June 30, 2024

		For the years ended June 30,												%
		2025				2024				Change				Change
Revenue:
Online Promotion revenue		$	3,099,321			$	3,587,564			$	(488,243	)			-13.6	%
Premium Business Solutions revenue			12,519,123				13,916,977				(1,397,854	)			-10.0	%
Value-Added Services revenue			475,496				1,498,683				(1,023,187	)			-68.3	%
Shared office rental and management revenue			910,317				1,212,500				(302,183	)			-24.9	%
Digital marketing revenue			10,837,350				-				10,837,350				N/A
Total revenue			27,841,607				20,215,724				7,625,883				37.7	%
Cost of revenue			24,452,591				16,437,136				8,015,455				48.8	%
Gross profit			3,389,016				3,778,588				(389,572	)			-10.3	%
Operating Expenses:
Sales and marketing			7,484,798				2,739,806				4,744,992				173.2	%
General and administrative			6,253,235				1,709,225				4,544,010				265.9	%
Research and development			426,130				1,035,584				(609,454	)			-58.9	%
Total Operating expenses			14,164,163				5,484,615				8,679,548				158.3	%
Operating loss			(10,775,147	)			(1,706,027	)			(9,069,120	)			531.6	%
Other income, net			346,148				509,115				(162,967	)			-32.0	%
Loss before income taxes			(10,428,999	)			(1,196,912	)			(9,232,087	)			771.3	%
Income tax expenses			11,260				6,004				5,256				87.5	%
Net loss			(10,440,259	)			(1,202,916	)			(9,237,343	)			767.9	%

Net revenues

Our net revenues increased by $7.6 million or 37.7% from $20.2 million in 2024 to $27.8 million in 2025, primarily because the Company launch digital marketing service, a new business line, in 2025, which contributed $10.8 million revenue in 2025, offset by decrease of revenue of $3.2 million for other business lines. Revenue of online promotion decreased 13.6% from $3.6 million in 2024 to $3.1 million because the seller of our marketplace platform, the small and medium-sized creative design and software development enterprises have faced the challenges due to the slowdown in China's domestic economic growth, they are more cautious about purchasing online promotion service. Revenue of premium business solution service decreased by 10.0% to $12.5 million in 2025, from $13.9 million in 2024, because less demands from our platform due to slowdown in China's domestic economic growth. Revenue of shared office rental and management service decreased by 24.9% to $0.9 million in 2025 from $1.21 million in 2024, because more tenants terminated their lease term than new tenants began to lease our shared office, due to overall slowdown economic situation. Revenue of Value-Added Services decreased 68.3% from $1.5 million in 2024 to $0.5 million in 2025 because (i) we have offered a range of value-added services to support the business development of small and medium-sized enterprises, entrepreneurs, talents for free; and (ii) we gradually stop to provide IP registration service to customers in 2025.

Cost of revenues, gross profit and gross profit margin

Our cost of revenues increased by $8.0 million or 48.8% from $16.4 million in 2024 to $24.5 million in 2025, primarily attribute to increment of cost of digital marketing service of $10.2 million, which is generally align with the increase of revenue of this segment of $10.8 million. The cost of other four business lines decreased by $2.1 million, which are resulted from the decrease of revenue of the four business line of $3.2 million.

Our gross profit decreased by $0.4 million or 10.3% from $3.8 million in 2024 to $3.4 million in 2025. Our gross profit margin was 12.2% in 2025 and 18.7% in 2024. Our gross profit margin decreased from 18.7% for the year ended June 30, 2024 to 12.2% in 2025, primarily due to the increase of the digital marketing service line from nil in 2024 to 35.1% of total revenue in 2025, which contributed a low gross profit margin of 6.0%.

Operating expenses

Sales and marketing expenses. Our sales and marketing expenses in total increased by US$4.7 million or 173.2% from $2.7 million in 2024 to $7.5 million in 2025, primarily due to increase of marketing expenses $4.7 million. The increase in marketing expenses was mainly due to the Company initiated a series of marketing activities after its IPO to build up company image. In particular, in 2025, the Company issued shares to external consultants as compensation for advisory services, with $2.7 million recognized in sales and marketing expenses.

General and administrative (G&A) expenses. Our general and administrative expenses increased by $4.6 million or 265.9% from $1.7 million in 2024 to $6.3 million in 2025, primary because the Company incurred certain costs in strategy consulting and business consulting after the Company's IPO. In particular, in 2025, the Company issued shares to external consultants as compensation for advisory services, with $4.04 million recognized in G&A expenses.

Research and development expense. Our research and development expenses decreased by $0.6 million or 58.9% from $1.0 million in 2024 to $0.4 million in 2025, primarily due to the reason that most of the network framework or platforms are ready, thus not necessary to input more resources into research and development work.

Other income, net

Total other income decreased by $0.16 million from $0.51 million in 2024 to $0.35 million in 2025, primarily due to decrease of subsidy income by $0.22 million.

Loss before income tax

Our loss before income tax was $10.4 million in 2025 and $1.20 million in 2024, respectively, representing an increase of loss of $9.2 million or 771.3%. The increase of loss before income tax in 2025 was mainly due to the increase of operating expenses of $8.7 million, decrease of gross profit of $0.4 million, and decrease of other income, net of $0.16 million.

Net loss

As a result of the foregoing, our net loss was $10.4 million in 2025 and $1.20 million in 2024, respectively.

Year ended June 30, 2024 compared to year ended June 30, 2023

The following table sets forth a summary of our consolidated results of operations for the periods presented, both in absolute amounts and as percentages of our total revenues.

		For the years ended June 30,
		2024				%				2023				%
Revenue
Premium Business Solutions revenue		$	13,916,977				69	%		$	11,884,095				60	%
Online Promotion revenue		$	3,587,564				18	%		$	4,512,432				23	%
Value-Added Services revenue		$	1,498,683				7	%		$	2,150,566				11	%
Shared office rental and management revenue		$	1,212,500				6	%		$	1,253,781				6	%
Total revenue		$	20,215,724				100	%		$	19,800,874				100	%
Cost of revenue		$	16,437,136				81	%		$	14,745,967				74	%
Gross profit		$	3,778,588				19	%		$	5,054,907				26	%
Operating Expenses		$								$
Sales and marketing		$	2,739,806				14	%		$	3,072,609				16	%
General and administrative		$	1,709,225				8	%		$	2,262,928				11	%
Research and development		$	1,035,584				5	%		$	1,687,650				9	%
Total Operating expenses		$	5,484,615				27	%		$	7,023,187				35	%
Operating Loss		$	(1,706,027	)			-8	%		$	(1,968,280	)			-10	%
Other income, net		$	509,115				3	%		$	883,314				4	%
Loss before income taxes		$	(1,196,912	)			-6	%		$	(1,084,966	)			-5	%
Income tax expenses (benefit)		$	6,004				0	%		$	(4,950	)			0	%
Net loss		$	(1,202,916	)			-6	%		$	(1,080,016	)			-5	%

Net revenues

Our net revenues increased by US$0.42 million or 2.1% from $19.8 million in 2023 to $20.22 million in 2024, primarily because our premium business solutions revenue has increased by US$2.04 million or %17.17%from $11.88 million in 2023 to $13.92 million in 2024 due to customer's demands of high professionalism and customization requirements for technical services grows quickly during the fiscal year of 2024. Revenue of online promotion decreased 20.4% from $4.51 million in 2023 to $3.59 million because the seller of our marketplace platform, the small and medium-sized creative design and software development enterprises have faced the challenges due to the slowdown in China's domestic economic growth, they are more cautious about purchasing online promotion service. Revenue of Value-Added Services decreased 30.23% from $2.15 million in 2023 to $1.50 million in 2024 because we have offered a range of value-added services to support the business development of small and medium-sized enterprises, entrepreneurs, talents for free.

Cost of revenues, gross profit and gross profit margin

Our cost of revenues increased by $1.69 million or 11.47% from $14.75 million in 2023 to $16.44 million in 2024, primarily attribute to cost of premium business solutions service which is based on the revenue of premium business solutions service and it has increased by $1.80 million.

Our gross profit rate decreased from 25.53% for the year ended June 30, 2023 to 18.69% in the same period in 2024, primarily due to the increase of volume of premium business solutions service. The revenue and cost of this service is recognized on a gross basis and the gross profit rate of it is lower than other services. The percentage of premium business solutions service revenue to total revenue increased from 60.0% in 2023 to 68.8% in 2024, and the cost to total cost increased from 73.9% in 2023 to 77.2%, in 2024 which led to the decrease of the overall gross profit rate.

Our gross profit decreased by $1.27 million or 25.25% from $5.05 million in 2023 to $3.78 million in 2024. Our gross profit margin was 25.5% in 2023 and 18.69% in 2024.

Operating expenses

Sales and marketing expenses. Our sales and marketing expenses in total decreased by US$0.33 million or 10.83% from $3.07 million in 2023 to $2.74 million in 2024, primarily because labor expenses decreased $0.27 million.

General and administrative(G&A) expenses. Our general and administrative expenses decreased by 24.47% from $2.26 million in 2023 to $1.71 million in 2024, primary because the professional service fees decreased by 41.54% or $0.36 million and other expenses decreased by 60.0% or $0.23 million.

Research and development expense. Our research and development expenses decreased by $0.65 million or 38.64% from $1.69 million in 2023 to $1.04 million in 2024, primarily due to, The entrusted development cost for network system upgrade decreased from $0.39 million in 2023 to $0.08 million in 2024. The entrusted development cost was for platform development and upgrade. As the platform upgrade has been completed, we no longer incur any entrusted development expenditure. Besides, labor expenses decreased by 41% or $0.39 million from $0.94 million in 2023 to $0.55 million in 2024, related to some task of development has completed.

Other income, net

Total other income decreased by $0.37 million from $0.88 million in 2023 to $0.51 million in 2024, primarily due to subsidy income decreased from $0.98 million in 2023 to $0.70 million in 2024.

Loss before income tax

Our loss before income tax was $1.08 million in 2023 and $1.20 million in 2024, respectively, compared to loss of $0.11 million or 10.32%.

Net loss

As a result of the foregoing, our net loss was $1.08 million in 2023 and $1.20 million in 2024, respectively.

Liquidity and Capital Resources

The following table sets forth a summary of our cash flows for the periods indicated:

		For the years ended June 30,
		2025				2024				2023
Net cash used in operating activities		$	(10,675,740	)		$	(1,622,048	)		$	(1,496,547	)
Net cash (used in) provided by investing activities		$	(4,040	)		$	(1,280	)		$	35,264
Net cash provided by financing activities		$	10,836,894			$	1,242,456			$	1,447,767
Effect of exchange rate changes		$	4,408			$	1,249			$	(92,684	)
Total cash flow		$	161,522			$	(379,623	)		$	(106,200	)

To date, we have financed our operations and capital expenditures primarily through bank loans, and utilization of cash generated from operations in the period in which we generated cash flows from operations.

We had cash of $0.39 million as of June 30, 2025 and $0.23 million as of June 30, 2024, respectively.

The functional currency for Chinese subsidiaries and VIEs is Renminbi (RMB). An exception exists for the three individual overseas entities, which transact in US Dollars (USD). The closing balance for EP HK as of June 30, 2025.

Substantially most of our net revenues have been, and we expect will likely to continue to be, denominated in Renminbi. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior SAFE approval as long as certain routine procedural requirements are fulfilled. Therefore, our PRC subsidiaries are allowed to pay dividends in foreign currencies to us without prior SAFE approval by following certain routine procedural requirements. However, approval from or registration with competent government authorities is required where the Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. The PRC government may at its discretion restrict access to foreign currencies for current account transactions in the future.

Operating activities

For the year ended June 30, 2025, net cash used in operating activities was $10.7 million, primarily due to (i) net loss of $10.4 million, (ii) increase of advance to suppliers of $7.2 million, (iii) decrease of lease liability of $0.6 million, and (iv) increase of accounts receivable of $0.2 million. These factors were offset in part by (i) shares issue expensed for services rendered for service of $6.7 million, (ii) increase of contract liability of $0.13 million, (iii) non-cash lease expenses of $0.5 million, (iv) depreciation and amortization expense of $0.2 million, and (v) increase of accrued expenses and other liabilities of $0.3 million.

For the year ended June 30, 2024, net cash used in operating activities was $1.62 million, primarily due to (i)net loss of $1.20 million, (ii) decrease in operating lease liabilities of $0.97 million, representing primarily lease payments for our shared office space, (iii) decrease of contract liabilities $0.72 million representing unsatisfied performance obligations turns into revenue, and (iv) decrease of accounts payable $0.51 million, representing the payment of accounts payable. These factors were offset in part by (i) increase of adjusted noncash operating lease expense $0.91 million and (ii) decrease of accounts receivable $0.55 million.

For the year ended June 30, 2023, net cash used in operating activities was $1.50 million, primarily due to (i)net loss $1.08 million, and (ii) decrease of lease liabilities $0.84 million, representing primarily lease payments for our shared office space. These factors were offset in part by increase of adjusted noncash operating lease expenses $0.82 million.

Investing activities

For the year ended June 30, 2025, net cash used in investing activities was $4,040 which was attributed to $4,426 of purchase of property and equipment offset by $386 of proceeds from disposal of property and equipment.

For the year ended June 30, 2024, net cash used in investing activities was $1,280 which was attributed to $1,280 of purchase of property and equipment.

For the year ended June 30, 2023, net cash provided by investing activities was $35,264, which was attributed to $28,766 of payback of equity investments and $11,925 repayment from related parties.

Financing activities

For the year ended June 30, 2025, net cash provided by financing activities was $10.8 million, primarily due to proceeds from bank loans of $3.7 million, proceeds from related parties of $3.8 million, and proceeds from public offering of $13.0 million, partially offset by and repayment of bank loans of $3.8 million, repayment to related parties of $3.1 million, and offering cost of $2.7 million.

For the year ended June 30, 2024, net cash provided by financing activities was $1.24 million, primarily due to proceeds from bank loans of $3.82 million and proceeds from related parties of $2.32 million, partially offset by and repayment of bank loans of $3.69 million and repayment to related parties of $1.21 million.

For the year ended June 30, 2023, net cash provided by financing activities was $1.45 million, primarily due to proceeds from bank loans of $3.91 million and deduced by repayment of bank loans of $2.69 million.

Contractual Obligations

We had various outstanding bank loans of approximately $3.34 million as of June 30, 2025. We have also entered into non-cancellable operating lease agreements for several offices and operating facilities. The leases are expiring through 2029.

The following table sets forth our contractual obligations and commercial commitments as of June 30, 2025:

						Payment Due by Period
		Total				Less than 1 Year				2 - 3 Years				4 - 5 Years				More than 5 Years
Operating lease arrangements		$	2,542,172			$	708,954			$	1,361,227			$	471,991			$	-
Bank loans		$	3,343,291			$	3,343,291			$	-				-				-
Total		$	5,885,463			$	4,052,245			$	1,361,227			$	471,991			$	-

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 shareholder's 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 us or engages in leasing, hedging, or product development services with us.

Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future. As of June 30, 2025, the Company had an accumulated deficit of $29.3 million, a negative working capital of $0.9 million. During the year ended June 30, 2025, the Company suffered net loss of $10.4 million. Losses have principally occurred as a result of the substantial expenses for professional fees as part of the Company's capital market strategy which have been accounted for as general and administrative expenses. Additionally, the Company has invested into itself on two fronts: 1.) marketing expense to enhance company image either in domestic and overseas market, and 2.) strategy and brand consulting expenses to shape the company's growth path. Both expenditure have been paid and will not occur in the near future. The continuation of the Company as a going concern is dependent upon the realization of the investments made in the business to generate positive operating cash flows, or the procurement of additional external financing. Management's plan is to continue improve operations by leveraging more types of services through its online platform and active users registered thereon in order to generate sustainable profits and positive cash flows. Management believes that the Company will reduce the operating loss and negative operating cash flow in the upcoming year. The Company also obtained loans from banks to support its normal operations. In October 2025, the Company filed F-1 to raise capital up to $8 million. However, there is no assurance that the Company will be successful in securing sufficient funds to sustain or grow its operations.

These conditions raise substantial doubt about the Company's ability to continue as a going concern. These financial statements do not include any adjustments to reflect the possible future effect on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the outcome of these uncertainties. Management believes that the actions presently being taken to obtain additional funding and implement its strategic plan provides the opportunity for the Company to continue as a going concern.

Critical Accounting Policies, Judgments and Estimates

We have identified certain accounting policies, judgments, and estimates that are significant to the preparation of our historical financial information in accordance with the U.S. GAAP. Our significant accounting policies, which are important for an understanding of our financial position and results of operations, are set forth in detail in Note 2 to the consolidated financial statements included elsewhere in this prospectus.

Some of our accounting policies require us to apply estimates and assumptions as well as complex judgments relating to accounting items. The estimates and assumptions that we use and the judgments that we make in applying our accounting policies have a significant impact on our financial position and results of operations. Actual results could differ from those estimates. Our management continually evaluates such estimates, assumptions, and judgments based on past experience and other factors, including industry practices and expectations of future events that we believe to be reasonable under the circumstances. There has not been any material deviation between our management's estimates or assumptions and actual results, and we have not made any material changes to these estimates or assumptions for the years ended June 30, 2025, 2024 and 2023. We do not expect any material changes in these estimates and assumptions in the foreseeable future. Our critical accounting judgments and estimates that were used in the preparation of our historical financial information are set forth in Note 2 to the consolidated financial statements included elsewhere in this prospectus.

(a)

Basis of presentation

The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP"). The consolidated financial statements include the financial statements of the Company, its subsidiaries, its VIE and its VIE's subsidiaries. All inter-company transactions and balances have been eliminated upon consolidation.

(b)

Use of estimates

The preparation of financial statements in conformity with US GAAP requires to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period and accompanying notes, mainly include, but are not limited to, allowance for expected credit losses, the useful lives of property and equipment and intangible assets, impairment of long-lived assets, valuation allowance of deferred tax assets. Actual results could differ from those estimates.

(c)

Fair Value Measurement

Accounting guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact, and it considers assumptions that market participants would use when pricing the asset or liability.

Accounting guidance establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Accounting guidance establishes three levels of inputs that may be used to measure fair value:

●

Level 1 applies to assets or liabilities for which there are quoted prices, in active markets for identical assets or liabilities.

●

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical asset or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

●

Level 3 applies to asset or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

Based on the short-term nature of cash and cash equivalents, accounts receivable, advance to suppliers, amounts due from related parties and other current assets, accounts payable, advances from customers, accrued expenses and other current liabilities management has determined that the carrying value approximates their fair values.

(d)

Operating leases

The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use ("ROU") assets, operating lease liability, and operating lease liability, non-current in the Company's consolidated balance sheets. ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. When determining the lease term, the Company includes options to extend or terminate the lease when it is reasonably certain that it will exercise that option, if any. As the Company's leases do not provide an implicit rate, the Company used an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company has elected to adopt the following lease policies in conjunction with the adoption of ASU 2016-02: (i) for leases that have lease terms of 12 months or less and does not include a purchase option that is reasonably certain to exercise, the Company elected not to apply ASC 842 recognition requirements; and (ii) the Company elected to apply the package of practical expedients for existing arrangements entered into prior to January 1, 2019 to not reassess (a) whether an arrangement is or contains a lease, (b) the lease classification applied to existing leases, and(c) initial direct costs.

Internal Control over Financial Reporting

Prior to this offering, we have been a private company with limited accounting and financial reporting personnel and other resources to address our internal controls and procedures. In connection with the audits of our consolidated financial statements included in this prospectus, we and our independent registered public accounting firm identified two material weaknesses in our internal control over financial reporting. As defined in the standards established by the Public Company Accounting Oversight Board of the United States, a "material weakness" is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis.

The material weaknesses identified are our (i) lack of sufficient accounting and financial reporting personnel with requisite knowledge and experience in application of U.S. GAAP and SEC rules and (ii) lack of financial reporting policies and procedures that are commensurate with U.S. GAAP and SEC reporting requirements.

We are in the process of implementing a number of measures to address these material weaknesses identified, including: (i) hiring additional accounting and financial reporting personnel with U.S. GAAP and SEC reporting experience, (ii) expanding the capabilities of existing accounting and financial reporting personnel through continuous training and education in the accounting and reporting requirements under U.S. GAAP, and SEC rules and regulations, (iii) developing, communicating and implementing an accounting policy manual for our accounting and financial reporting personnel for recurring transactions and period-end closing processes, and (iv) establishing controls to identify non-recurring and complex transactions to ensure the accuracy and completeness of our company's consolidated financial statements and related disclosures.

The process of designing and implementing an effective financial reporting system is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a financial reporting system that is adequate to satisfy our reporting obligation. See "Risk Factors - Risks Relating to this Offering and Our Ordinary Shares - Our lack of effective internal controls over financial reporting may affect our ability to accurately report our financial results or prevent fraud which may affect the market for and price of our Ordinary Share."

Holding Company Structure

EPWK Holdings Ltd. is a holding company with no material operations of its own. We conduct our operations through our PRC subsidiaries and EPWK VIE in China, and our revenues are derived from EPWK VIE and its subsidiaries. As a result, our ability to pay dividends depends significantly upon dividends paid by our PRC subsidiaries. If our existing PRC subsidiaries or any newly formed ones incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends to us. In addition, our wholly foreign-owned subsidiaries in China are permitted to pay dividends to us only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Under the PRC law, each of our subsidiaries and EPWK VIE in China is required to set aside at least 10% of its after-tax profits each year, if any, to fund certain statutory reserve funds until such reserve funds reach 50% of its registered capital. In addition, each of our wholly foreign-owned subsidiaries and EPWK VIE in China may allocate a portion of its after-tax profits based on PRC accounting standards to enterprise expansion funds and staff bonus and welfare funds at its discretion. The statutory reserve funds and the discretionary funds are not distributable as cash dividends. Remittance of dividends by a wholly foreign-owned company out of China is subject to examination by the banks designated by the SAFE. Our PRC subsidiaries have not paid dividends and will not be able to pay dividends until they generate accumulated profits and meet the requirements for statutory reserve funds.

Inflation

To date, inflation in China has not materially affected our results of operations. According to the PRC National Bureau of Statistics, the year-over-year percentage changes in the consumer price index for 2022, 2023 and 2024 were increases of 2%, 0.2%, and 0.2%, respectively. The percentage changes in the consumer price index for the six months ended June 30, 2025 was decrease of 0.1%. Although we have not been materially affected by inflation in the past, we may be affected if China experiences higher rates of inflation in the future. For example, certain operating expenses, such as employee compensation and rental and related expenses for office may increase as a result of higher inflation. Additionally, high inflation could significantly reduce the value and purchasing power of these assets. We are not able to hedge our exposure to higher inflation in China.

Quantitative and Qualitative Disclosure about Market Risk

Risks in relation to the VIE structure

We believe that the contractual arrangements with EPWK VIE and their respective shareholders are in compliance with PRC laws and regulations and are legally enforceable. However, uncertainties in the PRC legal system could cause the relevant regulatory authorities to find the current contractual agreements and businesses to be in violation of any existing or future PRC laws or regulations. If we, EPWK WFOE or any of our current or future VIE are found in violation of any existing or future laws or regulations, or fail to obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authorities would have broad discretion in dealing with such violations, which may include, but not limited to, revocation of business and operating licenses, being required to discontinue or restrict its business operations, restriction of the our right to collect revenues, being required to restructure its operations, imposition of additional conditions or requirements with which we may not be able to comply, or other regulatory or enforcement actions against us that could be harmful to its business. The imposition of any of these or other penalties may result in a material and adverse effect on our ability to conduct its business. In addition, if the imposition of any of these penalties causes us to lose the rights to direct the activities of EPWK VIE or the right to receive their economic benefits, we would no longer be able to consolidate EPWK VIE.

In addition, if EPWK VIE or the nominee shareholders fail to perform their obligations under the contractual agreements, we may have to incur substantial costs and expend resources to enforce our rights under the contracts. We may have to rely on legal remedies under PRC laws, including seeking specific performance or injunctive relief and claiming damages, which may not be effective. All of the contractual agreements are governed by PRC laws and provide for the resolution of disputes through arbitration in the PRC. Accordingly, these contracts would be interpreted in accordance with PRC laws and any disputes would be resolved in accordance with PRC legal procedures. The legal system in PRC is not as developed as in other jurisdictions, such as the United States. As a result, uncertainties in the PRC legal system could limit our ability to enforce these contractual arrangements. Under PRC laws, rulings by arbitrators are final, parties cannot appeal the arbitration results in courts, and prevailing parties may only enforce the arbitration awards in PRC courts through arbitration award recognition proceedings, which would incur additional expenses and delay. In the event that we are unable to enforce the contractual agreements, we may not be able to exert effective control over the VIE through WFOE, and our ability to conduct its business may be negatively affected.

Concentrations and Credit Risk

Certain financial instruments, which subject us to concentration of credit risk, consist of cash and restricted cash. We have cash balances at financial institutions located in PRC. Since March 31, 2015, balances at financial institutions and state-owned banks within the PRC are covered by insurance up to RMB500,000 (US$79,600) per bank. As of June 30, 2025 and 2024, we had deposits totaling $389,344 and $224,042 that were covered by such limited insurance, respectively. Any balance over US$79,600 per bank in PRC will not be covered. To date, we have not experienced any losses in such accounts.

The following table sets forth a summary of single customer who represent 10% or more of the Company's total accounts receivable as of June 30, 2025 and 2024:

		As of June 30,
		2025				2024
Percentage of the Company's accounts receivable
Customer A			-				86	%
Customer B			50	%			*
Customer F			20	%			*
Customer G			18	%			*

*	Less than 10% of total balance of accounts receivable.

The following table sets forth a summary of single customer who represent 10% or more of the Company's total sales:

		For the years ended June 30,
		2025				2024				2023
Percentage of the Company's sales
Customer A			*				12	%			*
Customer C			*				*				16	%
Customer D			12	%			*				*
Customer E			10	%			*				*

*	Less than 10% of total revenue.

The following table sets forth a summary of single Supplier who represent 10% or more of the Company's accounts payable as of June 30, 2025 and 2024.

		As of June 30,
		2025				2024
Percentage of the Company's accounts payable
Supplier A			86	%			54	%
Supplier B			12	%			*
Supplier C			*				22	%
Supplier D			*				17	%

*	Less than 10% of total balance of accounts payable.

The following table sets forth a summary of single suppliers who represent 10% or more of the Company's total purchases:

		For the years ended June 30,
		2025				2024				2023
Percentage of the Company's purchase
Supplier C			*				15	%			*
Supplier E			*				10	%			*
Supplier F			25	%			*				*
Supplier G			10	%			*				*

Supplier C represents 22% of the Company's accounts payable as of June 30, 2024 and 15% of the Company's purchase during the year ended June 30, 2024 is the same supplier.

The following table sets forth a summary of single suppliers who represent 10% or more of the Company's advance to suppliers:

		As of June 30,
		2025				2024
Percentage of the Company's Advanced to Supplier
Supplier H			96	%			*
Supplier I			*				43	%
Supplier J			*				21	%
Supplier K			*				13	%
Supplier L			*				12	%

*	Less than 10% of total balance of advanced to supplier.

Recently Issued Accounting Pronouncements

A list of recently issued accounting pronouncements that are relevant to us is included in Note 2(y) of our consolidated financial statements included elsewhere in this prospectus.

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

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

D.	Trend Information

Other than as disclosed below and elsewhere in this annual report on Form 20-F, we are not aware of any trends, uncertainties, demands, commitments, or events for the period from July 1, 2024 to June 30, 2025 that are reasonably likely to have a material adverse effect on our net revenue, income, profitability, liquidity, or capital resources, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial condition.

Key Factors Affecting Our Results of Operations

General Factors Affecting Our Results of Operations

Our results of operations and financial condition are affected by the general factors driving digital economy in China, which include China's overall economic growth and level of per capita disposable income, growth of mobile Internet usage, and penetration rate. They are also affected by factors that drive the crowdsourcing industry in China, such as increased crowdsourcing downstream demand, growing labor costs, government policies and initiatives, and technology development. As a result, unfavorable changes in any of these general factors could materially and adversely affect demand for our services and our results of operations.

Specific Factors Affecting Our Results of Operations

While our business is influenced by the general factors set forth above, our results of operations are more directly affected by specific factors relating to our business, including:

Our ability to increase and maintain users.

Our revenue mainly comes from providing various services for our users on both supply and demand sides. In order to increase and maintain our user pool, first, we will focus our marketing efforts on actively promoting and obtaining users, and build up an efficient after-sales support system to maintain user relations.

As shown in the figure below, we have been able to maintain an annual growth rate of about 30% since 2015 before hitting by the COVID-19 pandemic. After the outbreak of the COVID-19 pandemic at the end of 2019, the growth rate decreased to 2.69% in 2020 but quickly returned to an annual growth rate of 24.37% in 2021. Despite the COVID-19 pandemic's impact on global business in 2022, we still achieved a growth rate of 5.7%. The growth rate decreased to decreased to 3.4% in 2024 and further decreased to 1.64% during the first half year of 2025, but we were able to maintain most of our users. As more buyers start to understand and trust our online task transactions, we could obtain higher customer growth rate and consumption proportion. We believe that the task oriented and flexible online task transactions with little geographical restrictions will provide an efficient option to the traditional way of fulfilling all tasks by hiring employees.

Whether we can continue to develop our user registration and value-added consumption mainly depends on our excellent operation and promotion team, personalized user experience and accurate intelligent matching of buyers and sellers. Therefore, we will continue to focus on multi-channel marketing methods, establish a perfect combination of online and offline promotion methods, and establish a perfect promotion matrix, especially the traffic acquisition of short video platform and information flow platform. We also plan to enhance our artificial intelligence and big data technology capabilities to provide personalized user experience, user matching ancillary services, more effective and flexible communication methods for our users, and improve the efficiency and reliability of our marketplace.

We will continue to improve our brand recognition to attract more users to our online marketplace as well as shared offices.

Our ability to retain and increase user activities

We measure our effectiveness in attracting and retaining user activities through several key performance indicators, such as gross merchandise volume ("GMV"). The GMV is calculated by multiplying the number of projects or transactions completed through our marketplace platform by the offering prices of the completed projects or transactions. An increase in the number of projects offered and the offering price of such projects within a given period leads to an increase in the GMV in the same period. We believe a platform with increasing GMV indicates increasing user activities, which means the platform remains attractive to suppliers (sellers) and customers (buyers).

In the first half of 2025, we enabled approximately $180 million of GMV across 521,500 projects. In 2024, we enabled US$348 million of GMV across 0.99 million projects. In 2023, we enabled US$349 million of GMV across 0.98 million projects.

Our ability to optimize services

We have an R&D team of 14 professional staff to improve our online marketplace continuously as of the date of this prospectus. Through powerful artificial intelligence algorithms and large data capacity, we improve the two-way matching accuracy between buyers and sellers. We also focus on optimizing the online marketplace such as providing more convenient user interface, more supporting tools and databases, and better user data security. In order to expand our services to existing paying corporate users, we plan to launch new value-added services, and recommend more customized services according to the analysis of users' historical data.

Our ability to expand our business

Our operation team constantly explores and tests new products and services to meet market trends and user requirements. Currently, we offer services in seven categories with over 40 sub-categories and more than 300 items. We constantly adjust and add subdivided service categories according to the continuous changes of domestic and international markets. For example, short video and smart products have been gaining popularity and growth momentum in the domestic markets. Accordingly, we have added and promoted short video production, film production, face recognition, machine learning, Internet of things on our marketplace. With the popularity of the concept of meta universe in domestic and international markets, it may give birth to more products or industrial layout. We also keep up with the market trend and are ready to expand our service categories to meet the service demand of the market for emerging industries. We will continue to add more service categories to better satisfy buyer requirements and attract more sellers with different skills.

Our ability to manage costs and expenses effectively

Our ability to manage our costs and expenses effectively is critical to the success of our business. Through optimized and adjusted business process, talent selection and retention, systematic employee training, and cross-department cooperation, we could effectively reduce our labor cost and ensure productivity. We also find innovative ways to control our marketing and administrative expenses to improve our profit margin.

Selectively pursue acquisition and investment opportunities

We plan to continuously evaluate various investment opportunities, including acquiring local office sharing brands with strong regional influence and companies that may help us further integrate and refine our services. Furthermore, we plan to pursue additional investment opportunities through investing in relevant service providers or in start-ups and SMEs in our incubation and acceleration programs. With the support of our platform and ecosystem, we expect that the investees' business will grow with us, and the services provided by our investees could help satisfy the demands of our other customers.

Consolidation

The Company provides substantially all of its services in China via its VIE and its subsidiaries, due to PRC legal restrictions of foreign ownership in certain sectors. Substantially all of the Company's revenues, costs and net income in China are directly or indirectly generated through the VIE and its subsidiaries. The Company has signed various agreements with its VIE and legal shareholders of the VIE to allow the transfer of economic benefits from the VIE to the Company and to direct the activities of the VIE.

Total assets and liabilities presented on the Company's consolidated balance sheets and revenue, expense, net loss presented on consolidated statement of operations and comprehensive loss as well as the cash flow from operating, investing and financing activities presented on the consolidated statement of cash flows are substantially the financial position, operation and cash flow of the Company's VIE and VIE's subsidiaries. The Company has not provided any financial support to the VIE and the VIE's subsidiaries for the years ended June 30, 2025 and 2024. Our variable interest entities accounted for an aggregate of 34.01% of our total assets and 99.95% of total liabilities as of June 30, 2025. Our variable interest entities accounted for an aggregate of 99.98% of our total assets and 99.97% of total liabilities as of June 30, 2024. As of June 30, 2025 and 2024, $388,564 and $226,776 cash were denominated in RMB, respectively. The following table sets forth the assets, liabilities, results of operations and changes in cash, cash equivalents the VIE and its subsidiaries taken as a whole, which were included in the Company's consolidated balance sheets and statements of comprehensive income and statements of cash flows with intercompany transactions eliminated:

		As of
		June 30,				June 30
		2025				2024
Total Current assets		$	1,405,642			$	1,123,724
Total non-current assets		$	2,705,095			$	3,387,662
Total assets		$	4,110,737			$	4,511,386
Total liabilities		$	12,183,945			$	11,709,424

		As of
		June 30, 2025				June 30, 2024
Total net revenue		$	27,841,607			$	20,215,245
Net loss		$	(765,653	)		$	(1,200,039	)
Net cash provided by (used in) operating activities		$	(372,969	)		$	(1,623,106	)
Net cash used in investing activities		$	(4,040	)		$	(1,280	)
Net cash (used in) provided by financing activities		$	534,404			$	1,242,456

E.	Critical Accounting Estimates

We have identified certain accounting policies, judgments, and estimates that are significant to the preparation of our historical financial information in accordance with the U.S. GAAP. Our significant accounting policies, which are important for an understanding of our financial position and results of operations, are set forth in detail in Note 2 to the consolidated financial statements included elsewhere in this annual report.

Some of our accounting policies require us to apply estimates and assumptions as well as complex judgments relating to accounting items. The estimates and assumptions that we use and the judgments that we make in applying our accounting policies have a significant impact on our financial position and results of operations. Actual results could differ from those estimates. Our management continually evaluates such estimates, assumptions, and judgments based on past experience and other factors, including industry practices and expectations of future events that we believe to be reasonable under the circumstances. There has not been any material deviation between our management's estimates or assumptions and actual results, and we have not made any material changes to these estimates or assumptions for the years ended June 30, 2025 and 2024. We do not expect any material changes in these estimates and assumptions in the foreseeable future. Our critical accounting judgments and estimates that were used in the preparation of our historical financial information are set forth in Note 2 to the consolidated financial statements included elsewhere in this annual report.

(a)

Basis of presentation

The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP"). The consolidated financial statements include the financial statements of the Company, its subsidiaries, its VIE and its VIE's subsidiaries. All inter-company transactions and balances have been eliminated upon consolidation.

(b)

Use of estimates

The preparation of financial statements in conformity with US GAAP requires to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period and accompanying notes, mainly include, but are not limited to, allowance for expected credit losses, the useful lives of property and equipment and intangible assets, impairment of long-lived assets, valuation allowance of deferred tax assets. Actual results could differ from those estimates.

(c)

Fair Value Measurement

Accounting guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact, and it considers assumptions that market participants would use when pricing the asset or liability.

Accounting guidance establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Accounting guidance establishes three levels of inputs that may be used to measure fair value:

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Level 1 applies to assets or liabilities for which there are quoted prices, in active markets for identical assets or liabilities.

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Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical asset or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

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Level 3 applies to asset or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

Based on the short-term nature of cash and cash equivalents, accounts receivable, advance to suppliers, amounts due from related parties and other current assets, accounts payable, advances from customers, accrued expenses and other current liabilities management has determined that the carrying value approximates their fair values.

(d)

Operating leases

The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use ("ROU") assets, operating lease liability, and operating lease liability, non-current in the Company's consolidated balance sheets. ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. When determining the lease term, the Company includes options to extend or terminate the lease when it is reasonably certain that it will exercise that option, if any. As the Company's leases do not provide an implicit rate, the Company used an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company has elected to adopt the following lease policies in conjunction with the adoption of ASU 2016-02: (i) for leases that have lease terms of 12 months or less and does not include a purchase option that is reasonably certain to exercise, the Company elected not to apply ASC 842 recognition requirements; and (ii) the Company elected to apply the package of practical expedients for existing arrangements entered into prior to January 1, 2019 to not reassess (a) whether an arrangement is or contains a lease, (b) the lease classification applied to existing leases, and(c) initial direct costs.

Revenue Recognition

The Company adopted Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customer. To determine revenue recognition for contracts with customers, the Company performs the following five steps:

Step 1: Identify the contract with the customer

Step 2: Identify the performance obligations in the contract

Step 3: Determine the transaction price

Step 4: Allocate the transaction price to the performance obligations in the contract

Step 5: Recognize revenue when the company satisfies a performance obligation

Net revenue consists of revenue from Premium business solutions revenue, Online promotion revenue, Digital marketing revenue, Value-Added Services revenue and Shared office rental and management revenue:

Premium Business Solutions revenue:

The Company offers premium business solutions to corporate clients, including the design and development of tailor-made systems or software such as BI platforms, ERP systems, and cybersecurity software. Each custom service is considered a distinct performance obligation, fulfilled upon customer acceptance. Revenue from these premium business solutions is recognized at the point when services are verified and approved by the clients. Typically, service fees are paid within one month after fulfilling the performance obligation, and once determined, they are not subject to clawback.

The Company records revenue on a gross basis as the Company is acting as a principal in its premium business solutions service and is responsible for fulfilling the promise to provide the specified services. In contracts involving third-party vendors, the Company is regarded as the service provider as it has control of the specified services at any time before it is transferred to customers which is evidenced by i) the Company selects the vendors and establishes the pricing; ii) the Company assumes primary responsibility for the customized services rendered; and iii) the Company carries both commercial and market risk.

Online Promotion revenue:

The Company's revenue is derived from rendering services to varied service providers to generate greater exposure, brand recognition, and connection to users through its online platforms. The Company recognizes the revenues on a gross basis as the Company is acting as a principal in these transactions and is responsible for fulfilling the promise to provide the specified services. Payments are made by customers in advance and recorded as contract liabilities for subscription of services that covered a specified period of time; accordingly, these advances for subscription services are amortized over the subscription period on a straight-line basis and recognized to revenue as online promotion revenue.

Value-Added Services revenue:

The Company provides varied Value-Added Services to customers, mainly including bookkeeping services, tax filing services, IP application and registration services, qualification certification services. For each type of Value-Added Services, the Company identifies a single performance obligation that must be satisfied in order for the Company discharge its responsibilities as set forth in the agreement of service. The Company recognizes revenue when the evidence of the service has been rendered. Value-Added Services revenue is recognized on a gross basis, as the Company is the primary obligator in its contracts to provide the specified services, and has the discretion in establishing the pricing of services charged to the customers.

Shared office rental and management revenue:

The Company provides shared office space to startup companies or small companies, and it also provides property management services to these companies using shared office. The Company recognizes the revenues on a gross basis as the Company is acting as a principal in these transactions and is fully bearing the rental cost regardless the space is leasing out or not. The Company recognizes revenue from the rental arrangement that is classified as an operating lease on a straight-line basis over the term of the lease even if the receipts from rental payments collected do not follow the same pattern. Customers reimburse the Company for the common charges (as opposed to paying directly a third party), customers' payments for their prorated share of those items are considered lessor costs in accordance with paragraph 842-10-15-40A and are recognized on a gross basis in profit or loss.

Digital marketing revenue:

The Company offers to corporate clients digital marketing services, including designing the advertising content or idea and posting the advertisement on varied online platforms. The packaged service is considered a distinct performance obligation, fulfilled upon advertisement was posted in varied online platforms. Revenue from digital marketing is recognized in time when the advertisement was posted in varied online platforms. Typically, service fees are paid before the advertisement is posted.

The Company records revenue on a gross basis as the Company is acting as a principal in digital marketing service and is responsible for fulfilling the promise to provide the specified services. In contracts involving third-party vendors, the Company is regarded as the service provider as it has control of the specified services at any time before it is transferred to customers which is evidenced by i) the Company selects the vendors and establishes the pricing; ii) the Company assumes primary responsibility for the customized services rendered; and iii) the Company carries both commercial and market risk.

Timing of revenue recognition may differ from the timing of invoicing to customers. Accounts receivable represent amounts invoiced and revenue recognized when the Company has satisfied the Company's performance obligation and has the unconditional right to payment.

Contract liabilities consist of payments received related to unsatisfied performance obligations at the end of the period. Contract liabilities as of June 30, 2025 and 2024 were $2,384,192 and $2,225,461, respectively.

The Company applied a practical expedient to expense costs as incurred for costs to obtain a contract with a customer when the amortization period would have been one year or less. The Company has no material incremental costs of obtaining contracts with customers that the Company expects the benefit of those costs to be longer than one year which need to be recognized as assets. The Company records revenue net of value added tax and related surcharges.