| SEGMENT REPORTING |
NOTE 16 — SEGMENT
REPORTING
The Group adopted ASU 2023-07,
Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, during the year ended July 31, 2025. The adoption did not
change how segments are identified, aggregated or measured, but added incremental annual and interim disclosure requirements.
An operating segment is a
component of the Group that engages in business activities from which it may earn revenues and incur expenses, and is identified on the
basis of the internal financial reports that are provided to and regularly reviewed by the Group’s chief operating decision maker
(“CODM”) in order to allocate resources and assess performance of the segment.
The management of the Group
concludes that it has only one reporting segment. The Group provides game distribution and related services to game developers. The Group’s
services have similar economic characteristics with respect to nature and form of the services provided. The Group’s chief operating
decision maker has been identified as the Chief Executive Officer, who reviews Consolidated results when making decisions about allocating
resources and assessing performance of the Group, rather than by geographic area; hence the Group has only one reporting segment. CODM
reviews operation results on the consolidated in-game purchase amount, recoup of advances to game developers and revenue share with game
developers and IP holders, advertising expenses, transaction fees, server cost directly related to the host of games, in-house payroll
cost directly related to the art and design support services provided. The following table summarizes the operating results reviewed by
CODM and reconciliation to net income as reported in the consolidated statement of comprehensive income.
| | |
For the Six Months Ended January 31, | |
| | |
2026 | | |
2025 | |
| | |
(Unaudited) | | |
(Unaudited) | |
| Consolidated in-game purchases | |
$ | 48,603,849 | | |
$ | 49,125,267 | |
| Less: Revenue share with game developers and IP holders | |
| 8,186,251 | | |
| 9,453,531 | |
| Transaction fee | |
| 2,245,367 | | |
| 2,486,795 | |
| Advertisement expense | |
| 18,760,029 | | |
| 24,651,703 | |
| Server cost directly related to hosting the games | |
| 1,400,430 | | |
| 894,239 | |
| Segment profits | |
| 18,011,772 | | |
| 11,638,999 | |
| | |
| | | |
| | |
| Other operating expenses: | |
| | | |
| | |
| Payroll and related cost | |
| 7,698,199 | | |
| 4,025,616 | |
| Share-based compensation cost | |
| 1,913,692 | | |
| - | |
| Lease expense | |
| 1,451,104 | | |
| 1,101,375 | |
| Depreciation and amortization expense (including prepaid royalties amortization) | |
| 867,889 | | |
| 1,339,080 | |
| Impairment expense | |
| 892,534 | | |
| 1,392,610 | |
| Recoup of advances made to game developers | |
| 1,549,346 | | |
| 1,362,612 | |
| Other cost of sales (1) | |
| 2,325,095 | | |
| 805,784 | |
| Other selling and marketing expenses (2) | |
| 1,441,766 | | |
| 766,401 | |
| Other general and administrative expenses (3) | |
| 1,621,277 | | |
| 1,387,283 | |
| Total other operating expenses | |
| 19,760,902 | | |
| 12,180,761 | |
| | |
| | | |
| | |
| Income (loss) from operation | |
| (1,749,130 | ) | |
| (541,762 | ) |
| Interest income, net | |
| 333,453 | | |
| 282,507 | |
| Foreign Currency Transaction gain (loss) | |
| 260,296 | | |
| 221,056 | |
| Other income | |
| 499,078 | | |
| 292,677 | |
| Income before income tax | |
$ | (656,303 | ) | |
$ | 254,478 | |
| (1) | Other cost of sales mainly includes server and infrastructure cost that are not directly related to the host of a specific game and certain outsourcing cost. |
| (2) | Other selling and marketing expenses mainly includes cost associated with meeting, travel and promotions. |
| (3) | Other general and administrative expenses mainly includes cost associated with professional services, office supplies, recruiting and education. | The following table reconcile
from consolidated in-game purchase amount of revenue.
| | |
For
the Six Months Ended January 31, | |
| | |
2026 | | |
2025 | |
| |
(Unaudited) | | |
(Unaudited) | |
| Revenue
reconciliation | |
| | |
| |
| Consolidated in-game
purchases | |
$ | 48,603,849 | | |
$ | 49,125,267 | |
| Less: | |
| | | |
| | |
| Recoup
of advances made to game developers | |
| 1,549,346 | | |
| 1,362,612 | |
| Revenue
share paid to game developers | |
| 6,122,156 | | |
| 6,548,748 | |
| Consolidated
revenue | |
$ | 40,932,347 | | |
$ | 41,213,907 | |
As of January 31, 2026 and
July 31, 2025, the Group’s long-lived assets by geographic locations are as follows:
| | |
As of | |
| | |
January 31,
2026 (Unaudited) | | |
July 31,
2025 | |
| Japan | |
$ | 15,506,677 | | |
$ | 14,726,888 | |
| Singapore | |
| 11,191,484 | | |
| 6,502,511 | |
| Taiwan | |
| 3,901,121 | | |
| 4,481,573 | |
| China, excluding Taiwan | |
| 2,376,709 | | |
| 836,698 | |
| United States | |
| 2,350,346 | | |
| — | |
| Total | |
$ | 35,326,337 | | |
$ | 26,547,670 | |
|