# EDGAR Filing Document

**Accession Number:** 0002047148
**File Stem:** 0001213900-26-055850
**Filing Date:** 2026-5
**Character Count:** 132880
**Document Hash:** 352c8f5693c8812699a5b9746d9bc9b3
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001213900-26-055850.hdr.sgml**: 20260513

**ACCESSION NUMBER**: 0001213900-26-055850

**CONFORMED SUBMISSION TYPE**: 6-K

**PUBLIC DOCUMENT COUNT**: 89

**CONFORMED PERIOD OF REPORT**: 20260131

**FILED AS OF DATE**: 20260513

**DATE AS OF CHANGE**: 20260513

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** CTW Cayman
- **CENTRAL INDEX KEY:** 0002047148
- **STANDARD INDUSTRIAL CLASSIFICATION:** SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374]
- **ORGANIZATION NAME:** 06 Technology
- **EIN:** 000000000
- **STATE OF INCORPORATION:** M0
- **FISCAL YEAR END:** 0731

**FILING VALUES:**
- **FORM TYPE:** 6-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-42758
- **FILM NUMBER:** 26973932

**BUSINESS ADDRESS:**
- **ADDRESS IS A NON US LOCATION:** YES
- **STREET 1:** 29F, ARK HILLS SENGOKUYAMA MORI TOWER
- **STREET 2:** 1 CHOME 1-9-10, ROPPONGI, MINATO CITY
- **CITY:** TOKYO
- **PROVINCE COUNTRY:** M0
- **BUSINESS PHONE:** 050-1748-6333

**MAIL ADDRESS:**
- **ADDRESS IS A NON US LOCATION:** YES
- **STREET 1:** 29F, ARK HILLS SENGOKUYAMA MORI TOWER
- **STREET 2:** 1 CHOME 1-9-10, ROPPONGI, MINATO CITY
- **CITY:** TOKYO
- **PROVINCE COUNTRY:** M0

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**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**Form 6-K**

**REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16**

**UNDER THE SECURITIES EXCHANGE ACT OF 1934**

For the month of May 2026

Commission File Number: 001-42758

**CTW**

(Exact Name of Registrant as Specified in Its Charter)

**29F, 1 Chome-9-10,** 

**ARK Hills Sengokuyama Mori Tower Roppongi, Minato City,** 

**Tokyo 106-0032, Japan**

(Address of Principal Executive Office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F ☒ Form 40-F ☐

**Exhibit Index**

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| | |
|:---|:---|
| **Exhibit No.** | **Description** |
| 99.1 | [CTW Management's Discussion and Analysis of Financial Position and Results of Operations as of and for the Six Months Ended January 31, 2026](ea028999901ex99-1.htm) |
| 99.2 | [CTW Unaudited Condensed Consolidated Interim Financial Statements for the Six Months Ended January 31, 2026](ea028999901ex99-2.htm) |
| 101.INS | Inline XBRL Instance Document. The instance document does not appear on the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. |
| 101.PRE | Inline XBRL Taxonomy Extension Linkbase Document. |
| 104 | Cover page interactive data (formatted as Inline XBRL and contained in Exhibit 101). |

---

**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

---

| | | |
|:---|:---|:---|
| Date: May 13, 2026 | **CTW** | **CTW** |
|  | By: | /s/ Patrick Liu |
|  | Name: | Patrick Liu |
|  | Title: | Chief Financial Officer |

---

## Exhibit 99.1

**Exhibit 99.1**

**MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

 

*The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated interim financial statements and the related notes furnished with this Report on Form 6-K, as well as our audited consolidated financial statements and related notes included in our Annual Report on Form 20-F for the fiscal year ended July 31, 2025. This discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties. See "Special 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 "Risk Factors" in our Annual Report on Form 20-F.*

**Overview**

We are a leading globally accessible, web-based gaming platform, offering players an immersive digital experience through our flagship HTML5 platform, G123.jp. Our platform features a diverse selection of free-to-play games inspired by popular Japanese animations, including Queen's Blade, So I'm a Spider, So What?, and Goblin Slayer. As of the date of this Report on Form 6-K, we have 40 games on our platform and 5 games in pre-registration.

Historically, our top games and related developers have accounted for a substantial portion of revenues generated from our G123.jp platform. For the six months ended January 31, 2026, our largest customer (the game developer of Arifureta: From Commonplace to World's Strongest – Rebellion Soul) contributed approximately 23.92% of our total revenues. This represents a change from the six months ended January 31, 2025, during which our largest customer (the game developer of Vivid Army) contributed 28.61% of our total revenues. While revenue concentration remains significant, the shift in our largest revenue-contributing game and developer reflects changes in the relative performance and lifecycle of individual game titles on our platform, as well as our continued efforts to diversify our portfolio of games and developer relationships.

We expect that our top titles will rotate as more games gain success on our platform. Our mission is to unlock the potential of Japanese animation-based games, offering game developers commercial opportunities and essential support to turn their craft into financial success, while creating an unforgettable, ad-free, immersive gaming experience for end-users.

In the six months ended January 31, 2026, our revenues amounted to approximately US$40.9 million, compared to approximately US$41.2 million in the six months ended January 31, 2025, a decrease of approximately 0.7%. We recorded a net loss of approximately US$1.2 million in the six months ended January 31, 2026, compared to net income of approximately US$0.6 million in the six months ended January 31, 2025. Net cash used in operating activities was approximately US$0.4 million in the six months ended January 31, 2026, compared to net cash provided by operating activities of approximately US$2.6 million in the six months ended January 31, 2025. We believe our overall profitability will improve in the long run, primarily driven by our continued focus on acquiring high-quality content and strategic partnerships and our growth momentum from expansion into international markets.

**Our Business Model**

We operate a next-generation web-based gaming platform, G123.jp, designed to deliver value to game developers and gamers. At the core of our business model is the strategic integration of Japanese animation IPs, comprehensive services for game developers, and features designed to engage end-users, creating a sustainable ecosystem that drives growth and profitability.

We acquire IP licenses from famous and popular Japanese animations with well-established fan bases. Leveraging these IPs, we collaborate with selected game developers with a proven track record of successfully launching games that drive substantial in-game purchases or strong end-user engagement, providing a comprehensive suite of services to game developers that generate revenue for us.

Although our revenue is derived from the sale of services to game developers, it is directly linked to end-users' continued engagement and purchasing activity. To ensure sustained engagement and in-game purchases, we focus on enhancing the end-user experience through features like instant play, which eliminates the need for downloads or registration, and an ad-free environment.

Our position as an HTML5 gaming platform provides significant advantages, including relatively low front-end risk due to minimal advance payments required for individual games and related IPs. Our business model is also highly efficient, with low variable costs associated with royalties paid to IP holders and no reliance on external platforms, enabling us to avoid high compliance costs such as platform fees.

**Major Factors Affecting Our Results of Operations**

Our business and results of operations are affected by a number of general factors that impact the gaming industry, including, among others, economic, political and social conditions in Japan, trade and environmental regulations or enforcement, changes in the business strategies of our customers and the end-users, any increase or decrease in customer demand for our services, changes in end-users' playing preferences, new technology and feature sets for mobile and other devices, and the competitive environment.

Unfavorable changes in any of these general factors, including those set forth in the section entitled "Risk Factors" in our Annual Report on Form 20-F, could adversely affect demand for our products and materially and adversely affect our results of operations.

While our business is influenced by these general factors, our results of operations are more directly affected by the following company-specific factors: (i) our ability to secure key intellectual property and content of high quality, marketability and value; (ii) our ability to partner with talented and experienced third-party game developers to launch high-quality and playability games on our platform; (iii) our ability to achieve and maintain successful end-user engagement and adapt to changing player preferences; and (iv) our ability to effectively manage game marketing and other operating expenses in a cost-effective manner.

**Key Operating Metrics**

The following table sets forth our key operating metrics for the six months ended January 31, 2026 and 2025.

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| | | |
|:---|:---|:---|
|  | **For the Six Months Ended** | **For the Six Months Ended** |
|  | **January 31,** | **January 31,** |
|  | **2026** | **2025** |
| Gross in-game purchase amount<sup>(1)</sup> | $48603849 | $49125267 |
| Paying daily active users ("PDAUs") | 14519 | 16373 |
| Daily active users ("DAUs") | 236904 | 247379 |
| PDAUs to DAUs ratio | 6.13% | 6.62% |
| Paying monthly active users ("PMAUs")<sup>(2)</sup> | 75715 | 76684 |
| Monthly active users ("MAUs")<sup>(2)</sup> | 1984354 | 3269618 |
| PMAUs to MAUs ratio | 3.82% | 2.35% |
| PDAUs to PMAUs ratio | 19.18% | 21.35% |
| DAUs to MAUs ratio | 11.94% | 7.57% |
| ARPPDAU | $18.19 | $16.31 |
| ARPDAU | $1.12 | $1.08 |
| ARPPMAU | $106.99 | $106.77 |
| ARPMAU | $4.08 | $2.50 |
| Day 1 retention rate for paying users<sup>(3)</sup> | 58.23% | 60.74% |
| Day 7 retention rate for paying users<sup>(3)</sup> | 35.50% | 38.47% |
| Day 30 retention rate for paying users<sup>(3)</sup> | 16.00% | 18.47% |
| Day 1 retention rate for active users<sup>(4)</sup> | 6.15% | 5.86% |
| Day 7 retention rate for active users<sup>(4)</sup> | 2.59% | 2.16% |
| Day 30 retention rate for active users<sup>(4)</sup> | 1.00% | 0.85% |
| Return on advertisement spend ("ROAS") | 109.29% | 105.80% |

---

*Capitalized terms used in the table above (Gross in-game purchase amount, PDAUs, DAUs, PMAUs, MAUs, paying user retention rate, active user retention rate and ROAS) have the meanings ascribed to them in our Annual Report on Form 20-F.*

For the six months ended January 31, 2026, gross in-game purchase amount was approximately $48.6 million, compared to approximately $49.1 million for the six months ended January 31, 2025, representing a decrease of approximately 1.1%. The slight decrease in gross in-game purchase amount occurred despite lower overall user activity, including a decrease in MAUs from 3,269,618 to 1,984,354. The decrease in MAUs was primarily attributable to reduced marketing and advertising expenditures during the six months ended January 31, 2026. During the period, we launched seven games; however, due to various external factors, the performance of the newly released games was below our expectations. As a result, we promptly reduced and reallocated marketing and advertising expenditures to preserve capital and improve advertising efficiency. Because marketing and advertising campaigns around new game launches generally drive significant traffic from new users and free users, the reduction in advertising spend had a more significant impact on MAUs than on our paying-user metrics. PMAUs remained relatively stable, decreasing from 76,684 to 75,715, and the PMAUs to MAUs ratio increased from 2.35% to 3.82%, reflecting a higher proportion of paying users within a smaller monthly active user base. In addition, ARPPDAU increased from $16.31 to $18.19, ARPDAU increased from $1.08 to $1.12, and ARPMAU increased from $2.50 to $4.08, primarily due to improved monetization, a higher-quality paying user base and changes in the geographic mix of paying users. Retention rates for paying users declined across the Day 1, Day 7 and Day 30 periods, primarily due to changes in title mix and geographic mix, while retention rates for active users improved modestly. ROAS increased from 105.8% to 109.29%, primarily reflecting reduced marketing spend and more disciplined campaign optimization. We expect to continue monitoring the performance of games on our platform and adjusting our advertising budget and allocation based on game performance, user acquisition efficiency, monetization trends and available capital resources.

**Key Components of Results of Operations**

 ****

***Revenue***

We derive our revenue primarily from providing a comprehensive suite of services, including providing access to IP-related content for game development, online gaming distribution, game development support, and game marketing and advertising services, to game developers. Our revenue is variable and directly derived from a share of in-game purchases made by end-users, with a fixed proportion of these purchases representing our compensation.

 ****

***Cost of Revenue***

Our cost of revenue primarily consists of the costs that are directly related to providing our platform and services to game developers. These costs include royalty fees paid to intellectual property holders, costs associated with the maintenance of our G123.jp game distribution platform, and transaction fees for payment processing.

We expect our cost of revenue to increase in absolute amount in line with our expansion of business and customer base growth, and to decrease as a percentage of our revenues in the long run through economies of scale and improvement of operating efficiency.

 ****

***General & Administrative Expenses***

Our general and administrative expenses primarily consist of (i) payroll for administrative staff and management, (ii) depreciation and amortization, (iii) general office and administrative expenses, including rent and insurance, and (iv) others.

We expect our general and administrative expenses to continue to increase in absolute amount in the foreseeable future as we continue to support the expansion of our business and incur expenses associated with operating as a public company, including SEC and stock exchange compliance, insurance, investor relations activities, and other administrative and professional services.

 ****

***Research and Development Expenses***

Our research and development expenses primarily consist of (i) payroll for our in-house research and development staff, and (ii) expenses related to advance fees paid to third-party game developers that we deemed unrecoverable.

We believe that continued investment in research and development is key to our future growth.

 ****

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***Sales and Marketing Expenses***

Our sales and marketing expenses primarily consist of (i) advertising and marketing expenses, (ii) compensation paid to sales and marketing employees, (iii) expenses generated from marketing activities, such as meeting and travel expenses, and (iv) others.

**Results of Operations**

The following table sets forth a summary of our consolidated results of operations for the periods indicated. This information should be read together with our unaudited condensed consolidated interim financial statements and related notes furnished with this Report on Form 6-K. The operating results in any period are not necessarily indicative of the results that may be expected for any future period.

Comparison of Results of Operations for the six months ended January 31, 2026 and 2025

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Six Months Ended January 31,** | **For the Six Months Ended January 31,** | **Change** | **Change** |
|  | **2026** | **2025** | **Amount** | **%** |
| Revenue | $40932347 | $41213907 | $(281560) | (0.7)% |
| Cost and expenses: |  |  |  |  |
| Cost of revenue | 13876078 | 9942740 | 3933338 | 39.6% |
| General & administrative expenses | 5119691 | 4507982 | 611709 | 13.6% |
| Research & development expenses | 1657902 | 1322913 | 334989 | 25.3% |
| Sales and marketing expenses | 22027806 | 25982034 | (3954228) | (15.2)% |
| Total cost and expenses | 42681477 | 41755669 | 925808 | 2.2% |
| Loss from operations | (1749130) | (541762) | (1207368) | 222.9% |
| Other income: |  |  |  |  |
| Interest income, net | 333453 | 282507 | 50946 | 18.0% |
| Foreign Currency Transaction gain | 260296 | 221056 | 39240 | 17.8% |
| Other income | 499078 | 292677 | 206401 | 70.5% |
| Other income, net | 1092827 | 796240 | 296587 | 37.2% |
| (Loss) income before income tax expense | (656303) | 254478 | (910781) | (357.9)% |
| Income tax provision (benefit) | 504937 | (384307) | 889244 | (231.4)% |
| **Net (loss) income** | $**(1161240)** | $**638785** | $**(1800025)** | **(281.8)%** |

---

***Revenue***

For the six months ended January 31, 2026, revenue decreased by approximately US$0.3 million, or 0.68%, compared to the six months ended January 31, 2025.

The slight decrease in revenue for the six months ended January 31, 2026, compared to the prior-year period, was primarily attributable to the impact of foreign exchange rate movements. As approximately 68% of our revenue is generated from end-users in Japan, the depreciation of the Japanese yen against the U.S. dollar reduced our reported revenue when translated into U.S. dollars. Based on period-over-period changes in average exchange rates, we estimate that foreign exchange movements reduced reported revenue by approximately 0.8% compared to the prior-year period.

Excluding the impact of foreign exchange, our revenue was relatively stable period over period. During the six months ended January 31, 2026, 10 new games were released since February 1, 2025 that generated approximately US$10.0 million of revenue compared to approximately US$12.9 million of revenue generated by 10 games launched during the comparable prior-year period. The lower aggregate contribution from newly released titles was largely offset by modest increases in revenue from markets outside of Japan, reflecting continued, albeit gradual, progress in our international expansion efforts.

For the six months ended January 31, 2026, revenue from end-users in Japan decreased by approximately US$1.4 million, or 4.6%, to approximately US$28.0 million, compared to approximately US$29.4 million for the six months ended January 31, 2025. Revenue from end-users in South Korea increased by approximately US$0.1 million, or 2.42%, to approximately US$4.6 million. Revenue from end-users in Taiwan, Hong Kong and Macau collectively increased by approximately US$0.8 million, or 38.6%, to approximately US$3.0 million. Revenue from end-users in North America was approximately US$2.9 million, substantially unchanged from the comparable prior-year period. Revenue from end-users in Europe increased by approximately US$0.1 million, or 9.4%, to approximately US$1.3 million, and revenue from end-users in other regions was approximately US$1.1 million.

As a percentage of total revenue, revenue from end-users in Japan was approximately 68.4% for the six months ended January 31, 2026, compared to approximately 71.2% for the six months ended January 31, 2025. Revenue from end-users outside of Japan increased to approximately 31.6% of total revenue for the six months ended January 31, 2026, up from approximately 28.8% for the comparable prior-year period.

The change in geographic revenue mix was primarily driven by the decrease in revenue from Japan, together with modest growth in certain international markets. While we continue to pursue expansion opportunities outside of Japan, including in North America, revenue contributions from these markets remain a smaller portion of our overall revenue base.

 ****

***Cost of Revenue***

For the six months ended January 31, 2026, cost of revenue increased by approximately US$3.9 million, or 39.6%, to approximately US$13.9 million, compared to approximately US$9.9 million for the six months ended January 31, 2025. As a percentage of revenue, cost of revenue represented approximately 33.9% and 24.1% for the six months ended January 31, 2026 and 2025, respectively, reflecting an increase in cost of revenue as a percentage of revenue.

The increase in cost of revenue was primarily driven by higher personnel-related costs and infrastructure expenses, partially offset by reductions in royalty-related costs. Payroll-related costs increased significantly by approximately US$3.5 million or 305.60% comparing the six months ended January 31, 2026 with the same period in the prior year, reflecting continued investment in operational capabilities and platform support functions. Server costs also increased by approximately US$0.5 million, or 56.6%, primarily due to higher usage associated with platform expansion and ongoing service enhancements. Other cost of revenue increased by approximately US$1.5 million, or 188.6%, driven by increased outsourcing, content-related, and operational support expenses.

These increases were partially offset by a decrease in revenue share with IP holders of approximately US$0.8 million, or 28.9%, and a decrease in transaction fees of approximately US$0.2 million, or 9.7%, generally consistent with changes in revenue mix and lower relative contribution from certain licensed titles. In addition, amortization of prepaid royalties decreased by approximately US$0.5 million, or 54.2%, and no impairment of prepaid royalties was recognized in the current period compared to approximately US$0.3 million in the prior period. Share-based compensation of approximately US$0.2 million was recognized in the current period, with no comparable expense in the prior period. Overall, the increase in cost of revenue reflects a shift toward higher fixed and semi-fixed cost components as the Company continues to scale its platform and invest in long-term growth initiatives.

 ****

***General & Administrative Expenses***

For the six months ended January 31, 2026, general and administrative expenses increased by approximately US$0.6 million, or 13.6%, to approximately US$5.1 million, compared to approximately US$4.5 million for the six months ended January 31, 2025. The overall increase was primarily driven by higher infrastructure, professional support, and personnel-related costs.

Key components contributing to the increase included: (a) an increase of approximately US$0.4 million in rent expenses, or 31.8%, primarily attributable to expansion of office space in Taipei for our Art & Design center and the new leased office in New York City to support our growing operations; (b) an increase of approximately US$0.4 million in professional fees, or 49.6%, mainly due to higher audit, legal, and advisory costs associated with our public company reporting and ongoing compliance requirements; and (c) a net increase in payroll-related expenses of approximately US$0.02 million, reflecting continued investment in administrative and support functions, partially offset by cost optimization efforts.

These increases were partially offset by a decrease of approximately US$0.1 million, or 33.7%, in other general and administrative expenses.

Overall, the increase in general and administrative expenses reflects our continued investment in administrative infrastructure and public company readiness, while actively managing and optimizing our cost structure.

 ****

 ****

***Research and Development Expenses***

For the six months ended January 31, 2026, research and development expenses increased by approximately US$0.3 million, or 25.3%, to approximately US$1.7 million, compared to approximately US$1.3 million for the six months ended January 31, 2025.

Key components contributing to the change included: (a) share-based compensation expense of approximately US$0.6 million recognized in the current period, with no comparable expense in the prior period; and (b) a decrease in impairment expense of approximately US$0.2 million, or 20.0%, reflecting improved performance of certain projects and more disciplined capital allocation. Payroll-related research and development expenses remained relatively flat period over period.

Overall, the increase in research and development expenses reflects our ongoing investment in platform capabilities and long-term growth initiatives, alongside improved discipline in project selection and execution.

 ****

***Sales and Marketing Expenses***

For the six months ended January 31, 2026, sales and marketing expenses decreased by approximately US$4.0 million, or 15.2%, to approximately US$22.0 million, compared to approximately US$26.0 million for the six months ended January 31, 2025. The decrease was primarily attributable to a reduction in advertising expenditure, which decreased by approximately US$5.9 million, or 23.9%, to approximately US$18.8 million, compared to approximately US$24.7 million for the six months ended January 31, 2025.

The overall decrease was primarily driven by lower advertising expenditures, partially offset by increases in personnel-related and other marketing support costs.

Key components contributing to the change included: (a) a decrease of approximately US$5.9 million, or 23.9%, in advertising expenses, primarily reflecting more disciplined and efficiency-focused user acquisition strategies; (b) an increase of approximately US$1.1 million in share-based compensation recognized in the current period, with no comparable expense in the prior period; (c) an increase of approximately US$0.7 million, or 495.6%, in collaboration expenses, driven by higher collaboration costs associated with joint promotional activities with IP holders, including the introduction of characters from other anime titles into our games for limited-time events, which are designed to enhance user engagement and monetization; (d) an increase of approximately US$0.2 million, or 120.9%, in travel expenses and approximately US$0.1 million, or 26.3%, in meeting expenses, reflecting increased business development and promotional activities; and (e) an increase of approximately US$0.1 million, or 24.5%, in payroll-related expenses, consistent with continued investment in marketing and user acquisition capabilities.

Overall, the decrease in selling and marketing expenses reflects our continued focus on improving marketing efficiency and return on investment, while continuing to support user growth and platform expansion initiatives.

 ****

***Interest Income, net***

In the six months ended January 31, 2026, interest income, net was approximately US$0.3 million, compared to approximately US$0.3 million for the six months ended January 31, 2025. Interest income continues to reflect interest earned on U.S. dollar-denominated deposits.

 ****

***Foreign Currency Transaction Gain***

For the six months ended January 31, 2026, we had a foreign currency transaction gain of approximately US$0.3 million, compared to a foreign currency transaction gain of approximately US$0.2 million for the six months ended January 31, 2025. The gains primarily reflect translation of U.S. dollar-denominated balances of our Japanese subsidiary as the Japanese Yen continued to depreciate against the U.S. dollar during the current period.

 ****

 ****

***Other Income***

For the six months ended January 31, 2026, our other income was approximately US$0.5 million, compared to approximately US$0.3 million for the six months ended January 31, 2025, an increase of approximately US$0.2 million, or 70.5%. The increase was primarily attributable to increased income generated from our investment in films and television programs.

 ****

***Income Tax Expense***

For the six months ended January 31, 2026, we recorded an income tax expense of approximately US$0.5 million, compared to an income tax benefit of approximately US$0.4 million for the six months ended January 31, 2025.

Our effective income tax rate was approximately (76.9)% for the six months ended January 31, 2026, compared to approximately (151.0)% for the six months ended January 31, 2025. The negative effective tax rate in the current period reflects the geographic mix of our earnings, including pre-tax losses in jurisdictions with relatively higher statutory tax rates and pre-tax income in jurisdictions with lower statutory tax rates.

 ****

***Net (Loss) Income***

As a result of the foregoing, we recorded a net loss of approximately US$1.2 million in the six months ended January 31, 2026, compared to net income of approximately US$0.6 million in the six months ended January 31, 2025, a decrease of approximately US$1.8 million.

**Liquidity and Capital Resources**

As of January 31, 2026, we had approximately US$19.5 million in cash and cash equivalents and net working capital of approximately US$9.2 million. As of July 31, 2025, we had approximately US$12.2 million in cash and cash equivalents and net working capital of approximately US$9.7 million.

In the six months ended January 31, 2026, we used approximately US$0.4 million in cash for operating activities, compared to net cash provided by operating activities of approximately US$2.6 million for the six months ended January 31, 2025. During the six months ended January 31, 2026, we received aggregate net proceeds of approximately US$10.6 million from the issuance of ordinary shares in our initial public offering. Our principal sources of liquidity historically have been cash generated from our operations and, more recently, the net proceeds from our initial public offering. Based on our current operating plan, we believe that cash on hand and cash generated from operations will be sufficient to support our working capital needs for at least the next 12 months from the date of this Report on Form 6-K. Our future cash requirements will depend on many factors, including our rate of revenue growth and the expansion of our sales and marketing activities. We also may invest in or acquire complementary businesses, applications or technologies.

 ****

***Cash flows for the six months ended January 31, 2026 and 2025***

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

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| | | |
|:---|:---|:---|
|  | **For the Six Months Ended** | **For the Six Months Ended** |
|  | **January 31,** | **January 31,** |
|  | **2026**<br>**(Unaudited)** | **2025**<br>**(Unaudited)** |
| Net cash (used in) provided by operating activities | $(381004) | $2585143 |
| Net cash used in investing activities | (2819253) | (678657) |
| Net cash provided by (used in) financing activities | 10645000 | (639872) |
| Effect of exchange rate changes | (186332) | (658886) |
| Net change in cash, cash equivalents and restricted cash | 7258411 | 607728 |
| Cash, cash equivalents and restricted cash, beginning of the period | 12369250 | 14594265 |
| Cash, cash equivalents and restricted cash, end of the period | $19627661 | $15201993 |

---

 ****

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***Operating activities***

For the six months ended January 31, 2026, our net cash used in operating activities was approximately US$0.4 million, which was primarily attributable to (i) a net loss of approximately US$1.2 million; (ii) non-cash adjustments of approximately US$5.8 million, including US$1.9 million of share-based compensation, US$1.5 million of amortization of right-of-use assets, US$1.1 million of depreciation and amortization, and US$0.8 million of impairment of advance to game developers; (iii) a net decrease in cash of approximately US$5.1 million from changes in operating assets and liabilities, primarily consisting of a US$6.2 million increase in advance to game developers, a US$1.6 million decrease in operating lease liabilities, a US$1.2 million increase in prepaid royalties and a US$1.0 million increase in other non-current assets, partially offset by a US$3.5 million increase in accrued advertising expenses, a US$1.1 million increase in accrued expenses and other current liabilities, a US$0.2 million increase in tax payable and a US$0.7 million increase in accounts payable.

For the six months ended January 31, 2025, our net cash provided by operating activities was approximately US$2.6 million, which was primarily attributable to (i) net income of approximately US$0.6 million; (ii) an adjustment of added non-cash items of a net amount of approximately US$3.2 million, which primarily include US$1.3 million of depreciation and amortization expenses, US$1.0 million of amortization of right-of-use asset and about US$1.1 million impairment of advance to game developers; (iii) net decrease in cash and cash equivalents of about US$1.2 million related to changes in operating assets and liabilities, which primarily consists of US$1.1 million decrease in lease liabilities, US$0.7 million increase in prepaid royalties, US$0.7 million decrease in accrued expenses and other current liabilities, US$0.5 million decrease in accounts payable and US$0.5 million decrease in taxes payables. The use of cash and cash equivalents from the changes in operating assets and liabilities is partially offset by increase of about US$2.0 million in accrued advertising expenses due to overall increasing in advertising expenditure.

 ****

***Investing Activities***

For the six months ended January 31, 2026, we used approximately US$2.8 million in investing activities, which primarily consisted of approximately US$2.1 million in capitalized internal-use software costs (reflecting the early adoption of ASU 2025-06), approximately US$0.6 million for the purchase of property and equipment, and approximately US$0.1 million for investments in films and television programs.

For the six months ended January 31, 2025, we used about US$0.7 million in investing activities which primarily consists of US$0.4 million used to provide a loan to a third-party game developer to support their operations and US$0.2 million used to purchase property and equipment.

 ****

***Financing Activities***

For the six months ended January 31, 2026, we generated approximately US$10.6 million in net cash from financing activities, comprising approximately US$10.6 million of net proceeds from the issuance of ordinary shares in our initial public offering.

For the six months ended January 31, 2025, we used about US$0.6 million in financing activities, including primarily US$0.7 million related to payment of deferred offering costs.

 ****

***Capital expenditure***

Our capital expenditures are incurred primarily in connection with the purchase of property and equipment, investment in films and television programs, and (beginning August 1, 2025) capitalized internal-use software. Our capital expenditures were approximately US$2.8 million and US$0.3 million for the six months ended January 31, 2026 and 2025, respectively.

We expect our capital expenditures to remain meaningful in the foreseeable future as we continue to expand our business and enhance our research and development capabilities.

**Tabular Disclosure of Contractual Obligations and Commitments**

The following table sets forth our contractual obligations and commitments as of January 31, 2026:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |<br>**Total** | **Less than**<br>**1 year** |<br>**1-3 years** |<br>**3-5 years** | **Over**<br>**5 years** |
| Lease obligations | $7965499 | 1605030 | 3994673 | 2148957 | 216839 |
| **Total** | $**7965499** | **1605030** | **3994673** | **2148957** | **216839** |

---

**Off-Balance Sheet Arrangements**

We have not entered into any off-balance sheet financial guarantees or other off-balance sheet commitments to guarantee the payment obligations of any third parties. 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 us or engages in leasing, hedging or product development services with us.

**Critical Accounting Estimates**

There have been no material changes to our critical accounting estimates from those disclosed in our Annual Report on Form 20-F for the fiscal year ended July 31, 2025, except as discussed below in respect of internal-use software accounting following the early adoption of ASU 2025-06 and stock options.

Internal-use software — Following the early adoption of ASU 2025-06 effective August 1, 2025, we capitalize qualifying costs incurred in connection with the development of internal-use software (including certain cloud computing implementation costs) and amortize such costs over the estimated useful life of the related software once it is ready for its intended use. Determining whether costs are eligible for capitalization, the appropriate useful life, and the date software is ready for its intended use requires significant management judgment. During the six months ended January 31, 2026, we capitalized approximately US$2.1 million of qualifying internal-use software costs.

Stock options — During the six months ended January 31, 2026, we granted stock options that were fully vested on the grant date and, accordingly, recognized the related share-based compensation cost immediately upon grant in accordance with ASC 718, Compensation—Stock Compensation. The fair value of the stock options was estimated on the grant date using the Black-Scholes option pricing model. The determination of grant-date fair value under the Black-Scholes model requires significant management judgment and the use of subjective assumptions, including the expected term of the awards, the expected volatility of our common stock, the risk-free interest rate and the expected dividend yield. Because we have limited historical trading data for our common stock, we estimated expected volatility based on the historical volatility of comparable publicly traded companies. We estimated the expected term of the stock options using the simplified method, as appropriate. The risk-free interest rate was based on U.S. Treasury yields in effect at the time of grant for instruments with a term commensurate with the expected term of the awards, and the expected dividend yield was assumed to be zero because we have no history of paying dividends and do not expect to pay dividends in the foreseeable future. Changes in these assumptions, particularly expected volatility and expected term, could materially affect the estimated fair value of stock options granted and the amount of share-based compensation expense recognized in our consolidated financial statements.

## Exhibit 99.2

?xml version='1.0' encoding='ASCII'?

**Exhibit 99.2**

**CTW CAYMAN**

**CONDENSED CONSOLIDATED BALANCE SHEETS**

**(Amounts in U.S. dollars, except for number of shares)**

---

| | | |
|:---|:---|:---|
|  | **As of<br> January 31,**<br>**2026** | **As of <br> July 31,**<br>**2025** |
| **ASSETS** | ***(Unaudited)*** |  |
| **Current assets:** |  |  |
| Cash and cash equivalents | $19497920 | $12208630 |
| Restricted cash | 129741 | 160620 |
| Accounts receivable, net | 1625129 | 1410083 |
| Deferred offering cost |  | 1429523 |
| Prepaid expenses and other current assets | 2867509 | 2866243 |
| **Total current assets** | **24120299** | **18075099** |
| **Non-current assets:** |  |  |
| Property, plant and equipment, net | 1198179 | 1098679 |
| Prepaid royalties, net | 4207499 | 3499962 |
| Investments in films and television programs, net | 432618 | 576956 |
| Advance to game developer, net | 19937664 | 14561726 |
| Deferred tax assets, net | 62968 | 49067 |
| Rights-of-use assets, net | 7415273 | 6782354 |
| Other noncurrent assets | 4916847 | 1858413 |
| **Total non-current assets** | **38171048** | **28427157** |
| **TOTAL ASSETS** | $**62291347** | $**46502256** |
| **LIABILITIES AND SHAREHOLDERS' EQUITY** |  |  |
| **Current liabilities:** |  |  |
| Accounts payable | $3024289 | $2377279 |
| Accrued advertising expenses | 3916206 | 475099 |
| Tax payable | 462404 | 293482 |
| Lease liabilities - current | 4343563 | 2728326 |
| Accrued expenses and other current liabilities | 3192831 | 2549763 |
| **Total current liabilities** | **14939293** | **8423949** |
| **Non-current liabilities:** |  |  |
| Lease liabilities - noncurrent | 3142682 | 4222089 |
| Deferred tax liabilities, net | 6819986 | 6208161 |
| **Total non-current liabilities** | **9962668** | **10430250** |
| **Total liabilities** | **24901961** | **18854199** |
| **Shareholders' equity** |  |  |
| Class A ordinary shares, par value $0.0001 per share, 200,000,000 shares authorized, 50,400,000 shares and 48,000,000 shares issued and outstanding as of January 31, 2026 and July 31, 2025, respectively. | 5040 | 4800 |
| Class B ordinary shares, par value $0.0001 per share, 20,000,000 shares authorized, 12,000,000 shares issued and outstanding as of January 31, 2026 and July 31, 2025 | 1200 | 1200 |
| Additional paid-in capital | 12023874 | 872315 |
| Statutory reserve | 676416 | 676416 |
| Retained earnings | 30701099 | 31862339 |
| Accumulated other comprehensive loss | (6018243) | (5769013) |
| **Total Shareholders' equity** | **37389386** | **27648057** |
| **TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY** | $**62291347** | $**46502256** |

---

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

**CTW CAYMAN**

**UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME**

**(Amounts in U.S. dollars, except for number of shares)**

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended January 31,** | **For the Six Months Ended January 31,** |
|  | **2026** | **2025** |
| **Revenue** | $40932347 | $41213907 |
| **Cost and expenses:** |  |  |
| Cost of revenue | 13876078 | 9942740 |
| General & administrative expenses | 5119691 | 4507982 |
| Research & development expenses | 1657902 | 1322913 |
| Sales and marketing expenses | 22027806 | 25982034 |
| **Total cost and expenses** | **42681477** | **41755669** |
| **Loss from operations** | **(1749130)** | **(541762)** |
| **Other income** |  |  |
| Interest income, net | 333453 | 282507 |
| Foreign currency transaction gain | 260296 | 221056 |
| Other income | 499078 | 292677 |
| **Other income , net** | **1092827** | **796240** |
| **(Loss) income before income tax expense** | **(656303)** | **254478** |
| Income tax provision (benefit) | 504937 | (384307) |
| **Net (loss) income** | **(1161240)** | **638785** |
| **Other comprehensive income** |  |  |
| Foreign currency translation adjustment | (249230) | (566536) |
| Comprehensive (loss) income | $**(1410470)** | $**72249** |
| **Earnings per share** |  |  |
| Basic and Diluted\* | $(0.02) | $0.01 |
| **Weighted average number of ordinary shares** |  |  |
| Basic and Diluted\* | 62321739 | 60000000 |

---

\* Retrospectively restated for effect of share reorganization (see Note 13)

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

**CTW CAYMAN**

**UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY**

**(Amounts in U.S. dollars, except for number of shares)**

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Ordinary Shares** | **Ordinary Shares** | **Ordinary Shares** | **Ordinary Shares** | | | | | |
|  | **Class A Shares\*** | **Amount** | **Class B Shares\*** | **Amount** | **Additional**<br>**paid-in<br> capital** | <br>**Statutory<br> reserves** | <br>**Retained<br> earnings** | **Accumulated<br> other**<br>**comprehensive<br> loss** | **Total**<br>**Shareholders'<br> equity** |
| **Balance as of July 31, 2025** | 48000000 | $4800 | 12000000 | $1200 | $872315 | $676416 | $31862339 | $(5769013) | $**27648057** |
| Issuance of ordinary shares in initial public offering | 2400000 | 240 |  |  | 9237867 |  |  |  | **9238107** |
| Share-based compensation |  |  |  |  | 1913692 |  |  |  | **1913692** |
| Net loss |  |  |  |  |  |  | (1161240) |  | **(1161240)** |
| Foreign currency translation adjustment |  |  |  |  |  |  |  | (249230) | **(249230)** |
| **Balance as of January 31, 2026** | **50400000** | **5040** | **12000000** | **1200** | **12023874** | **676416** | **30701099** | **(6018243)** | **37389386** |
| **Balance as of July 31, 2024** | 48000000 | $4800 | 12000000 | $1200 | $849848 | $674156 | $28036036 | $(5726586) | $**23839454** |
| Capital contribution |  |  |  |  | 27616 |  |  |  | **27616** |
| Net income |  |  |  |  |  |  | 638785 |  | **638785** |
| Foreign currency translation adjustment |  |  |  |  |  |  |  | (566536) | **(566536)** |
| **Balance as of January 31, 2025** | **48000000** | $**4800** | **12000000** | $**1200** | $**877464** | $**674156** | $**28674821** | $**(6293122)** | $**23939319** |

---

\*: Retrospectively restated for effect of share reorganization (see Note 13)

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements

**CTW CAYMAN**

**UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(Amounts in U.S. dollars, except for number of shares)**

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended January 31,** | **For the Six Months Ended January 31,** |
|  | **2026** | **2025** |
| **CASH FLOWS FROM OPERATING ACTIVITIES:** |  |  |
| Net (loss) income | $(1161240) | $638785 |
| *Adjustments to reconcile net income to net cash provided by operating activities:* |  |  |
| Depreciation and amortization | 1109775 | 1323096 |
| Impairment of advance to game developers | 750416 | 1113863 |
| Impairment of prepaid royalties |  | 278747 |
| Amortization of right-of-use asset | 1514860 | 1017089 |
| Gain from disposal of property, equipment and software |  | (3211) |
| Foreign currency exchange gain | (139961) | (65249) |
| Deferred income tax expenses | 705348 | (510750) |
| Share-based compensation | 1913692 |  |
| *Changes in operating assets and liabilities:* |  |  |
| Accounts receivable, net | (247360) | (352211) |
| Prepaid expenses and other current assets, net | (261481) | 954348 |
| Advance to game developers, net | (6193386) | (211492) |
| Prepaid royalties, net | (1198137) | (730946) |
| Other non-current assets | (978578) | 15369 |
| Accounts payable | 713339 | (494929) |
| Accrued advertising expenses | 3498413 | 1966414 |
| Tax payable | 173365 | (471055) |
| Accrued expenses and other current liabilities | 1055017 | (711989) |
| Operating lease liabilities | (1604380) | (1134783) |
| Amount due to related parties | (30706) | (36003) |
| **Net cash (used in) provided by operating activities** | **(381004)** | **2585143** |
| **CASH FLOWS FROM INVESTING ACTIVITIES** |  |  |
| Purchase of property and equipment | (604817) | (188774) |
| Proceeds from disposal of property and equipment |  | 27765 |
| Investments in films and television programs | (112494) | (107648) |
| Investments in software | (2101942) |  |
| Advances to third-party loan |  | (410000) |
| **Net cash used in investing activities** | **(2819253)** | **(678657)** |
| **CASH FLOWS FROM FINANCING ACTIVITIES** |  |  |
| Proceeds from shareholder's contribution |  | 27848 |
| Proceeds from issuance of shares - IPO | 10645000 |  |
| Deferred offering cost |  | (667720) |
| **Net cash provided by (used in) financing activities** | **10645000** | **(639872)** |
| **Effect of exchange rate changes** | (186332) | (658886) |
| Net change in cash, cash equivalents and restricted cash | 7258411 | 607728 |
| Cash, cash equivalents and restricted cash, beginning of the period | 12369250 | 14594265 |
| Cash, cash equivalents and restricted cash, end of the period | $19627661 | $15201993 |
| **Cash, cash equivalents and restricted cash, end of the period** | $19627661 | $15201993 |
| Less: restricted cash, end of the period | 129741 | 129127 |
| Cash and cash equivalents, end of the period | $19497920 | $15072866 |
| **SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:** |  |  |
| Cash paid for income tax | $— | $264574 |
| Cash paid for operating leases | $1450936 | $1174328 |
| **Supplemental disclosures of non-cash activities:** |  |  |
| Obtaining right-of-use assets in exchange for operating lease liabilities | $2282775 | $1126466 |
| Offering costs charged against additional paid-in capital | $1107209 | $— |

---

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

**CTW CAYMAN AND SUBSIDIARIES**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 1 — ORGANIZATION AND BUSINESS DESCRIPTION**

CTW Cayman (the "Company", together with its subsidiaries and its variable interest entities, the "Group") was incorporated on November 15, 2024 under the laws of the Cayman Islands with limited liability. The Company through its operating subsidiaries in Japan and Singapore, primarily provides game distribution services and related services to game developers.

 ****

***Reorganization***

The Company began its business operations on August 14, 2013, with the establishment of CTW Inc. ("CTW Japan") by the Founder, Chairman of the Board and Chief Executive Officer, Mr. Ryuichi Sasaki, in Tokyo, Japan. CTW Japan was wholly owned by Mr. Sasaki. In 2023, to explore international opportunities and prepare for the initial public offering ("IPO") in the United States, the following entities were established and initiated the step I reorganization. On June 9, 2023, Bao Cayman (previously known as CTW Cayman) was established under the laws of the Cayman Islands as an exempted company with limited liability. Bao Cayman has no operations of its own and was established as an investment holding company. Bao Cayman is 100% owned by Mr. Sasaki. On September 29, 2023, Mr. Sasaki, transferred his 100% ownership interest in CTW Japan to Bao Cayman with nominal consideration. (the "Step I Reorganization", together with the Step II Reorganization as described below, the "Reorganization") After the transaction, CTW Japan became a wholly owned subsidiary of Bao Cayman. On September 11, 2023, CTW G123 Singapore Pte., Ltd. ("CTW Singapore") was established in Singapore as a wholly owned subsidiary of Bao Cayman to provide game distribution and related services. Additionally, on October 12, 2023, AinekoX Co., Ltd. ("AinekoX") was established in Taipei City, Taiwan by an executive of the Company, solely to provide art and design services to the Company. On March 4, 2024, Shanghai Tuwaii Tech Co., Ltd. ("Tuwaii") was established in Shanghai, China by an executive of the Company, solely to provide technical support services to the Company. AinekoX and Tuwaii lack sufficient equity to finance their activities without additional subordinated financial support from the Company, and the Company has the power to direct activities of AinekoX and Tuwaii. The Company receives the economic benefits from AinekoX and Tuwaii and concluded that the Company is the primary beneficiary of AinekoX and Tuwaii.

Subsequent to the Step I Reorganization, the Company established CTW HK Limited ("CTW HK") on November 29, 2024, as a wholly owned subsidiary in Hong Kong. On September 25, 2024, Beijing Weiyou Chuxin Tech Co, Ltd. ("WFOE") was incorporated in the People's Republic of China ("PRC"). On January 27, 2025, CTW Cayman acquired 100% ownership of Bao Cayman for nominal consideration. On November 25, 2024, CTW Japan established a wholly owned subsidiary, Change the World Corporation, in Seoul, South Korea. The Company established Shanghai Weiyouyi Chuxin Tech Co., Ltd. ("CTW Shanghai") as a wholly owned subsidiary of WFOE and transferred all of Tuwaii's assets and liabilities to CTW Shanghai for nominal consideration. (the "Step II Reorganization", collectively with the Step I Reorganization, referred to as the "Reorganization.")

The Reorganization has been accounted for as a recapitalization among entities under common control since Mr. Sasaki effectively controlled CTW Japan, Bao Cayman, CTW Cayman, Tuwaii and CTW Shanghai and all assets and liabilities transferred and exchanges of shares were recorded at historical cost. The equity structure was retroactively adjusted as if CTW Cayman had been in existence since the beginning of the periods presented.

**CTW CAYMAN AND SUBSIDIARIES**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 1 — ORGANIZATION AND BUSINESS DESCRIPTION** (cont.)

The unaudited condensed consolidated financial statements as of January 31, 2026 and July 31, 2025 and for the six months ended January 31, 2026 and 2025 include the following entities:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Name of Entity** | **Date of<br> Incorporation** | **Places of<br> Incorporation** | **% of<br> Ownership** | **Principal Activities** |
| CTW Cayman | November 15, 2024 | Cayman | Parent | Investment holding |
| Bao Cayman | June 9, 2023 | Cayman | 100% owned by CTW Cayman | Investment holding |
| CTW Inc. ("CTW Japan") | August 14, 2013 | Japan | 100% owned by Bao Cayman | Game distribution and related services |
| CTW G123 Singapore Pte., Ltd. ("CTW Singapore") | September 11, 2023 | Singapore | 100% owned by Bao Cayman | Game distribution and related services |
| CTW HK Limited ("CTW HK") | November 29, 2024 | Hong Kong | 100% owned by CTW Cayman | Investment holding |
| Beijing Weiyou Chuxin Tech Co., Ltd. ("WFOE") | September 25, 2024 | Beijing, PRC | 100% owned by CTW HK | Investment holding |
| Shanghai Weiyouyi Chuxin Technology Co., Ltd. ("CTW Shanghai") | April 24, 2025 | Shanghai, PRC | 100% owned by WFOE | Research and development center |
| Shanghai Tuwaii Tech Co., Ltd. ("Tuwaii") | March 4, 2025 (Inactive since May 2025) | Shanghai, PRC | VIE | Research and development center |
| Shanghai Cangyuan Zhidian Tech Co., Ltd. ("Cangyuan")\* | November 26, 2025 | Shanghai, PRC | VIE | Platform development and end-user support |
| Change the World Corporation ("CTW Korea") | November 25, 2024 | Seoul, South Korea | 100% owned by CTW Japan | Platform development and end-user support |
| AinekoX Co., Ltd. ("AinekoX") | October 12, 2023 | Taiwan | VIE | Art and design center |
| CTW US Inc. ("CTW US") | April 3, 2025 | Delaware, USA | 100% owned by CTW Cayman | Platform development and end-user support |

---

---

| | |
|:---|:---|
| \*: | On November 26, 2025, Mr. Ryuichi Sasaki, the Founder, Chairman of the Board of Directors and Chief Executive Officer of the Company, together with Mr. Hairihan Tong, the Company's Chief Technology Officer, established Shanghai Cangyuan Zhidian Tech Co., Ltd. ("Cangyuan") in the PRC. Cangyuan was established to explore potential game distribution and related opportunities in Mainland China. |

---

Immediately following the establishment of Cangyuan, the Company, through its wholly foreign-owned enterprise in the PRC ("WFOE"), entered into a series of contractual arrangements with Cangyuan and its equity holders (the "Cangyuan VIE Agreements"), including but not limited to exclusive business cooperation agreements, exclusive option agreements, equity pledge agreements, powers of attorney and loan agreements. These agreements are designed to provide the Company with (i) the power to direct the activities of Cangyuan that most significantly impact its economic performance, and (ii) the right to receive substantially all of the economic benefits from Cangyuan.

Cangyuan is considered a VIE due to the lack of sufficient equity at risk and because its equity holders, including Mr. Sasaki and Mr. Tong, as related parties of the Company, do not have the characteristics of a controlling financial interest. The Company evaluated the Cangyuan VIE Agreements under the guidance of ASC 810, Consolidation, and concluded that it has the power to direct the activities that most significantly impact the economic performance of Cangyuan and has the obligation to absorb losses and the right to receive benefits that could potentially be significant. Accordingly, the Company is the primary beneficiary of Cangyuan.

As of January 31, 2026, Cangyuan had not commenced significant operations, and the financial position and results of operations of Cangyuan were not material to the Company's consolidated financial statements. The Company will continue to monitor the development of Cangyuan and reassess consolidation conclusions as necessary.

**CTW CAYMAN AND SUBSIDIARIES**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 1 — ORGANIZATION AND BUSINESS DESCRIPTION** (cont.)

The following table sets for the assets, liabilities, results of operations and changes in cash and cash equivalents of the VIEs, which were included in the Group's unaudited condensed consolidated financial statements before elimination of intercompany balances and transactions between the Group and the VIEs.

---

| | | |
|:---|:---|:---|
|  | **As of** | **As of** |
|  | **January 31,<br> 2026<br> (Unaudited)** | **July 31,<br> 2025** |
| Total current assets | $731275 | $963273 |
| Total assets | $4946730 | $5930103 |
| Total current liabilities | $1297542 | $1308319 |
| Total liabilities | $4800549 | $5984922 |

---

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended<br> January 31,** | **For the Six Months Ended<br> January 31,** |
|  | **2026<br> (Unaudited)** | **2025<br> (Unaudited)** |
| Net revenue | $3597156 | $2707994 |
| Net income | $181499 | $61432 |

---

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended<br> January 31,** | **For the Six Months Ended<br> January 31,** |
|  | **2026<br> (Unaudited)** | **2025<br> (Unaudited)** |
| Net cash provided by (used in) operating activities | $20762 | $408945 |
| Net cash used in investing activities | $(55640) | $94489 |
| Net cash provided by financing activities | $— | $— |

---

Total current assets and total assets of the VIEs include amounts due from the Group of $447,285 and $194,661, respectively, as of January 31, 2026 and July 31, 2025. Total current liabilities and total liabilities of the VIEs include amounts due to the Group of $1,017,162 and $1,227,896, respectively, as of January 31, 2026 and July 31, 2025. During the six months ended January 31, 2026 and 2025, the VIEs earned intercompany revenue of $3,597,156 and $2,707,994, respectively. All of these balances and transactions have been eliminated in consolidation.

**NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

 ****

***Basis of presentation and principle of consolidation***

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and pursuant to the applicable rules and regulations of the Securities and Exchange Commission (the "SEC"). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete annual financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the Group's unaudited condensed consolidated financial position, results of operations and cash flows have been included. Operating results for the six months ended January 31, 2026 are not necessarily indicative of the results that may be expected for the year ending July 31, 2026. These unaudited condensed consolidated financial statements should be read in conjunction with the Group's audited consolidated financial statements and related notes as of and for the year ended July 31, 2025.

 ****

**CTW CAYMAN AND SUBSIDIARIES**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** (cont.)

***Uses of estimates***

In preparing the unaudited condensed consolidated financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information available as of the date of the unaudited condensed consolidated financial statements. Actual results could differ from those estimates. There were no material changes to the Group's significant estimates from those disclosed in the audited consolidated financial statements as of and for the year ended July 31, 2025, except for updates made in the ordinary course of preparing interim financial statements.

 ****

***Summary of significant accounting policies and interim disclosure basis***

There have been no material changes to the Group's significant accounting policies from those disclosed in the audited consolidated financial statements as of and for the year ended July 31, 2025, except as disclosed in these notes. Certain annual disclosures have been condensed or omitted consistent with interim reporting requirements.

The Group continues to qualify as an emerging growth company and has elected to use the extended transition period for complying with new or revised accounting standards.

 ****

***Cash and cash equivalents***

Cash and cash equivalents include currency on hand and deposits held by banks and financial institutions that can be added or withdrawn without limitation. The Company holds most of its cash and cash equivalents in Japan and the United States. The deposits for payment and settlement purposes held by banks and certain specified financial institutions in Japan are insured by Deposit Insurance Corporation of Japan ("DICJ") without any coverage limit while the general deposits are covered by insurance provided by DICJ with a maximum limitation of JPY 10,000,000 (approximately $64,792) per depositor per financial institution. The deposits held by banks and financial institutions in the United States are insured by the Federal Deposit Insurance Corporation ("FDIC") up to USD 250,000 per depositor per insured financial institution. The deposits held by banks and financial institutions in Singapore are insured by Singapore Deposit Insurance Corporation Limited ("SDIC") with a maximum limitation of SGD 100,000 (approximately $78,746) per depositor per financial institution. The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. As of January 31, 2026 and July 31, 2025, the Group did not have any cash equivalents.

***Restricted Cash***

Restricted cash consists of cash used as security deposits to secure its leases and to meet certain requirements related to international money transfers. The Group is required to keep certain amounts on deposit that are subject to withdrawal restrictions. These security deposits at the bank are refundable only when the related agreements are terminated. The restricted cash is classified as a current asset if the related agreements are expected to be terminated within one year, and as a non-current asset if otherwise.

 ****

***Expected credit loss***

The Group adopted Financial Standards Accounting Board ("FASB") Accounting Standards Codification ("ASC") 326 "Financial Instruments — Credit Losses" ("ASC 326") on August 1, 2023 by applying the modified retrospective approach. The adoption of ASC 326 did not have a material impact on the Group's unaudited condensed consolidated financial statements.

**CTW CAYMAN AND SUBSIDIARIES**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** (cont.)

The Group's accounts receivable, loan to third party, which are included in the prepaid expenses and other current assets in the condensed consolidated balance sheets, and deposits which are included in the other noncurrent assets in the condensed consolidated balance sheets are within the scope of ASC 326. ASC 326 introduces an approach based on expected credit losses on financial assets at amortized cost. Upon adoption of ASC 326, the Group estimates the expected credit losses for accounts receivable using the roll-rate method on a collective basis when similar risk characteristics exist. The roll-rate method stratifies the receivables balance by delinquency stages and projected forward in three-month increments using historical roll rate. In each year of the simulation, losses on the receivables are captured, and the ending delinquency stratification serves as the beginning point of the next iteration. The loss rate calculated for each delinquency stage is then adjusted for both current and forecasts of economic conditions. The management then applied the adjusted loss rate to respective receivables balance. For deposit and loan to third party, the Group uses the loss-rate method to evaluate the expected credit losses on an individual basis. When establishing the loss rate, the Group makes the assessment on various factors, including historical experience, credit-worthiness of debtors, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect its ability to collect from the debtors. The Group also provides specific provisions for allowance when facts and circumstances indicate that the receivable is unlikely to be collected.

Expected credit losses are included in general and administrative expenses in the unaudited condensed consolidated statements of comprehensive income. After all attempts to collect a receivable have failed, the receivable is written off against the allowance.

 ****

***Accounts receivable, net***

Accounts receivable are presented net of allowance for credit losses and are primarily in-transit payments due from payment processing companies for in-game purchases made by gamers. Accounts receivable is recognized in the period when the Group has an unconditional right to consideration for services provided to its customers. The allowance for credit losses as of January 31, 2026 and July 31, 2025 was $nil and $nil, respectively.

 ****

***Advance to game developers, net***

Advance to game developers, net represents advances made to game developers to support their game development activities. There were no material changes to the Group's accounting policy for advances to game developers during the six months ended January 31, 2026. As of January 31, 2026 and July 31, 2025, valuation provisions of $562,396 and $8,115,468, respectively, had been provided for advances to game developers.

 ****

***Prepaid royalties, net***

The Group evaluates the expected future realization of prepaid royalties each quarter. There were no material changes to the Group's accounting policy for prepaid royalties during the six months ended January 31, 2026. For the six months ended January 31, 2026 and 2025, the Group incurred impairment losses on prepaid royalties of $nil and $278,747, respectively.

 ****

***Fair value measurements***

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

● Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

● Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable and inputs derived from or corroborated by observable market data.

● Level 3 — inputs to the valuation methodology are unobservable.

Unless otherwise disclosed, the fair value of the Group's financial instruments, including cash and cash equivalents, accounts receivable, other receivables, accounts payable, accrued liabilities and other payables, and income taxes payable, approximated the fair value of the respective assets and liabilities as of January 31, 2026 and July 31, 2025 based upon the short-term nature of the assets and liabilities.

**CTW CAYMAN AND SUBSIDIARIES**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** (cont.)

***Property and equipment, net***

Property and equipment are stated at cost less accumulated depreciation. Depreciation of property and equipment is provided using the straight-line method over their expected useful lives, as follows:

---

| | |
|:---|:---|
|  | **Useful life** |
| Buildings | 17 – 29 years |
| Leasehold improvement | Lesser of useful life and lease term |
| Automobiles | 3 – 6 years |
| Office and electric equipment | 3 – 10 years |

---

Expenditures for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the unaudited condensed consolidated statements of comprehensive income.

 ****

***Leases***

Effective August 1, 2021, the Group adopted ASC 842, Leases. The adoption of this standard did not have a material impact on the Group's unaudited condensed consolidated financial statements. Therefore, no adjustments to opening retained earnings were necessary. The Group leases administrative office, which is classified as operating leases in accordance with Topic 842. Under Topic 842, lessees are required to recognize the following for all leases (with the exception of short-term leases, usually with an initial term of 12 months or less) on the commencement date: (i) lease liability, which is a lessee's obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) right-of-use ("ROU") asset, which is an asset that represents the lessee's right to use, or control the use of, a specified asset for the lease term.

At the commencement date, the Group recognizes the lease liability at the present value of the lease payments not yet paid, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate for the same term as the underlying lease. The ROU asset is recognized initially at cost, which primarily comprises the initial amount of the lease liability, plus any initial direct costs incurred, less any lease incentives received. All ROU assets are reviewed for impairment annually. The Group also established a capitalization threshold of $10,000 for lease to be recognized as ROU and lease liability.

 ****

***Investment in films and television programs***

Investment in films and television programs includes the unamortized costs of films and television programs. From time to time, the Company entered into certain investment and collaboration agreements with other qualified investors and the production management entities pursuant to which the Company agreed to invest a fixed amount of money in the respective Japanese animation films and television programs in exchange for a share of revenue proportional to its investment percentage after deducting operating expenses, administrative fees and related taxes. The initial investment in films and television programs is capitalized when incurred and subsequently amortized over the estimated period of use.

***Internal-use software development costs***

 ****

The Company accounts for internal-use software in accordance with ASU 2025-06, adopted effective August 1, 2025 on a prospective basis.

The Company capitalizes certain costs incurred in connection with developing or obtaining internal-use software and hosted cloud computing arrangements. Costs capitalized primarily include, 1) payroll and payroll-related costs for employees directly involved in software development activities; 2) fees paid to third-party developers and consultants; and 3) certain implementation and configuration costs associated with cloud-based software arrangements.

**CTW CAYMAN AND SUBSIDIARIES**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** (cont.)

 ****

Capitalization begins when (a) management authorizes and commits to funding the software project, and (b) it is probable that the project will be completed and the software will be used to perform its intended function ("probable-to-complete recognition threshold"). Significant development uncertainty exists if the software involves technological innovations, novel or unproven features not yet resolved by coding/testing, or if performance requirements are not fully identified. During this period of uncertainty, costs are expensed as incurred. Capitalization ceases when the software project is substantially complete and ready for its intended use, which typically occurs after all substantial testing is completed.

Capitalized software costs are amortized on a straight-line basis over the estimated useful life of the related software once placed into service and amortized over the term of the hosting arrangement.

For the six months ended January 31, 2026, the Company capitalized $2,101,942 qualifying internal-use software development cost.

***Deferred offering costs***

 ****

The Group complies with ASC 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A, "Expenses of Offering." Deferred offering costs consist of underwriting, legal, accounting and other expenses incurred through the balance sheet date that are directly related to the intended initial public offering ("IPO"). Deferred offering costs will be charged to shareholders' equity upon the completion of the IPO. Should the IPO prove to be unsuccessful, these deferred costs, as well as additional expenses to be incurred, will be charged to the unaudited condensed consolidated statements of comprehensive income. As of January 31, 2026 and July 31, 2025, deferred IPO costs were $nil and $1,429,523, respectively.

 ****

***Impairment of long-lived assets***

Long-lived assets with finite lives, primarily prepaid royalties, property and equipment and investment in films and television programs, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For the six months ended January 31, 2026 and 2025, the Group had impairment losses of $nil and $nil, respectively, related to its investment in films and television programs.

***Share-Based Compensation***

The Company accounts for share-based compensation in accordance with ASC 718 Compensation—Stock Compensation. Share-based compensation cost is measured at the grant-date fair value of equity awards and is recognized as expense over the requisite service period, which is generally the vesting period of the respective awards. For awards that vest immediately, compensation cost is recognized in full on the grant date. The Company recognizes forfeitures as they occur.

The fair value of stock options is estimated on the grant date using the Black-Scholes option pricing model. The determination of fair value using this model requires management to make assumptions and judgments regarding a number of variables, including the expected term of the awards, the expected volatility of the Company's common stock, the risk-free interest rate, and the expected dividend yield. The Company estimates expected volatility based on the historical volatility of comparable publicly traded companies, as the Company has limited historical trading data for its own common stock. The expected term of stock options is estimated using the simplified method, as appropriate. The risk-free interest rate is based on U.S. Treasury yields in effect at the time of grant for instruments with a term commensurate with the expected term of the awards. The expected dividend yield is assumed to be zero, as the Company has no history of paying dividends and does not expect to pay dividends in the foreseeable future.

For the six months ended January 31, 2026, the Company granted stock options that were fully vested on the grant date; accordingly, the related share-based compensation cost was recognized immediately upon grant. No stock options were exercised during the six months ended January 31, 2026.

**CTW CAYMAN AND SUBSIDIARIES**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** (cont.)

***Revenue recognition***

The Group generates its revenues primarily through sales of its services to game developers and recognizes revenue in accordance with ASC 606. The core principle requires an entity to recognize revenue to depict the transfer of controls over goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied.

ASC 606 requires the use of a new five-step model to recognize revenue from customer contracts. The five-step model requires that the Group (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Group satisfies the performance obligation. The application of the five-step model to the revenue streams compared to the prior guidance did not result in significant changes in the way the Group records its revenue.

The Group enters into contracts with third-party game developers to provide a range of services, including but not limited to facilitating the use of intellectual property (IP) derived from Japanese animation titles for game development and offering game distribution services. Each contract contains one game expected to be developed by the game developer and the associated services to be provided by the Group for the game. Game developers use these services to develop and monetize Japanese animation IP-based games through the Group's HTML 5 gaming platform at G123.jp. In return, the Group receives a fixed proportion of the end-users' in-game purchase amount, representing the variable consideration for the services rendered. Each contract generally allows the game developer to develop a specific game using the IP access to them in a period of two to three years. In general, the Group has distributed the developed games on behalf of game developers through its platform, enabling end users to access games for an initial period of three years from the date the game is launched. The game developers are responsible for fulfilling gaming activities and providing in-game items to end users upon request. End users purchase in-game items within the games, and the order information including the amount to be collected is transferred from the game to the Group, which partners with various payment processing companies to facilitate payment collection from end users. Based on the payment status, game developers deliver the requested in-game items to end users. The price as well as the useful lives of in-game items vary and are solely defined and controlled by the game developers. The Group does not provide any incentive to end users for their purchase of in-game items. The Group does not control or have the ability to modify the games. All intellectual property rights to the games remain with the game developers. These services provided to the game developers represent the Group's ordinary activities, aligning with its operational objectives. Accordingly, the Group identifies game developers as its customers, and these contracts meet the criteria for a customer contract under ASC 606.

The Group has determined that its contracts with game developers includes up to four distinct performance obligations: (1) providing access to IP-related content for game development, (2) online gaming distribution services, (3) game development support services, and (4) game marketing and advertising services. These performance obligations all comprise series of services that are satisfied over time, as customers simultaneously receive and consume the benefits of the services as the Group performs. These services are provided throughout the contractual term and cannot be selectively used, paused, or opted out of by game developers once the contract is in effect.

**CTW CAYMAN AND SUBSIDIARIES**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** (cont.)

The variable consideration to be received by the Group relates to the uncertainties inherent in the benefits to and usage by the game developers, as it is directly linked to the actual in-game purchase amounts generated by end users. In accordance with ASC 606-10-32-40, the Group's variable consideration arrangement with its customers qualifies for the variable consideration allocation exception. In accordance with ASC 606-10-32-39, the Company allocates the variable consideration to the distinct time periods (e.g., each month) in which the services are provided, rather than across the entire contract. The Company recognizes revenue monthly based on the actual top-up amounts multiplied by the predetermined fixed revenue share percentage, which reflects the value of services transferred during that period. The allocation among the four performance obligations is not further disaggregated, as the total transaction price earned each day or month is fixed and measurable, and no additional allocation is required. This amount of revenue recognized served as an appropriate measure of the value received by the customers. Other than the aforementioned variable consideration, there is no other fixed and variable fee arrangement between the Group and its customers. The Group does not allow refund for services provided and the Group does not provide any incentive to game developers for services provided.

As part of the online gaming distribution services, the Group collects in-game purchase amounts from end-users on behalf of game developers from third-party payment processing companies such as PayPal. The Group withholds its share of the in-game purchase amount. The balance to be paid to game developers is initially recognized as a liability and derecognized when paid. $2,627,155 and $2,369,304 was payable to game developers related to their share of in-game purchases and recorded in accounts payable in the condensed consolidated balance sheets as of January 31, 2026 and July 31, 2025, respectively.

 

*Contract Assets and Liabilities*

The Group did not have material contract assets or contract liabilities as of January 31, 2026 and July 31, 2025. The Group provides advances to game developers to support their game development activities. See "Advance to game developers, net" above for the Group's accounting policies related to advances to game developers.

 

*Disaggregation of Revenues*

The Group disaggregates its revenue from contracts by end users' geographic locations, as the Group believes this presentation best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. The Group's disaggregation of revenues for the six months ended January 31, 2026 and 2025 is as follows:

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended<br> January 31,** | **For the Six Months Ended<br> January 31,** |
|  | **2026** | **2025** |
| Japan | $28001147 | $29359316 |
| Korea | 4556323 | 4448606 |
| Taiwan, Hong Kong and Macau | 3016593 | 2177242 |
| North America | 2912624 | 2916368 |
| Europe | 1327806 | 1213472 |
| Other | 1117854 | 1098903 |
| **Total revenue** | $**40932347** | $**41213907** |

---

***Cost of revenue***

The Group's cost of revenue primarily consists of royalties paid to intellectual property holders, cost associated with the provision of game developer support services, the maintenance of the Group's G123 game distribution platform, transaction fees for payment processing and etc.

 ****

***Advertising expenses***

Advertising expenses primarily include advertisements for the Group's G123 gaming platform and games distributed on the platform. Advertising costs are expensed as incurred. Advertising expenses charged to selling and marketing expenses in the unaudited condensed consolidated statements of comprehensive income were $18,760,029 and $24,651,703 for the six months ended January 31, 2026 and 2025, respectively.

**CTW CAYMAN AND SUBSIDIARIES**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** (cont.)

 ****

***Research and development expenses***

In connection with the design and development of our distribution platform and related tools and technology, the Group expense all internal research costs as incurred, which primarily comprise employee costs, internal and external costs related to execution of studies, testing costs, and depreciation for property and equipment used in the research and development activities.

 ****

***Income taxes***

The Group accounts for current income taxes in accordance with the laws of the relevant tax authorities. Deferred income taxes are recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the unaudited condensed consolidated financial statements. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

No significant penalties or interest relating to income taxes were incurred during the six months ended January 31, 2026 and 2025. The Group does not believe there was any material uncertain tax provision as of January 31, 2026 and July 31, 2025.

The Group's subsidiary in Japan are subject to the income tax laws of Japan. As of July 31, 2025, the tax years ended July 31, 2023 through July 31, 2025 for the Company's operating entities in Japan remain open for statutory examination by the Japanese tax authorities. The Company's subsidiaries in Singapore, the People's Republic of China ("PRC"), Hong Kong, and the United States, as well as, its VIEs in the PRC and Taiwan, are subject to income taxes in their respective jurisdictions. As of July 31, 2025, the tax years since the years of incorporations of these subsidiaries and VIEs through July 31, 2025 remain open for statutory examination by the relevant taxing authorities.

 ****

***Earnings per share***

The Group computes earnings per share ("EPS") in accordance with ASC 260, "Earnings Per Share." Basic EPS is measured as net income divided by the weighted average ordinary shares outstanding for the period. Diluted EPS presents the dilutive effect of potential ordinary shares, if any. As of January 31, 2026 and July 31, 2025, there were no dilutive shares, subject to management confirmation.

 ****

***Risks and uncertainties***

 

*Political and economic risk*

The Group distributes games to global end users on behalf of game developers. For the six months ended January 31, 2026 and 2025, a significant portion of the Group's revenue was ultimately contributed by end users in Japan, the United States, South Korea and Taiwan. Accordingly, the Group's business, financial condition and results of operations may be influenced by political, economic and legal environments in these jurisdictions.

 

**CTW CAYMAN AND SUBSIDIARIES**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** (cont.)

*Credit risk*

As of January 31, 2026 and July 31, 2025, $3,005,477 and $961,946 of the Group's cash was on deposit at financial institutions in Japan, respectively, which were insured by the Deposit Insurance Corporation of Japan subject to certain limitations. As of January 31, 2026 and July 31, 2025, $2,388,907 and $10,204,181 of the Group's cash was on deposit at financial institutions in Singapore, respectively, which were insured by Singapore Deposit Insurance Corporation Limited subject to certain limitations. As of January 31, 2026 and July 31, 2025, $460,452 and $518,847 of the Group's cash was on deposit at financial institutions in Taiwan, respectively, which were insured by Central Deposit Insurance Corporation ("CDIC") subject to certain limitations. As of January 31, 2026 and July 31, 2025, $59,726 and $534,082 of the Group's cash was on deposit at financial institutions in PRC, respectively, which were insured by Deposit Insurance Fund Management Co., Ltd. ("DIFM") subject to certain limitations. As of January 31, 2026 and July 31, 2025, $13,712,941 and $149,604 of the Group's cash was on deposit at financial institutions in the United States, respectively, which were insured by FDIC subject to certain limitations. The Group has not experienced any losses in such accounts in each of the respective jurisdictions.

Accounts receivable are typically unsecured and derived from in-transit end-user top-ups to be received from third-party payment processing companies. These balances generally settle within a few days to a week. Management should confirm subsequent collection of accounts receivable outstanding as of January 31, 2026.

*Concentrations*

As of January 31, 2026 and July 31, 2025, majority of the Group's assets were located in Japan, Singapore and the United States.

The Group's revenue was ultimately generated from end-users' in-game purchases. Revenue generated from end users located in Japan accounted for 68.41% and 71.24% of revenue for the six months ended January 31, 2026 and 2025, respectively.

Revenue from significant customers and related games representing 10% or more of the Group's revenue for the respective years are summarized as follows:

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended <br> January 31,** | **For the Six Months Ended <br> January 31,** |
|  | **2026<br> (Unaudited)** | **2025<br> (Unaudited)** |
| Customer E (Game: Arifureta: From Commonplace to World's Strongest Rebellion Soul) | 19.28% | \*% |
| Customer E (Other games) | 4.64% | \*% |
| Customer E subtotal | 23.92% | \*% |
| Customer A (Game: Vivid Army) | 23.45% | 28.61% |
| Customer A (Other games) | 0.02% | \*% |
| Customer A subtotal | 23.47% | 28.61% |
| Customer D (Game: High School D×D Operation Paradise Infinity) | 12.32% | 15.87% |
| Customer D (Other games) | 0.34% | \*% |
| Customer D subtotal | 12.66% | \*% |
| Customer F (Game: I've Been Killing Slimes for 300 Years and Maxed Out My Level: Witchcraft) | 6.51% | \*% |
| Customer F (Game:Crayon Shinchan My Sugoroku Great Strategy) | 4.12% | \*% |
| Customer F subtotal | 10.63% | \*% |
| Customer B (Game: Queens Balde) | \*% | 11.91% |
| Customer B (Game: Strike the Blood Daybreak) | \*% | 2.65% |
| Customer B subtotal | \*% | 14.56% |
| Customer C (Game: So I'm a Spider, So What? Labyrinth Ruler) | \*% | 15.87% |

---

---

| | |
|:---|:---|
| \*: | Revenue from the customer and the related games representing less than 10% of the Group's revenue for the respective years. |

---

---

| | | |
|:---|:---|:---|
|  | **As of** | **As of** |
|  | **January 31,<br> 2026<br> (Unaudited)** | **July 31,<br> 2025** |
| Customer A | 57.82% | 51.00% |
| Customer D | \*% | 14.02% |

---

---

| | |
|:---|:---|
| \*: | Accounts payable due to the customer representing less than 10% of the Group's accounts payable as of respective date |

---

**CTW CAYMAN AND SUBSIDIARIES**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** (cont.)

Accounts receivable due from significant third-party payment processing companies representing 10% or more of the Group's accounts receivable as of January 31, 2026 and July 31, 2025 are as follows:

---

| | | |
|:---|:---|:---|
|  | **As of** | **As of** |
|  | **January 31,<br> 2026 <br> (Unaudited)** | **July 31,<br> 2025** |
| Payment processing company I | 53.1% | 65.9% |
| Payment processing company II | 10.8% | 12.7% |

---

---

| | |
|:---|:---|
| \*: | Accounts receivable due from these payment processing companies as of the respective period is less than 10%. |

---

Purchases made from significant suppliers representing 10% or more of the Group's purchases for the six months ended January 31, 2026 and 2025 are as follows:

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended<br> January 31,** | **For the Six Months Ended<br> January 31,** |
|  | **2026<br> (Unaudited)** | **2025<br> (Unaudited)** |
| Supplier X | 37.61% | 17.65% |
| Supplier Y | 17.27% | 26.96% |

---

 ****

***Foreign currency translation***

The functional currency for CTW Cayman and its subsidiaries in Hong Kong and Singapore are U.S Dollar ("US$"). The Group's functional currency for its Japanese subsidiary is the Japanese Yen ("JPY"). The functional currency for its Taiwan VIE is the New Taiwan Dollars ("NTD") and the functional currency for its subsidiaries in mainland China is Chinese Yuan ("CNY"). The Group's Consolidated financial statements have been translated into the reporting currency of U.S. Dollars ("US$"). Assets and liabilities of the Group are translated at the exchange rate at each reporting period end date. Equity is translated at historical rates. Income and expense accounts are translated at the average rate of exchange during the reporting period. The resulting translation adjustments are reported under other comprehensive income. Gains and losses resulting from foreign currency transactions are reflected in the results of operations.

The following table outlines the currency exchange rates that were used in creating the Consolidated financial statements in this report:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **31-Jan-26** | **31-Jan-26** | **31-Jan-25** | **31-Jan-25** | **31-Jul-25** | **31-Jul-25** |
| **Year-end spot rate** | **Average rate** | **Year-end spot rate** | **Average rate** | **Year-end spot rate** | **Average rate** |
| US$1=JPY154.3400 | US$1=JPY152.3198 | US$1=JPY154.9100 | US$1=JPY150.4900 | US$1=JPY150.6000 | US$1=JPY148.6506 |
| US$1=RMB6.9510 | US$1=RMB7.0897 | US$1=RMB7.2422 | US$1=RMB7.1818 | US$1=RMB7.2002 | US$1=RMB7.2067 |
| US$1=TWD31.5100 | US$1=TWD30.8451 | US$1=TWD32.8500 | US$1=TWD32.3482 | US$1=TWD29.9100 | US$1=TWD31.8010 |

---

**CTW CAYMAN AND SUBSIDIARIES**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** (cont.)

***Recent accounting pronouncements***

The Group considers the applicability and impact of all accounting standards updates ("ASUs"). Management periodically reviews new accounting standards that are issued.

In December 2023, the FASB issued ASU No. 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures". This ASU requires additional quantitative and qualitative income tax disclosures to enable financial statements users better assess how an entity's operations and related tax risks and tax planning and operational opportunities affect its tax rate and prospects for future cash flows. This ASU is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Group has adopted this guidance effective August 1, 2025 and the adoption of this ASU does not have a material impact on Group's unaudited condensed consolidated financial statements.

In March 2024, the FASB issued ASU No. 2024-02, "Codification Improvements – Amendments to Remove References to the Concepts Statements". The amendments in this ASU remove the various references to FASB Concept Statements from the codification to make clear distinction between authoritative and non-authoritative literature in the codification. This is ASU is effective for fiscal years beginning after December 15, 2024 with early adoption permitted. The adoption of this ASU is not expected to have a material impact on the Group's unaudited condensed consolidated financial statements.

In November 2024, the FASB issued ASU No. 2024-03, "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40". This ASU addresses improvements to disclosures surrounding operating expenses, including purchases of inventory, employee compensation, depreciation, amortization, and depletion, which are all normally included in common expense captions on the face of the income statement. Any expenses remaining in relevant expense captions that are not disaggregated should be accompanied with a qualitative disclosure as to their nature. This ASU is effective for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The Group is currently evaluating the effect this standard will have on its unaudited condensed consolidated financial statements and related disclosures.

In September 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Accounting for Internal-Use Software. This ASU provides updated guidance on the accounting for internal-use software, including clarifying the scope of software arrangements, aligning the capitalization guidance for certain cloud computing and software development arrangements, and enhancing consistency in the recognition of implementation costs. The Company early adopted ASU 2025-06 on August 1, 2025, on a prospective basis. Accordingly, the updated guidance is applied to qualifying costs incurred on or after the adoption date, while prior period amounts were not adjusted. Since adoption, the Company has capitalized approximately $2.1 million of qualifying internal-use software and cloud computing implementation costs, which are included within other noncurrent assets in the consolidated balance sheets. The adoption of this ASU did not have a material impact on the Company's consolidated financial position or cash flows; however, it reduced operating expenses and net loss for the period by the amount capitalized, and may affect the timing of expense recognition for such costs in future periods.

**CTW CAYMAN AND SUBSIDIARIES**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 3 — ACCOUNTS RECEIVABLE, NET**

Accounts receivable, net consist of the following:

---

| | | |
|:---|:---|:---|
|  | **As of** | **As of** |
|  | **January 31,<br> 2026<br> (Unaudited)** | **July 31,<br> 2025** |
| Accounts receivable | $1625129 | $1410083 |
| Allowance for credit losses |  |  |
| **Accounts receivable, net** | $**1625129** | $**1410083** |

---

The Group's accounts receivable are presented net of allowance for credit losses and are primarily in-transit payments due from payment processing companies for in-game purchases made by gamers. Accounts receivable is recognized in the period when the Group has unconditional right to consideration for services provided to its customers.

**NOTE 4 — ADVANCE TO GAME DEVELOPERS, NET**

Advance to game developers, net consist of the following:

---

| | | |
|:---|:---|:---|
|  | **As of** | **As of** |
|  | **January 31,<br> 2026<br> (Unaudited)** | **July 31, <br> 2025** |
| Advance to game developers | $20500060 | $22677194 |
| Less: allowance for credit loss | (562396) | (8115468) |
| **Advance to game developers, net** | $**19937664** | $**14561726** |

---

Movements in advances to game developers are as follows:

---

| | | |
|:---|:---|:---|
|  | **As of** | **As of** |
|  | **January 31,<br> 2026<br> (Unaudited)** | **July 31,<br> 2025** |
| Beginning balance | $22677194 | $22134756 |
| Additional investments | 7776480 | 7379759 |
| Amortization | (1487620) | (3433290) |
| Write-off | (8607108) | (3375786) |
| Foreign currency translation adjustments | 141114 | (28245) |
| Ending balance | 20500060 | 22677194 |
| Less: allowance for credit loss | (562396) | (8115468) |
| **Advance to game developers, net** | $**19937664** | $**14561726** |

---

Provision for valuation allowance movement is as follows:

---

| | | |
|:---|:---|:---|
|  | **As of** | **As of** |
|  | **January 31,<br> 2026<br> (Unaudited)** | **July 31,<br> 2025** |
| Beginning balance | $(8115468) | $(7967665) |
| Additions | (892557) | (3157669) |
| Reversals | 1049 | 10258 |
| Write-off | 8607108 | 3375786 |
| Foreign currency translation adjustments | (162528) | (376178) |
| **Ending balance** | $**(562396)** | $**(8115468)** |

---

**CTW CAYMAN AND SUBSIDIARIES**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 5 — PREPAID EXPENSES AND OTHER CURRENT ASSETS**

Prepaid expenses and other current assets consisted of the following as of January 31, 2026 and July 31, 2025:

---

| | | |
|:---|:---|:---|
|  | **As of** | **As of** |
|  | **January 31,<br> 2026<br> (Unaudited)** | **July 31, <br> 2025** |
| Tax recoverable | 461071 | 843175 |
| Prepaid IP collaboration fee | 581832 | 599933 |
| Loan to third party | 410000 | 410000 |
| Prepaid rental expenses | 198107 | 354485 |
| Prepaid SaaS service costs | 583316 | 200424 |
| Prepaid advertising expenses |  | 64843 |
| Others | 633183 | 393383 |
| **Prepaid expenses and other current assets** | $**2867509** | $**2866243** |

---

**NOTE 6 — PROPERTY, PLANT AND EQUIPMENT, NET**

Property, plant and equipment, net, consist of the following:

---

| | | |
|:---|:---|:---|
|  | **As of** | **As of** |
|  | **January 31,<br> 2026<br> (Unaudited)** | **July 31,<br> 2025** |
| Office equipment | $931833 | $828933 |
| Leasehold improvements | 865126 | 591895 |
| Automobile | 611099 | 532058 |
| Land | 129736 | 132957 |
| Building | 107846 | 110525 |
| Subtotal | 2645640 | 2196368 |
| Construction in progress |  | 177909 |
| Less: accumulated depreciation | (1447461) | (1275598) |
| **Property, plant and equipment, net** | $**1198179** | $**1098679** |

---

Depreciation expense was $468,891 and $186,075 for the six months ended January 31, 2026 and 2025, respectively.

**NOTE 7 — PREPAID ROYALTIES, NET**

Movement in prepaid royalties is as follows:

---

| | | |
|:---|:---|:---|
|  | **As of** | **As of** |
|  | **January 31,<br> 2026<br> (Unaudited)** | **July 31, <br> 2025** |
| Beginning balance | $3499962 | $3660198 |
| Addition investments | 1198137 | 2024883 |
| Amortization | (395280) | (1698654) |
| Impairments |  | (483149) |
| Foreign currency translation adjustments | (95320) | (3316) |
| **Ending balance** | $**4207499** | $**3499962** |

---

**CTW CAYMAN AND SUBSIDIARIES**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 8 — INVESTMENT IN FILMS AND TELEVISION PROGRAMS, NET**

Movement in investment in films and television programs is as follows:

---

| | | |
|:---|:---|:---|
|  | **As of** | **As of** |
|  | **January 31,<br> 2026<br> (Unaudited)** | **July 31, <br> 2025** |
| Beginning balance | $576956 | $800033 |
| Addition investments | 111021 | 258882 |
| Amortization | (241379) | (483700) |
| Impairments |  |  |
| Foreign currency translation adjustments | (13980) | 1741 |
| **Ending balance** | $**432618** | $**576956** |

---

**NOTE 9 — OTHER NONCURRENT ASSETS**

As of January 31, 2026 and July 31, 2025, other noncurrent assets consist of the followings:

---

| | | |
|:---|:---|:---|
|  | **As of** | **As of** |
|  | **January 31,<br> 2026<br> (Unaudited)** | **July 31,<br> 2025** |
| Deposits | $2781742 | $1830420 |
| Long-term prepaid expense | 1620 | 6640 |
| Capitalized SaaS implementation cost | 2126122 |  |
| Other | 7363 | 21353 |
| **Other noncurrent assets** | $**4916847** | $**1858413** |

---

**NOTE 10 — ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES**

Accrued expenses and other current liabilities as of January 31, 2026 and July 31, 2025 consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **As of** | **As of** |
|  | **January 31,<br> 2026<br> (Unaudited)** | **July 31,<br> 2025** |
| Accrued payroll and employee benefits | $1630388 | $1379766 |
| Accrued communication expense | 423021 | 336932 |
| Accrued legal fee | 827 | 309672 |
| Credit card payable | 123459 | 64341 |
| Accrued license fee | 213814 | 58433 |
| Unpaid advance payment to a game developer | 286885 |  |
| Due to related parties<sup>(1)</sup> | 77409 | 47688 |
| Unearned revenue | 145729 | 145000 |
| Others | 291299 | 207931 |
| **Accrued expenses and other current liabilities** | $**3192831** | $**2549763** |

---

&nbsp;&nbsp;&nbsp;&nbsp;(1) Due to related parties related to unreimbursed expenses paid by management on behalf of the Group.

**CTW CAYMAN AND SUBSIDIARIES**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 11 — LEASES**

The Group's leasing activities primarily consist of operating leases for its offices with terms ranging from 1 to 6 years. There were no material changes to the Group's lease accounting policy during the six months ended January 31, 2026. The Group's right-of-use assets and lease liabilities as of January 31, 2026 and July 31, 2025 are as follows:

---

| | | |
|:---|:---|:---|
|  | **As of** | **As of** |
|  | **January 31,<br> 2026<br> (Unaudited)** | **July 31,<br> 2025** |
| Operating lease right-of-use assets | $7415273 | $6782354 |
| Operating lease liabilities - current | $4343563 | $2728326 |
| Operating lease liabilities - noncurrent | 3142682 | 4222089 |
| **Total lease liabilities** | $**7486245** | $**6950415** |

---

The weighted-average remaining lease term and the weighted-average discount rate of leases are as follows:

---

| | | |
|:---|:---|:---|
|  | **As of** | **As of** |
|  | **January 31,<br> 2026 (Unaudited)** | **July 31,<br> 2025** |
| Remaining lease term and discount rate: |  |  |
| **Weighted average remaining lease term (years)** | 3.39 | 3.84 |
| **Weighted average discount rate** | 3.40% | 2.55% |

---

During the six months ended January 31, 2026 and 2025, the Company incurred total operating lease expenses of $2,208,699 and $1,056,633, respectively.

The following table summarizes the maturity of operating lease liabilities as of July 31, 2025:

---

| | |
|:---|:---|
|  | **Amount** |
| For the twelve months ending January 31, |  |
| &nbsp;&nbsp;&nbsp;2027 | $1605030 |
| &nbsp;&nbsp;&nbsp;2028 | 2338523 |
| &nbsp;&nbsp;&nbsp;2029 | 1656150 |
| &nbsp;&nbsp;&nbsp;2030 | 1353880 |
| &nbsp;&nbsp;&nbsp;2031 | 795077 |
| &nbsp;&nbsp;&nbsp;After 2031 | 216839 |
| &nbsp;&nbsp;&nbsp;Total lease payments | 7965499 |
| &nbsp;&nbsp;&nbsp;Less: imputed interest | (479254) |
| &nbsp;&nbsp;&nbsp;**Total lease liabilities** | $**7486245** |

---

Supplemental cash flow information related to leases for the six months ended January 31, 2026 and 2025 is as follows:

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended**<br> **January 31,** | **For the Six Months Ended**<br> **January 31,** |
|  | **2026 (Unaudited)** | **2025 (Unaudited)** |
| **Cash paid for amounts included in the measurement of lease liabilities:** | | |
| Payments for operating leases included in cash from operating activities | $1450936 | $1174328 |
| **Supplemental disclosures of non-cash activities:** |  |  |
| Obtaining right-of-use assets in exchange for operating lease liabilities | $2282775 | $1126466 |

---

**CTW CAYMAN AND SUBSIDIARIES**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 12 — TAXES**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a) Corporate Income Taxes ("CIT")**

The Company is subject to income taxes on an entity basis on income arising in or derived from the tax jurisdiction in which each entity is domiciled.

 

*<u>Cayman</u>*

Under the current laws of the Cayman Islands, the Company is not subject to tax on income or capital gain. Additionally, the Cayman Islands does not impose a withholding tax on payments of dividends to shareholders.

 

*<u>Japan</u>*

The Group's subsidiary in Japan is primarily subject to Japanese national and local income taxes, including corporate income tax, inhabitant tax, and enterprise tax, which, in the aggregate, represented a statutory income tax rate of approximately 34.59% for the six months ended January 31, 2026 and 2025.

 

On March 31, 2025, Japan enacted tax legislation introducing a defense-related surtax (the "Defense Special Corporate Tax"), which increases the statutory corporate income tax rate applicable to the Group's Japanese subsidiary to approximately 35.43% for fiscal years beginning on or after April 1, 2026.

In accordance with ASC 740, Income Taxes, the effect of the change in enacted tax rate is recognized in the period of enactment, including the remeasurement of deferred tax assets and liabilities using the newly enacted tax rate. Accordingly, deferred tax balances are measured at the applicable enacted tax rates based on the expected timing of reversal of temporary differences. The impact of this change was not material to the Company's consolidated financial statements.

*<u>Singapore</u>*

The Group's subsidiary in Singapore is subject to Singapore Corporate tax on the taxable income as reported in its statutory financial statements adjusted in accordance with relevant Singapore tax laws. The applicable tax rate is 17% in Singapore, with 75% of the first S$10,000 taxable income and 50% of the next S$190,000 taxable income exempted from income tax.

**CTW CAYMAN AND SUBSIDIARIES**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 12 — TAXES** (cont.)

 

*<u>Hong Kong</u>*

CTW HK is subject to Hong Kong profits tax at a rate of 8.25% on assessable profits up to HK$2,000,000, and 16.5% on any part of assessable profits over HK$2,000,000. However, CTW HK did not generate any assessable profits arising in or derived from Hong Kong for the six months ended January 31, 2026 and 2025, and accordingly no provision for Hong Kong profits tax has been made in these periods.

 

*<u>PRC</u>*

The Group's subsidiaries that are incorporated in the PRC are subject to the PRC Enterprise Income Tax. Under the Enterprise Income Tax ("EIT") Law of the PRC, domestic enterprises and Foreign Investment Enterprises ("FIEs") are subject to a unified 25% enterprise income tax rate, while preferential tax rates, tax holidays and tax exemptions may be granted on a case-by-case basis. During the six months ended January 31, 2026 and 2025, substantially all of the Group's subsidiaries and VIEs in the PRC qualified for preferential tax treatment as small and low-profit enterprises, resulting in a reduced effective tax rate. However, CTW Shanghai ceased to qualify for such preferential tax treatment beginning in the calendar year 2026 and is subject to the standard statutory enterprise income tax rate of 25%.

*<u>Taiwan</u>*

The Group's VIE that are incorporated in Taiwan is subject to corporate income taxes at the rate of 20% on the estimated assessable profits.

The components of the income tax provision are as follows:

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended January 31,** | **For the Six Months Ended January 31,** |
|  | **2026** | **2025** |
|  | **(Unaudited)** | **(Unaudited)** |
| Current tax provision |  |  |
| Outside of Japan | $(331261) | $120918 |
| Inside of Japan | 130950 | 1786 |
|  | (200411) | 122704 |
| Deferred tax provision (benefit) |  |  |
| Outside of Japan | 1190853 | 98732 |
| Inside of Japan | (485505) | (605743) |
|  | 705348 | (507011) |
| **Total income tax provision** | $**504937** | $**(384307)** |

---

Deferred tax assets, net and deferred tax liabilities are composed of the following:

---

| | | |
|:---|:---|:---|
|  | **As of<br> January 31,**<br>**2026** | **As of <br> July 31,**<br>**2025** |
|  | **(Unaudited)** | **(Unaudited)** |
| **Deferred tax assets:** |  |  |
| Fixed assets depreciation adjustment | $97308 | $85190 |
| Software depreciation adjustment |  | 51958 |
| Amortization of investment in films and TV series | 250578 | 165146 |
| Accrued asset retirement obligation | 61953 | 56735 |
| Operating lease liabilities | 1276635 | 1555157 |
| Net operating loss | 1450905 | 357947 |
| Total deferred tax assets | 3137379 | 2272133 |
| Valuation allowance | (1420384) | (49909) |
| Total deferred tax assets, net of valuation allowance | 1716995 | 2222224 |
| Net off with deferred tax liabilities | (1654027) | (2173157) |
| **Deferred tax assets, net** | $**62968** | $**49067** |

---

**CTW CAYMAN AND SUBSIDIARIES**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 12 — TAXES** (cont.)

---

| | | |
|:---|:---|:---|
|  | **As of<br> January 31,**<br>**2026** | **As of <br> July 31,**<br>**2025** |
| **Deferred tax liabilities** |  |  |
| &nbsp;&nbsp;Advance to game developers | $4904363 | $3782403 |
| &nbsp;&nbsp;Prepaid royalties and prepaid expenses | 1651981 | 1373710 |
| &nbsp;&nbsp;Right-of-use assets | 1298285 | 1534321 |
| &nbsp;&nbsp;Realized contingent gains |  | 1607769 |
| &nbsp;&nbsp;Foreign interest | 93682 | 83115 |
| &nbsp;&nbsp;Capitalized SaaS costs | 517133 |  |
| &nbsp;&nbsp;Other | 8569 |  |
| &nbsp;&nbsp;Total deferred tax liabilities | 8474013 | 8381318 |
| &nbsp;&nbsp;Net off with deferred tax assets | (1654027) | (2173157) |
| &nbsp;&nbsp;**Deferred tax liabilities, net** | $**6819986** | $**6208161** |

---

Movement of the valuation allowance:

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended<br> January 31,**<br>**2026** | **For the<br> Years ended<br> July 31,**<br>**2025** |
|  | **(Unaudited)** | |
| Beginning balance | 49909 | $56911 |
| Current year addition | 1420384 |  |
| Current year reversal | (48396) | (11560) |
| Exchange difference | (1513) | 4558 |
| **Ending balance** | $**1420384** | $**49909** |

---

The Group periodically evaluates the likelihood of the realization of deferred tax assets, and reduces the carrying amount of the deferred tax assets by a valuation allowance to the extent it believes a portion will not be realized. Management considers new evidence, both positive and negative, that could affect the Group's future realization of deferred tax assets including its recent cumulative earnings experience, expectation of future income, the carry forward periods available for tax reporting purposes and other relevant factors.

**CTW CAYMAN AND SUBSIDIARIES**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 12 — TAXES** (cont.)

The following table reconciles the Federal statutory rate to the Group's effective tax rate for the six months ended January 31, 2026 and 2025:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the six months ended** | **For the six months ended** | **For the six months ended** | **For the six months ended** |
|  | **January 31,** | **January 31,** | **January 31,** | **January 31,** |
|  | **2026** | **2026** | **2025** | **2025** |
|  | **(Unaudited)** | **(Unaudited)** | **(Unaudited)** | **(Unaudited)** |
| U.S. federal statutory tax rate | $(137824) | 21.00% | $53440 | 21.00% |
| State and local income taxes, net of federal income tax effect |  | —% |  | —% |
| Foreign tax effects |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Japan | (184054) | 28.04% | (237639) | (93.38)% |
| &nbsp;&nbsp;&nbsp;Cayman Islands | 81637 | (12.44)% |  | —% |
| &nbsp;&nbsp;&nbsp;Other countries | (82127) | 12.51% | 36407 | 14.31% |
| Return-to-provision true-up adjustment | (332660) | 50.69% |  | —% |
| Effect of change in tax rates | 113629 | (17.31)% |  | —% |
| Loss of preferential tax treatment | 343461 | (52.33)% |  | —% |
| Change in valuation allowance |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Singapore | 736560 | (112.23)% |  | —% |
| &nbsp;&nbsp;&nbsp;Taiwan | (48396) | 7.37% | 44081 | 17.32% |
| &nbsp;&nbsp;&nbsp;Other countries | 183 | (0.03)% |  | —% |
| Non-deductible expenses | 14528 | (2.15)% | (280596) | (110.26)% |
| &nbsp;&nbsp;&nbsp;Provision for income taxes | $504937 | (76.88)% | $(384307) | (151.02)% |

---

The following table reconciles the Japanese statutory rate to the Group's effective tax rate for the six months ended January 31, 2026 and 2025:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the six months ended** | **For the six months ended** | **For the six months ended** | **For the six months ended** |
|  | **January 31,** | **January 31,** | **January 31,** | **January 31,** |
|  | **2026** | **2026** | **2025** | **2025** |
|  | **(Unaudited)** | **(Unaudited)** | **(Unaudited)** | **(Unaudited)** |
| Japan statutory income tax rate | $(227016) | 34.59% | $88024 | 34.59% |
| Foreign tax effects |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Singapore | (87824) | 13.38% | (283985) | (111.60)% |
| &nbsp;&nbsp;&nbsp;Cayman Islands | 134468 | (2049)% |  | —% |
| &nbsp;&nbsp;&nbsp;Other countries | (141996) | 21.64% | 48169 | 18.93% |
| Return-to-provision true-up adjustment | (332660) | 50.69% |  | —% |
| Effect of change in tax rates | 113629 | (17.31)% |  | —% |
| Loss of preferential tax treatment | 343461 | (52.33)% |  | —% |
| Change in valuation allowance |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Singapore | 736560 | (112.23)% |  | —% |
| &nbsp;&nbsp;&nbsp;Taiwan | (48396) | 7.37% | 44081 | 17.32% |
| &nbsp;&nbsp;&nbsp;Other countries | 183 | (0.03)% |  | —% |
| Non-deductible expenses | 14528 | (2.14)% | (280596) | (110.26)% |
| &nbsp;&nbsp;&nbsp;Provision for income taxes | $504937 | (76.88)% | $(384307) | (151.02)% |

---

The Group continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative rulings.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b) Taxes payable**

Taxes payable consist of the following:

---

| | | |
|:---|:---|:---|
|  | **As of** | **As of** |
|  | **January 31,<br> 2026 (Unaudited)** | **July 31,<br> 2025** |
| Income tax payable | $130230 | $52758 |
| Consumption tax payable in Japan | 332174 | 240724 |
| **Total tax payable** | $**462404** | $**293482** |

---

**CTW CAYMAN AND SUBSIDIARIES**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 13 — SHAREHOLDERS' EQUITY**

CTW Cayman was incorporated as an exempted company with limited liability under the laws of Cayman Islands on November 15, 2024. The Company is authorized to issue 500,000,000 ordinary shares, par value $0.0001 per share and 1 ordinary share were issued on November 15, 2024.

On May 15, 2025, the Company completed the following share re-structure: 1) 200,000,000 authorized but unissued ordinary shares in the capital of the Company each be redesignated as a Class A ordinary share of US$0.0001 par value each; 2) the one issued and 19,999,999 authorized but unissued ordinary shares in the capital of the Company each be redesignated as a Class B ordinary share of US$0.0001 par value each; 3) the remaining 280,000,000 authorized but unissued ordinary shares be redesignated as share of a par value of US$0.0001 each of such class or classes as the Board of Directors may determine in accordance with the Amended M&A; 4) re-designated the 1 ordinary share beneficially owned by Mr. Sasaki, Founder, CEO and Chairman of Board of Directors, then issued and outstanding into Class B ordinary shares on a one-for-one basis; 5) the Company issued 48,000,000 Class A ordinary shares and 11,999,999 Class B ordinary shares to Mr. Sasaki, Founder, CEO, and Chairman of Board of Directors. ("Share Reorganization")

Holders of Class A ordinary shares and Class B ordinary shares will have the same rights except for voting and conversion rights. Each Class A ordinary share will be entitled to one vote, and will not be convertible into Class B ordinary shares under any circumstances. Each Class B ordinary share will be entitled to ten (10) votes, subject to certain conditions, and will be convertible into one Class A ordinary share at any time by the holder thereof. Upon any sale, transfer, assignment or disposition of any Class B ordinary share by the holder thereof to any non-affiliate of such holder, each of such Class B ordinary share will be automatically and immediately converted into one Class A ordinary share.

 ****

***Statutory reserve***

One of the Company's operating subsidiaries, CTW Japan, was incorporated as a company limited by shares under the laws of Japan on August 14, 2013. CTW Japan allocated JPY 69,500,000 ($673,339) to capital reserve as of January 31, 2026 and July 31, 2025. There were no material changes to the related statutory reserve requirements during the six months ended January 31, 2026.

In accordance with the PRC Company Law, entities incorporated in side of mainland China are required to allocate statutory reserves, appropriated from net profit as reported in their PRC statutory accounts. As of January 31, 2026 and July 31, 2025, the Company's subsidiaries and VIEs incorporated in mainland China collectively attributed $3,077 and $3,077 of retained earnings to statutory reserves, respectively.

 ****

***Restricted net assets***

The Company's ability to pay dividends is primarily dependent on the Company receiving distributions of funds from its subsidiaries. Restricted amounts include paid-in capital and statutory reserves, as determined under local generally accepted accounting principles in each jurisdiction where the Company's subsidiaries operate. As of January 31, 2026 and July 31, 2025, restricted net assets of the Company's subsidiaries were $1,554,731 and $1,554,731, respectively.

**CTW CAYMAN AND SUBSIDIARIES**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 14 — SHARE-BASED COMPENSATION**

On December 17, 2025, the Company granted 2,000,000 stock options to employees. As the awards were fully vested on the grant date, the Company recognized the entire grant-date fair value of the options as share-based compensation expense on December 17, 2025. The grant-date fair value of options granted during the six months ended January 31, 2026 was $1,913,692

The grant-date fair value of the stock options was estimated using the Black-Scholes option pricing model. The determination of the fair value of share-based awards on the grant date using an option pricing model is affected by the Company's stock price, as well as assumptions regarding a number of complex and subjective variables. These variables include the expected term of the options, expected stock price volatility, risk-free interest rate, and expected dividend yield.

The following table presents the allocation of share-based compensation expense by functional expense category for the periods presented:

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| | | |
|:---|:---|:---|
|  | **For the Six Months Ended January 31,** | **For the Six Months Ended January 31,** |
|  | **2026** | **2025** |
|  | **(Unaudited)** | **(Unaudited)** |
| Cost of revenue | $223942 | $&nbsp;&nbsp;&nbsp;&nbsp; — |
| General & administrative expenses | 10181 |  |
| Research & development expenses | 559855 |  |
| Sales and marketing expenses | 1119714 |  |
| **Total share-based compensation expenses** | $**1913692** | $**—**  |

---

As of January 31, 2026, there was no unrecognized compensation cost related to unvested stock options.

---

| | |
|:---|:---|
|  | **For the Six Months Ended<br> January 31,**<br>**2026** |
| Expected volatility | 60.67% |
| Expected term (years) | 5 |
| Risk-free interest rate | 3.70% |
| Expected dividend yield | —% |

---

The following table summarizes stock option activity for the six months ended January 31, 2026:

---

| | | |
|:---|:---|:---|
|  | **Number of Options** | **Weighted-average Exercise Price** |
| Outstanding at July 31, 2025 |  | $&nbsp;&nbsp;&nbsp;&nbsp;— |
| Granted | 2000000 | 1.75 |
| Exercised |  |  |
| Forfeited |  |  |
| **Outstanding at January 31, 2026** | **2000000** | $**1.75** |

---

All outstanding options were vested and exercisable as of January 31, 2026. No options were exercised during the six months ended January 31, 2026.

**NOTE 15 — COMMITMENTS AND CONTINGENCIES**

***Contingencies***

From time to time, the Group is a party to various legal actions arising in the ordinary course of business. The Group accrues costs associated with these matters when they become probable and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. The Group's management does not expect any liability from the disposition of such claims and litigation individually or in the aggregate to have a material adverse impact on the Group's consolidated financial position, results of operations and cash flows. The Group currently does not have any material legal proceedings.

**CTW CAYMAN AND SUBSIDIARIES**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**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.

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| | | |
|:---|:---|:---|
|  | **For the Six Months Ended January 31,** | **For the Six Months Ended January 31,** |
|  | **2026** | **2025** |
|  | **(Unaudited)** | **(Unaudited)** |
| Consolidated in-game purchases | $48603849 | $49125267 |
| Less: Revenue share with game developers and IP holders | 8186251 | 9453531 |
| Transaction fee | 2245367 | 2486795 |
| Advertisement expense | 18760029 | 24651703 |
| Server cost directly related to hosting the games | 1400430 | 894239 |
| Segment profits | 18011772 | 11638999 |
| **Other operating expenses:** |  |  |
| Payroll and related cost | 7698199 | 4025616 |
| Share-based compensation cost | 1913692 | - |
| Lease expense | 1451104 | 1101375 |
| Depreciation and amortization expense (including prepaid royalties amortization) | 867889 | 1339080 |
| Impairment expense | 892534 | 1392610 |
| Recoup of advances made to game developers | 1549346 | 1362612 |
| Other cost of sales (1) | 2325095 | 805784 |
| Other selling and marketing expenses (2) | 1441766 | 766401 |
| Other general and administrative expenses (3) | 1621277 | 1387283 |
| **Total other operating expenses** | 19760902 | 12180761 |
| **Income (loss) from operation** | **(1749130)** | **(541762)** |
| Interest income, net | 333453 | 282507 |
| Foreign Currency Transaction gain (loss) | 260296 | 221056 |
| Other income | 499078 | 292677 |
| **Income before income tax** | $**(656303)** | $**254478** |

---

&nbsp;&nbsp;&nbsp;&nbsp;(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.

&nbsp;&nbsp;&nbsp;&nbsp;(2) Other selling and marketing expenses mainly includes cost associated with meeting, travel and promotions.

&nbsp;&nbsp;&nbsp;&nbsp;(3) Other general and administrative expenses mainly includes cost associated with professional services, office supplies, recruiting and education.

**CTW CAYMAN AND SUBSIDIARIES**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 16 — SEGMENT REPORTING** (cont.)

The following table reconcile from consolidated in-game purchase amount of revenue.

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| | | |
|:---|:---|:---|
|  | **For the Six Months Ended January 31,** | **For the Six Months Ended January 31,** |
|  | **2026** | **2025** |
|  | **(Unaudited)** | **(Unaudited)** |
| **Revenue reconciliation** |  |  |
| Consolidated in-game purchases | $48603849 | $49125267 |
| Less: |  |  |
| &nbsp;&nbsp;&nbsp;Recoup of advances made to game developers | 1549346 | 1362612 |
| &nbsp;&nbsp;&nbsp;Revenue share paid to game developers | 6122156 | 6548748 |
| **Consolidated revenue** | $**40932347** | $**41213907** |

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As of January 31, 2026 and July 31, 2025, the Group's long-lived assets by geographic locations are as follows:

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| | | |
|:---|:---|:---|
|  | **As of** | **As of** |
|  | **January 31,<br> 2026 (Unaudited)** | **July 31,<br> 2025** |
| Japan | $15506677 | $14726888 |
| Singapore | 11191484 | 6502511 |
| Taiwan | 3901121 | 4481573 |
| China, excluding Taiwan | 2376709 | 836698 |
| United States | 2350346 |  |
| **Total** | $**35326337** | $**26547670** |

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**NOTE 17 — SUBSEQUENT EVENTS**

In accordance with ASC Topic 855, "Subsequent Events," the Group has evaluated events or transactions that occurred after January 31, 2026 through May 13, 2026, the date the unaudited condensed consolidated financial statements were issued. Management should update this disclosure for all recognized and non-recognized subsequent events before issuance.