# EDGAR Filing Document

**Accession Number:** 0001905920
**File Stem:** 0001213900-26-055633
**Filing Date:** 2026-5
**Character Count:** 124977
**Document Hash:** b51fb9472412f6446864cca719d82d41
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001213900-26-055633.hdr.sgml**: 20260513

**ACCESSION NUMBER**: 0001213900-26-055633

**CONFORMED SUBMISSION TYPE**: 6-K

**PUBLIC DOCUMENT COUNT**: 70

**CONFORMED PERIOD OF REPORT**: 20251231

**FILED AS OF DATE**: 20260513

**DATE AS OF CHANGE**: 20260513

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Galaxy Payroll Group Ltd
- **CENTRAL INDEX KEY:** 0001905920
- **STANDARD INDUSTRIAL CLASSIFICATION:** SERVICES-ENGINEERING, ACCOUNTING, RESEARCH, MANAGEMENT [8700]
- **ORGANIZATION NAME:** 07 Trade & Services
- **EIN:** 000000000
- **STATE OF INCORPORATION:** D8
- **FISCAL YEAR END:** 0630

**FILING VALUES:**
- **FORM TYPE:** 6-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-42269
- **FILM NUMBER:** 26972330

**BUSINESS ADDRESS:**
- **ADDRESS IS A NON US LOCATION:** YES
- **STREET 1:** 25/F, OVEST, 77 WING LOK STREET
- **STREET 2:** SHEUNG WAN
- **CITY:** HONG KONG
- **NON US STATE TERRITORY:** HONG KONG
- **PROVINCE COUNTRY:** K3
- **ZIP:** 00000
- **BUSINESS PHONE:** 85231052622

**MAIL ADDRESS:**
- **ADDRESS IS A NON US LOCATION:** YES
- **STREET 1:** 25/F, OVEST, 77 WING LOK STREET
- **STREET 2:** SHEUNG WAN
- **CITY:** HONG KONG
- **NON US STATE TERRITORY:** HONG KONG
- **PROVINCE COUNTRY:** K3
- **ZIP:** 00000

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

**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: 001-42269**

**Galaxy Payroll Group Limited**

**25th Floor, Ovest**

**77 Wing Lok Street**

**Sheung Wan, Hong Kong**

**(Address of principal executive offices)**

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 ☒&nbsp;&nbsp;&nbsp;&nbsp; Form 40-F ☐

Galaxy Payroll Group Limited (the "Company"), a British Virgin Islands business company, is hereby furnishing under this report of foreign private issuer on Form 6-K its Management's Discussion and Analysis of Financial Condition and Results of Operations for the six months ended December, 31 2025 and 2024, and the Unaudited Interim Consolidated Financial Statements for the same period, which are attached as Exhibit 99.1 and Exhibit 99.2, respectively.

**EXHIBIT INDEX**

---

| | |
|:---|:---|
| **Exhibit No.** | **Description** |
| 99.1 | [Operating and Financial Review and Prospects for the Six Months ended December 31, 2025 and 2024](ea028571301ex99-1.htm) |
| 99.2 | [Unaudited Interim Consolidated Financial Statements for the Six Months ended December 31, 2025 and 2024](ea028571301ex99-2.htm) |
| 101.INS | Inline XBRL Instance 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 Presentation Linkbase Document. |
| 104 | Cover Page Interactive Data File (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.

---

| | | |
|:---|:---|:---|
|  | **Galaxy Payroll Group Limited** | **Galaxy Payroll Group Limited** |
| Date: May 13, 2026 | By: | */s/ Wai Hong Lao* |
|  | Name: | Wai Hong Lao |
|  | Title: | Chief Executive Officer |

---

## Exhibit 99.1

**Exhibit 99.1**

**OPERATING AND FINANCIAL REVIEW AND PROSPECTS**

**IN CONNECTION WITH THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**FOR THE SIX MONTHS ENDED DECEMBER 31, 2025 AND 2024**

*Unless the context otherwise requires, all references in this section to the "Company," "we," "us," or "our" refer to Galaxy Payroll Group Limited,*

 

*The following discussion and analysis of our financial condition and result of operations for the six months ended December 31, 2025 and 2024, should be read together with our unaudited condensed consolidated financial statements and related notes. The following discussion contains "forward-looking statements "that reflect our future plans, estimates, beliefs and expected performance. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements as a result of a number of factors. We caution that assumptions, expectations, projections, intentions, or beliefs about future events may, and often do, vary from actual results and the differences can be material.*

**Six months ended December 31, 2025 compared to six months ended December 31, 2024**

**Results of Operations**

The following table sets forth a summary of the unaudited condensed consolidated results of operations of the Company and its subsidiaries (the "Group") for the periods indicated, both in absolute amount and as a percentage of its total revenues.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** |
|  | **2024** | **2024** | **2025** | **2025** | **2025** |
|  | **HKD** | **% of<br> Revenue** | **HKD** | **US$** | **% of<br> Revenue** |
| **Revenues** |  |  |  |  |  |
| Employment services | $5038418 | 37% | 5329806 | 684775 | 38% |
| Payroll outsourcing services | 8686075 | 63% | 8702307 | 1118074 | 62% |
| Total revenues | 13724493 | 100% | 14032113 | 1802849 | 100% |
| **Cost of revenues** | (8786932) | -64% | (9014200) | (1158146) | -64% |
| **Operating expenses** |  |  |  |  |  |
| Selling, general and administrative expenses | (13036023) | -95% | (6459337) | (829897) | -46% |
| Research and development expenses | (18686290) | -136% |  |  | 0% |
| Reversal of provision for credit losses | 92618 | 1% | 342 | 44 | 0% |
| Total operating expenses | (31629695) | -230% | (6458995) | (829853) | -46% |
| Loss from operations | (26692134) | -194% | (1441082) | (185150) | -10% |
| Interest income | 339072 | 1% | 426696 | 54822 | 3% |
| Interest expense | (34181) | 0% | (23481) | (3017) | 0% |
| Other (expense) income | (54548) | 0% | 11193 | 1438 | 0% |
| Loss before income taxes | (26441791) | -193% | (1026674) | (131907) | -8% |
| Income tax expense | (87570) | -1% | (120336) | (15461) | -1% |
| Net loss | $(26529361) | -193% | (1147010) | (147368) | -8% |

---

***Revenues***

For the six months ended December 31, 2025 and 2024, the Group generated its revenues from two primary streams, namely employment services and payroll outsourcing services, through its wholly-owned subsidiaries.

The following table presented the Group's revenues disaggregated by service lines and geographic location of the employees of our customers for the six months ended December 31, 2025 and 2024:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** |
| | **2024** | **2025** | **2025** | **Change** | **Change** |
| <br>**Revenues** | **HKD** | **HKD** | **US$** | **HKD** | **%** |
| Hong Kong | $446999 | $425982 | $54730 | $(21017) | -5% |
| Macau | 36000 | 24037 | 3088 | (11963) | -33% |
| PRC | 2593720 | 2711617 | 348389 | 117897 | 5% |
| Taiwan | 1540392 | 1470822 | 188972 | (69570) | -5% |
| Japan | 42584 | 69761 | 8963 | 27177 | 64% |
| Australia | 120056 |  |  | (120056) | -100% |
| Thailand | 12098 | 32471 | 4172 | 20373 | 168% |
| Malaysia |  | 177869 | 22853 | 177869 | N/A |
| Vietnam |  | 19488 | 2504 | 19488 | N/A |
| India | 10346 | 99486 | 12782 | 89140 | 862% |
| Indonesia |  | 27068 | 3478 | 27068 | N/A |
| Philippines | 53125 | 13349 | 1715 | (39776) | -75% |
| Singapore | 36790 | 79179 | 10173 | 42389 | 115% |
| South Korea | 146308 | 71172 | 9144 | (75136) | -51% |
| Italy | - | 107505 | 13812 | 107505 | N/A |
| **Total employment services** | 5038418 | 5329806 | 684775 | 291388 | 6% |
| Hong Kong | 424836 | 817924 | 105087 | 393088 | 93% |
| Macau | 219605 | 264882 | 34032 | 45277 | 21% |
| PRC | 7856625 | 7468402 | 959541 | (388223) | -5% |
| Taiwan | 160312 | 102954 | 13228 | (57358) | -36% |
| India | 24697 | 48145 | 6186 | 23448 | 95% |
| **Total payroll outsourcing services** | 8686075 | 8702307 | 1118074 | 16232 | 0% |
| **Total revenues** | $13724493 | $14032113 | $1802849 | $307620 | 2% |

---

The following table presented the Group's revenues disaggregated by the timing of revenue recognition for the six months ended December 31, 2025 and 2024:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** |
|  | **2024** | **2025** | **2025** | **Change** | **Change** |
|  | **HKD** | **HKD** | **US$** | **HKD** | **%** |
| Services transferred over time | $13724493 | $14032113 | $1802849 | $307620 | 2% |
| **Total revenues** | $13724493 | $14032113 | $1802849 | $307620 | 2% |

---

The following table presented the Group's number of payroll transactions disaggregated by service lines and geographic markets for the six months ended December 31, 2025 and 2024:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** |
| <br>**Number of payroll transactions** | **2024** | **2025** | **Change** | **Change** |
| Hong Kong | 63 | 75 | 12 | 19% |
| Macau | 10 | 12 | 2 | 20% |
| PRC | 339 | 315 | (24) | -7% |
| Taiwan | 250 | 91 | (159) | -64% |
| Japan | 11 | 18 | 7 | 64% |
| Australia | 10 |  | (10) | -100% |
| Thailand | 1 | 6 | 5 | 500% |
| Malaysia |  | 6 | 6 | N/A |
| Vietnam |  | 14 | 14 | N/A |
| India |  | 24 | 24 | N/A |
| Indonesia | 3 | 6 | 3 | 100% |
| Philippines | 21 | 6 | (15) | -71% |
| Singapore | 6 | 2 | (4) | -67% |
| South Korea | 17 | 10 | (7) | -41% |
| Italy | - | 2 | 2 | N/A |
| **Total employment services** | 731 | 587 | (144) | -20% |
| Hong Kong | 653 | 883 | 230 | 35% |
| Macau | 441 | 476 | 35 | 8% |
| PRC | 50760 | 49186 | (1574) | -3% |
| Taiwan | 248 | 284 | 36 | 15% |
| India | 74 | 83 | 9 | 12% |
| **Total payroll outsourcing services** | 52176 | 50912 | (1264) | -2% |
| **Total number of payroll transactions** | 52907 | 51499 | (1408) | -3% |

---

The following table presented the Group's number of customers disaggregated by service lines and the respective revenue contribution to the Group for the six months ended December 31, 2025 and 2024:

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** |
|  | **2024** | **2024** | **2025** | **2025** | **2025** | **Change** | **Change** |
|  | **Number of Customer** | **Revenue (HKD)** | **Number of Customer** | **Revenue (HKD)** | **Revenue (US$)** | **Revenue (HKD)** | **Revenue<br> (%)** |
| End-users | 28 | 3514576 | 35 | 3735859 | 479984 | 221283 | 6% |
| Indirect end-users referred by the channels | 19 | 1523842 | 18 | 1593947 | 204791 | 70105 | 5% |
| **Total employment services** | 47 | 5038418 | 53 | 5329806 | 684775 | 291388 | 6% |
| End-users | 38 | 1638760 | 33 | 1753706 | 225317 | 114946 | 7% |
| Indirect end-users referred by the channels | 111 | 7047315 | 124 | 6948601 | 892757 | (98714) | -1% |
| **Total payroll outsourcing services** | 149 | 8686075 | 157 | 8702307 | 1118074 | 16232 | 0% |
| **Total** | 196 | 13724493 | 210 | 14032113 | 1802849 | 307620 | 2% |

---

Total number of customers increased by 14 (from 196 to 210), and total revenues of the Group increased by HKD307,620 or 2% from HKD13,724,493 for the six months ended December 31, 2024 to HKD14,032,113 (US$1,802,849) for the same period in 2025. The increase was mainly driven by the increase in employment services of HKD291,338, although there is a slight growth in payroll outsourcing services of HKD16,232. Therefore, the overall revenue is increased.

Our revenue in respect of employment services increased by HKD291,388, or 6%, from HKD5,038,418 for the six months ended December 31, 2024 to HKD5,329,806 (US$684,775), for the six months ended December 31, 2025. The increase was mainly due to higher contributions from Vietnam, India, Malaysia, and Italy, which amounted to HKD394,002 (US$50,621), partly offset by lower revenue from Australia amounted to HKD120,056 (US$15,425). The average revenue per payroll transaction in Vietnam, India, Malaysia, and Italy was approximately HKD8,800 (US$1,131) during the six months ended December 31, 2024, while the average revenue per payroll transaction in Australia was about HKD12,000 (US$1,542) during that period. Industry surveys in late 2025 highlighted rising demand for employment services in Asia, driven by cross-border hiring and flexible staffing. Employers in Vietnam and India reported skill shortages and greater reliance on outsourcing, while Australia showed weaker demand. The average revenue per payroll transaction increased from approximately HKD6,900 (US$887) for the six months ended December 31, 2024 to HKD9,000 (US$1,156) for the six months ended December 31, 2025. This increase primarily reflected higher remuneration packages for our customers' employees and the impact of global inflation. As a result, growth in Southeast Asia and European markets offset contraction in Australia, resulting in an overall increase in revenue generated from employment services.

Our revenue in respect of payroll outsourcing services increased by HKD16,232, or 0.2%, from HKD8,686,075 for the six months ended December 31, 2024 to HKD8,702,307 (US$1,118,074) for the six months ended December 31, 2025. The increase was primarily driven by higher revenue per payroll transaction in Hong Kong, which rose from HKD651 to HKD926, contributing HKD393,088 (US$50,504) to overall growth. In contrast, aggregate revenue from mainland China (the "PRC") declined by HKD388,223 (US$49,879), reflecting a reduction of 1,574 payroll transactions (from 50,760 to 49,186), while revenue per transaction remained relatively stable, decreasing slightly from HKD155 (US$20) to HKD152 (US$20). Meanwhile, aggregated revenue in Macau, Taiwan, and India increased by HKD11,367 (US$1,460), notwithstanding a decline in revenue per payroll transaction from HKD540 (US$69) to HKD493 (US$63). Revenue trends in the second half of 2025 were influenced by both regional and global industry conditions. In Hong Kong, stronger cross-border business activity and a shortage of high-skilled talent supported demand for payroll outsourcing. Industry surveys indicated talent gaps in certain sectors, leading to greater reliance on outsourcing and higher revenue per transaction. In the PRC, the human resources outsourcing market continued to expand; however, slower economic growth during the period reduced overall momentum. At the macro level, inflationary pressures in major economies and currency volatility across Asia affected corporate cost structures and outsourcing demand. As a result, Hong Kong and other non-PRC markets recorded growth, while PRC revenues declined, which resulted in a slight overall increase in revenue generated from payroll outsourcing services.

***Cost of revenues***

Cost of revenues included in-country partner costs, net exchange difference, employee compensation, related employee benefits and director's remuneration. Employee compensation and related payroll benefits consisted of staff salaries, employer's contribution to pension scheme, staff training, staff allowance and recruitment fee. For the six months ended December 31, 2025, cost of revenues was HKD9,014,200 (US$1,158,146), increased by HKD227,268 or 2.6% from HKD8,786,932 for the same period in 2024. The percentage of cost of revenues to revenue slightly increased from 64.0% for the six months ended December 31, 2024 to 64.2% for the six months ended December 31, 2025. The change was primarily driven by the slight increase in revenue, notwithstanding the recognition of year-end bonuses to employees and annual salary increments during the period.

***Operating Expenses***

The Group's total operating expenses decreased by HKD25,170,700 or 80% from HKD31,629,695 for the six months ended December 31, 2024 to HKD6,458,995 (US$829,853) for the six months ended December 31, 2025, driven by a significant decrease in research and development expenses, of HKD18,686,290 (US$2,400,818), and selling, general and administrative expenses, of HKD6,576,686 (US$844,974), during the current period, and the decrease in reversal of provision of credit losses incurred, of HKD92,276 (US$11,856).

***Selling, general and administrative expenses***

Selling, general and administrative expenses consisted primarily of bank charge, building management fee, depreciation, insurance, Internet and IT service fee, meal and entertainment, office premises expenses, travelling, staff cost, legal and professional fees and others.

The Group's major selling, general and administrative expenses were comprised of the following items during the periods indicated:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** |
|  | **2024** | **2025** | **2025** | **Change** | **Change** |
|  | **HKD** | **HKD** | **US$** | **HKD** | **(%)** |
| Bank Charge | $120225 | $149947 | $19265 | $29722 | 25% |
| Building management fee | 83617 | 82301 | 10574 | (1316) | -2% |
| Depreciation | 53548 | 55053 | 7073 | 1505 | 3% |
| Insurance | 9045 | 256270 | 32927 | 247225 | 2733% |
| Internet and IT service fee | 249008 | 263878 | 33904 | 14870 | 6% |
| Meal and entertainment | 491604 | 642801 | 82586 | 151197 | 31% |
| Office premises expenses | 557495 | 567585 | 72923 | 10090 | 2% |
| Travelling | 11383 | 17618 | 2264 | 6235 | 55% |
| Staff costs | 8755449 | 2660475 | 341818 | (6094974) | -70% |
| Legal and professional fee | 2339225 | 1251709 | 160820 | (1087516) | -46% |
| Others | 365424 | 511700 | 65743 | 146276 | 40% |
| **Total** | $13036023 | $6459337 | $829897 | $(6576686) | -50% |

---

Selling, general and administrative expenses decreased by HKD6,576,686 or 50%, from HKD13,036,023 for the six months ended December 31, 2024 to HKD6,459,337 (US$829,897) for the six months ended December 31, 2025, which was mainly driven by the decrease in staff costs by HKD5,725,590 (US$735,625) due to the one-time discretionary bonuses to the executive directors and staffs during the six months ended December 31, 2024.

*Bank Charge*

Bank charge was HKD149,947 (US$19,265) for the six months ended December 31, 2025 which increased by HKD29,722 or 25%, compared to HKD120,225 for the same period in 2024. For the six months ended December 31, 2025, higher bank charges were incurred as a result of an increased volume of transactions processed by the banks during the period.

 

*Building management fee*

Building management fees, relating to the Group's office facilities in PRC, Hong Kong and Taiwan, decreased by HKD1,316 or 2%, from HKD83,617 for the six months ended December 31, 2024 to HKD82,301 (US$10,574) for the six months ended December 31, 2025. Management confirms that the Group's financial position and operating results remained stable, with no significant variances noted compared to prior periods.

*Depreciation*

The Group incurred depreciation expenses for its leasehold improvements, furniture and fixtures and office equipment. Depreciation expense increased by HKD1,505 or 3%, from HKD53,548 for the six months ended December 31, 2024 to HKD55,053 (US$7,073) for the same period in 2025. Management confirms that the Group's financial position and operating results remained stable, with no significant variances noted compared to prior periods.

 

*Insurance*

Insurance costs comprised premiums for medical insurance and employee compensation insurance premiums the Group paid for its employees. Such costs increased by HKD247,225 or 2,733%, from HKD9,045 for the six months ended December 31, 2024 to HKD256,270 (US$32,927) for the six months ended December 31, 2025. The increase primarily reflects a renewal insurance premium charged to the Group during the period of 2025 under its medical insurance policy, together with the exchange difference arising from the settlement in US dollars by the insurance provider and the presentation currency of the Group in Hong Kong dollars. The overall charge recorded a significant increase compared to the corresponding period in 2024.

*Internet and IT service fee*

Internet and IT service fees included consulting and service fee paid to internet service providers, as well as maintenance services rendered by third-party service providers. Such fees increased by HKD14,870 or 6%, from HKD249,008 for the six months ended December 31, 2024 to HKD263,878 (US$33,904) for the same period in 2025. Internet and IT service fees incurred in the second half of 2025 increased as the Group recognized higher configuration and maintenance expenses relating to the payroll system and the Enterprise Resource Planning system. In addition, the Group continued to incur service charges for server maintenance throughout the period, which are essential to ensuring optimal performance and system uptime. Furthermore, internet security measures were strengthened by engaging a specialized service provider to deliver comprehensive protection against cyber threats.

 

*Meal and entertainment*

The Group's meal and entertainment expenses increased by HKD151,197 or 31%, from HKD491,604 for the six months ended December 31, 2024 to HKD642,801 (US$82,586) for the six months ended December 31, 2025. The increase in meal and entertainment expenses was strategically incurred to strengthen our Group's customer relationships and support overall business performance. In addition, such expenditures contributed to employee welfare initiatives, including organized corporate retreats and related activities.

*Office premises expenses*

 

Office premises expenses included rent paid for the Group' office facilities in PRC, Hong Kong and Taiwan. Such expenses increased by HKD10,090 or 2%, from HKD557,495 for the six months ended December 31, 2024 to HKD567,585 (US$72,923) for the same period in 2025. Management confirmed that the Group's financial position and operating results remained stable, with no significant variances noted compared to prior periods.

*Travelling*

 

Travel expenses represented costs incurred by employees and management for business-related travel. Such expenses increased by HKD6,235 or 55%, from HKD11,383 for the six months ended December 31, 2024 to HKD17,618 (US$2,264) for the same period in 2025. Travel expenses increased as our management developed the business and the travelling costs incurred increased for the business development in other Asian countries, such as PRC.

*Staff costs*

Staff costs consisted of staff salaries, remuneration to independent executive directors, employer's contribution to pension scheme, staff training, staff allowance, ESOP expenses, and recruitment fees. For the six months ended December 31, 2025, staff costs were HKD2,660,475 (US$341,818), decreased by HKD6,094,974 or 70%, from HKD8,755,449 for the six months ended December 31, 2024. The decrease was primarily attributable to one-time discretionary bonuses of USD250,000, awarded to each senior management during the period of 2024. For the six months ended December 31, 2025, the Group recognized ESOP compensation expense was HKD50,762 (US$6,522). In both reporting periods, additional year-end bonuses to employees and annual salary increments were recognized, contributing to staff costs.

*Legal and professional fees*

 

Legal and professional fees included service fees paid to legal counsels, auditors and any other third-party service providers for professional services. The Group incurred legal and professional fees in an amount of HKD1,251,709 (US$160,820) for the six months ended December 31, 2025 compared to HKD2,339,225 for the six months ended December 31, 2024, with a decrease by HKD1,087,516 or 46%. Following the completion of the IPO in September 2024, most IPO-related expenses to professional parties were incurred during that period and did not recur in 2025. As a result, legal and professional service expenses decreased in 2025 compared with 2024.

*Others*

Other expenses included commission paid to independent third parties, donation to charities, office supplies and sundry expenses. For the six months ended December 31, 2025, the Group incurred other expenses in an amount of HKD511,700 (US$65,743) which consisted of donation, HKD16,000 (US$2,056), advertising, HKD60,750 (US$7,805) and sundry expense, HKD236,037 (US$30,336). For the six months ended December 31, 2024, the Group incurred other expenses in an amount of HKD365,424 which consisted of donation, HKD6,000, advertising, HKD57,096 and sundry expense, HKD110,228.

***Research and development expenses***

 ****

Research and development expenses decreased by HKD18,686,290 or 100%, from HKD18,686,290 for the six months ended December 31, 2024 to nil for the six months ended December 31, 2025. Research and development expenses mainly consisted of technology infrastructure expenses related to platform development to support the Group's business operations. However, due to considerations of cost-effectiveness and time limitation, increased competition in the industry, and limited resources within the Group, the management determined that further investment should be discontinued. As a result, the related expenditures were expensed as incurred and not capitalized in the period of 2024. There were no expenditures recurred and incurred during the period of 2025.

***Provision for credit losses***

We carry accounts receivable at the original invoice amount less a provision for estimated credit losses. We estimated our provision for credit losses using relevant available information from internal and external sources relating to past events, current conditions and reasonable and supportable forward-looking factors. During the six months ended December 31, 2025 and 2024, the Group reversed HKD342 (US$44) and HKD92,618 provision for credit losses on the unaudited condensed consolidated financial statement related to accounts receivable respectively. As of December 31, 2025 and June 30, 2025, the provision for credit losses was HKD43,060 (US$1,790) and HKD43,402.

The table below sets forth the age analysis of the Group's gross accounts receivable at the end of each period:

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **0-30 <br> days** | **31-60 <br> days** | **61-90 <br> days** | **91-182 <br> days** | **181-365<br> days** | **>365 <br> days** | **Total** |
| December 31, 2025 (USD) | $210608 | $135557 | $13393 | $66605 | $25908 | $1245 | $453316 |
| December 31, 2025 (HKD) | $1639223 | $1055083 | $104239 | $518404 | $201650 | $9700 | $3528299 |
| June 30, 2025 (HKD) | $1372170 | $674528 | $316878 | $1006473 | $250121 | $5084 | $3625254 |
| Change (HKD) | $267053 | $380555 | $(212639) | $(484069) | $(48471) | $4616 | $(96955) |

---

The gross accounts receivable decreased to HKD3,528,299 (US$453,316) as of December 31, 2025 from HKD3,625,254 as of June 30, 2025. Due to its increased effort in collection and the steady business recovery of its clients, the Group received collections HKD2,796,698 (US$359,320) in the subsequent period as of the date this report. The Group factored the customer settlements received for its account receivables in subsequent period when it estimated its provision for credit losses as of December 31, 2025 and June 30, 2025. The amount of reversal of provision for credit losses was HKD342 (US$44) for the six months ended December 31, 2025. The Group's allowance for credit losses as of December 31, 2025 decreased to HKD43,060 (US$1,790) from HKD43,402 as of June 30, 2025.

***Other income***

Other income was primarily comprised of interest income, interest expenses and other income/expenses. The total other income for the six months ended December 31, 2025 was HKD414,408 (US$53,243), compared to the total other income of HKD250,343 for the six months ended December 31, 2024. During the six months ended December 31, 2025, we recognized interest income, HKD426,696 (US$54,822), interest expenses, HKD23,481 (US$3,071) and other income, HKD11,193 (US$1,438). For the six months ended December 31, 2024, we recognized interest income, HKD339,072, interest expenses, HKD34,181 and other expenses, HKD54,548.

***Income tax expense***

Income tax expenses were HKD120,336 (US$15,461) for the six months ended December 31, 2025, as compared to HKD87,570 for the six months ended December 31, 2024. The profit was recorded in a Hong Kong subsidiary, and the related taxes were payable in Hong Kong. An increase in our income tax expenses by HKD32,766 or 37% was due to the increase in our total revenues and the decrease in selling, general and administrative expenses and research and development expenses before income taxes as discussed aforementioned.

 ****

***Net loss***

As a result of the above discussed, the Group recorded a net loss of HKD1,147,010 (US$147,368) for the six months ended December 31, 2025, compared to a net loss of HKD26,529,361 for the six months ended December 31, 2024. A significant decrease in our net loss for the six months ended December 31, 2025 by HKD25,382,351 or 96% resulted from significant decrease in our selling, general and administrative expenses and research and development expenses for the six months ended December 31, 2025 as previously discussed.

**Liquidity and Capital Resources**

The Group financed its daily operations and business development through cash generated from the operations of the Group. As of December 31, 2025 and June 30, 2025, its cash balances were HKD33,195,112 (US$4,264,915) and HKD32,188,711 respectively.

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

---

| | | | |
|:---|:---|:---|:---|
|  | **For the six months ended December 31,** | **For the six months ended December 31,** | **For the six months ended December 31,** |
|  | **2024** | **2025** | **2025** |
|  | **HKD** | **HKD** | **US$** |
| Net cash (used in) provided by operating activities | $(27368305) | $1254374 | $161162 |
| Net cash used in investing activity | $(48240) | $(43500) | $(5589) |
| Net cash provided by financing activities | $49269420 | $- | $- |

---

 

 

*Cash (used in) provided by operating activities:*

For the six months ended December 31, 2025, net cash provided by operating activities of HKD1,254,374 (US$161,162) primarily resulted from the net loss of HKD1,147,010 (US$147,368) as adjusted for non-cash items and changes in operating activities. Adjustments for non-cash items consisted of depreciation of property and equipment, HKD55,053 (US$7,073), amortization of right-of-use assets, HKD567,585 (US$72,923), reversal of provision for credit losses, HKD342 (US$44) and ESOP expense, HKD50,762 (US$6,522). Change in operating activities included decrease in accounts receivable, HKD96,955 (US$12,457), increase in prepayment, deposits and other receivables, HKD4,329,416 (US$556,245), increase in amount due from a related party, HKD20,000 (US$2,570), increase in accrued expenses and other payables, HKD6,779,337 (US$871,011), increase in account payable, HKD24,703 (US$3,174), decrease in income tax payable, HKD267,833 (US$34,411) and decrease in lease liabilities, HKD555,420 (US$71,360).

For the six months ended December 31, 2024, net cash used in operating activities of HKD27,368,305 resulted from the net loss of HKD26,529,361 as adjusted for non-cash items and changes in operating activities. Adjustments for non-cash items consisted of depreciation of property and equipment, HKD53,548, amortization of right-of-use assets, HKD557,495 and reversal of provision for doubtful debts, HKD92,618. Change in operating activities included increase in accounts receivable, HKD146,017, decrease in prepayment, deposits and other receivables, HKD1,077,571, decrease in accrued expenses and other payables, HKD906,195, increase in account payable, HKD15,012, decrease in income tax payable, HKD841,670 and decrease in lease liabilities, HKD556,070.

 

*Cash used in investing activity:*

 

For the six months ended December 31, 2025, net cash used in investing activity was incurred by the purchases of property and equipment, HKD43,500 (US$5,589).

For the six months ended December 31, 2024, net cash used in investing activity was incurred by the purchases of property and equipment, HKD48,240.

*Cash provided by financing activities:*

 

For the six months ended December 31, 2025, net cash provided by financing activities was nil.

For the six months ended December 31, 2024, net cash provided by financing activities, HKD49,269,420 consisted of proceed from IPO, net, HKD55,057,154, repayment from shareholders, HKD77,630 and payment of dividend, HKD5,865,364.

The following table sets forth a summary of the Group's working capital as of December 31, 2025 and June 30, 2025:

---

| | | | |
|:---|:---|:---|:---|
|  | **June 30, <br> 2025** | **December 31, <br> 2025** | **December 31, <br> 2025** |
|  | **HKD** | **HKD** | **US$** |
| Current assets | $37745218 | $43004422 | $5525217 |
| Current liabilities | 11744979 | $17997000 | 2312258 |
| Working capital | $26000239 | $25007422 | $3212959 |

---

Current assets as of December 31, 2025 were HKD43,004,422 (US$5,525,217). Out of this balance, the Group had cash in an amount of HKD33,195,112 (US$4,264,915). 92% of the cash was deposited in financial institutions in Hong Kong Special Administrative Region, and 8% of the cash was deposited in PRC, Macau and Taiwan. All of the cash is insured. The current asset balance also included the following: accounts receivable, net, HKD3,485,239 (US$447,784), prepayment, deposits and other receivables, net, HKD6,304,071 (US$809,948) and amount due from a related party, HKD20,000 (US$2,570).

Current liabilities as of December 31, 2025 were HKD17,997,000 (US$2,312,258). This amount was composed of accrued expenses and other payables, HKD14,851,076 (US$1,908,069), account payable, HKD73,325 (US$9,421), income tax payable, HKD2,410,984 (US$309,764) and an operating lease obligation-current portion, HKD661,615 (US$85,004).

Current assets as of June 30, 2025 were HKD37,745,218. Out of this balance, the Group had cash in an amount of HKD32,188,711. 92% of the cash was deposited in financial institutions in Hong Kong Special Administrative Region, and 8% of the cash was deposited in PRC, Macau and Taiwan. There was no restricted cash balance held in Hong Kong, PRC, Taiwan and Macau as of June 30, 2025. The current asset balance also included the following: accounts receivable, net, HKD3,581,852 and prepayment, deposits and other receivables, net, HKD1,974,655.

Current liabilities as of June 30, 2025 were HKD11,744,979. This amount was composed of accrued expenses and other payables, HKD8,071,739, account payable, HKD48,622, income tax payable, HKD2,678,817 and an operating lease obligation-current portion, HKD945,801.

The Group believes that its current levels of cash and cash flows from operations will be sufficient to meet its anticipated cash needs for at least the next twelve months. However, it may need additional cash resources in the future if it finds and wishes to pursue opportunities for investment, acquisition, strategic cooperation or other similar actions. If it determines that its cash requirements exceed its amounts of cash on hand or if it decides to further optimize its capital structure, it may seek to issue additional debt or equity securities or obtain credit facilities or other sources of funding.

**Contractual Obligations** 

The following tables summarized the contractual obligations of the Group as of December 31, 2025:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Payments Due by Period** | **Payments Due by Period** | **Payments Due by Period** | **Payments Due by Period** | **Payments Due by Period** |
|  | **Less Than<br> 1 Year** | **1 to 3<br> Years** | **3 to 5 <br> Years** | **More <br> Than 5 Years** | **Total** |
|  | **HKD** | **HKD** | **HKD** | **HKD** | **HKD** |
| **Contractual Obligations:** |  |  |  |  |  |
| Operating lease obligation | $661615 | $190765 | $- | $- | $852380 |
| &nbsp;&nbsp;&nbsp;Total contractual obligations | $661615 | $190765 | $- | $- | $852380 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Payments Due by Period** | **Payments Due by Period** | **Payments Due by Period** | **Payments Due by Period** | **Payments Due by Period** |
|  | **Less Than<br> 1 Year** | **1 to 3<br> Years** | **3 to 5 <br> Years** | **More<br> Than 5 Years** | **Total** |
|  | **US$** | **US$** | **US$** | **US$** | **US$** |
| **Contractual Obligations:** |  |  |  |  |  |
| Operating lease obligation | $85004 | $24510 | $- | $- | $109514 |
| &nbsp;&nbsp;&nbsp;Total contractual obligations | $85004 | $24510 | $- | $- | $109514 |

---

**Off-Balance Sheet Arrangements** 

The Group has no off-balance sheet arrangements, including arrangements that would affect its liquidity, capital resources, market risk support, and credit risk support or other benefits.

**Financings** 

The Group may offer its Ordinary Shares in order to fund its business growth. There is no assurance that the Group will achieve sales of the equity securities or arrange for debt or other financing to fund its growth in case it is necessary, or if the Group is able to do so, there is no guarantee that existing shareholders will not be substantially diluted.

On January 21, 2026, the Company entered into a termination agreement with the 2025 Investors (as defined below), pursuant to which all the obligations under (i) that certain securities purchase agreement, dated as July 11, 2025, and amended on September 12, 2025, by and among the Company and the investors (the "2025 Investors"); and (ii) that certain registration rights agreement dated as of July 11, 2025, by and between the Company and each of the 2025 Investors were terminated.

On January 15, 2026, the Company entered into a securities purchase agreement (the "2026 SPA") with certain non-U.S. investors (collectively, the "2026 Purchasers"), pursuant to which the Company agreed to sell and the 2026 Purchasers agreed to purchase an aggregate of 3,800,000 Class A Ordinary Shares of the Company, at a purchase price of US$0.66 per Ordinary Share, which is 40% of the closing price of the Class A Ordinary Shares as of January 14, 2026 (the "2026 PIPE Transaction").

The Company also entered into a registration rights agreement, dated January 15, 2026 (the "2026 RRA") with each of the 2026 Purchasers, pursuant to which the Company has agreed to file a registration statement to register for resale by the 2026 Purchasers the Ordinary Shares they purchased in the 2026 PIPE Transaction, such registration statement was filed with the United States Securities and Exchange Commission (the "SEC") on March 11, 2026 and was declared effective on March 19, 2026.

On March 30, 2026, the Company's board of directors resolved the Company could prepare, execute and file with the SEC, a registration statement on Form F-3, including the base prospectus and any and all exhibits and other documents relating thereto, for the registration under the Securities Act of 1933, as amended (the "Securities Act"), of the offer and sale by the Company from time to time, pursuant to Rule 415 under the Securities Act, of any combination of (i) Class A Ordinary Shares (the "Equity Securities"), (ii) debt securities of the Company (the "Debt Securities"), in one or more series, (iii) warrants of the Company to purchase Equity Securities or Debt Securities (the "Warrants"), (iv) rights to purchase Equity Securities, Debt Securities, Warrants, or Units as defined below (the "Rights"), and (v) units consisting of combinations of one or more of the foregoing (the "Units", and together with the Equity Securities, Debt Securities, Warrants and Rights, the "Securities"), for a maximum aggregate offering price of $200,000,000. This is a shelf registration statement. There is no assurance there will be any take down offerings to occur from such shelf registration statement when and after it is declared effective by the SEC.

## Exhibit 99.2

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

**Exhibit 99.2**

**GALAXY PAYROLL GROUP LIMITED** 

**UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS**

---

| | | | |
|:---|:---|:---|:---|
|  | **June 30,<br> 2025** | **December 31,<br> 2025** | **December 31,<br> 2025** |
|  | **HKD** | **HKD** | **US$** |
| **Assets** | | | |
| **Current assets** | | | |
| &nbsp;&nbsp;&nbsp;Cash | $32188711 | $33195112 | $4264915 |
| &nbsp;&nbsp;&nbsp;Accounts receivable, net | 3581852 | 3485239 | 447784 |
| &nbsp;&nbsp;&nbsp;Prepayment, deposits and other receivables, net | 1974655 | 6304071 | 809948 |
| &nbsp;&nbsp;&nbsp;Amount due from a related party | - | 20000 | 2570 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total current assets** | 37745218 | 43004422 | 5525217 |
| &nbsp;&nbsp;&nbsp;Property and equipment, net | 165045 | 152547 | 19599 |
| &nbsp;&nbsp;&nbsp;Right-of-use ("ROU") assets – operating lease | 1225109 | 840603 | 108000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total non-current assets** | 1390154 | 993150 | 127599 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total assets** | $39135372 | $43997572 | $5652816 |
| **Liabilities and shareholders' equity** |  |  |  |
| **Current liabilities** |  |  |  |
| &nbsp;&nbsp;&nbsp;Accrued expenses and other payables | $8071739 | $14851076 | $1908069 |
| &nbsp;&nbsp;&nbsp;Account payable | 48622 | 73325 | 9421 |
| &nbsp;&nbsp;&nbsp;Income tax payable | 2678817 | 2410984 | 309764 |
| &nbsp;&nbsp;&nbsp;Operating lease obligation, current portion | 945801 | 661615 | 85004 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total current liabilities** | 11744979 | 17997000 | 2312258 |
| **Other liabilities** |  |  |  |
| &nbsp;&nbsp;&nbsp;Operating lease obligation, non-current portion | 291151 | 190765 | 24510 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total other liabilities** | 291151 | 190765 | 24510 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total liabilities** | 12036130 | 18187765 | 2336768 |
| **Commitment and contingencies** |  |  |  |
| **Shareholders' equity** |  |  |  |
| &nbsp;&nbsp;&nbsp;Class A Ordinary shares, US$0.00625 par value, unlimited number of shares authorized; 1,801,515 shares issued and 1,463,012 shares outstanding as of December 31, 2025 and 1,801,515 shares issued and 1,441,265 shares outstanding as of June 30, 2025\* | 87694 | 87694 | 11266 |
| &nbsp;&nbsp;&nbsp;Class B Ordinary shares, US$0.00625 par value, unlimited number of shares authorized; 360,000 shares issued and outstanding as of December 31, 2025 and June 30, 2025\* | 17550 | 17550 | 2255 |
| &nbsp;&nbsp;&nbsp;Shares reserved for issuance | (17562) | (16502) | (2120) |
| &nbsp;&nbsp;&nbsp;Additional paid-in capital | 48293749 | 48343451 | 6211176 |
| &nbsp;&nbsp;&nbsp;Accumulated deficit | (21187583) | (22334593) | (2869553) |
| &nbsp;&nbsp;&nbsp;Accumulated other comprehensive loss | (94606) | (287793) | (36976) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total shareholders' equity** | 27099242 | 25809807 | 3316048 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total liabilities and shareholders' equity** | $39135372 | $43997572 | $5652816 |

---

\* Number of shares divided as 14,412,500 Class A Ordinary Shares with a par value of US$0.000625 per share and 3,600,000 Class B Ordinary Shares with a par value of US$0.000625 per share, were approved by the board of directors, and were further approved by the shareholders on March 19, 2025, before giving effect to the Reverse Stock Split (as defined below). Giving retroactive effect to the 10 for 1 reverse share split effected on September 8, 2025 (the "Reverse Stock Split").

The accompany notes are an integral part of these unaudited condensed consolidated financial statements.

**GALAXY PAYROLL GROUP LIMITED** 

**UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS** 

**AND COMPREHENSIVE LOSS**

---

| | | | |
|:---|:---|:---|:---|
|  | **For the six months ended<br> December 31,** | **For the six months ended<br> December 31,** | **For the six months ended<br> December 31,** |
|  | **2024** | **2025** | **2025** |
|  | **HKD** | **HKD** | **US$** |
| **Revenues** |  |  |  |
| Employment services | $5038418 | $5329806 | $684775 |
| Payroll outsourcing services | 8686075 | 8702307 | 1118074 |
| **Total revenues** | 13724493 | 14032113 | 1802849 |
| **Cost of revenues** | (8786932) | (9014200) | (1158146) |
| **Operating expenses** |  |  |  |
| Selling, general and administrative expenses | (13036023) | (6459337) | (829897) |
| Research and development expenses | (18686290) | - | - |
| Reversal of provision for credit losses | 92618 | 342 | 44 |
| **Total operating expenses** | (31629695) | (6458995) | (829853) |
| **Loss from operations** | (26692134) | (1441082) | (185150) |
| **Other income** |  |  |  |
| Interest income | 339072 | 426696 | 54822 |
| Interest expense | (34181) | (23481) | (3017) |
| Other (expense) income | (54548) | 11193 | 1438 |
| **Total other income** | 250343 | 414408 | 53243 |
| **Loss before income tax** | (26441791) | (1026674) | (131907) |
| Income tax expense | (87570) | (120336) | (15461) |
| **Net loss** | $(26529361) | $(1147010) | $(147368) |
| Foreign currency translation adjustment | (130574) | (193187) | (24821) |
| **Comprehensive loss** | $(26659935) | $(1340197) | $(172189) |
| Weighted average number of ordinary shares |  |  |  |
| Basic and diluted\* | 1715280 | 2030231 | 2030231 |
| Loss per share |  |  |  |
| Basic and diluted\* | $(15.47) | $(0.56) | $(0.07) |

---

\* Number of shares divided as 14,412,500 Class A Ordinary Shares with a par value of US$0.000625 per share and 3,600,000 Class B Ordinary Shares with a par value of US$0.000625 per share, were approved by the board of directors, and were further approved by the shareholders on March 19, 2025, before giving effect to the Reverse Stock Split (as defined below). Giving retroactive effect to the 10 for 1 reverse share split effected on September 8, 2025.

The accompany notes are an integral part of these unaudited condensed consolidated financial statements.

**GALAXY PAYROLL GROUP LIMITED** 

**UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN** 

**SHAREHOLDERS' EQUITY**

**For the six months ended December 31, 2024**

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Ordinary Shares** | **Ordinary Shares** | | | | | |
|  | **Shares\*** | **Par Value** |<br><br>**Subscription**<br>**receivable** |<br>**Additional**<br>**paid-in**<br>**capital** |<br>**Retained**<br>**(Accumulated**<br> **deficit)** | **Accumulated**<br>**other**<br>**comprehensive**<br>**Income**<br>**(deficit)** |<br><br>**Total** |
|  | | **HKD** | **HKD** | **HKD** | **HKD** | **HKD** | **HKD** |
| Balance, July 1, 2024 | 1600000 | $77630 | $(77630) | $40000 | $6381130 | $54353 | $6475483 |
| Issuance of ordinary shares upon IPO, net | 201265 | 10052 | 77630 | 48253749 | - | - | 48341431 |
| Net loss |  | - | - |  | (26529361) | - | (26529361) |
| Foreign currency translation | - | - | - | - | - | (130574) | (130574) |
| Balance, December 31, 2024 | 1801265 | $87682 | $- | $48293749 | $(20148231) | $(76221) | $28156979 |

---

**For the six months ended December 31, 2025**

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Class A ordinary Shares** | **Class A ordinary Shares** | **Class B ordinary Shares** | **Class B ordinary Shares** | | | | | |
|  | **Shares\*** | **Par Value** | **Shares\*** | **Par Value** | **Shares reserved for**<br>**issuance** | **Additional paid-in**<br>**capital** | **Accumulated**<br>**deficit** | **Accumulated other comprehensive**<br>**loss** |<br>**Total** |
|  | | **HKD** | | **HKD** | **HKD** | **HKD** | **HKD** | **HKD** | **HKD** |
| Balance, July 1, 2025 | 1801515 | $87694 | 360000 | $17550 | $(17562) | $48293749 | $(21187583) | $(94606) | $27099242 |
| Distribution of shares to employees for ESOP |  | - |  | - | 1060 | 49702 | - | - | 50762 |
| Net loss |  | - |  | - | - |  | (1147010) | - | (1147010) |
| Foreign currency translation | - | - | - | - | - | - | - | (193187) | (193187) |
| Balance, December 31, 2025 | 1801515 | $87694 | 360000 | $17550 | $(16502) | $48343451 | $(22334593) | $(287793) | $25809807 |
|  |  | **11266** |  | **2255** | **(2120)** | **6211176** | **(2869553)** | **(36976)** | **3316048** |

---

\* Number of shares divided as 14,412,500 Class A Ordinary Shares with a par value of US$0.000625 per share and 3,600,000 Class B Ordinary Shares with a par value of US$0.000625 per share, were approved by the board of directors, and were further approved by the shareholders on March 19, 2025, before giving effect to the Reverse Stock Split (as defined below). Giving retroactive effect to the 10-for-1 reverse share split effected on September 8, 2025.

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

**GALAXY PAYROLL GROUP LIMITED** 

**UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**

---

| | | | |
|:---|:---|:---|:---|
|  | **For the six months ended<br> December 31,** | **For the six months ended<br> December 31,** | **For the six months ended<br> December 31,** |
|  | **2024** | **2025** | **2025** |
|  | **HKD** | **HKD** | **US$** |
| **Cash flows from operating activities:** |  |  |  |
| Net loss | $(26529361) | $(1147010) | $(147368) |
| Adjustments to reconcile net income to net cash provided by operating activities: |  |  |  |
| Depreciation of property and equipment | 53548 | 55053 | 7073 |
| Amortization of right-of-use assets-operating lease | 557495 | 567585 | 72923 |
| Reversal of provision for credit losses | (92618) | (342) | (44) |
| ESOP Expenses | - | 50762 | 6522 |
| Change in operating assets and liabilities |  |  |  |
| Accounts receivable | (146017) | 96955 | 12457 |
| Prepayment, deposits and other receivables | 1077571 | (4329416) | (556245) |
| Amount due from a related party | - | (20000) | (2570) |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued expenses and other payables | (906195) | 6779337 | 871011 |
| &nbsp;&nbsp;&nbsp;&nbsp;Account payable | 15012 | 24703 | 3174 |
| &nbsp;&nbsp;&nbsp;&nbsp;Income tax payable | (841670) | (267833) | (34411) |
| &nbsp;&nbsp;&nbsp;&nbsp;Lease liabilities | (556070) | (555420) | (71360) |
| Net cash (used in) provided by operating activities | (27368305) | 1254374 | 161162 |
| **Cash flow from investing activities:** |  |  |  |
| Purchases of property and equipment | (48240) | (43500) | (5589) |
| Net cash used in investing activity | (48240) | (43500) | (5589) |
| **Cash flow from financing activities:** |  |  |  |
| Repayment from shareholders | 77630 | - | - |
| Proceed from IPO, net | 55057154 | - | - |
| Dividend payments | (5865364) | - | - |
| Net cash provided by financing activities | 49269420 | - | - |
| **Net change in cash** | 21852875 | 1210874 | 155573 |
| **Cash, beginning of the period** | 10855128 | 32188711 | 4135613 |
| Effect on exchange rate | (131311) | (204473) | (26271) |
| **Cash, end of the period** | $32576692 | $33195112 | $4264915 |
| **Reconciliation of cash to the unaudited condensed consolidated balance sheets** |  |  |  |
| Cash | $32576692 | $33195112 | $4264915 |
| **Cash, end of the period** | $32576692 | $33195112 | $4264915 |
| **Supplemental cash flow information** |  |  |  |
| Cash paid for income tax | $874929 | $350462 | $45027 |
| Cash paid for interest expense | $18 | $86 | $11 |
| **Non-cash transactions in investing and financing activities** |  |  |  |
| Deferred IPO cost recognized as additional paid-in capital | $7334123 | $- | $- |
| Right-of-use assets obtained in exchange of lease liabilities | - | 170848 | 21951 |

---

The accompany notes are an integral part of these unaudited condensed consolidated financial statements

**GALAXY PAYROLL GROUP LIMITED** 

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(UNAUDITED)**

**Note 1 — Nature of business and organization**

Galaxy Payroll Group Limited ("Galaxy Payroll BVI") was incorporated in the British Virgin Islands with limited liability on August 26, 2021. Galaxy Payroll BVI has no substantial operations other than holding all of the outstanding share capital of Melkweg Holdings Limited ("Melkweg Cayman"). Melkweg Cayman is a holding Group incorporated on October 31, 2019 under the Companies Act (2021 Revision) of the Cayman Islands. Melkweg Cayman has no substantial operations other than holding all of the outstanding share capital of Melkweg Holdings (BVI) Limited ("Melkweg BVI") which was incorporated under BVI law on November 5, 2019. Melkweg BVI is also a holding Group holding of all the equity interest of Galaxy Payroll Services Limited ("Galaxy Payroll (HK)" (which is the holding Group of Galaxy Recursos Humanos (Macau) Limitada ("Galaxy HR (Macau)"), Galaxy Solutions Partner Limited ("Galaxy Solutions Partner"), Galaxy Payroll (Taiwan) Limited ("Galaxy Payroll (TW)") (which is the holding Group of Galaxy Human Resources Limited ("Galaxy HR (TW)")) and Galaxy Payroll (China) Limited ("Galaxy Payroll (China)") (which is the holding Group of Galaxy Corporate Management Consultancy (Shenzhen) Limited ("Galaxy HR (SZ)")) (collectively referred to as the "Subsidiaries").

Galaxy Payroll BVI, through the Subsidiaries (together, the "Group"), is engaged in providing payroll outsourcing services and employment services. The Group's headquarters are in Hong Kong, China, Taiwan, and Macau. Majority of the Group's business activities are carried out by Galaxy Payroll (HK).

Melkweg BVI acquired all the equity interest of the Subsidiaries from the equity holders via certain share exchange agreement on December 12, 2019.

Melkweg Cayman acquired all the equity interest of Melkweg BVI from the shareholder via share exchange agreement on January 17, 2020. Galaxy Payroll BVI then acquired all the equity interests of Melkweg Cayman via certain share exchange agreement on August 26, 2021. Upon completion of the exchange, Melkweg Cayman was 100% owned by the Group, and the restructuring of the Group was then completed. Galaxy Payroll BVI, Melkweg Cayman and Melkweg BVI and all subsidiaries are under common control which results in the consolidation of Melkweg Cayman and Galaxy Payroll BVI at carrying value. The unaudited condensed consolidated financial statements are prepared on the basis as if the reorganization became effective as of the beginning of the first period presented in the accompany unaudited condensed consolidated financial statements.

The unaudited condensed consolidated financial statements reflect the activities of each of the following entities:

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| | | | |
|:---|:---|:---|:---|
| **Name** | **Background** | **Ownership** | **Principal activities** |
| Galaxy Payroll Group Limited ("Galaxy Payroll BVI") | ● Located in the British Virgin Islands ("BVI")<br> ● Incorporated on August 26, 2021 |  | Investment holding |
| Melkweg Holdings Limited ("Melkweg Cayman") | ● Located in the Cayman Islands <br> ● Incorporated on October 31, 2019 | 100% directly owned by Galaxy Payroll BVI | Investment holding |
| Melkweg Holdings (BVI) Limited ("Melkweg BVI") | ● Located in the BVI<br> ● Incorporated on November 5, 2019 | 100% directly owned by Melkweg Cayman | Investment holding |
| Galaxy Payroll Services Limited ("Galaxy Payroll (HK)") | ● Located in Hong Kong<br> ● Incorporated on February 21, 2013 | 100% owned by Melkweg BVI | Provision of payroll outsourcing and employment services |
| Galaxy Recursos Humanos (Macau) Limitada ("Galaxy HR (Macau)") | ● Located in Macau<br> ● Incorporated on July 26, 2016 | 98% owned by Galaxy Payroll (HK) and 2% owned by Galaxy Solutions Partner | Provision of payroll outsourcing services |
| Galaxy Payroll (Taiwan) Limited ("Galaxy Payroll (TW)") | ● Located in Hong Kong<br> ● Incorporated on December 31, 2018 | 100% owned by Melkweg BVI | Investment holding |
| Galaxy Human Resources Limited ("Galaxy HR (TW)") | ● Located in Taiwan <br> ● Incorporated on March 21, 2018 | 100% owned by Galaxy Payroll (TW) | Provision of employment services |
| Galaxy Solutions Partner Limited ("Galaxy Solutions Partner") | ● Located in Hong Kong<br> ● Incorporated on February 5, 2013 | 100% owned by Melkweg BVI | Provision of employment services (acting as employer of record) |
| Galaxy Payroll (China) Limited ("Galaxy Payroll (China)") | ● Located in Hong Kong <br> ● Incorporated on October 24, 2017 | 100% owned by Melkweg BVI | Investment holding |
| Galaxy Corporate Management Consultancy (Shenzhen) Limited ("Galaxy HR (SZ)") | ● Located in People's Republic of China ("PRC") <br> ● Incorporated on February 21, 2013 | 100% owned by Galaxy Payroll (China) | Provision of payroll outsourcing and employment services |

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**Note 2 — Summary of significant accounting policies**

<u>Basis of presentation</u>

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and applicable rules and regulations of the Securities and Exchange Commission ("SEC").

<u>Principles of consolidation</u>

The unaudited condensed consolidated financial statements include the accounts of the Group and its subsidiaries. All inter-Group transactions and balances are eliminated upon consolidation.

<u>Use of estimates and assumptions</u>

The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities including provision for credit losses, and disclosures of contingent assets and liabilities as of the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the periods presented. Actual results could differ from these estimates. Significant accounting estimates reflected in the Group's unaudited condensed consolidated financial statements include the Group's ability to realize deferred tax assets and the estimates of provision for credit losses.

<u>Loss per share</u>

Basic loss per share is computed by dividing net loss attributable to ordinary shareholders, taking into consideration the deemed dividends to preferred shareholders (if any), by the weighted average number of ordinary shares outstanding during the year using the two-class method. Under the two-class method, net loss is allocated between ordinary shares and other participating securities based on their participating rights. Class A ordinary share and Class B ordinary share have the same rights in dividend. Therefore, basic and diluted loss per share is the same for both classes of ordinary shares. Shares issuable for little to no consideration upon the satisfaction of certain conditions are considered as outstanding shares and included in the computation of basic loss per share as of the date that all necessary conditions have been satisfied. Net loss is not allocated to other participating securities if based on their contractual terms they are not obligated to share the loss.

Diluted loss per share is calculated by dividing net loss attributable to ordinary shareholders, as adjusted for the effect of dilutive ordinary equivalent shares, if any, by the weighted average number of ordinary and dilutive ordinary equivalent shares outstanding during the periods. Ordinary equivalent shares consist of ordinary shares issuable upon the exercise of share options using the treasury stock method. Ordinary equivalent shares are not included in the denominator of the diluted loss per share calculation when inclusion of such share would be anti-dilutive.

<u>Foreign currency translation and transaction</u>

The Group uses Hong Kong Dollar ("HKD") as its reporting currency. The functional currency of Galaxy Payroll BVI is United States Dollar ("US$") and its subsidiaries which are incorporated in Hong Kong, Cayman, Macau, Taiwan and China is HKD, USD, MOP, NTD and RMB, respectively, which are their respective local currency based on the criteria of ASC 830, "Foreign Currency Matters."

In the unaudited condensed consolidated financial statements of the Group, transactions in currencies other than the functional currency are measured and recorded in the functional currency using the exchange rate in effect at the date of the transaction. At the balance sheet date, monetary assets and liabilities that are denominated in currencies other than the functional currency are translated into the functional currency using the exchange rate at the balance sheet date. All gains and losses arising from foreign currency transactions are recorded in the income statements during the year in which they occur.

<u>Convenience translation</u> 

Translations of balances in the unaudited condensed consolidated balance sheets, unaudited condensed consolidated statements of income and comprehensive income, unaudited condensed consolidated statements of changes in shareholders' equity and unaudited condensed consolidated statements of cash flows from HKD into US$ as of December 31, 2025 are solely for the convenience of the readers and are calculated at the rate of US$1.00=7.7833, representing the exchange rate set forth in the H.10 statistical release of the Federal Reserve Board on December 31, 2025. No representation is made that the HKD amounts could have been, or could be, converted, realized or settled into US$ at such rate, or at any other rate.

<u>Fair value measurement</u>

The accounting standard regarding fair value of financial instruments and related fair value measurements defines financial instruments and requires disclosure of the fair value of financial instruments held by the Group.

The accounting standards define fair value, establish a three-level valuation hierarchy for disclosures of fair value measurement and enhance disclosure requirements for fair value measures. The three levels are defined as follow:

● 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, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.

● Level 3 inputs to the valuation methodology are unobserved and significant to the fair value.

Financial instruments included in current assets and current liabilities are reported in the balance sheets at face value or cost because of the short period of time between the origination of such instruments and their expected realization and their current market rates of interest.

<u>Revenue recognition</u>

The Group adopted ASC Topic 606, Revenue from Contracts with Customers. The five-step model defined by ASC Topic 606 requires the Group to (1) identify its contracts with customers, (2) identify its performance obligations under those contracts, (3) determine the transaction prices of those contracts, (4) allocate the transaction prices to its performance obligations in those contracts and (5) recognize revenue when each performance obligation under those contracts is satisfied. Revenue is recognized when promised goods or services are transferred to the customer in an amount that reflects the consideration expected in exchange for those goods or services.

Revenues are recognized when control of the promised services and deliverables are transferred to the Group's clients in an amount that reflects the consideration the Group expects to be entitled to and receive in exchange for services and deliverables rendered.

The Group has elected to apply the practical expedient in paragraph ASC 606-10-50-14 and does not disclose information about remaining performance obligations that have original expected durations of one year or less.

The Group elected a practical expedient that it does not adjust the promised amount of consideration for the effects of a significant financing component if the Group expects that, upon the inception of revenue contracts, the period between when the Group transfers its promised services or deliverables to its clients and when the clients pay for those services or deliverables will be one year or less.

As a practical expedient, the Group elected to expense the incremental costs of obtaining a contract when incurred if the amortization period of the asset that the Group otherwise would have recognized is one year or less.

The Group generates revenues from fees charged for the services (payroll outsourcing services and employment services) provided to its clients.

There are two revenue streams within the Group's operations: payroll outsourcing services and employment services.

*<u>Employment services</u>*

For the employment services, the Group (i) employs candidates who are sourced by the customers themselves under the name of the Group's entities or under the name of the Group's in-country partners and then the Group seconds the employees back to the customers; (ii) handles the seconded employees' payroll and other administrative matters as their employer of records directly or through its in-country partners; and (iii) makes sure the employment is complied with the Labor Law in the respective jurisdictions.

The performance obligations in the agreements are generally combined into one performance obligation, as they are considered a series of distinct services, and are satisfied over time because the client simultaneously receives and consumes the benefits provided as the Group performs the services. The Group uses the output method based on a fixed fee per employee serviced to recognize revenue, as the value to the client of the goods or services transferred to date (e.g., number of payees or number of payrolls processed) appropriately depicts performance towards complete satisfaction of the performance obligation. The fees are typically billed in the period in which services are performed.

The Group considers the guidance in ASC 606 with respect to principal versus agent considerations, in determining the appropriate treatment for the transactions between the Group and the Group's in-country partners and the customers related to employment of candidates. The classification of transactions under the arrangements is determined based on the nature and contractual terms of the arrangement along with the nature of the operations of the participants. The Group arranges employment for the Group's customers who bear the cost of candidates' salary. The Group collects the payroll and pays the candidate on behalf of its customers. Therefore, the Group acts as an agent in the provision of such services and recognizes the revenue with the gross billings to the customers less the amounts the Group pays to the candidates sourced by the customers.

The service fee for each seconded employee is charged on a monthly basis during the service period based on an agreed percentage of the seconded employee's monthly remuneration package or at a fixed fee per seconded employee, at an agreed currency exchange rate on the monthly remuneration package for settlement where applicable. The Group usually allows a credit term of 30 days to its customers, or the invoices are due upon receipt.

There is no variable consideration, significant financing components or non-cash consideration in the contracts. Accordingly, based on the output methods, the Group recognizes revenues for the employment services on a monthly basis when it satisfies its performance obligations that it renders employment services throughout the contract terms.

There is no contract asset that the Group has right to consideration in exchange for its employment services that the Group has transferred to customers, which such right is conditional on something other than the passage of time.

*<u>Payroll outsourcing services</u>*

The Group provides payroll outsourcing services to customers. Such services are recognized as a performance obligation satisfied over time as customers simultaneously receive and consume the benefits provided by the Group using output methods.

The promises in the agreements are generally combined into one performance obligation, as they are considered a series of distinct services, and are satisfied over time because the client simultaneously receives and consumes the benefits provided as the Group performs the services. The service fee for the payroll outsourcing services is charged and invoiced on a fixed fee per staff upon completion of each payroll calculation, as the value to the client of the goods or services transferred to date (e.g., number of payees or number of payrolls processed) appropriately depicts performance towards complete satisfaction of the performance obligation. The fees are typically billed in the period in which services are performed. The Group usually allows a credit term ranging from 30 days to 90 days for its customers.

The Group concludes that the monthly payroll outsourcing services satisfy the requirements of ASC 606-10-25-14(b) to be accounted for as a single performance obligation.

There is no variable consideration, significant financing components or non-cash consideration in the contracts. Accordingly, based on the output methods, The Group recognizes revenues for the payroll outsourcing services on a monthly basis when it satisfies its performance obligations that it renders payroll outsourcing services throughout the contract terms.

There is no contract asset that the Group has right to consideration in exchange for its payroll outsourcing services that the Group has transferred to its customers, which such right is conditional on something other than the passage of time.

<u>Cost of Revenues</u>

 ****

Cost of revenues consists of in-country partner cost, net exchange difference, employee compensation, related payroll benefits and the Group's directors' remuneration which are attributable to the revenue-generating activities.

<u>Related Parties</u>

The Group accounts for related party transactions in accordance with FASB Accounting Standards Codification (ASC) Topic 850 (Related Party Disclosures). A party is considered to be related to the Group if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Group. Related parties also include principal owners of the Group, its management, members of the immediate families of principal owners of the Group and its management and other parties with which the Group may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests.

<u>Cash</u>

Cash primarily consists of bank deposits with original maturities of three months or less, which are unrestricted as to withdrawal and use. Cash also consists of funds generated from the Group's operating activities which were held at the third-party platform fund accounts which are unrestricted as to immediate use or withdraw. The Group maintains its bank accounts in the Hong Kong SAR, China, Macau and Taiwan.

Deposits accounts denominated in Hong Kong Dollars, Renminbi or any other currencies at the banks and financial institutions who are the members of Deposit Protection Scheme will be covered up to a limit of HKD500,000 (US$64,240) per depositor per scheme member by Hong Kong Deposit Protection Board in an event of bank failure. As of December 31, 2025 and June 30, 2025, the cash was HKD33,195,112 (US$4,264,915) and HKD32,188,711 respectively. Majority of cash is held in the financial institutions in Hong Kong which are insured by Deposit Protection Scheme. The Group's cash deposits held in financial institutions located in China, Macau and Taiwan are insured with the local regulation mandated on obligatory insurance of bank accounts. The Group has not experienced any losses in bank accounts and believe its credit risk is not significant.

<u>Accounts receivable, net</u>

Accounts receivable represents the service fees earned from the clients but have not yet been collected. Accounts receivable is recorded at the original invoice amount less a provision for estimated credit losses.

On July 1, 2023, the Group adopted ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASC 326").

The Group estimated its provision for credit losses using relevant available information from internal and external sources relating to past events including aging schedule of receivables, migration rate of receivables, assessment of receivables due from specific identifiable counterparties that are considered at risk or uncollectible, current conditions and reasonable and supportable forward-looking factors. During the six months ended December 31, 2025 and 2024, the Group reversed HKD342 (US$44) and HKD92,618 provision for credit losses on the unaudited condensed consolidated financial statements related to accounts receivable respectively. As of December 31, 2025 and June 30, 2025, the provision for credit losses was HKD43,060 (US$5,532) and HKD43,402 (See Note 4).

<u>Prepayment, deposits and other receivables</u>

Prepayment include the expenses paid in advance to service providers. Deposits consist of security payments made to local in-country partners for the employment services provided and are refundable upon termination of services. Other receivables include remuneration/ Mandatory Provident Fund ("MPF") payment to be collected from the Group's customers.

On July 1, 2023, the Group adopted ASC 326 using the modified retrospective method for other receivables recorded in prepayment, deposits and other receivables.

The Group did not have provision for credit losses against other receivables as of December 31, 2025 and June 30, 2025, respectively (See Note 5).

<u>Property and equipment, net</u>

Property and equipment are stated at cost less accumulated depreciation and impairment if applicable. Depreciation is computed using the straight-line method after consideration of the estimated useful lives. The estimated useful lives are as follows:

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| | |
|:---|:---|
|  | **Lesser of<br> Lease<br> Term or<br> Estimated<br> Useful<br> Life** |
| Leasehold improvements | 5 years |
| Furniture and fixtures | 5 years |
| Office equipment | 5 years |

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The cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the statements of loss. Expenditures for maintenance and repairs are charged to earnings as incurred, while additions, renewals and betterment, which are expected to extend the useful life of assets, are capitalized. The Group also re-evaluates the periods of depreciation to determine whether subsequent events and circumstances warrant revised estimates of useful lives.

<u>Impairment for long-lived assets</u>

Long-lived assets, including property and equipment with finite lives, are reviewed for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying value of an asset may not be recoverable.

The Group assesses the recoverability of the assets based on the non-discounted future cash flows the assets are expected to generate and recognize an impairment loss when estimated discounted future cash flows expected to result from the use of the assets plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. For the six months ended December 31, 2025 and 2024, no impairment of long-lived assets was recognized.

<u>Employee benefits</u>

Under Hong Kong Mandatory Provident Fund Schemes Ordinance, an employer shall enroll their regular employees in Mandatory Provident Fund Schemes. Regular employees are those who are between 18 and 65 years of age and have been employed for consecutive 60 days or more. An employer is required to make regular mandatory contributions of at least 5% of the employee's monthly income between HKD7,100 and HKD30,000 and HKD1,500 of the employee's monthly income over HKD30,000.

The employees of the Group's subsidiary in the PRC are members of state-managed retirement pension schemes operated by the local government. The subsidiary is required to contribute a specified percentage of its payroll costs to the retirement pension scheme to fund the benefits. The only obligation of this subsidiary with respect to the retirement pension scheme is to make the specified contributions.

The Group's subsidiary in Taiwan also participates in the employee retirement benefits plans in Taiwan in respect of employees solely under the Group's employment services. The Group is required to make monthly contributions calculated as a percentage of the monthly payroll costs and the government undertakes to assume the retirement benefit obligations of all existing and future retired employees of the Group in Taiwan.

The Group also operates a defined contribution scheme which is a unitized scheme, for eligible employees in Macau.

During the six months ended December 31, 2025 and 2024, the Group provides employee benefits to its employees amounting to HKD426,262 (US$54,776) and HKD380,449, respectively.

<u>Leases</u>

Under ASC Topic 842, lease assets and liabilities are recognized at the present value of the future lease payments at the lease commencement date. The interest rate used to determine the present value of the future lease payments is the Group's incremental borrowing rate based on the information available at the lease commencement date. The Group generally uses the base, non-cancellable lease term in calculating the right-of-use assets and lease liabilities.

The Group may recognize the lease payments in the unaudited condensed consolidated statements of loss on a straight-line basis over the lease terms and variable lease payments in the periods in which the obligations for those payments are incurred, if any. The lease payments under the lease arrangements are fixed.

The Group elected the practical expedients for an entity ongoing accounting and applied the short-term lease exception for lease arrangements with a lease term of 12 months or less at commencement. Lease terms used to compute the present value of lease payments do not include any option to extend, renew or terminate the lease that the Group is not able to reasonably certain to exercise upon the lease inception. Accordingly, operating lease right-of-use assets and liabilities do not include leases with a lease term of 12 months or less.

The Group did not adopt the practical expedient that allows lessees to treat the lease and non-lease components of a lease as a single lease component. Non-lease components include payments for building management, utilities and property tax. It separates the non-lease components from the lease components to which they relate.

Operating lease expense is recognized on a straight-line basis over the lease term. For the six months ended December 31, 2025 and 2024, the Group's operating lease expense was HKD567,585 (US$72,923) and HKD557,495 respectively.

The Group evaluates the impairment of its ROU assets consistent with the approach applied for its other long-lived assets. The Group reviews the recoverability of its long-lived assets when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on its ability to recover the carrying value of the asset from the expected undiscounted future pre-tax cash flows of the related operations. The Group has elected to include the carrying amount of operating lease liabilities in any tested asset group and include the associated lease payments in the undiscounted future pre-tax cash flows. For the six months ended December 31, 2025 and 2024, the Group did not have any impairment loss against its operating lease ROU assets.

<u>Research and development expenses</u>

Research and development expenses mainly consist of technology infrastructure expenses related to platform development to support the Group's business operations. The expenditure incurred related to development of platform are capitalized only when the preliminary project stage is completed and it is probable that the project will be completed and the platform will be used to perform the function intended.

<u>Income taxes</u>

Galaxy Payroll BVI, Melkweg Cayman and Melkweg BVI are not subject to tax on income or capital gains under the current laws of the Cayman Islands and British Virgin Islands respectively. In addition, upon payments of dividends by the Melkweg BVI and Galaxy Payroll (HK), Melkweg BVI to the Group's shareholders, no British Virgin Islands and Cayman Island withholding tax will be imposed.

Galaxy Payroll HK, Galaxy Solutions Partner, Galaxy Payroll (China) and Galaxy Payroll (TW) are incorporated in and carry trade and business in Hong Kong Special Administrative Region and is subject to Hong Kong profits tax under Inland Revenue Department Ordinance.

No provision for taxation in PRC has been made as the Group's entities in PRC had no assessable profit for the six months ended December 31, 2025 and 2024.

The Group accounts for income tax in accordance with U.S. GAAP. Under the asset and liability method as required by this accounting standard, the recognition of deferred income tax liabilities and assets for the expected future tax consequences of temporary differences between the income tax basis and financial reporting basis of assets and liabilities. Income tax expense consists of taxes currently due plus deferred tax.

The charge for taxation is based on the results for the fiscal year as adjusted for items, which are non-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is charged or credited in the statements of loss, except when it is related to items credited or charged directly to equity. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.

An uncertain tax position is recognized as a benefit only if it is "more likely than not" that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely to be realized upon examination. For tax positions not meeting the "more likely than not" test, no tax benefit is recorded. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. The Group had no uncertain tax position as of December 31, 2025 and June 30, 2025. The Group does not expect that its assessment regarding unrecognized tax positions will materially change over the next 12 months.

No penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. PRC tax returns filed in 2020 to 2025 are subject to examination by any applicable tax authorities. Hong Kong tax returns filed in 2018 to 2025 are subject to examination by any applicable tax authorities. Taiwan tax returns filed in 2018 to 2025 are subject to examination by any applicable tax authorities.

<u>Commitments and Contingencies</u>

In the normal course of business, the Group is subject to contingencies, including legal proceedings and claims arising out of the business that relate to a wide range of matters, such as government investigations and tax matters. The Group recognizes a liability for such contingency if it determines it is probable that a loss has occurred and a reasonable estimate of the loss can be made. The Group may consider many factors in making these assessments including historical and the specific facts and circumstances of each matter.

<u>Segment reporting</u>

The Group operates and manages its business as a single reportable segment, in accordance with ASC 280, Segment Reporting. The Group's chief operating decision maker ("CODM") is the Chief Executive Officer. The Group's CODM assesses the Group's performance and results of operations on a consolidated basis. The Group generates its revenues from subsidiaries in Taiwan, Macau, Hong Kong and the PRC, all of which are under the control of the Chief Executive Officer. Accordingly, tabular disclosure regarding geographical segments have been presented under Note 3 – Revenues.

<u>Concentration of Risks</u>

The Group is subject to risks associated with concentrations in its customer base and financial instruments. Additionally, the Group's operations are geographically concentrated in the Asia-Pacific region. Economic, political, or regulatory changes in this region could significantly impact the Group's performance.

Credit risk

Financial instruments that potentially expose the Group to concentration on credit risk consist primarily of cash and cash equivalents and account receivable. The Group places its cash and cash equivalents with financial institutions with high-credit ratings and quality.

Accounts receivable primarily comprise of amounts receivable from the service clients. Other receivables consist of out-of-pocket payments to be receivable from the service clients. To reduce credit risk, the Group performs on-going credit evaluations of the financial condition of these service clients. The Group establishes a provision for credit losses based upon estimates, factors surrounding the credit risk of specific service clients and other information. The Group discloses concentrations of customers and vendors whose transactions or balances exceeded 10% during the reporting period.

Concentration of customers

As of December 31, 2025, three customers accounted for 31.7%, 21.6% and 13.5%, respectively, of the Group's total accounts receivable. As of June 30, 2025, three customers accounted for 50.6%, 16.0% and 15.9%, respectively, of the Group's total accounts receivable.

For the six months ended December 31, 2025, four major customers accounted for 25.4%, 18.8%, 11.1% and 10.8%, respectively, of the Group's total revenues. For the six months ended December 31, 2024, three major customers accounted for 23.7%, 19.7% and 13.6%, respectively, of the Group's total revenues.

Concentration of vendors

As of December 31, 2025, two major vendors accounted for 75% and 15% of the Group's total account payable, respectively. As of June 30, 2025, one vendor accounted for 100% of the Group's total account payable.

For the six months ended December 31, 2025, three major vendors accounted for 22.7%, 18.9% and 15.8% of the Group's total in-country partner costs, respectively. For the six months ended December 31, 2024, three major vendors accounted for 29.4%, 23.1% and 12.0% of the Group's total in-country partner costs, respectively.

Interest rate risk

The Group's exposure on fair value interest rate risk mainly arises from its fixed deposits with banks. It also has exposure on cash flow interest rate risk which is mainly arising from its deposits with banks.

In respect of the exposure to cash flow interest rate risk arising from floating rate non-derivative financial instruments held by the Group, such as cash and cash equivalents, at the end of the reporting period, the Group is not exposed to significant interest rate risk as the interest rates of cash at bank are not expected to change significantly.

Foreign currency exchange risk

There is a linked exchange rate system implemented in Hong Kong to stabilize the exchange rate between the Hong Kong dollar (HKD) and the United States dollar (USD). The value of RMB against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political and economic conditions and the foreign exchange policy adopted by the PRC government. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between the RMB and the U.S. dollar in the future. There remains significant international pressure on the PRC government to adopt a more flexible currency policy, which could result in greater fluctuation of the RMB against the U.S. dollar. The Company is a holding company, and it relies on dividends paid by the Group's operating subsidiaries in China for its cash needs. Any significant revaluation of the RMB may materially impact its liquidity and cash flow. To the extent that the Group needs to convert U.S. dollars into RMB for its operations, appreciation of the RMB against the U.S. dollar would have an adverse effect on the RMB amount the Group would receive. Conversely, if the Group decides to convert RMB into U.S. dollars for other business purposes, appreciation of the U.S. dollar against the RMB would have a negative effect on the U.S. dollar amount the Group would receive.

Liquidity Risk

Liquidity risk is the risk that we will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. Our approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to our reputation.

Typically, we ensure that it has sufficient cash on demand to meet expected operational expenses for a period of 180 days, including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.

<u>Recent accounting pronouncements</u>

*<u>Recently adopted accounting pronouncements</u>*

Segment Reporting (Topic 280). In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2023-07, Segment Reporting (Topic 280)- Improvements to Reportable Segment Disclosures. ASU No. 2023-07 requires an enhanced disclosure of significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit or loss, on an annual and interim basis. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Adoption of this guidance should be applied retrospectively to all prior periods presented. Early adoption is permitted. The Group's adoption of this standard did not have a material impact on its unaudited condensed consolidated financial statements.

*<u>New Accounting Pronouncements Not Yet Adopted</u>*

In November 2024, the FASB issued ASU 2024-03, Improvements to expense disaggregation disclosures (Subtopic 220-40). During the FASB's 2021 agenda consultation and other outreach, investors observed that expense information is critically important in understanding a company's performance, assessing its prospects for future cash flows, and comparing its performance over time with that of other companies. They indicated that more granular expense information would assist them in better understanding an entity's cost structure and forecasting future cash flows. The ASU addresses this feedback by requiring public companies to disclose, in the notes to financial statements, specified information about certain costs and expenses at each interim and annual reporting period. The amendments in the ASU are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Group is currently evaluating the impact of this new standard on the Group's unaudited condensed consolidated financial statements and related disclosures.

In July 2025, the FASB issued ASU 2025-05, which amends ASC 326-20 to provide a practical expedient (for all entities) and an accounting policy election (for all entities, other than public business entities, that elect the practical expedient) related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606. The Board developed the new guidance in conjunction with the Private Company Council to address concerns from stakeholders that estimating expected credit losses can be costly and complex for such transactions. ASU 2025-05 is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted. Entities should apply the new guidance prospectively. The Group expects the adoption of this ASU will not have a material effect on the Group's unaudited condensed consolidated financial statements.

In December 2025, FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow Scope Improvements, which clarifies interim disclosure requirements. This ASU is effective for interim reporting periods beginning after December 15, 2027, with early adoption permitted. The Group is currently assessing the impact of this ASU on the Group's accounting policies and the unaudited condensed consolidated financial statements.

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

**Note 3 — Revenues** 

Revenues are recognized when control of the promised services and deliverables are transferred to the Group's clients at an amount that reflects the considerations the Group expects to be entitled to and receive in exchange for services and deliverables rendered.

The following table presents the Group's revenues disaggregated by service lines for the six months ended December 31, 2025 and 2024:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the six months ended<br> December 31,** | **For the six months ended<br> December 31,** | **For the six months ended<br> December 31,** |
|  | **2024** | **2025** | **2025** |
|  | **HKD** | **HKD** | **US$** |
| Employment services | $5038418 | $5329806 | $684775 |
| Payroll outsourcing services | $8686075 | $8702307 | $1118074 |
| Total revenues | $13724493 | $14032113 | $1802849 |

---

The following table presented the Group's revenues disaggregated by service lines and geographic location of the employees of our customers for the six months ended December 31, 2025 and 2024:

---

| | | | |
|:---|:---|:---|:---|
| | **For the six months ended<br> December 31,** | **For the six months ended<br> December 31,** | **For the six months ended<br> December 31,** |
| | **2024** | **2025** | **2025** |
| <br>**Revenues** | **HKD** | **HKD** | **US$** |
| Hong Kong | $446999 | $425982 | $54730 |
| Macau | 36000 | 24037 | 3088 |
| PRC | 2593720 | 2711617 | 348389 |
| Taiwan | 1540392 | 1470822 | 188972 |
| Japan | 42584 | 69761 | 8963 |
| Australia | 120056 | - | - |
| Thailand | 12098 | 32471 | 4172 |
| Malaysia | - | 177869 | 22853 |
| Vietnam | - | 19488 | 2504 |
| India | 10346 | 99486 | 12782 |
| Indonesia | - | 27068 | 3478 |
| Philippines | 53125 | 13349 | 1715 |
| Singapore | 36790 | 79179 | 10173 |
| South Korea | 146308 | 71172 | 9144 |
| Italy | - | 107505 | 13812 |
| **Total employment services** | 5038418 | 5329806 | 684775 |
| Hong Kong | 424836 | 817924 | 105087 |
| Macau | 219605 | 264882 | 34032 |
| PRC | 7856625 | 7468402 | 959541 |
| Taiwan | 160312 | 102954 | 13228 |
| India | 24697 | 48145 | 6186 |
| **Total payroll outsourcing services** | 8686075 | 8702307 | 1118074 |
| **Total revenues** | $13724493 | $14032113 | $1802849 |

---

The following table presents the Group's revenues disaggregated by the timing of revenue recognition for the six months ended December 31, 2025 and 2024:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the six months ended<br> December 31,** | **For the six months ended<br> December 31,** | **For the six months ended<br> December 31,** |
|  | **2024** | **2025** | **2025** |
|  | **HKD** | **HKD** | **US$** |
| Services transferred over time | $13724493 | $14032113 | $1802849 |
| Total revenues | $13724493 | $14032113 | $1802849 |

---

**Note 4 — Accounts receivable, net**

Accounts receivable, net consisted of the following:

---

| | | | |
|:---|:---|:---|:---|
|  | **June 30, <br> 2025** | **December 31,<br> 2025** | **December 31,<br> 2025** |
|  | **HKD** | **HKD** | **US$** |
| Accounts receivable | $3625254 | $3528299 | $453316 |
| Less: Allowance for credit losses | (43402) | (43060) | (5532) |
| Accounts receivable, net | $3581852 | $3485239 | $447784 |

---

During the six months ended December 31, 2025 and 2024, reversal of provision for credit losses was HKD342 (US$44) and HKD92,618 respectively.

The following table sets forth the movement of allowance for credit losses:

---

| | | | |
|:---|:---|:---|:---|
|  | **June 30, <br> 2025** | **December 31,<br> 2025** | **December 31,<br> 2025** |
|  | **HKD** | **HKD** | **US$** |
| Beginning balance | $120620 | $43402 | $5576 |
| Recovery | (115535) | (37962) | (4877) |
| Addition | 38317 | 37620 | 4833 |
| Ending balance | $43402 | $43060 | $5532 |

---

**Note 5 — Prepayment, deposits and other receivables, net**

Prepayment, deposits and other receivables, net included the following:

---

| | | | |
|:---|:---|:---|:---|
|  | **June 30,<br> 2025** | **December 31,<br> 2025** | **December 31,<br> 2025** |
|  | **HKD** | **HKD** | **US$** |
| Prepayments (1) | $153818 | $164537 | $21140 |
| Other deposits (2) | 872428 | 4540054 | 583306 |
| Rental deposits | 516293 | 515243 | 66199 |
| Remuneration receivables from the customers to customers' employees | 432116 | 1084237 | 139303 |
| Total Prepayment, deposits and other receivables, net | $1974655 | $6304071 | $809948 |

---

&nbsp;&nbsp;&nbsp;&nbsp;(1) It includes the expenses paid in advance to service providers.

&nbsp;&nbsp;&nbsp;&nbsp;(2) It is refundable deposits to in-country partners upon the termination of services.

**Note 6 — Property and equipment, net**

Property and equipment consisted of the following:

---

| | | | |
|:---|:---|:---|:---|
|  | **June 30,<br> 2025** | **December 31,<br> 2025** | **December 31,<br> 2025** |
|  | **HKD** | **HKD** | **US$** |
| Leasehold improvements | $229624 | $229624 | $29502 |
| Furniture and fixtures | 102000 | 102000 | 13105 |
| Office equipment | 767502 | 810186 | 104093 |
| Subtotal | 1099126 | 1141810 | 146700 |
| Less: accumulated depreciation | (934081) | (989263) | (127101) |
| Total | $165045 | $152547 | $19599 |

---

Depreciation expense for the six months ended December 31, 2025 and 2024 amounted to HKD55,053 (US$7,073) and HKD53,548, respectively. Purchase of property and equipment for the six months ended December 31, 2025 and 2024 amounted to HKD43,500 (US$5,589) and HKD48,240 respectively.

**Note 7 — Accrued expenses and other payables**

Accrued expenses and other payables consisted of the following:

---

| | | | |
|:---|:---|:---|:---|
|  | **June 30,<br> 2025** | **December 31, <br> 2025** | **December 31, <br> 2025** |
|  | **HKD** | **HKD** | **US$** |
| Accrued expenses | $2308793 | $2036138 | $261603 |
| Refundable deposits received for employment services (1) | 3678667 | 7555357 | 970714 |
| Remuneration payables for customers' employees (2) | 1769208 | 1651419 | 212175 |
| Other deposits received (3) | 286871 | 3589362 | 461162 |
| Deferred income | 28200 | 18800 | 2415 |
| Total | $8071739 | $14851076 | $1908069 |

---

&nbsp;&nbsp;&nbsp;&nbsp;(1) It represented security deposits received from the customers to protect the Group from the loss that the Group may suffer from the termination of employment with the Group's seconded employees.

&nbsp;&nbsp;&nbsp;&nbsp;(2) It mainly comprised funds received from the customers in relation to retirement benefit contributions (including MPF and social insurance) and payroll funds of employees of the customers which are to be paid.

&nbsp;&nbsp;&nbsp;&nbsp;(3) The deposits mainly represented the customers' advance of payroll funds to ensure timely settlement of customer's employees' salaries and retirement benefit contributions to the relevant government authorities.

**Note 8 — Taxes**

 

*Cayman Island and British Virgin Islands* 

The Group, Melkweg Cayman and Melkweg BVI were incorporated in the Cayman Islands and British Virgin Islands respectively and conduct all of the Group's businesses through subsidiaries in Hong Kong, Macau, PRC and Taiwan. Under the current laws of the Cayman Islands and British Virgin Islands, the Group and Melkweg BVI are not subject to tax on income or capital gains. In addition, upon payments of dividends by Melkweg BVI to Melkweg Cayman and Melkweg Cayman to the Group's shareholders, no Cayman Island and British Virgin Islands withholding tax will be imposed.

*Hong Kong*

*Two-tier Profits Tax Rates*

Galaxy Payroll (HK), Galaxy GEO Services, Galaxy Payroll (China) and Galaxy Payroll (TW) were incorporated in Hong Kong and are subject to Hong Kong profits tax compliance.

The two-tier profits tax rates system was introduced under the Inland Revenue (Amendment)(No.3) Ordinance 2018 ("the Ordinance") of Hong Kong became effective for the assessment year 2018/2019. Under the two-tier profit tax rates regime, the profits tax rate for the first HKD2 million of assessable profits of a corporation will be subject to the lowered tax rate, 8.25% while the remaining assessable profits will be subject to the legacy tax rate, 16.5%. The Ordinance only allows one entity within a group of "connected entities" is eligible for the two-tier tax rate benefit. An entity is a connected entity of another entity if (1) one of them has control over the other; (2) both of them are under the control (more than 50% of the issued share capital) of the same entity; (3) in the case of the first entity being a natural person carrying on a sole proprietorship business-the other entity is the same person carrying on another sole proprietorship business. Under the Ordinance, it is an entity's election to nominate an entity that will be subject to the two-tier profits tax rate on its Profits Tax Return. The election is irrevocable.

Galaxy Payroll (HK), Galaxy GEO Services, Galaxy Payroll (China) and Galaxy Payroll (TW) elected the two-tier profits tax rate for its tax years of 2024 and 2025. Galaxy Payroll (HK) applies the two-tier profits tax rate for its provision for current income and deferred taxes.

Net operating loss will be carried forward indefinitely under Hong Kong profits tax regulation.

 

*Macau*

Corporate Income Tax in Galaxy HR (Macau) is charged at 12% during the six months ended December 31, 2025 and 2024.

*The People's Republic of China ("PRC")*

Under the Law of The People's Republic of China on Enterprise Income Tax (the "EIT Law") and Implementation Regulation of the EIT Law, the tax rate of Galaxy HR (SZ) is 25% during the six months ended December 31, 2025 and 2024.

*Taiwan*

Corporate Income Tax in Galaxy HR (TW) is charged at 20% during the six months ended December 31, 2025 and 2024.

No provision for taxation in Macau, PRC and Taiwan has been made as the Group's entities in Macau, PRC and Taiwan had no assessable profit.

The Loss before Income Taxes consisted of the following components:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the six months ended<br> December 31,** | **For the six months ended<br> December 31,** | **For the six months ended<br> December 31,** |
|  | **2024** | **2025** | **2025** |
|  | **HKD** | **HKD** | **US$** |
| Hong Kong | $1307335 | $1443325 | $185440 |
| Foreign | (27749126) | (2469999) | (317347) |
| Total loss before income taxes | $(26441791) | $(1026674) | $(131907) |

---

The income tax provision consisted of the following components:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the six months ended<br> December 31,** | **For the six months ended<br> December 31,** | **For the six months ended<br> December 31,** |
|  | **2024** | **2025** | **2025** |
|  | **HKD** | **HKD** | **US$** |
| Current: |  |  |  |
| Hong Kong | $87570 | $120336 | $15461 |
| Total current | 87570 | 120336 | 15461 |
| Total provision for income taxes | $87570 | $120336 | $15461 |

---

The following table sets forth the significant components of the aggregate deferred tax assets and liabilities as of:

---

| | | | |
|:---|:---|:---|:---|
|  | **June 30,<br> 2025** | **December 31, <br> 2025** | **December 31, <br> 2025** |
|  | **HKD** | **HKD** | **US$** |
| Deferred Tax Assets/Liabilities |  |  |  |
| Net operating loss carryforwards | $364025 | $216679 | $27839 |
| Less: valuation allowance | (364025) | (216679) | (27839) |
| Deferred tax assets, net | $- | $- | $- |

---

For the six months ended December 31, 2025, the net increase in valuation allowance was HKD147,345 (US$18,931). This movement mainly reflected the utilization of the WFOE net operating loss of HKD197,588 (US$25,386), an increase in valuation allowance of HKD44,796 (US$5,755), and a foreign exchange difference of HKD5,447 (US$700).

A reconciliation between the Group's actual provision for income taxes and the provision at the Hong Kong statutory rate was as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the six months ended <br> December 31,** | **For the six months ended <br> December 31,** | **For the six months ended <br> December 31,** |
|  | **2024** | **2025** | **2025** |
|  | **HKD** | **HKD** | **US$** |
| Loss before income tax | $(26441791) | $(1026674) | $(131907) |
| Hong Kong income tax rate | 16.5% | 16.5% | 16.5% |
| Income tax expense computed at statutory rate | (4362896) | (169400) | (21764) |
| Reconciling items: |  |  |  |
| &nbsp;&nbsp;&nbsp;Non-deductible expenses | 4483219 | 369201 | 47435 |
| &nbsp;&nbsp;&nbsp;Non-taxable income | (70758) | (157279) | (20208) |
| &nbsp;&nbsp;&nbsp;Preferential rate (1) | (193617) | (158289) | (20337) |
| &nbsp;&nbsp;&nbsp;Temporary difference not recognized | 7456 | 55 | 7 |
| &nbsp;&nbsp;&nbsp;Valuation allowance | 284327 | 44806 | 5757 |
| &nbsp;&nbsp;&nbsp;Different tax rates of subsidiaries operating in other jurisdictions | 53895 | (35156) | (4517) |
| &nbsp;&nbsp;&nbsp;(Over) Under-provision in prior year | (114056) | 226398 | 29088 |
| Total income tax expense | $87570 | $120336 | $15461 |
| Effective tax rate | -0.33% | -11.72% | -11.72% |

---

&nbsp;&nbsp;&nbsp;&nbsp;(1) The Group's basic and diluted losses per share would have been each lowered by HKD0.010 (US$0.001) per share for the six months ended December 31, 2025 and 2024 without the preferential tax rate reduction, respectively.

The Group evaluates the level of authority for each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measures the unrecognized benefits associated with the tax positions. As of December 31, 2025 and 2024, the Group have unrecognized tax losses, incurred from the PRC entities, of approximately HKD866,716 (US$111,356) and HKD1,417,215, respectively. The Management believes that it is more likely than not that the Group will not realize these potential tax benefits as these operations will not generate any operating profits in the foreseeable future. As a result, a valuation allowance was provided against the full amount of potential tax benefits based on the unrecognized tax losses incurred. No deferred tax is recognized during the six months ended December 31, 2025 and 2024. As of December 31, 2025, the tax loss carry-forwards will expire between the calendar year 2024 through 2028.

**Note 9 — Related party transactions**

The following was a summary of related party's balance as of December 31, 2025 and June 30, 2025 and transactions for the six months ended December 31, 2025 and 2024:

Mr. But, Yiu Kong Kenneth ("Mr. Kenneth But"), an executive director of the Group.

Mr. Lao Wai Hong ("Mr. Lao") is an executive director and Chief Executive Officer of the Group.

Mr. Lao Wai Man ("Raymond") is an employee of the Group.

<u>Balance with a related party</u>

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | | | **June 30,** | **December 31,** | **December 31,** |
| | | | **2025** | **2025** | **2025** |
| <br>**Name of related parties** | <br>**Relationship** | <br>**Nature of**<br>**transactions** | **HKD** | **HKD** | **US$** |
| Galaxy Accounting & Tax Services Limited | Mr. Lao and Mr. Kenneth But being the directors | Amount due from a related party | $- | $20000 | $2570 |

---

<u>Transactions with related parties</u> 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | | | **For the six months ended <br> December 31,** | **For the six months ended <br> December 31,** | **For the six months ended <br> December 31,** |
| | | | **2024** | **2025** | **2025** |
| <br>**Name of related parties** | <br>**Relationship** | <br>**Nature of**<br>**transactions** | **HKD** | **HKD** | **US$** |
| Noah Trust (Asia) Limited | Mr. Kenneth But being one of its directors | Payroll outsourcing service fee income | $3000 | $3000 | $385 |
| Nebula 360 Services Limited | Raymond, brother of Mr. Lao, being the director | Referral service fee income | $6455 | $60925 | $7828 |
| Nebula 360 Services Limited | Raymond, brother of Mr. Lao, being the director | Employment service fee expense | $23357 | $23384 | $3000 |

---

**Note 10 — Commitments and contingencies**

The Group has entered into lease arrangements for its office facility.

The components of lease expense were as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the six months ended <br> December 31,** | **For the six months ended <br> December 31,** | **For the six months ended <br> December 31,** |
|  | **2024** | **2025** | **2025** |
|  | **HKD** | **HKD** | **US$** |
| Operating lease cost | $557495 | $567585 | $72923 |

---

Supplemental balance sheet information related to leases was as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **June 30,<br> 2025** | **December 31, <br> 2025** | **December 31, <br> 2025** |
|  | **HKD** | **HKD** | **US$** |
| Operating lease: |  |  |  |
| &nbsp;&nbsp;&nbsp;Operating lease right-of-use assets | $1225109 | $840603 | $108000 |
| &nbsp;&nbsp;&nbsp;Current operating lease obligation | 945801 | 661615 | 85004 |
| &nbsp;&nbsp;&nbsp;Non-current operating lease obligation | 291151 | 190765 | 24510 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating lease obligation | $1236952 | $852380 | $109514 |
| Weighted average remaining lease term (in year or period): |  |  |  |
| &nbsp;&nbsp;&nbsp;Operating lease | 1 | 1.2 |  |
| Weighted average discount rate: |  |  |  |
| &nbsp;&nbsp;&nbsp;Operating lease | 3.6% | 3.9% |  |
| &nbsp;&nbsp;&nbsp;Cash paid for amounts included in the measurement of lease liabilities | $1108944 | $590264 | $75837 |

---

*Non-cancellable Operating Lease*

The Group's commitment for minimum lease payment under its operating lease for its office facility as of December 31, 2025 was as follows:

---

| | | |
|:---|:---|:---|
| **Period ending December 31,** | **Amount** <br> **(HKD)** | **Amount**<br> **(US$)** |
| 2026 | $675771 | $86823 |
| 2027 | 204023 | 26213 |
| Total future lease payments | $879794 | $113036 |
| Amount representing interest | (27414) | (3522) |
| Present value of future payments | $852380 | $109514 |

---

Total operating lease expense for the Group's office facility for the six months ended December 31, 2025 and 2024 was HKD567,585 (US$72,923) and HKD557,495, respectively.

*Contingencies*

In the ordinary course of business, the Group may be subject to certain legal proceedings, claims, and disputes that arise from the business operations. Although the outcomes of these legal proceedings cannot be predicted, the Group does not believe these actions, in the aggregate, will have a material adverse impact on its financial position, results of operations or liquidity. As of December 31, 2025, the Group had no outstanding lawsuits nor claims.

**Note 11 — Equity**

*Ordinary shares*

As of December 31, 2025 and June 30, 2025, the ordinary shares issued were 21,615,000 with US$0.000625 par value per share with 18,229,970 and 18,012,500 ordinary shares outstanding as of December 31, 2025 and June 30, 2025 respectively before (i) giving effect to the re-designation of the ordinary shares on March 19, 2025 (as further discussed below); and (ii) giving the retroactive effect of the reverse shares split on September 8, 2025. Each share confers upon the shareholders (a) the right to one vote at a meeting of the shareholders or on any resolution of shareholders; (b) the right to an equal share in any dividend paid by the Group; and (c) the right to an equal share in the distribution of the surplus assets of the Group on its liquidation. If at any time the shares are divided into different classes, the rights attached to any class may only be varied, whether or not the Group is in liquidation, with the consent in writing of or by a resolution passed at a meeting by the holders of not less than 50 percent of the issued Shares in that class. The rights conferred upon the holders of the shares of any class shall not, unless otherwise expressly provided by the terms of issue of the shares of that class, be deemed to be varied by the creation or issue of further shares ranking pari passu therewith.

*Consummation of IPO*

On September 13, 2024, the Group closed its IPO of 1,750,000 ordinary shares at the initial public offering price of US$4.00 per share for total gross proceeds of US$7,000,000, before deducting underwriting discounts and other offering expenses. On October 15, 2024, the Group closed the sales of an additional 262,500 ordinary shares, representing full exercise of the underwriter's over-allotment option granted in connection with the Group's IPO, at the offering price of US$4.00 per share. As a result, the Group has raised gross proceeds of $1,050,000 in addition to the previously announced IPO gross proceeds of $7,000,000, before deducting underwriting discounts and offering expenses.

*Re-classification and re-designation of ordinary shares*

On March 19, 2025, the re-designation and re-classification of its ordinary shares into two classes each with a par value of US$0.000625 that (a) all the issued 18,012,500 Ordinary Shares be and are re-designated into 14,412,500 Class A Ordinary Shares each with a par value of US$0.000625 with one vote per share but with all rights and restrictions remaining identical to the Ordinary Shares (the "Class A Ordinary Shares") on a one-for-one basis and 3,600,000 Class B Ordinary Shares each with a par value of US$0.000625 with fifty votes per share but with all rights and restrictions remaining identical to the Ordinary Shares (the "Class B Ordinary Shares") on a one-for-one basis, (b) the remaining authorized but unissued Ordinary Shares be and are re-designated into (i) an unlimited number of Class A Ordinary Shares and (ii) an unlimited number of Class B Ordinary Shares on a one-for-one basis and (c) such that the Group will be authorized to issue an unlimited number of shares each with a par value of US$0.000625 divided into (i) an unlimited number of Class A Ordinary Shares and (ii) an unlimited number of Class B Ordinary Shares.

*Share reserved for issuance*

On February 26, 2025, the Group had reserved an aggregate of 3,602,500 Class A Ordinary Shares for issuance under its Employee Share Ownership Plan ("ESOP"), which is designed to attract, retain and incentivize employees through equity-based compensation. Class A Ordinary Shares issued upon exercise or vesting of such awards rank pari passu with all other outstanding Class A Ordinary Shares, including voting and dividend rights. The plan is administered by the Compensation Committee, and all grants are subject to vesting conditions and other terms set forth in the 2025 Stock Incentive Plan. During the six months ended December 31, 2025, 21,747 Class A Ordinary Shares were granted, vested, and exercised by one employee and two consultants under 2025 Stock Incentive Plan respectively. During the year ended June 30, 2025, no Class A Ordinary Shares were granted, vested, or exercised by employees, directors, or consultants under 2025 Stock Incentive Plan respectively.

*Reverse shares split*

On September 8, 2025, the Group has been approved a consolidation of all issued and unissued Ordinary Shares at a ratio of ten (10) shares to one (1) share of the same class (the "Share Consolidation") and the Share Consolidation was effective. The Share Consolidation applied to both Class A and Class B Ordinary Shares, with the par value per share increasing from US$0.000625 to US$0.00625 following the consolidation. The Share Consolidation reduced the number of outstanding ordinary shares of the Group from 21,615,000 to approximately 2,161,500. No fractional shares were issued in connection with the Share Consolidation. Instead, the Group issued one full post-Share Consolidation ordinary share to any shareholder at a participant level who would have been entitled to receive a fractional share as a result of the process. The Group issued an aggregate of 15 full post-Share Consolidation ordinary shares pursuant to this arrangement.

The above-mentioned reverse share split of both Class A and Class B Ordinary Shares have been accounted for on a retroactive basis and reflected in the comparative financial information presented in these unaudited condensed consolidated financial statements.

 

*Dividends*

The Group did not declare and pay dividends to its shareholders during the six months ended December 31, 2025 and 2024. The dividend per share was nil during the six months ended December 31, 2025 and 2024. As of December 31, 2025 and June 30, 2025, the dividend payable balance was nil.

 

*Subscription receivable*

 

The subscription receivable represents the unpaid capital contribution of US$10,000 for Galaxy Payroll BVI by the shareholders. The receivable was fully settled as of December 31, 2025 and June 30, 2025.

**Note 12 — Share-Based Compensation**

On February 26, 2025, the Group adopted the 2025 Share Incentive Plan, for the purpose of granting share-based compensation awards to employees, directors and consultants to incentivize their performance and align their interests with the Group. The maximum aggregate number of Class A Ordinary Shares which may be issued pursuant to all awards under the 2025 Share Incentive Plan is 360,250, after the retroactive effect of reverse share split on September 8, 2025.

The Group recognized compensation expense for the six months ended December 31, 2025 and 2024 was HKD50,762 (US$6,522) and nil respectively.

As of December 31, 2025 and June 30, 2025, 360,250 Class A Ordinary Shares were issued with retroactive effect of reverse shares split on September 8, 2025. As of December 31, 2025, 21,747 shares have been granted, vested and fully exercised. As of June 30, 2025, nil shares have been fully granted, vested or exercised. There was no unrecognized compensation cost related to unvested share options for the six months ended December 31, 2025 and 2024.

**Note 13 — Subsequent events**

The Group evaluated all events and transactions that occurred after December 31, 2025 up through the date the Group issued the unaudited condensed consolidated financial statements. There were no subsequent events occurred that would require recognition or disclosure in the Group's unaudited condensed consolidated financial statements other than those set forth below.

On January 21, 2026, the Company entered into a termination agreement with the 2025 Investors (as defined below), pursuant to which all the obligations under (i) that certain securities purchase agreement, dated as July 11, 2025, and amended on September 12, 2025, by and among the Company and the investors (the "2025 Investors"); and (ii) that certain registration rights agreement dated as of July 11, 2025, by and between the Company and each of the 2025 Investors were terminated.

On January 15, 2026, the Company entered into a securities purchase agreement (the "2026 SPA") with certain non-U.S. investors (collectively, the "2026 Purchasers"), pursuant to which the Company agreed to sell and the 2026 Purchasers agreed to purchase an aggregate of 3,800,000 Class A Ordinary Shares of the Company, at a purchase price of US$0.66 per Ordinary Share, which is 40% of the closing price of the Class A Ordinary Shares as of January 14, 2026 (the "2026 PIPE Transaction").

The Company also entered into a registration rights agreement, dated January 15, 2026 (the "2026 RRA") with each of the 2026 Purchasers, pursuant to which the Company has agreed to file a registration statement to register for resale by the 2026 Purchasers the Ordinary Shares they purchased in the 2026 PIPE Transaction. Such registration statement was filed with the United States Securities and Exchange Commission (the "SEC") on March 11, 2026 and was declared effective on March 19, 2026.

On March 30, 2026, the Company's board of directors resolved the Company could prepare, execute and file with the SEC, a registration statement on Form F-3, including the base prospectus and any and all exhibits and other documents relating thereto, for the registration under the Securities Act of 1933, as amended (the "Securities Act"), of the offer and sale by the Company from time to time, pursuant to Rule 415 under the Securities Act, of any combination of (i) Class A Ordinary Shares (the "Equity Securities"), (ii) debt securities of the Company (the "Debt Securities"), in one or more series, (iii) warrants of the Company to purchase Equity Securities or Debt Securities (the "Warrants"), (iv) rights to purchase Equity Securities, Debt Securities, Warrants, or Units as defined below (the "Rights"), and (v) units consisting of combinations of one or more of the foregoing (the "Units", and together with the Equity Securities, Debt Securities, Warrants and Rights, the "Securities"), for a maximum aggregate offering price of $200,000,000. This is a shelf registration statement. There is no assurance there will be any take down offerings to occur from such shelf registration statement when and after it is declared effective by the SEC.