The Group generates revenue through the delivery of educational programsand licensing and sales of HybriU solutions.

The core principle of ASC 606 is that an entity recognizes revenuewhen control of the promised goods or services is transferred to customers in an amount that reflects the consideration to which the entityexpects to be entitled in exchange for those goods or services.

To achieve that principle, the Group applies the following steps:

Step 1: Identify the contract(s) with a customer;

Step 2: Identify the performance obligations in the contract;

Step 3: Determine the transaction price;

Step 4: Allocate the transaction price to the performance obligationsin the contract;

Step 5: Recognize revenue when (or as) the entity satisfies a performanceobligation.

The Group has two reportable segments. One reportable segment generatesrevenue from providing career-oriented higher education services to undergraduate students. The other reportable segment generates revenuefrom the sale and licensing of HybriU solutions.

For undergraduate students, usually there are no written formal contractsbetween the Group and the students according to business practice. Records with students’ name, grade, tuition and fee collectedare signed or confirmed by students. Academic requirements and each party’s rights are communicated with students through enrollmentbrochures or daily teaching and academic activities. 

For undergraduate students, the Group’s performance obligationis to provide acknowledged academic education within academic years, and post-secondary with Associates and Bachelor’s programswithin agreed-upon periods. The transaction price is the tuition fee received and circumstances like other variable consideration, significantfinancing component, noncash consideration, consideration payable to a customer did not exist. As there is only one performance obligation,all the transaction price is allocated to the one performance obligation. The Group satisfies performance obligation to students overtime, and recognizes revenue according to school days consumed in each month of a semester.

We also generate revenue primarily through the licensing and salesof HybriU solutions.

Licensing - There is only one performance obligation for Licensingwhich is to deliver our HybriU solution to customers as a combination of software, user manuals, technical documentation and other relatedmaterials, from which customers can benefit alongside ready-made resources. Revenue for Licensing is recognized at the point in time ofdelivery of the HybriU solution because the solution is considered functional intellectual property due to its significant standalonefunctionality, and the Group does not expect to substantively change that functionality in any way that would significantly affect theutility of the solution after delivery. The Group also promises to provide unspecified updates, bug fixes and error collection for thesolution (referred to as “technical support”) free of charge if any issues occur during the operation and if support is requestedby customers during the licensing term. This technical support is considered an immaterial promise and not identified as a single performanceobligation because it is minimally and infrequently provided to customers based on historical experience which is also in line with theGroup’s expectations. There is no variable consideration and significant financing component.

For sales of HybriU solutions, the performance obligation is similarlyfulfilled at the point in time when control of the product transfers to the customer. This includes the delivery of hardware and the fullsoftware package, along with all necessary documentation and resources for immediate use. Revenue is recognized upon delivery, as thecustomer obtains control and the ability to direct the use of the solution at that point.

The Group generally provide a standard warranty for a period of 12months from the date of delivery of the products. The Group determines that such product warranty is not a separated performance obligationbecause the nature of warranty is to provide assurance that a product will function as expected and in accordance with customer’sspecification and the Group has not sold the standard warranty separately. As the Group has only recently commenced sales and, based onestimates, does not expect to incur any significant warranty costs in the future, it has determined that no provision for warranty expensesis required for the period ended 30 June 2025.

Contract Balances

The Group classifies its right to consideration in exchange for servicetransferred to a customer as either a receivable or a contract asset. A receivable is a right to consideration that is unconditional ascompared to a contract asset which is a right to consideration that is conditional upon factors other than the passage of time. The Grouprecognizes accounts receivable in its consolidated balance sheets when it performs a service in advance of receiving consideration andit has the unconditional right to receive consideration. A contract asset is recorded when the Group has transferred services to the customerbefore payment is received or is due. The Group did not record contract assets as of December 31, 2024 and June 30, 2025.

The contract liabilities consist of deferred revenue, which relatesto unsatisfied performance obligations at the end of each reporting period and consists of tuition received in advance from students.As of December 31, 2023 and 2024, the Group has deferred revenue amounted $544 and $436, respectively. For the six months ended June 30,2024 and 2025, the Group has recognized $122 and $226 in educational programs and services revenue from the deferred revenues balanceas of December 31, 2023 and 2024, respectively. As of June 30, 2025, the Group has deferred revenue amounted $210. 

In accordance with ASC 280-10, Segment Reporting: Overall, the Group’schief operating decision maker (“CODM”) has been identified as the Chief Executive Officer.

In November 2023, FASB issued ASU 2023-07, Segment Reporting (Topic280): Improvements to Reportable Segment Disclosures, which expands public entities’ segment disclosures, among others, requiringdisclosure of significant segment expenses that are regularly provided to the CODM and included within each reported measure of segmentprofit or loss; an amount and description of its composition for other segment items; and interim disclosures of a reportable segment’sprofit or loss and assets.

The Group’s chief operating decision maker has been identifiedas the Chief Executive Officer who reviews financial information of operating segments based on US GAAP amounts when making decisionsabout allocating resources and assessing performance of the Group. For the three-month and six-month periods ended June 30, 2024 and 2025,the Group present financial information disaggregated by business components including (i) Educational programs and services and (ii)HybriU licensing and selling for internal management purposes.

The Group’s CODM makes decisions on resource allocation, evaluatesoperating performance, and monitors budget versus actual results using net income. There is no reconciling items or adjustments betweensegment income and net income as presented in the Group’s statements of operations. The CODM does not review assets in evaluatingthe segment results and therefore such information is not presented.

In accordance with Accounting Standards Codification (“ASC”)Topic 326, Financial Instruments - Credit Losses, the Company estimates and records an expected lifetime credit loss on accounts receivableand long-term receivable included in other non-current assets by utilizing historical write-off rates as a starting point for determiningexpected credit losses and has considered all available relevant information, including details about past events, current conditions,and reasonable and supportable forecasts, as well as their impact on the expected credit losses. The allowance for expected credit lossesis adjusted for current conditions and reasonable and supportable forecasts.

The Group accounts for its lease under ASC 842 Leases, and identifieslease as a contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (anidentified asset) for a period of time in exchange for consideration. For all operating leases except for short-term leases, the Grouprecognizes operating right-of-use assets and operating lease liabilities. Leases with an initial term of 12 months or less are short-termlease and not recognized as right-of-use assets and lease liabilities on the consolidated balance sheet. The Group recognizes lease expensefor short-term leases on a straight-line basis over the lease term. The operating lease liabilities are recognized based on the presentvalue of the lease payments not yet paid, discounted using the Group’s incremental borrowing rate over a similar term of the leasepayments at lease commencement. Some of the Group’s lease agreements contain renewal options; however, the Group do not recognizeright-of-use assets or lease liabilities for renewal periods unless it is determined that the Group is reasonably certain of renewingthe lease at inception or when a triggering event occurs. The right-of-use assets consist of the amount of the measurement of the leaseliabilities and any prepaid lease payments. Lease expense for lease payments is recognized on a straight-line basis over the lease term.The Group’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

When none of the criteria of finance lease are met, a lessee shallclassify the lease as an operating lease.

Income taxes are provided for in accordance with the laws of the relevanttaxing authorities. Deferred income taxes are recognized for temporary differences between the tax basis of assets and liabilities andtheir reported amounts in the financial statements, net of operating loss carry forwards and credits, by applying enacted statutory taxrates applicable to future years. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is morelikely than not that some portion or all of the deferred tax assets will not be realized.

ASC 740-10-50-19 requires that an entity disclose its policy on theclassification of interest and penalties due to taxing authorities in the notes to the financial statements. In addition, ASC 740-10-50-15(c)requires that all entities disclose in the statement of operations and in the statement of financial position the total amounts of theinterest and penalties related to tax positions recognized. As of June 30 2025, the Company did not have any interest or penalty on taxdeficiencies.

Deferred tax liabilities and assets are classified as noncurrent andpresented with a netted-off amount in the condensed consolidated balance sheets as of December 31, 2024 and June 30 2025, respectively.

In December, 2023, the FASB issued ASU 2023-09 “Income Taxes(Topics 740): Improvements to Income Tax Disclosures” to expand the disclosure requirements for income taxes, specifically relatedto the rate reconciliation and income taxes paid. ASU 2023-09 is effective for our annual periods beginning January 1, 2025, with earlyadoption permitted. The Group is currently evaluating the impact of the above new accounting pronouncement or guidance on the consolidatedfinancial statements.

In November, 2024, the FASB issued ASU No. 2024-03, Income Statement(Topic 220)- Reporting Comprehensive Income- Expense Disaggregation Disclosures (Subtopic 220-40). ASU No. 2024-03 requires publicly-tradedbusiness entities to disclose specified information about the components of certain costs and expenses that are currently disclosed inthe financial statements. The guidance is effective for annual reporting periods beginning after December 15, 2026, and interim reportingperiods beginning after December 15, 2027. Early adoption is permitted. The Group is currently evaluating the impact of the above newaccounting pronouncement or guidance on the consolidated financial statements.

Recently issued ASUs by the FASB, except for the one mentioned above,have no material impact on the Group’s consolidated results of operations or financial position.

Supplemental balance sheet information related to leases was as follows: