Knorex : Annual Report for Fiscal Year Ending December 31, 2025 (Form 20-F)

About this update from Knorex Ltd.

OPERATING AND FINANCIAL REVIEW AND PROSPECTS The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes thereto included elsewhere in this annual report. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs that involve risks and uncertainties. Our actual results could differ materially from those discussed in the forward-looking statements as a result of many factors, including those factors set forth in the sections titled "Item 3. Key Information-D. Risk Factors" and "Forward-Looking Statements. This section generally discusses the results of our operations for the year ended December 31, 2025 compared to the year ended December 31, 2024. For a discussion of the year ended December 31, 2024 compared to the year ended December 31, 2023, please refer to "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Registration Statement, which discussion is incorporated herein by reference. A. Operating Results Overview We are a B2B technology company that provides programmatic advertising products and solutions to marketers, enabling them to streamline and automate their advertising and marketing workflows. Our flagship product, KNOREX XPO, is a self-service, enterprise-grade cloud platform that allows marketers to orchestrate omni-channel advertising across the Open Internet and Native Platforms, including search, social media, apps, websites, desktop, mobile, connected television, streaming devices and digital billboards. Leveraging our proprietary AI/ML technology, XPO automates and optimizes advertisement purchasing and campaign management processes, helping marketers improve advertising efficiency, targeting and performance. Since our inception in Singapore in September 2009, we have expanded our operations to the United States, Vietnam, India and Malaysia, with the United States currently representing our largest market. We have made significant investments in research and development and established partnerships with leading media, data and technology partners across the United States, Europe and Asia. As of June 30, 2026, our customers, primarily advertising agencies and marketers, had used XPO to automate and optimize campaigns for over 8,759 advertiser accounts across a broad range of industry verticals, including automotive, healthcare, e-commerce, business-to-business, retail, consumer packaged goods, travel and hospitality. We generate revenue from our advertising customers based on platform subscription and platform services on the XPO platform, managed activations and professional services, for which we receive subscription fees, a percentage of their advertising spend as they use the platform services and service fees, enabling us to grow as our customers increase their digital advertisement spending and as we integrate into new channels and platforms. Our business, financial condition, results of operations and other key performance metrics may vary from quarter to quarter due to the seasonal nature of our clients' spending on advertising campaigns. For example, certain clients of ours tend to devote more of their advertising budgets to the fourth fiscal quarter to coincide with consumer holiday spending. Key Factors Affecting Our Results of Operations Our results of operations have been, and are expected to continue to be, affected by various factors, which primarily include the following: Our Ability to Create Value for Our Customers and Generate Revenue Creating value for our customers and generate recurring revenues from them is driven by our strong focus and experience in empowering data and technology. Our ability to provide access and aggregate data from different sources from the data marketplace, different devices and across heterogeneous channels and platforms, to enable marketers through our AI capabilities to automate and effectively harness increasingly complex, disparate data in real-time to deliver impactful advertising experience to the desired target audience segments via the right ad channels, ultimately to maximize the advertising campaigns, ROAS or fulfilment of the campaign objective are key measurements to create value for our customers. Further, our ability to help marketers to achieve efficiency and cost savings in their business operation through AI/ML-driven automation is equally important. We may lose customers if we fail to improve and enhance our platform and service offerings and performance optimization and solutions to meet our customers' evolving needs. Our Ability to Retain and Expand Our Customer Relationships Our results of operations depend significantly on our ability to acquire new customers, retain existing customers and increase their usage of our XPO platform and related services. Our customers generally are not subject to long-term or exclusive obligations to use our platform and may reduce their advertising spend, shift spending to other service providers or discontinue their use of our platform with limited switching costs. We have historically derived a significant portion of our revenue from a limited number of customers, and have experienced a material reduction in business from our largest customer due to a decrease in advertising spend by one of its major clients. If we are unable to replace lost revenue from significant customers by acquiring new customers, increasing usage by existing customers or diversifying our customer base and revenue sources, our revenue, results of operations and cash flows could be materially and adversely affected. Our Investment in Technology and Infrastructure We have made, and will continue to make, significant investments in our platform, as well as service and infrastructure modifications to enhance user experience and expand the capabilities and scope of our platform while we scale our platform to meet increasing demand and sophistication. We expect to continue our strong priority in investing in our research and development effort and our technology capabilities and infrastructure which will provide us the differentiation in a competitive market. It will lower our margins but deliver sustaining overall long-term growth. If we fail to respond to technological change or to adequately maintain, expand, upgrade, and develop our platform, systems and infrastructure in a timely manner, our growth prospects and results of operations could be adversely affected. Our Ability to Retain Key Management Team Members Our management team has a long history of working together. Each executive brings with them deep, extensive business and technical expertise in digital advertising. A few of our executives are serial entrepreneurs, having co-founded and expanded several companies into various countries before successfully exiting. The varied industry experience of our management team allows us to deliver superior and differentiated products and services to our customers as the management team possesses an in-depth understanding of the pain points prevalent in the industry where they have worked with media publishers or owners, advertising agencies and brand advertisers. Our success relies on the retention and commitment of our management team and key employees, and the substantial loss of any of our key executive team members could harm our business. Comparison of Results of Operations Year ended December 31, 2025 compared to year ended December 31, 2024 The following tables set forth a summary of our consolidated results of operations for the periods indicated. This information should be read together with our consolidated financial statements and related notes included elsewhere in this annual report. The operating results in any period are not necessarily indicative of the results that may be expected for any future period. For the Years Ended December 31, Percentage 2025 2024 Change Change US$ US$ US$ % Revenue $ 6,038,542 $ 10,820,365 $ (4,781,823 ) (44.2 ) Cost of revenue (3,093,432 ) (6,298,166 ) 3,204,734 50.9 Gross profit 2,945,110 4,522,199 (1,577,089 ) (34.9 ) Platform operations expenses (2,630,019 ) (2,758,292 ) 128,273 4.7 Sales and marketing expenses (2,411,277 ) (2,979,014 ) 567,737 19.1 Technology and development expenses (2,476,724 ) (2,608,355 ) 131,631 5.0 General and administrative expenses (4,817,540 ) (1,684,706 ) (3,132,834 ) (186.0 ) Loss from operations (9,390,450 ) (5,508,168 ) (3,882,282 ) (70.5 ) Total other expense, net (2,051,108 ) (317,220 ) (1,733,888 ) (546.6 ) Loss before income taxes (11,441,558 ) (5,825,388 ) (5,616,170 ) (96.4 ) Provision for income taxes (103,616 ) (58,223 ) (45,393 ) (78.0 ) Net loss (11,545,174 ) (5,883,611 ) (5,661,563 ) (96. 2 ) Less: Net income attributable to noncontrolling interest (1,316 ) (540 ) (776 ) (143.7 ) Net loss attributable to KNOREX Ltd. $ (11,546,490 ) $ (5,884,151 ) $ (5,662,339 ) (96.2 ) Revenue For the years ended December 31, 2025 and 2024, we derived our revenue primarily from platform subscription fees, platform services fees, managed activations and professional services. The following tables set forth the breakdown of our revenue by service lines for the periods indicated: For the Years Ended December 31, 2025 2024 US$ US$ Revenue: Platform subscription fee $ 2,626,572 $ 4,408,157 Platform services fees 3,310,716 6,233,241 Managed activations and professional services 101,254 178,967 Total $ 6,038,542 $ 10,820,365 The following tables set forth the breakdown of our revenue by regions for the periods indicated: For the Years Ended December 31, 2025 2024 US$ US$ Revenue: U.S. operation $ 5,000,611 $ 10,422,293 International operation 1,037,931 398,072 Total $ 6,038,542 $ 10,820,365 Our revenue decreased by 44.2%, from approximately US$10.8 million for the year ended December 31, 2024 to approximately US$6.0 million for the year ended December 31, 2025. This decline was primarily driven by a decrease of approximately US$5.4 million in revenue from our U.S. operations, which declined from approximately US$10.4 million in 2024 to approximately US$5.0 million in 2025, partially offset by an increase of approximately US$0.6 million in revenue from our international operations, which grew from approximately US$0.4 million in 2024 to approximately US$1.0 million in 2025. The decline in U.S. revenue was primarily attributable to reduced customer demand, in particular from our largest customer, resulting from new U.S. import tariffs imposed on our customers' end-clients, which adversely affected their operations and advertising expenditures. Key Operating Data The table below sets forth our selected operating data for the periods indicated: For the Years Ended December 31, 2025 2024 Number of customers (1) 26 37 Average revenue per customer (US$) (2) 232,252 292,187 Revenue from self-serve (includes add-ons) (%) 98.3 98.3 Revenue from managed activations and professional services (%) 1.7 1.7 Notes: (1) "Customer" refers to any entity that enters into a contract with us, typically an advertising agency or a corporate entity. To be classified as a Customer, the party must have a cumulative contract value exceeding US$3,000 between January 1 and December 31 of the respective year. The advertiser (defined as the Customer's client) is the end user or ultimate buyer of the advertisement. (2) "Average revenue per customer" is calculated as the total revenue for the year divided by the total number of customers for the same year. Our management uses this metric as a measure to assess the overall progress and direction of our business, as well as to select and pursue customers who can keep pace with our growth. Revenue from self-serve refers to the portion of XPO revenue generated through customer activations, onboarding, and usage that occur without significant involvement from sales, customer success, or implementation teams. Customers are able to operate and expand their usage independently through product-led workflows and automated systems. This operating metric is important because it reflects the scalability, efficiency, and product maturity of the XPO platform. Higher self-serve revenue generally indicates that customers can realize value quickly with minimal operational support, reducing customer servicing costs while enabling faster growth. Compared to managed activations, self-serve activations are typically associated with lower dependency on internal resources, improved gross margins, and greater ability to scale across customer segments and geographies. While managed activations remain important for complex or strategic accounts, self-serve revenue is generally viewed as a favorable indicator of operational leverage, automation effectiveness, and long-term sustainable growth. As a number of our key customers' end-clients operate in the automotive sector and have been adversely affected by U.S. import tariffs, customer demand has slowed. As a result, for the year ended December 31, 2025, our customer count declined by approximately 29.7%, from 37 customers for the year ended December 31, 2024, to 26 customers for the year ended December 31, 2025. In addition, average revenue per customer decreased by approximately 20.5%, from US$292,187 to US$232,252 over the same period. Cost of Revenue Our cost of revenue is primarily the cost to acquire advertisement media sources, advertisement data sources and advertisement related technology features. Our cost of revenue decreased by 50.9%, from approximately US$6.3 million for the year ended December 31, 2024 to approximately US$3.1 million for the year ended December 31, 2025, primarily due to a decrease in the purchase and usage of advertisement media sources, advertisement data sources and advertisement-related technology features, consistent with the decrease in revenue from our platform subscriptions and services. Gross profit and gross profit margin We recorded a gross profit of approximately US$2.9 million for the year ended December 31, 2025, as compared to approximately US$4.5 million for the year ended December 31, 2024, consistent with the decrease in revenue from our platform subscriptions and services. Our gross profit margin is primarily determined by the type of platform subscriptions and services utilized by our customers. For the year ended December 31, 2025, a greater proportion of customers utilized our higher-margin platform subscription and service offerings, including data and AI-driven automation features. As a result, our gross profit margin improved from 41.8% for the year ended December 31, 2024 to 48.8% for the year ended December 31, 2025. Operating Expenses Our operating expenses include sales and marketing expenses, platform operations expenses, technology and development expenses, general and administrative expenses, and amortization expenses. We allocate overhead costs such as information technology infrastructure, rent and occupancy charges based on headcount for all these categories. The following tables set forth components of our operating expenses for the periods indicated: For the Years Ended December 31, 2025 2024 US$ % US$ % Platform operations expenses $ 2,630,019 21.3 $ 2,758,292 27.5 Sales and marketing expenses 2,411,277 19.5 2,979,014 29.7 Technology and development expenses 2,476,724 20.1 2,608,355 26.0 General and administrative expenses 4,817,540 39.1 1,684,706 16.8 Total $ 12,335,560 100.0 $ 10,030,367 100.0 Our total operating expenses increased by 23.0%, from approximately US$10.0 million for the year ended December 31, 2024 to approximately US$12.3 million for the year ended December 31, 2025, primarily due to an increase of approximately US$3.1 million in general and administrative expenses, partially offset by a decrease of approximately US$0.1 million in platform operations expenses, a decrease of approximately US$0.6 million in sales and marketing expenses, and a decrease of approximately US$0.1 million in technology and development expenses. Platform operations expenses . Platform operations expenses primarily consist of expenses related to hosting our XPO platform, including hosting costs, data-related costs, IT systems and privacy certifications and audits, and personnel costs comprising salaries and other compensation-related expenses attributable to personnel who support the platform and provide clients with platform support. Our platform operations expenses decreased by 4.7%, from approximately US$2.8 million for the year ended December 31, 2024 to approximately US$2.6 million for the year ended December 31, 2025, primarily due to a decrease of approximately US$0.1 million in data service expenses related to the Company's platform operations and a decrease of approximately US$34,000 in infrastructure costs as a result of implementing our cost optimization plan. Our platform operations expenses as a percentage of revenue were 43.6% for the year ended December 31, 2025, as compared to 25.5% for the year ended December 31, 2024 as platform operations expenses are relatively fixed, and revenue declined. Sales and marketing expenses . Sales and marketing expenses consist primarily of personnel costs comprising salaries and other compensation-related expenses for our sales and marketing personnel, professional services costs, and facility-related costs associated with advertising, product management, promotional materials, public relations, and other sales and marketing programs. Our sales and marketing expenses decreased by 19.1%, from approximately US$3.0 million for the year ended December 31, 2024 to approximately US$2.4 million for the year ended December 31, 2025, primarily due to a decrease of approximately US$0.5 million in staff commissions and insurance costs for our sales and marketing personnel as we increased our use of AI tools to drive efficiency in our sales and marketing activities. Our sales and marketing expenses as a percentage of revenue were 39.9% for the year ended December 31, 2025, as compared to 27.5% for the year ended December 31, 2024. Technology and development expenses . Technology and development expenses consist primarily of personnel costs comprising salaries and other compensation-related expenses for the Company's technology and development personnel engaged in the ongoing development and maintenance of the Company's platform, professional services costs, facility-related costs, and costs related to research and product development. Technology and development costs are expensed as incurred, except to the extent that such costs are associated with software development that qualifies for capitalization in accordance with ASC 350-40, Internal-Use Software ("ASC 350-40"), which requires the capitalization of certain costs incurred only during the application development stage. The Company periodically evaluates research and development costs that may be eligible for capitalization. Our technology and development expenses decreased by 5.0%, from approximately US$2.6 million for the year ended December 31, 2024 to approximately US$2.5 million for the year ended December 31, 2025, primarily due to a decrease of approximately US$0.1 million in staff salaries as we moderated our headcount and compensation levels relative to the prior year. Our technology and development expenses as a percentage of revenue were 41.0% for the year ended December 31, 2025, as compared to 24.1% for the year ended December 31, 2024. General and administrative expenses. General and administrative expenses consist primarily of personnel costs comprising salaries and other compensation-related expenses for executive management, finance, accounting, human resources, legal, compliance, and other administrative functions, as well as professional services costs and other facility-related costs. Our general and administrative expenses increased by 186.0%, from approximately US$1.7 million for the year ended December 31, 2024 to approximately US$4.8 million for the year ended December 31, 2025, primarily driven by an increase of approximately US$1.5 million in connection with post-IPO fundraising activities, approximately US$1.3 million in directors' remuneration, consultancy fees, legal fees, and financial and statutory audit fees driven by the completion of our initial public offering in September 2025 and an increase of approximately US$0.3 million in administrative and compliance costs as a public company. Our general and administrative expenses as a percentage of revenue were 79.8% for the year ended December 31, 2025, as compared to 15.6% for the year ended December 31, 2024. Other Expense, Net The following table sets forth the breakdown of our other expense, net, for the periods indicated: For the Year Ended December 31, 2025 2024 Change US$ US$ US$ Interest expense (1,965,445 ) (317,727 ) (1,647,718 ) Amortization of discount on debt instrument (218,805 ) (28,519 ) (190,286 ) Foreign exchange (loss) gain (7,302 ) (53,095 ) 45,793 Other income, net 140,444 82,121 58,323 Total expense, net (2,051,108 ) (317,220 ) (1,733,888 ) ● Interest expense, net. Our interest expense increased by 518.6% from approximately US$0.3 million for the year ended December 31, 2024 to approximately US$2.0 million for the year ended December 31, 2025, primarily due to the increase in our short-term loans from third parties and convertible notes. ● Amortization of discount on debt instrument. Our amortization of discounts on debt instruments increased by 667.2% from approximately US$29,000 for the year ended December 31, 2024 to approximately US$0.2 million for the year ended December 31, 2025, primarily due to the increase in the fair value of warrants issued in connection with our debt instrument which we amortized the discount over the term of our debt instrument. ● Foreign exchange (loss) gain. Our foreign exchange loss was approximately US$53,000 for the year ended December 31, 2024, and our foreign exchange loss was approximately US$7,000 for the year ended December 31, 2025. The decrease in loss was primarily a result of the exchange rate fluctuation between the dates of the transaction and the balance sheet date with transactions denominated in currencies other than our or our subsidiaries' functional currency. ● Other income, net. Our other income increased from approximately US$82,000 for the year ended December 31, 2024 to approximately US$140,000 for the year ended December 31, 2025, primarily due to the increase in government grants we received. Provision for Income Taxes Our provision for income taxes increased from approximately US$58,000 for the year ended December 31, 2024 to approximately US$0.1 million for the year ended December 31, 2025, primarily as a result of an increase in net income before tax from our profitable subsidiaries for the year ended December 31, 2025 as compared to the same period in 2024. Net Loss As a result of the foregoing, our net loss was approximately US$11.5 million for the year ended December 31, 2025, as compared to approximately US$5.9 million for the year ended December 31, 2024. Comparison of Results of Operations Year ended December 31, 2024 compared to year ended December 31, 2023 The following tables set forth a summary of our consolidated results of operations for the periods indicated. This information should be read together with our consolidated financial statements and related notes included elsewhere in this annual report. The operating results in any period are not necessarily indicative of the results that may be expected for any future period. For the Years Ended December 31, Percentage 2024 2023 Change Change US$ US$ US$ % Revenue $ 10,820,365 $ 8,725,816 $ 2,094,549 24.0 Cost of revenue 6,298,166 5,496,119 802,047 14.6 Gross profit 4,522,199 3,229,697 1,292,502 40.0 Platform operations expenses (2,758,292 ) (3,598,134 ) (839,842 ) (23.3 ) Sales and marketing expenses (2,979,014 ) (3,306,652 ) (327,638 ) (9.9 ) Technology and development expenses (2,608,355 ) (2,049,444 ) 558,911 27.3 General and administrative expenses (1,684,706 ) (2,233,762 ) (549,056 ) (24.6 ) Loss from operations (5,508,168 ) (7,958,295 ) (2,450,127 ) (30.8 ) Total other (expense) income, net (317,220 ) 26,762 (343,982 ) (1,285.3 ) Loss before income taxes (5,825,388 ) (7,931,533 ) (2,106,145 ) (26.6 ) Provision for income taxes (58,223 ) (33,239 ) 24,984 75.2 Net loss (5,883,611 ) (7,964,772 ) (2,081,161 ) (26.1 ) Less: Net (income) loss attributable to noncontrolling interest (540 ) 3,248 (3,788 ) (116.6 ) Net loss attributable to KNOREX Ltd. $ (5,884,151 ) $ (7,961,524 ) $ 2,077,373 (26.1 ) Revenue For the years ended December 31, 2024 and 2023, we derived our revenue primarily from platform subscription fees, platform services fees, managed activations and professional services. The following tables set forth the breakdown of our revenue by service lines for the periods indicated: For the Years Ended December 31, 2024 2023 US$ US$ Revenue: Platform subscription fee $ 4,408,157 $ 3,167,832 Platform services fees 6,233,241 5,244,360 Managed activations and professional services 178,967 313,624 Total $ 10,820,365 $ 8,725,816 The following tables set forth the breakdown of our revenue by regions for the periods indicated: For the Years Ended December 31, 2024 2023 US$ US$ Revenue: U.S. operation $ 10,422,293 $ 8,446,459 International operation 398,072 279,357 Total $ 10,820,365 $ 8,725,816 Our revenue increased by 24.0%, from US$8.7 million for the year ended December 31, 2023 to US$10.8 million for the year ended December 31, 2024, primarily due to an increase of US$2.0 million in revenue generated from our U.S. operations, from US$8.4 million in 2023 to US$10.4 million in 2024, as well as an increase of approximately US$0.1 million in revenue generated from our international operations, from approximately US$0.3 million in 2023 to approximately US$0.4 million in 2024, reflecting our continued focus on the U.S. market since 2020 and our ongoing efforts to sharpen our focus on prospects and customers who fit our Ideal Customer Profile (" ICP "). The increase in our U.S. revenues was primarily attributable to increased demand and strong adoption of our platform in the U.S. market, which is our key market of focus, while we continued to streamline our customer base in terms of alignment with our ICP. Our data indicates that customers fitting our ICP significantly increased their usage and advertising spending on our platform, resulting in higher revenue. Additionally, such customers expanded their usage of our platform services through upselling. As we retained and acquired more customers fitting our ICP, such customers committed to longer contract terms and made more extensive use of our XPO platform. Since 2023, we intensified our focus on serving ICP-matching customers, resulting in a more targeted customer base. Customer count was 29 as of December 31, 2023, increasing to 37 as of December 31, 2024. Average revenue per customer was US$300,890 and US$292,187 for the years ended December 31, 2023, and 2024, respectively. This initiative enabled us to better allocate our resources while strengthening our engagement with customers. We also expanded our customer base across diversified industry sectors, including automotive, healthcare, e-commerce, business-to-business, retail, consumer packaged goods, travel, and hospitality. Subsequent to December 31, 2024, we experienced a material reduction in revenue beginning in February 2025 in connection with our largest customer. The reduction in volume was attributable to the impact of new U.S. import tariffs on one of this customer's clients, rather than customer dissatisfaction, which led that client to reduce its marketing spend, thereby reducing the business our largest customer conducted with us. As a result, our revenue for the six-month period in 2025 declined by approximately 50% compared to the same period in 2024. We are working closely with our largest customer to expand engagement with their other clients and are actively pursuing new ICP-matching customers and revenue sources. Concentrating on ICP-matching customers reduces costs and improves operational efficiency through better forecasting and planning. However, there can be no assurance that these efforts will offset the loss of business in the near term. The table below sets forth our selected operating data for the periods indicated: For the Years Ended December 31, 2024 2023 Number of customers (1) 37 29 Average revenue per customer (US$) (2) 292,187 300,890 Revenue from self-serve (includes add-ons) (%) 98.3 96.4 Revenue from managed activations and professional services (%) 1.7 3.6 Notes: (1) "Customer" refers to any entity that enters into a contract with us, typically an advertising agency or a corporate entity. To be classified as a Customer, the party must have a cumulative contract value exceeding US$3,000 between January 1 and December 31 of the respective year. The advertiser (defined as the Customer's client) is the end user or ultimate buyer of the advertisement. (2) Average revenue per customer is calculated as the total revenue for the year divided by the total number of customers for the same year. Our management use this metric as a measure to assess the overall progress and direction of our business, as well as to select and pursue customers who can keep pace with our growth. Cost of Revenue Our cost of revenue is primarily the cost to acquire advertising media sources, advertising data sources and advertisement related technology features. Our cost of revenue increased by 14.6%, from US$5.5 million for the year ended December 31, 2023 to US$6.3 million for the year ended December 31, 2024, primarily due to an increase in the purchase and usage of advertisement media sources, advertisement data sources and advertisement-related technology features, consistent with the increase in revenue from our platform services. Gross Profit Our gross profit and gross profit margin are primarily affected by our platform services as we scale. In 2024, overall platform utilization increased and a greater number of customers began utilizing our other platform service offerings, including data and technology features. We expect gross profit to continue to improve as we scale. As a result of the foregoing, we recorded a gross profit of US$4.5 million for the year ended December 31, 2024, as compared to US$3.2 million for the year ended December 31, 2023. Operating Expenses Our operating expenses include sales and marketing expenses, platform operations expenses, technology and development expenses, general and administrative expenses, and amortization expenses. We allocate overhead costs such as information technology infrastructure, rent and occupancy charges based on headcount for all these categories. Our total operating expenses decreased by 10.3%, from US$11.2 million for the year ended December 31, 2023 to US$10.0 million for the year ended December 31, 2024, primarily due to a decrease of US$0.8 million in platform operations expenses, a decrease of US$0.3 million in sales and marketing expenses, and a decrease of approximately US$0.5 million in general and administrative expenses, partially offset by an increase of approximately US$0.6 million in technology and development expenses as we optimized our spending. The following tables set forth components of our operating expenses for the periods indicated: For the Years Ended December 31, 2024 2023 US$ % US$ % Platform operations expenses $ 2,758,292 27.5 $ 3,598,134 32.2 Sales and marketing expenses 2,979,014 29.7 3,306,652 29.5 Technology and development expenses 2,608,355 26.0 2,049,444 18.3 General and administrative expenses 1,684,706 16.8 2,233,762 20.0 Total $ 10,030,367 100.0 $ 11,187,992 100.0 Platform operations expenses . Platform operations expenses primarily consist of expenses related to hosting our XPO platform, including hosting costs, data-related costs, IT systems and privacy certifications and audits, and personnel costs comprising salaries and other compensation-related expenses attributable to personnel who support the platform and provide clients with platform support. Our platform operations expenses decreased by 23.3%, from US$3.6 million for the year ended December 31, 2023, to US$2.8 million for the year ended December 31, 2024, primarily due to a decrease of US$0.5 million in infrastructure costs as a result of implementing our cost optimization plan. Our platform operations expenses as a percentage of revenue were 25.5% for the year ended December 31, 2024, as compared to 41.2% for the year ended December 31, 2023. Sales and marketing expenses . Sales and marketing expenses consist primarily of personnel costs comprising salaries and other compensation-related expenses for our sales and marketing personnel, professional services costs, and facility-related costs associated with advertising, product management, promotional materials, public relations, and other sales and marketing programs. Our sales and marketing expenses decreased by 9.9%, from US$3.3 million for the year ended December 31, 2023 to US$3.0 million for the year ended December 31, 2024, primarily due to a decrease of approximately US$0.3 million in staff commissions and insurance costs for our sales and marketing personnel as we cultivated a hybrid team of in-house and external partners for sales and marketing activities. Our sales and marketing expenses as a percentage of revenue were 27.5% for the year ended December 31, 2024, as compared to 37.9% for the year ended December 31, 2023. Technology and development expenses . Technology and development expenses consist primarily of personnel costs comprising salaries and other compensation-related expenses for the Company's technology and development personnel engaged in the ongoing development and maintenance of the Company's platform, professional services costs, facility-related costs, and costs related to research and product development. Technology and development costs are expensed as incurred, except to the extent that such costs are associated with software development that qualifies for capitalization in accordance with ASC 350-40, Internal-Use Software ("ASC 350-40"), which requires the capitalization of certain costs incurred only during the application development stage. The Company periodically evaluates research and development costs that may be eligible for capitalization. Our technology and development expenses increased by 27.3%, from US$2.0 million for the year ended December 31, 2023 to US$2.6 million for the year ended December 31, 2024, primarily due to an increase in amortization expenses of capitalized software development costs of approximately US$0.2 million as we continued to increase our technology and development personnel costs to upgrade and enhance the functionality of our XPO platform. Our technology and development expenses as a percentage of revenue were 24.1% for the year ended December 31, 2024, as compared to 23.5% for the year ended December 31, 2023. General and administrative expenses. General and administrative expenses consist primarily of personnel costs comprising salaries and other compensation-related expenses for executive management, finance, accounting, human resources, legal, compliance, and other administrative functions, as well as professional services costs and other facility-related costs. Our general and administrative expenses decreased by 24.6%, from US$2.2 million for the year ended December 31, 2023, to US$1.7 million for the year ended December 31, 2024, primarily driven by a decrease of approximately US$0.7 million in consultancy and professional fees, reflecting the nearing completion of our initial public offering and a corresponding reduction in the volume of professional services required. Our general and administrative expenses as a percentage of revenue were 15.6% for the year ended December 31, 2024, as compared to 25.6% for the year ended December 31, 2023. Other Expense, Net The following table sets forth the breakdown of our other expense, net, for the periods indicated: For the Year Ended December 31, 2024 2023 Change US$ US$ US$ Interest expense (317,727 ) (135,522 ) (182,205 ) Amortization of discount on debt instrument (28,519 ) (28,376 ) (143 ) Foreign exchange (loss) gain (53,095 ) 47,252 (100,347 ) Other income, net 82,121 143,408 (61,287 ) Total other income (expense), net (317,220 ) 26,762 (343,982 ) ● Interest expense, net. Our interest expense increased by 134.4% from approximately US$136,000 for the year ended December 31, 2023 to approximately US$318,000 for the year ended December 31, 2024, primarily due to the decrease in our long-term bank loans and convertible notes. ● Amortization of discount on debt instrument. Our amortization of discount on debt instrument increased by 0.5% from approximately US$28,000 for the year ended December 31, 2023 to approximately US$29,000 for the year ended December 31, 2024, primarily due to the decrease in the fair value of warrants issued in connection with our debt instrument which we amortized the discount over the term of our debt instrument. ● Foreign exchange (loss) gain. Our foreign exchange gain was approximately US$47,000 for the year ended December 31, 2023, and our foreign exchange loss was approximately US$(53,000) for the year ended December 31, 2024. The increase in loss in which was primarily a result of the exchange rate fluctuation between the dates of the transaction and the balance sheet date with transactions denominated in currencies other than our or our subsidiaries' functional currency. ● Other income, net. Our other income decreased from approximately US$143,000 for the year ended December 31, 2023 to approximately US$82,000 for the year ended December 31, 2024, primarily due to the decrease in government grant we received. Provision for Income Taxes Our provision for income taxes increased from US$33,239 for the year ended December 31, 2023 to approximately US$58,223 for the year ended December 31, 2024, primarily as a result of an increase in net income before tax from our profitable subsidiaries in 2024 as compared to the same period in 2023. Net Loss As a result of the foregoing, our net loss was US$5.9 million for the year ended December 31, 2024, as compared to US$8.0 million for the year ended December 31, 2023. Taxation Cayman Islands We are incorporated in the Cayman Islands. The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains, or appreciation, and there is no inheritance tax or estate duty. There are no other taxes likely to be material to us levied by the government of the Cayman Islands except for stamp duties, which may be applicable on instruments executed in, or brought within the jurisdiction of, the Cayman Islands. In addition, the Cayman Islands does not impose withholding tax on dividend payments. United States Our operating subsidiary in the U.S., KNOREX Inc., which was incorporated in the State of Delaware and holds its operation in the State of California, is subject to federal income tax rate of 21% and California income tax rate of 8.84%. Singapore KNOREX SG was incorporated in Singapore and is subject to Singapore income tax on the taxable income as reported in its statutory financial statements adjusted in accordance with relevant Singapore tax laws. Corporate income tax A Singapore tax resident corporate taxpayer is subject to Singapore income tax on: ● income accrued in or derived from Singapore; and ● foreign sourced income received or deemed received in Singapore, unless otherwise exempted. Foreign income in the form of branch profits, dividends, and service fee income, or specified foreign income, received or deemed received in Singapore by a Singapore tax resident corporate taxpayer on or after June 1, 2003, are exempted from Singapore tax subject to meeting the qualifying conditions. A non-Singapore tax resident corporate taxpayer, subject to certain exceptions, is subject to Singapore income tax on income accrued in or derived from Singapore, and on foreign income received or deemed received in Singapore. A company is regarded as a tax resident in Singapore if the control and management of the company's business is exercised in Singapore. Control and management are defined as the making of decisions on strategic matters, such as those concerning the company's policy and strategy. In general, control and management of the company is vested in its board of directors and therefore if the board of directors meets and conducts the company's business in Singapore, the company will be regarded as a tax resident in Singapore. The corporate tax rate in Singapore is 17.0% with effect from the year of assessment 2010, after allowing partial tax exemption on the first S$300,000 of a company's chargeable income as follows: ● 75.0% of up to the first S$10,000 of a company's chargeable income (excluding Singapore franked dividends); and ● 50.0% of up to the next S$290,000 of a company's chargeable income (excluding Singapore franked dividends). With effect from the year of assessment 2020, the partial tax exemption scheme will be limited to the first S$200,000 (instead of S$300,000) of the normal chargeable income -75.0% of the first S$10,000 and 50.0% of the next S$190,000. Goods and services tax The Goods and Services Tax, or GST, in Singapore is a consumption tax that is levied on the import of goods into Singapore, as well as nearly all supplies of goods and services in Singapore at a prevailing rate of 9.0%. This rate was raised from 8.0% to 9.0% with effect from January 1, 2024. Other Jurisdictions Where We Operate Our subsidiaries with operations in other jurisdictions including Vietnam, India, and Malaysia are insignificant to our operations for the years ended December 31, 2025, 2024 and 2023. Non-GAAP Financial Measures and Key Performance Metrics In this annual report, we have included Adjusted EBITDA, Adjusted EBITDA Margin, Gross Margin and Gross Profit, a few key non-GAAP financial measures used by our management and board of directors in evaluating our operating performance and making strategic decisions regarding capital allocation. Gross Profit is defined as gross revenue less cost of sales. Gross Margin is defined as Gross Profit as a percentage of revenue. Adjusted EBITDA is a non-GAAP financial measure defined as loss for the year plus depreciation and amortization, interest income, finance costs, income tax expenses/(credit), impairments of assets, equity-settled share option and share-based payment expenses, other long-term employee benefits expense/(credit), non-recurring costs related to strategic exercises, employee severance expenses, transaction expenses, changes in the fair value of financial instruments, non-recurring legal fees, gain on derecognition of convertible loan and bridge loan and unrealized foreign exchange differences. Adjusted EBITDA Margin is defined as Adjusted EBITDA as a percentage of revenue. We believe that these measures provide investors with greater comparability of our operating performance without the effects of unusual, non-repeating or non-cash adjustments. Adjusted EBITDA and Adjusted EBITDA Margin have limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of our results of operations as reported under US GAAP. Some of these limitations are: ● Adjusted EBITDA and Adjusted EBITDA Margin do not reflect changes in, or cash requirements for, our working capital needs; ● Adjusted EBITDA and Adjusted EBITDA Margin do not reflect any expenses related to the Business Combination; and ● Other companies, including companies in our industry, may calculate Adjusted EBITDA or Adjusted EBITDA Margin differently, which reduces their usefulness as a comparative measure. Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including various cash flow metrics, operating profit and other US GAAP results. The following table shows our non-GAAP financial measures for the years ended December 31, 2023, 2024 and 2025: For the Year Ended December 31, 2025 2024 2023 (US$ in thousands) Net Loss (11,545 ) (5,883 ) (7,964 ) Provision for Income Taxes 104 58 33 Interest Expense, net 1,965 317 135 Amortization of Discount on Debt Instrument 219 28 28 Amortization of Capital Software Development Costs 794 744 592 Foreign Exchange Gain/Loss 7 53 47 Other income, net (140 ) (82 ) (143 ) Adjusted EBITDA (8,596 ) (4,763 ) (7,365 ) Revenue 6,038 10,820 8,725 Gross Profit 2,945 4,522 3,229 Gross Margin 48.8 % 41.8 % 37.0 % Adjusted EBITDA Margin (142.4 )% (44.0 )% (84.4 )% B. Liquidity and Capital Resources Our primary source of liquidity historically has been cash generated from our business operations, bank loans, proceeds from conversion price of convertible notes upon conversion into its ordinary shares, and equity financing, which have historically been sufficient to meet our working capital and capital expenditure requirements. In March 2023, we completed equity financing through the issuance of shares for approximately US$3.7 million. In November 2023, we completed additional equity financing through the issuance of shares for approximately US$4.5 million. Between November 2023 and March 2024, we received aggregate consideration of approximately US$1.8 million from the exercise of warrants to subscribe for our ordinary shares. In April 2024, we completed our convertible notes offering and raised approximately US$1.6 million. Between July 2024 and January 2025, we further raised US$2.5 million of short-term loans from third parties and related parties. In January 2025, we received aggregate consideration of approximately US$0.2 million from the exercise of warrants to subscribe for our ordinary shares. We also expect to use net proceeds from this offering to support our working capital and capital expenditure requirements. Between February and June 2025, we raised US$1.6 million of short-term debt financing from third parties, related parties, and existing investors, with maturities in September 2025, subsequently extended to October 2026. Two of the lenders further subscribed for approximately US$0.1 million of convertible notes. In May 2025, we also obtained an additional US$0.2 million from a business lending company. In May 2025, we secured approximately US$1.0 million in short-term debt financing from an existing investor, maturing in September 2025, subsequently extended to October 2026, subject to a one-time interest charge of 10%. In connection with this financing, we issued 100,000 warrants to the investor, exercisable at US$2.6 per share and expiring in June 2027. In July and September 2025, we secured an additional US$1.0 million of short-term debt financing from existing investors, with maturities in September 2025, subsequently extended to October 2026. In September 2025, we completed our initial public offering with net proceeds of approximately US$10.8 million. In addition, management has continued to pursue a strategy to raise additional debt and equity financing. In April 2026, we secured approximately US$2.7 million, net of issuance costs, in short-term debt financing. As of the date of this annual report, our available cash resources amounted to approximately US$0.9 million. The minimum period of time that we expect to be able to conduct our planned operations using only currently available cash resources is approximately three months without additional cash raised from financing. Prepayments and other current assets primarily consist of security deposits and prepayments to service providers and related parties. As of December 31, 2024, the balance for prepayments and other current assets was approximately US$0.3 million. As of December 31, 2025, this balance was approximately US$3. 68 million, primarily reflecting refundable prepayments for advisory fees paid to a related party for corporate development, management, business consulting services and post-IPO fundraising activities. As of December 31, 2025 and 2024, no allowance for credit losses was recorded against prepayments and other current assets. We had a working capital deficit of approximately US$7.7 million as of December 31, 2025. This raises substantial doubt about our ability to continue as a going concern. To sustain our ability to support our operating activities, we considered supplementing our sources of funding through the following: ● Equity financing through private placements or the previously announced equity line of credit facility; ● Debt financing through issuance of convertible notes; and ● Other available sources of financing from banks or other financial institutions. Management has commenced a strategy to raise debt and equity. However, there can be no certainty that these additional financings will be available on acceptable terms or at all. If management is unable to execute this plan, there will likely be a material adverse effect on our business. All these factors raise substantial doubt about the ability of us to continue as a going concern. The consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern. Further to our ability to support our operating activities from the potential equity and debt financing as discussed above, the ability to support our operating activities is also affected by the timeliness of receiving the accounts receivable balances from our customers. Our credit term with our customers is typically 30 days. However, our days sales outstanding as of December 31, 2025 and 2024 were approximately 69 and 72 days, respectively, higher than our typical credit term. This is due to customer payment processing cycles, invoice disputes or reconciliations, enterprise procurement procedures, geographic and customer mix, timing of invoicing relative to period end, and other operational factors. We are actively addressing these issues by improving invoicing practices, improving our onboarding process, enhancing customer communication, enforcing stricter credit policies and migrating clients into prepayment whenever possible. The following tables set forth our selected consolidated cash flow data for the periods indicated: For the Years Ended December 31, 2025 2024 2023 US$ US$ US$ Net cash used in operating activities (10,8 89,163 ) (5,34 9,494 ) (5,508,254 ) Net cash used in investing activities (1,1 15,395 ) (866,761 ) (878,219 ) Net cash provided by financing activities 11,453,611 5,121,663 7,848,654 Effect of exchange rate changes (144,677 ) 56,539 (111,119 ) Net change in cash and cash equivalents (695,624 ) (1,038,053 ) 1,351,062 Cash and cash equivalents, at the beginning of year 824,728 1,862,781 511,719 Cash and cash equivalents, at the end of year 129,104 824,728 1,862,781 Operating Activities Net cash used in operating activities for the year ended December 31, 2025 was US$10.9 million, primarily reflecting a net loss of approximately US$11.5 million and an increase of approximately US$3.4 million in prepayments and other current assets including related party balances, partially offset by non-cash expenses comprising depreciation, amortization of discount on debt instrument, amortization of capitalized software development costs, and provision for credit losses of approximately US$1.1 million in aggregate; an increase of approximately US$2.0 million in other payables and accrued liabilities as a result of increased accrued payroll and professional fees; a decrease of approximately US$0.7 million in accounts receivable due to timely collections; a decrease of approximately US$0.2 million in other receivables due to the settlement of refundable deposits with third-party service providers; and an increase of approximately US$0.1 million in other payables - related parties due to increased interest accrual on related party loans and increased employee reimbursements. Net cash used in operating activities for the year ended December 31, 2024 was US$5.4 million, primarily reflecting net loss of US$5.9 million, an increase of US$0.4 million in accounts receivable as a result of our increased sales in 2024; an increase of US$0.2 million in other receivables as a result of increased refundable deposits from third party service providers; an increase of US$0.2 million other payables - related party as we had repaid our related party in connection with the business expansion consulting services; which was offset by non-cash expenses of depreciation, amortization of discount on debt instrument, amortization of capitalized software development costs, and provision of credit losses of approximately US$1.0 million; and an increase of US$0.8 million in other payables and accrued liabilities as a result of increased accrued payroll and professional fees. Net cash used in operating activities for the year ended December 31, 2023 was US$5.5 million, primarily reflecting a net loss of US$8.0 million and a decrease of US$0.2 million in deferred revenue, partially offset by non-cash expenses comprising depreciation, amortization of discount on debt instrument, amortization of capitalized software development costs, and provision for credit losses of approximately US$0.7 million in aggregate; an increase of US$1.0 million in accounts payable; an increase of US$0.6 million in other payables and accrued liabilities as a result of increased accrued payroll and professional fees, net of non-cash conversion of accrued interest of US$0.2 million into our ordinary shares; a decrease of US$0.1 million in accounts receivable due to timely collections; and a decrease of US$0.1 million in prepayments and other current assets as a result of decreased security deposits and prepayments to vendors. Investing Activities Net cash used in investing activities was approximately US$1.1 million for the year ended December 31, 2025, primarily attributable to capitalized software development costs of approximately US$0.7 million, a loan extended to a third party of approximately US$0.7 million, and purchases of office equipment of approximately US$6,000, partially offset by repayments received on the loan to such third party of approximately US$0.3 million. Net cash used in investing activities was approximately US$867,000 for the year ended December 31, 2024, which was primarily attributable to the purchase of office equipment of approximately US$13,000 and capitalized software development costs of approximately US$0.9 million. Net cash used in investing activities was approximately US$878,000 for the year ended December 31, 2023, primarily attributable to purchases of office equipment of approximately US$2,000 and capitalized software development costs of approximately US$0.9 million. Financing Activities Net cash provided by financing activities was approximately US$11.5 million for the year ended December 31, 2025, primarily attributable to proceeds from our gross initial public offering proceeds of US$12.0 million, proceeds from short-term loans from third parties of approximately US$3.8 million, proceeds from short-term loans from related parties of approximately US$0.4 million, proceeds from convertible notes of approximately US$0.1 million, and proceeds from the exercise of warrants of approximately US$0.2 million, partially offset by payments of initial public offering costs of approximately US$2.3 million, repayments of short-term loans to third parties of approximately US$1.9 million, repayments of short-term loans to related parties of approximately US$0.5 million and repayments of long-term bank loans of approximately US$0.5 million. Net cash provided by financing activities was US$5.1 million for the year ended December 31, 2024, which was mainly attributable to the proceeds from exercise of warrants of US$1.3 million, proceeds from convertible notes of US$1.9 million, proceeds from short-term loan- third parties of US$2.4 million, proceeds from short-term loan- related parties of US$0.3 million, and offset by the repayments of long-term bank loans of US$0.5 million and payments of short-term loan - third parties of approximately US$0.2 million. Net cash provided by financing activities was US$7.8 million for the year ended December 31, 2023, primarily attributable to proceeds from the issuance of ordinary shares of US$8.2 million and proceeds from the exercise of warrants of US$0.5 million, partially offset by repayments of long-term bank loans of US$0.5 million and payments of deferred offering costs of US$0.4 million. Capital Expenditures We made capital expenditures of approximately US$6,000, US$13,000, and US$2,000 for the years ended December 31, 2025, 2024, and 2023, respectively. In each of these periods, our capital expenditure was primarily used for the purchase of office equipment. We plan to fund our future capital expenditure with our existing cash balance and proceeds from this offering. We will continue to make capital expenditure necessary to support the expected growth of our business. Off-Balance Sheet Arrangements We have no off-balance sheet arrangements, including arrangements that would affect our liquidity, capital resources, market risk support, credit risk support, or other benefits. Quantitative and Qualitative Disclosure about Market Risks We are exposed to certain market risks in the ordinary course of our business, including foreign currency exchange risk, interest rate risk, and credit risk. Foreign Currency Exchange Risk Our reporting currency is U.S. dollars. We may be exposed to foreign currency exchange rate fluctuations to the extent that transactions are denominated in currencies other than the U.S. dollar. US dollars is also primarily used as the default currency for ad or media buying, though settlement by customers can be in other currencies. Hence, foreign currency fluctuations could affect our revenue, operating expenses, and results of operations. To date, we have not entered into derivative instruments or hedging arrangements to manage foreign currency risk. Interest Rate Risk We are exposed to interest rate risk primarily through our cash and cash equivalents. As of December 31, 2025, we did not have material outstanding indebtedness bearing variable interest rates. Accordingly, we do not believe that changes in interest rates would have a material effect on our business, financial condition, or results of operations. Credit Risk Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. We maintain cash balances with reputable financial institutions, which may at times exceed insured limits. Credit risk with respect to accounts receivable is generally dispersed across our customer base, although a limited number of customers may account for a significant portion of our revenue and receivables in certain periods. We purchased credit insurance to coverage for such customers, but in some cases, the customers may not qualify for coverage under our credit insurance plan. Inflation Risk Inflationary factors, including increases in labor, technology infrastructure, and operating costs, have in the past affected, and may continue to affect, our operating expenses. However, we do not believe inflation has had a material impact on our results of operations to date. A. Research and Development, Patents and Licenses, Etc. See "Item 4. Information On the Company-B. Business Overview-Research and Development" and "Item 4. Information On the Company-B. Business Overview-Intellectual Property" B. Trend Information Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events since January 1, 2025 to December 31, 2025 that are reasonably likely to have a material effect on our revenues, income from continuing operations, profitability, liquidity or capital resources, or that would cause reported financial information to be not necessarily indicative of future operating results or financial condition. C. Critical Accounting Estimates We prepare our financial statements in accordance with U.S. GAAP, which requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the balance sheet dates, and the reported amounts of revenue and expenses during the reporting periods. We continually evaluate these judgments and estimates based on our own historical experience, knowledge, and assessment of current business and other conditions, our expectations regarding the future based on available information, and assumptions that we believe to be reasonable, which together form our basis for making judgments about matters that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, our actual results could differ from those estimates. We believe that the accounting estimates described below are critical to a full understanding and evaluation of our financial condition and results of operations. Use of estimates The preparation of the 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 and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the periods presented. Significant accounting estimates reflected in the Company's consolidated financial statements include lease classification and liabilities, operating right-of-use assets, determinations of the useful lives and valuation of long-lived assets, estimates of allowances for credit losses, estimates of impairment of long-lived assets, valuation of deferred tax assets, contingencies and estimated fair value of warrants. Actual results could differ from these estimates. Accounts receivables, net Accounts receivables are recorded at the invoiced amount less an allowance for credit losses and do not bear interest; they are due within 30 days. Management reviews the adequacy of the allowance for credit losses on an ongoing basis, using historical collection trends and aging of receivables. Management also periodically evaluates individual customers' financial condition, credit history, and current economic conditions to adjust the allowance when considered necessary. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. Management continues to evaluate the reasonableness of the valuation allowance policy and updates it as necessary. Impairment for long-lived assets In accordance with ASC 360-10, 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 Company assesses the recoverability of assets based on the undiscounted future cash flows the assets are expected to generate and recognizes an impairment loss when estimated undiscounted future cash flows expected to result from the use of the asset plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. If an impairment is identified, the Company will reduce the carrying amount of the asset to its estimated fair value based on a discounted cash flows approach or, when available and appropriate, to comparable market values. As of December 31, 2025, and 2024, no impairment of long-lived assets was recognized. Operating leases Operating lease right-of-use ("ROU") assets and liabilities are initially recorded based on the present value of lease payments over the lease term, which includes the minimum unconditional term of the lease and may include options to extend or terminate the lease when it is reasonably certain at the commencement date that such options will be exercised. As the rate implicit in each of the Company's leases is not readily determinable, the Company uses its incremental borrowing rate, based on the information available at the lease commencement date, in determining the present value of its expected lease payments. The Company reviews the impairment of its ROU assets consistent with the approach applied for its other long-lived assets. The Company 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 the Company's ability to recover the carrying value of the asset from the expected undiscounted future pre-tax cash flows of the related operations. The Company has elected to include the carrying amount of operating lease liabilities in any tested asset group and to include the associated operating lease payments in the undiscounted future pre-tax cash flows. For the years ended December 31, 2025, 2024, and 2023, the Company did not recognize any impairment loss on its operating lease ROU assets. Warrants The Company estimates the fair value of warrants on the date of grant using the Black-Scholes model. The fair value of the warrants is estimated using the following assumptions: (1) expected volatility based on comparable companies; (2) risk-free interest rate as of the date of grant; (3) expected life of the warrants; (4) exercise price of the warrants; and (5) stock price of the Company on the date of grant. Income taxes We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained upon examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized. We recognize interest and penalties accrued in relation to uncertain tax positions in our income tax provision in the accompanying consolidated statements of operations. We make assumptions, judgments, and estimates to determine the current income tax provision, tax benefits from uncertain tax positions, deferred tax assets and liabilities, and any valuation allowance recorded against a deferred tax asset. The assumptions, judgments, and estimates relative to the current income tax provision (benefit) take into account current tax laws, their interpretation, and possible outcomes of foreign and domestic tax audits. Changes in tax law and their interpretation could significantly impact the income taxes reflected in our consolidated financial statements. The evaluation of our uncertain tax positions involves significant judgment in the interpretation and application of U.S. GAAP and complex domestic and international tax laws, including matters related to the allocation of international taxation rights between countries. Although management believes our reserves are reasonable, no assurance can be given that the final tax outcome of these matters will not differ from that which is reflected in our reserves. Reserves are adjusted to reflect changing facts and circumstances, such as the closing of a tax examination or the refinement of an estimate. Assumptions, judgments, and estimates relative to the amount of deferred income taxes and any applicable valuation allowances take into account future taxable income. Any of the assumptions, judgments, or estimates mentioned above could cause our actual income tax obligations to differ from our estimates

View stock analysis, news, and events for Knorex Ltd.