Huuuge Inc.

Huuuge, Inc. HUUUGE, INC. Separate Financial Statements as at and for the year ended December 31, 2023 prepared in accordance with International Financial Reporting Standards as adopted by the European Union Table of contents Company’s separate statement of comprehensive income 2 Company’s separate statement of ﬁnancial position 3 Company’s separate statement of changes in equity 4 Company’s separate statement of cash ﬂows 6 1. General information 8 2. Accounting policies 10 1) Basis for preparation of the ﬁnancial statements 10 2) Key judgements and estimates 10 3) Material accounting policies 12 4) Adoption of new and revised Standards 19 5) Determination of fair values 20 3. Revenue and dividend income 20 4. Segment information 20 5. Operating expenses 21 6. Finance income 21 7. Income tax 21 8. Investments in subsidiaries 23 9. Financial risk management 23 10. Accounting classiﬁcations of ﬁnancial instruments and fair values 28 11. Trade and other receivables 29 12. Cash and cash equivalents 29 13. Share capital 30 14. Share-based payment arrangements 34 15. Trade and other payables 40 16. Contingencies 40 17. Pledges and collaterals 42 18. Related party transactions 43 19. Transactions with management of the Company 44 20. Audit fees 44 21. Employment structure 45 22. Subsequent events 45 HUUUGE INC. Separate ﬁnancial statements as at and for the year ended December 31, 2023 (all amounts in tables presented in thousand USD, except where stated otherwise) This version is a pdf of executed xHTML Separate ﬁnancial statements as at and for the year ended December 31, 2023. In case of any discrepancies xHTML version shall prevail 1 Company’s separate statement of comprehensive income Note Year ended December 31, 2023 Year ended December 31, 2022 Revenue 3 1,577 2,922 Cost of sales - - Gross proﬁt/(loss) 1,577 2,922 Sales and marketing expenses 5 (56) (76) Research and development expenses 5 (419) (2,156) General and administrative expenses 5 (6,015) (8,167) Dividend income 3 159,729 - Other operating income/(expense), net (1,876) (16) Operating result 152,940 (7,493) Finance income 6 2,869 986 Finance expense 6 - (376) Proﬁt/(loss) before tax 155,809 (6,883) Income tax 7 (1,558) (829) Net result for the year 154,251 (7,712) Other comprehensive income - - Total comprehensive income/(loss) for the year 154,251 (7,712) The accompanying notes are an integral part of these separate ﬁnancial statements. HUUUGE INC. Separate ﬁnancial statements as at and for the year ended December 31, 2023 (all amounts in tables presented in thousand USD, except where stated otherwise) This version is a pdf of executed xHTML Separate ﬁnancial statements as at and for the year ended December 31, 2023. In case of any discrepancies xHTML version shall prevail 2 Company’s separate statement of ﬁnancial position Note As at December 31, 2023 As at December 31, 2022 Assets Non-current assets Investment in subsidiaries 8 29,847 29,162 Deferred tax assets 7 88 112 Property, plant and equipment - 80 Right-of-use asset - 62 Other long-term non-ﬁnancial assets - 30 Total non-current assets 29,935 29,446 Current assets Dividend receivable 3 10,000 - Trade and other receivables 11 1,961 1,224 Corporate income tax receivable 7 752 - Other short-term non-ﬁnancial assets - 6 Cash and cash equivalents 12 80,532 86,210 Total current assets 93,245 87,440 Total assets 123,180 116,886 Equity Share capital 13 1 2 Treasury shares 13 (16,652) (20,942) Supplementary capital 13 149,590 304,487 Employee beneﬁt reserve 14 25,749 22,894 Retained earnings/(Accumulated losses) (39,502) (193,753) Total equity 119,186 112,688 Current liabilities Trade and other payables 15 2,294 4,092 Provisions 16 1,700 - Corporate income tax payable - 39 Short-term lease liabilities - 67 Total current liabilities 3,994 4,198 Total equity and liabilities 123,180 116,886 The accompanying notes are an integral part of these separate ﬁnancial statements. HUUUGE INC. Separate ﬁnancial statements as at and for the year ended December 31, 2023 (all amounts in tables presented in thousand USD, except where stated otherwise) This version is a pdf of executed xHTML Separate ﬁnancial statements as at and for the year ended December 31, 2023. In case of any discrepancies xHTML version shall prevail 3 Company’s separate statement of changes in equity Note Share capital Treasury shares Supplementary capital Employee beneﬁt reserve Retained earnings/ (accumulated losses) Equity As at January 1, 2023 2 (20,942) 304,487 22,894 (193,753) 112,688 Net proﬁt/(loss) - - - - 154,251 154,251 Total comprehensive income for the year - - - - 154,251 154,251 Exercise of stock options 13,14 - 4,290 (3,820) - - 470 Employee share schemes - value of employee services 14 - - - 2,855 - 2,855 Share BuyBack (“SBB”) - repurchase of shares * 13 (1) (150,000) - - - (150,001) Transaction costs related to SBB program * 13 - (1,077) - - - (1,077) Retirement of shares purchased during the Share Buyback Scheme ("SBB") 13 - 151,077 (151,077) - - - As at December 31, 2023 1 (16,652) 149,590 25,749 (39,502) 119,186 * Share Buyback program (“SBB”) line includes the cash outﬂows for the repurchase of 17,121,919 own shares at a price of USD 8.7607 per share on July 4,2023. The change of trade and other payables presented in the statement of ﬁnancial position as at December 31, 2023 does not equal the change in the statement of cash ﬂows for the year ended December 31, 2023. The difference of USD 93 thousand is due to the transaction costs related to SBB, presented in the cash ﬂows from ﬁnancing activities in the statement of cash ﬂows, which were not paid as at December 31, 2023. ** (1) represents an amount less than USD 1 thousand. HUUUGE INC. Separate ﬁnancial statements as at and for the year ended December 31, 2023 (all amounts in tables presented in thousand USD, except where stated otherwise) This version is a pdf of executed xHTML Separate ﬁnancial statements as at and for the year ended December 31, 2023. In case of any discrepancies xHTML version shall prevail 4 Note Share capital Treasury shares Supplementary capital Employee beneﬁt reserve Retained earnings/ (accumulated losses) Equity As at January 1, 2022 2 (19,954) 321,049 19,813 (186,041) 134,869 Net proﬁt/(loss) - - - - (7,712) (7,712) Total comprehensive loss for the year - - - - (7,712) (7,712) Shares issued/(repurchased) * 13 0 (20,090) - - - (20,090) Exercise of stock options 13,14 - 18,791 (16,251) - - 2,540 Delivery of shares to former owners of Double Star Oy 13,14 - 311 (311) - - - Employee share schemes - value of employee services 14 - - - 3,081 - 3,081 As at December 31, 2022 2 (20,942) 304,487 22,894 (193,753) 112,688 * Shares issued/(repurchased) line includes payments for the purchase of 4,989,608 own shares under the buy-back program. ** 0 represents an amount less than USD 1 thousand. The accompanying notes are an integral part of these separate ﬁnancial statements. HUUUGE INC. Separate ﬁnancial statements as at and for the year ended December 31, 2023 (all amounts in tables presented in thousand USD, except where stated otherwise) This version is a pdf of executed xHTML Separate ﬁnancial statements as at and for the year ended December 31, 2023. In case of any discrepancies xHTML version shall prevail 5 Company’s separate statement of cash ﬂows Note Year ended December 31, 2023 Year ended December 31, 2022 Cash ﬂows from operating activities Proﬁt/(loss) before tax 155,809 (6,883) Adjustments for: Non-cash employee beneﬁts expense – share-based payments 14,8 2,170 774 Finance (income)/expense, net 6 (2,805) (1,051) Depreciation and amortization 76 103 (Proﬁt)/loss on disposal of property, plant and equipment 60 - Changes in net working capital: Dividend receivable 3 (10,000) - Trade and other receivables 11 (737) 2,925 Trade and other payables 15 (1,891) 1,189 Other non-ﬁnancial assets 36 (30) Provisions 16 1,700 - Other adjustments - (4) Cash ﬂows from operating activities 144,418 (2,977) Income tax paid (2,326) (545) Net cash ﬂows from/(used in) operating activities 142,092 (3,522) Cash ﬂows from investing activities Interest received 6 2,915 590 Acquisition of property, plant and equipment and intangible assets - (21) Net cash ﬂows from investing activities 2,915 569 Cash ﬂows from ﬁnancing activities Repurchase of own shares incl. transaction costs 13 (150,985) (20,090) Exercise of stock options 14 470 2,540 Lease repayment and interest paid (60) (78) Net cash ﬂows from/(used in) ﬁnancing activities (150,575) (17,628) Net increase/(decrease) in cash and cash equivalents (5,568) (20,581) Effect of exchange rate ﬂuctuations and accrued interest (110) 461 Cash and cash equivalents at the beginning of the year 86,210 106,330 Cash and cash equivalents at the end of the year 80,532 86,210 The accompanying notes are an integral part of these separate ﬁnancial statements. HUUUGE INC. Separate ﬁnancial statements as at and for the year ended December 31, 2023 (all amounts in tables presented in thousand USD, except where stated otherwise) This version is a pdf of executed xHTML Separate ﬁnancial statements as at and for the year ended December 31, 2023. In case of any discrepancies xHTML version shall prevail 6 Notes to the separate ﬁnancial statements 1. General information Huuuge Inc. (hereinafter the “Company”, the “Parent Company”) is a company registered in the United States of America. The Company’s registered oﬃce is located in Dover, Delaware, 850 Burton Road, Suite 201, DE 19904, and the operating oﬃce is located in Las Vegas, Nevada, 2300 W. Sahara Ave., Suite 800, Mailbox #32, NV 89102. The Company was established with a notary deed on February 11, 2015. These separate ﬁnancial statements (hereinafter “ﬁnancial statements”) of the Company cover the year ended December 31, 2023 and includes comparative data for the year ended December 31, 2022. These ﬁnancial statements were approved on March 11 ,2024 by the Board of Directors. The Company has an unlimited period of operation. The core business activity of Huuuge Inc. is holding activity for the Huuuge Inc. Group (the “Group”), for which the Company is the ultimate parent. The core business activities of the Group include: ● development of mobile games in the free - to-play model, ● distribution and user acquisition of own mobile games. The Company’s business activities are not subject to signiﬁcant seasonal or cyclical trends. The Group’s business activities are characterised by low environmental impact. For more information on climate matters, please refer to the Annual report for the twelve-month period ended December 31, 2023. There were no signiﬁcant risks identiﬁed related to climate change. Identiﬁcation of consolidated ﬁnancial statements The Company is the ultimate parent of the Huuuge Inc Group. The Company has prepared consolidated ﬁnancial statements for the year ended December 31, 2023, which were approved on March 11, 2024 by the Board of Directors. Composition of the Company’s Board of Directors as at December 31, 2023 and as at the date of signing of these separate ﬁnancial statements Directors have annual terms of duty and serve until the successors are duly elected. Preferred shareholders have the right to appoint certain directors. As at December 31, 2022, the composition of the Company’s Board of Directors was the following: ● Anton Gauﬃn, executive director, President, and co-CEO, ● Rod Cousens, executive director, co-CEO, ● Henric Suuronen, non-executive director, ● Krzysztof Kaczmarczyk, non-executive director, ● John Salter, non-executive director, ● Tom Jacobsson, non-executive director. Effective on March 7, 2023, Mr. Rod Cousens, co-CEO, and the Company reached a mutual agreement to end Mr. Cousens’s executive service with the Company. Mr. Cousens remained a member of the Company’s Board of Directors. Effective on September 18, 2023, the Board of Directors adopted a resolution on the following changes of the oﬃcers of the Company: ● Mr Anton Gauﬃn stepped down from the position of President and Chief Executive Oﬃcer of the Company and was appointed as the Executive Chairman of the Board while still remaining an executive director of the Company; ● Mr Wojciech Wronowski, who was thus far serving as the Chief Operating Oﬃcer (not being a formal oﬃcer of the Company), was appointed a formal oﬃcer of the Company, namely the Chief Executive Oﬃcer; HUUUGE INC. Separate ﬁnancial statements as at and for the year ended December 31, 2023 (all amounts in tables presented in thousand USD, except where stated otherwise) This version is a pdf of executed xHTML Separate ﬁnancial statements as at and for the year ended December 31, 2023. In case of any discrepancies xHTML version shall prevail 8 ● Mr Erik Duindam, who was thus far serving as the Chief Technology Oﬃcer (not being a formal oﬃcer of the Company), was appointed as a formal oﬃcer of the Company, namely the President, and the Chief Operating Oﬃcer; ● Mr Marek Chwałek, who was serving as Executive Vice President of Finance (not being a formal oﬃcer of the Company), was appointed as a formal oﬃcer of the Company, namely the Treasurer; ● Ms Monika Kierepa was appointed as the Secretary. Effective on October 27, 2023, Mr. Krzysztof Kaczmarczyk and Mr. Tom Jacobsson were re-elected as independent non-executive directors. In connection with the election of members of the Board of Directors by the Annual General Meeting, Mr. John Salter was elected to serve as the Series A Director for the next term, and Mr. Henric Suuronen and Mr. Anton Gauﬃn to serve as the Series B Directors for the next term. After these changes, as at December 31, 2023 and as at the date of signing of these ﬁnancial statements, the composition of the Company’s Board of Directors was the following: ● Anton Gauﬃn, executive director, Executive Chairman of the Board, ● Henric Suuronen, non-executive director, ● Krzysztof Kaczmarczyk, non-executive director, ● John Salter, non-executive director, ● Tom Jacobsson, non-executive director. Investments in subsidiaries The Company has an interest in share capital of the following subsidiaries: Name of entity Registered seat Activities Company's share in capital As at December 31, 2023 As at December 31, 2022 Huuuge Games Sp. z o.o. Szczecin, Poland games development and operations 100% 100% Huuuge Global Ltd Limassol, Cyprus games distribution, user acquisition 100% 100% Huuuge Publishing Ltd (formerly Fun Monkey Ltd) Limassol, Cyprus games distribution 100% 100% Huuuge Block Ltd (formerly Coffee Break Games Ltd) Limassol, Cyprus games distribution 100% 100% Billionaire Games Limited Limassol, Cyprus games distribution 100% 100% Huuuge Digital Ltd Tel Aviv, Israel games development, R&D 100% 100% Playable Platform B.V. Amsterdam, Netherlands games development, R&D 100% 100% Double Star Oy Helsinki, Finland games development 100% 100% Huuuge UK Ltd London, United Kingdom corporate development 100% 100% Huuuge Mobile Games Ltd Dublin, Ireland games distribution, user acquisition, in liquidation 100% 100% Coffee Break Games United Ltd * Dublin, Ireland games distribution, user acquisition, in liquidation 100% 100% MDOK GmbH (formerly Huuuge Pop GmbH) Berlin, Germany games development, in liquidation 100% 100% Huuuge Labs GmbH Berlin, Germany games development, R&D, in liquidation 100% 100% * Effective on January 24, 2024, Coffee Break Games United Ltd was dissolved and is no longer in existence. HUUUGE INC. Separate ﬁnancial statements as at and for the year ended December 31, 2023 (all amounts in tables presented in thousand USD, except where stated otherwise) This version is a pdf of executed xHTML Separate ﬁnancial statements as at and for the year ended December 31, 2023. In case of any discrepancies xHTML version shall prevail 9 2. Accounting policies 1) Basis for preparation of the ﬁnancial statements These ﬁnancial statements of the Company have been prepared in accordance with the International Financial Reporting Standards as adopted by the European Union (“IFRS”) and constitute the Company’s separate ﬁnancial statement prepared in order to meet the legal requirements imposed on issuers of the securities admitted to trading on regulated markets. The Company has prepared the ﬁnancial statements on the basis that it will continue to operate as a going concern. The Company is the parent entity of the Huuuge Inc. Group. The annual consolidated ﬁnancial statements of the Group have been prepared in accordance with the requirements of IFRS. In order to fully understand the ﬁnancial situation and the results of operations of the Company as the parent company in the Group, these ﬁnancial statements should be read together with the annual consolidated ﬁnancial statements for the period ended on 31 December 2023. The consolidated ﬁnancial statements of the Group are prepared and published at the same time as these separate ﬁnancial statements of the Company. These ﬁnancial statements are prepared on the historical cost basis. The functional currency of the Company and the presentation currency of these ﬁnancial statements is the US dollar (“USD”). 2) Key judgements and estimates The preparation of ﬁnancial statements in accordance with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from those estimated. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. In preparing these ﬁnancial statements, the signiﬁcant judgements and estimates made by management in applying the Company’s accounting policies have been consistently applied by the Company and are consistent across the reported periods. Model of revenue recognition Agent vs principal considerations – transactions between the Company and Huuuge Global Limited The Company purchases certain advertisement services from third parties (mostly Platform providers such as Facebook), which are subsequently recharged to Huuuge Global Ltd. The Company’s management has determined that in its relation to the platforms the Company acts as an agent on behalf of Huuuge Global Ltd. In accordance with IFRS 15.B34, when another entity is involved in providing goods or services to a customer, the entity evaluates the nature of its promise to the customer, whether the nature of the entitys performance obligation is to provide the speciﬁed goods or services to the customer itself (in this case the entity is a principal) or to arrange for them to be provided by another entity (in this case the entity is an agent). In accordance with IFRS 15.B35, the entity acts as the principal, if it obtains control of the speciﬁed good or service before it is transferred to the customer, otherwise the entity acts as an agent arranging for the provision of the speciﬁed goods or service for another entitys customer. An agent recognizes revenue on a net basis corresponding to any fee or commission to which it expects to be entitled in return for the arrangement of provision of goods or services by another entity. HUUUGE INC. Separate ﬁnancial statements as at and for the year ended December 31, 2023 (all amounts in tables presented in thousand USD, except where stated otherwise) This version is a pdf of executed xHTML Separate ﬁnancial statements as at and for the year ended December 31, 2023. In case of any discrepancies xHTML version shall prevail 10 The Company’s management assessed that, taking into account the IFRS 15 guidance, the nature of the Company’s performance obligation is to ensure the provision of advertisement services by Platform providers such as Facebook for Huuuge Global Ltd, and that the Company itself does not obtain control over the goods or services provided prior to its transfer to the customer. The Company’s management therefore assessed that the Company acts as an agent to Huuuge Global Limited. The conclusion that the Company acts as an agent is supported mainly by the following factors: Platform providers (such as Facebook) have the ultimate responsibility for providing the services to Huuuge Global Ltd; the Company does not set the prices for the advertisement services, nor it has a discretion to select the Platforms, Platform providers have right to change these prices at any time at their discretion. The Company being an agent presents revenues from those transactions in net amounts – revenue from Huuuge Global Ltd for the provision of these services was fully netted with related costs in the statement of comprehensive income for the years ended December 31, 2023 and December 31, 2022. For details on the accounting policies related to the revenue recognition please refer to Note 2.3 Material accounting policies , point (b) Revenue . Money market mutual funds As part of its liquidity management, the Company engages in short-term deposits with various banks or overnight deposits in money market mutual funds. The Company invests in money market funds that are open-ended mutual funds that invest in liquid, high-quality debt. This debt is either issued or guaranteed by the U.S. government, its agencies, or instrumentalities, along with repurchase agreements secured by such obligations or cash (Aaa-mf Moody’s rating of funds only). The main goals are the preservation of principal, high liquidity and a modest incremental return over short-term interest rates or a benchmark rate. Key judgment in applying accounting policies refers to the classiﬁcation of investments in money market mutual funds as “Cash and cash equivalents” and not as “Other ﬁnancial assets”. The units of the funds held by the Company are short-term, highly liquid, readily convertible to known amounts of cash and are subject to an insigniﬁcant risk of future changes in value, thus they meet the critical criteria indicated in IAS 7 Statement of Cash Flows and have been considered in substance as cash equivalents. Investments in money market funds have a determinable market value and they are puttable, with a short notice period. The Company can dispose the investments in funds at its discretion any time (same-day access), funds are not closed for a selected group of participants. They are convertible into cash and the cash amount to be received on redemption is known at the time of the investment because at the time of the initial investment, the risk of changes in value is insigniﬁcant. The volatility of changes in fair value, in particular the credit and liquidity risk, is limited taking into account the level of diversiﬁcation of the portfolio and its weighted average life of the underlying assets of the funds. The exposure to benchmark interest rate risk is also assessed to be low because of a short period of time until the next repricing of the assets held by the fund to current benchmark interest rates. These facts support the view that the investment is liquid. In addition, the Company considered the assets held by the fund to establish whether substantially all of its investments qualify individually as cash and cash equivalents. The consideration referred to all potential investments allowed by the investment rules set for the fund, and not only the assets that the fund holds as of the evaluation date. It was assessed that in general the investments’ maturity is less than three months and thus, investments qualify individually as cash and cash equivalents. Due to the above, in the management’s opinion, the Company’s investments in money market funds have the attributes to be considered a cash equivalent. This analysis is performed at each reporting period. For details on the funds and their credit ratings please refer to Note 9 Financial risk management , point (b) Credit risk . For carrying amounts as at December 31, 2023 and December 31, 2022 please refer to Note 12 Cash and cash equivalents . HUUUGE INC. Separate ﬁnancial statements as at and for the year ended December 31, 2023 (all amounts in tables presented in thousand USD, except where stated otherwise) This version is a pdf of executed xHTML Separate ﬁnancial statements as at and for the year ended December 31, 2023. In case of any discrepancies xHTML version shall prevail 11 Estimation uncertainty The assumptions made about the future and the major sources of estimation uncertainty refer to the following areas: Deferred tax assets and liabilities, in particular the realizability of deferred tax assets In order to determine deferred tax assets and deferred tax liabilities the management needs to make estimates and judgments, especially in the valuation of deferred tax assets and liabilities. Signiﬁcant management estimate is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable proﬁts, together with future tax planning strategies. The process includes evaluation of the tax results of the Company, under consideration of local tax laws and regulations, assessment of the actual tax exposure and of temporary differences as well as assessment of the likelihood that deferred tax assets can be utilized in future periods through generation of taxable proﬁts. The recognition of a deferred tax asset is based on the assumption that it will be recoverable against future taxable income. The deterioration of tax results in the future could cause that this assumption could not be justiﬁed. When accounting for transactions the Company takes into account uncertainties as to whether its treatment will be accepted by the tax authorities. Estimates used for the recognition of deferred tax assets are updated annually with factors such as expected tax rates and expected future tax results of the Company. Deferred tax liabilities and assets are not recognized for temporary differences between the carrying amount and tax bases of investments in subsidiaries as the Company is able to control the timing of the reversal of the temporary differences and in the management’s assessment it is probable that the differences will not reverse in the foreseeable future. For more details on deferred tax assets and liabilities please refer to Note 2.3 Material accounting policies , point (c) Income tax and to Note 7 Income tax . Provisions and contingent liabilities Determination of provisions and contingent liabilities is based on management’s assessment of the probability of the outﬂow of resources embodying economic beneﬁts, according to guidelines included in IAS 37 Provisions, Contingent Liabilities and Contingent Assets . Provisions are measured at management’s best estimate of the expenditure required to settle the obligation at the end of the reporting period and are discounted to present value where the effect is material. The Company has become involved in several pending litigations. In each instance, the Management considered the potential outcome of the matter and assessed its impact on these ﬁnancial statements, including deliberation on whether provisions should be recognized and, if so, the appropriate quantiﬁcation thereof. For more details on the Company's litigations please refer to Note 16 Contingencies 3) Material accounting policies The accounting policies applied by the Company in these ﬁnancial statements have been consistently applied by the Company and are consistent across the reported periods, unless indicated otherwise. a) Foreign currency transactions – transactions and balances Transactions in foreign currencies are translated to USD (which is the functional currency of the entity and the presentation currency of these ﬁnancial statements) at exchange rates effective on the days of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated into USD at the applicable closing exchange rates as of the balance sheet date. The foreign exchange rate differences arising on translation of transactions denominated in foreign currencies are recognized in the proﬁt or loss in the statement of comprehensive income. HUUUGE INC. Separate ﬁnancial statements as at and for the year ended December 31, 2023 (all amounts in tables presented in thousand USD, except where stated otherwise) This version is a pdf of executed xHTML Separate ﬁnancial statements as at and for the year ended December 31, 2023. In case of any discrepancies xHTML version shall prevail 12 Non-monetary assets and liabilities that are measured at historical cost in foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated at the exchange rates at the date the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. b) Revenue The Company’s revenue is generated by services provided to the other entities in the Group. The Company’s revenue comprises revenues from advertisement services, game design development services, and stewardship activities. Advertisement services The Company purchases certain advertisement services from third parties (mostly Platform providers such as Facebook), which are subsequently recharged to Huuuge Global Ltd. The Company’s management has determined that in its relation to the platforms the Company acts as an agent on behalf of Huuuge Global Ltd. Further information on the judgment in this respect is presented in Note 2.2 Key judgements and estimates – Model of revenue recognition. The Company’s management identiﬁed one performance obligation which is advertisement services in gaming applications. Revenue is recognized over time, in the period in which services are provided. Game design development services, and stewardship activities Under each of these revenue streams, The Company’s management identiﬁed one performance obligation. Revenue is recognized over time, in the period in which services are provided. For game design development services, legal services and stewardship activities, the Company has a right to consideration in an amount that corresponds directly with the value to the customer of the entity’s performance completed to date. Management assesses that the Company does not have any contracts where the period between the transfer of the promised goods or services and payment exceeds one year. As a consequence, the Company does not adjust any of the transaction prices for the time value of money. A receivable is recognized when the consideration is unconditional because only the passage of time is required before the payment is due. In relation to these services, the Company’s management has determined that the Company acts as the principal as it controls the speciﬁed good or service before it is transferred to the customer. In such circumstances, the Company recognizes revenue in the amount of gross remuneration to which it expects to be entitled in exchange for the goods or services transferred. c) Income tax Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in proﬁt or loss except to the extent that it relates to a business combination, or items are recognized directly in equity or in other comprehensive income. Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Deferred tax is recognized in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the ﬁnancial statements. Deferred tax is not recognized for temporary differences arising on the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable proﬁt or loss. Deferred tax liabilities and assets are not recognized for temporary differences between the carrying amount and tax bases of investments in subsidiaries where the company is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future. In addition, deferred tax is not recognized for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. HUUUGE INC. Separate ﬁnancial statements as at and for the year ended December 31, 2023 (all amounts in tables presented in thousand USD, except where stated otherwise) This version is a pdf of executed xHTML Separate ﬁnancial statements as at and for the year ended December 31, 2023. In case of any discrepancies xHTML version shall prevail 13 Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax assets and liabilities, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously. Huuuge, Inc. is subject to U.S. tax regulations on the global intangible low-taxed income (GILTI) that are applicable to U.S. taxpayers since 2017. The GILTI is a category of income that is earned abroad by U.S.-controlled foreign corporations from easily movable intangible assets, such as IP rights, and this income is subject to special tax treatment under the U.S. tax code. The Company applies the accounting policy to treat U.S. taxes due in relation to GILTI as a current-period expense when incurred. Therefore, the Company does not record the deferred taxes for basis differences expected to reverse as GILTI in future periods. In addition, starting from 2022, in the United States, Tax Cuts and Jobs Act requires capitalization and amortization of research & development expenses for U.S. federal income tax purposes. As the Company does not capitalize any research or development expenditures for the accounting purpose, this might give a rise to the deductible temporary differences related to the R&D expenses. As Huuuge Inc. does not carry out any R&D operations in the US, the deductible temporary differences do not arise in this area, and the deferred tax asset is not recognized. However, the tax capitalization rules apply also to R&D expenses incurred in the foreign operations when the income is being computed or reported on a U.S. tax basis. The deferral of R&D expenses for tax purposes affects the computation of GILTI that is accounted for in accordance with the accounting policy indicated above. A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable proﬁts will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent it is no longer probable that the related tax beneﬁt will be realized. d) Shares in subsidiaries, associates and joint ventures Shares in subsidiaries, associates and joint ventures not classiﬁed as held for sale in accordance with IFRS 5, are measured at historical cost in accordance with IAS 27 reduced by impairment losses, if any arise in accordance with IAS 36. The impairment test is carried out if there are any indications of impairment. The amount of the impairment loss is assessed by comparing the carrying amount to the higher of fair value less costs to sell and value in use. Usually, transaction costs related to acquisition of shares in subsidiaries increase the costs (the carrying amount) of the investment. Subsidiaries are entities controlled by the Company. The Company controls an entity when it: ● has power to direct the relevant activities of the investees that signiﬁcantly affect their returns, ● has exposure, or rights, to variable returns from its involvement with the investees, ● has the ability to use its power over the investees to affect the amount of the investor’s returns. The Company veriﬁes if it has control over entities, if an event results in a change to one or more of the control conditions listed above. The Company does not have any associates or/and joint ventures. HUUUGE INC. Separate ﬁnancial statements as at and for the year ended December 31, 2023 (all amounts in tables presented in thousand USD, except where stated otherwise) This version is a pdf of executed xHTML Separate ﬁnancial statements as at and for the year ended December 31, 2023. In case of any discrepancies xHTML version shall prevail 14 e) Financial instruments The Company recognizes the non-derivative ﬁnancial instruments such as, trade and other receivables, cash and cash equivalents (including investments in mutual funds) and trade and other payables. At initial recognition, the Company measures a ﬁnancial asset at its fair value plus, in the case of a ﬁnancial asset not at fair value through proﬁt or loss (“FVPL”), transaction costs that are directly attributable to the acquisition of the ﬁnancial asset. Transaction costs of ﬁnancial assets carried at FVPL are expensed in proﬁt or loss. The Company classiﬁes its ﬁnancial assets to the measurement category: debt instruments to be measured at amortized cost. The classiﬁcation depends on the entity’s business model for managing the ﬁnancial assets and the contractual terms of the cash ﬂows. Assets that are held for collection of contractual cash ﬂows, where those cash ﬂows represent solely payments of principal and interest (“SPPI test”), are measured at amortized cost. Interest income from these ﬁnancial assets is included in ﬁnance income using the effective interest rate method. Any gain or loss arising on derecognition is recognized directly in proﬁt or loss. Management assesses the Company’s expected credit losses (“ECLs”) associated with debt instruments measured at amortized cost, regardless of whether or not there has been any indication of impairment. Please refer to Note 2.3 Material accounting policies , point (f) Impairment, (i) Financial assets below. f) Impairment (i) Financial assets Management assesses the Company’s ECLs associated with debt instruments measured at amortized cost, regardless of whether or not there has been any indication of impairment. For trade receivables, the Company applies a simpliﬁed approach and measures a loss allowance for expected credit losses at the amount equal to the expected credit losses over the instrument's lifetime. The Company uses its historical data on credit losses, adjusted on an as-needed basis for the impact of forward-looking statements. g) Cash and cash equivalents Cash and cash equivalents comprise cash balances, call deposits and highly liquid investments (including money market funds) with maturities at initial recognition of three months or less. The judgment relating to the classiﬁcation of the investments in money market funds as “cash and cash equivalents’ is disclosed in Note 2.2 Key judgements and estimates – Money market mutual funds . Cash on bank accounts and investments in money market mutual funds meets the SPPI test and the business model test "held to collect", therefore they are measured at amortized cost including an impairment loss determined in accordance with the expected loss model described in Note 2.3 Material accounting policies , point (f) Impairment, (i) Financial assets . h) Trade and other receivables Trade receivables are recognized initially at the fair value which is equal to the nominal amount when the contract does not contain signiﬁcant ﬁnancing. Subsequently, they are carried at amortized cost using the effective interest method, less loss allowance. The loss allowance is determined according to the accounting policy presented in Note 2.3 Material accounting policies , point (f) Impairment, (i) Financial assets . Other receivables include tax receivables other than from corporate income taxes and advance payments for subscriptions. Other receivables that are not ﬁnancial assets as at the end of the reporting period are measured at the amount due. HUUUGE INC. Separate ﬁnancial statements as at and for the year ended December 31, 2023 (all amounts in tables presented in thousand USD, except where stated otherwise) This version is a pdf of executed xHTML Separate ﬁnancial statements as at and for the year ended December 31, 2023. In case of any discrepancies xHTML version shall prevail 15 i) Trade and other payables These amounts represent liabilities for goods and services provided to the group prior to the end of the ﬁnancial year which are unpaid. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognized initially at their fair value and subsequently measured at amortized cost using the effective interest method. The other payables comprise employees-related liabilities, tax other than income tax liabilities, and accrued expenses, which are measured at the amount due. j) Share capital and other components of the equity Share capital is presented at the total nominal value of the registered shares of the Company. As at December 31, 2023 and December 31, 2022 all ordinary shares and preferred shares (series A and B) are classiﬁed as equity. Preferences attributable to series A and B of preferred shares are described in Note 13 Share capital . Incremental costs directly attributable to the issue of new shares are presented as the deduction of equity, i.e. supplementary capital. Qualifying transaction costs incurred in anticipation of an issuance of equity instruments are also deducted from the equity, i.e. supplementary capital. If the equity instruments are not subsequently issued, the transaction costs are recognized as an expense. Any excess of the fair value of consideration received over the nominal value of shares issued is recorded as share premium in equity, i.e. supplementary capital. In the line “Treasury shares”, the Company presents the own shares repurchased, which are recognized at costs and are deducted from equity. No gain or loss is recognized in proﬁt or loss on the purchase, sale, issue or cancellation of the Company shares. Any difference between the carrying amount and the consideration, if reissued, is recognized in the supplementary capital. Incremental costs directly attributable to the repurchase of own shares are presented as the deduction of equity, i.e. in the line “Treasury shares”. In accordance with Delaware General Corporation Law, the Company may declare and pay dividends upon the shares of its capital stock either: 1. Out of its surplus, being the excess of its net assets over its capital (all or part of the consideration received by the corporation in exchange for its capital stock, as determined by the Board of Directors); or 2. In case there shall be no such surplus, out of its net proﬁts for the ﬁscal year in which the dividend is declared and/or the preceding ﬁscal year. If the capital, as deﬁned above, shall have been diminished by depreciation in the value of its property, or by losses, or otherwise, to an amount less than the aggregate amount of the capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets, the directors of such company shall not declare and pay out of such net proﬁts any dividends upon any shares of any classes of its capital stock until the deﬁciency in the amount of capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets shall have been repaired. Employee beneﬁts reserve results from the share-based payment arrangements and are described in detail in Note 2.3 Material accounting policies , (k) Share-based payment arrangements and Note 14 Share-based payment arrangements . Employee beneﬁt reserve is not transferred or reclassiﬁed within equity. HUUUGE INC. Separate ﬁnancial statements as at and for the year ended December 31, 2023 (all amounts in tables presented in thousand USD, except where stated otherwise) This version is a pdf of executed xHTML Separate ﬁnancial statements as at and for the year ended December 31, 2023. In case of any discrepancies xHTML version shall prevail 16 k) Share-based payment arrangements The Company runs an award program where the employees and contractors are receiving free options which entitle them to purchase the shares in the Company. Such a program is a share-based payment program which is classiﬁed as equity settled due to the fact that the Company does not have an obligation to settle the obligation arising under the program by delivering cash to the employees or contractors. Equity-settled share-based payments to employees of the Company and its subsidiaries and others providing similar services are measured at the fair value of the equity instruments at the grant date. The grant date fair value of the awards is determined using a share option pricing model. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in Note 14 Share-based payment arrangements . Options with the same grant date but with different periods during which all the speciﬁed vesting conditions of a share-based payment arrangement are to be satisﬁed are treated as separate awards with a different vesting period (staged vesting). The fair value determined at the grant date of the equity-settled share-based payments is expensed (options granted to employees of the Company) or allocated to investments in subsidiaries (options granted to employees of the Company’s subsidiaries) over the vesting period. The amount recognized as an expense or allocated to investment in subsidiaries is adjusted to reﬂect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognized is based on the number of awards that meet the related service and non-market performance conditions at the vesting date. At the end of each period the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognized in proﬁt or loss, or investment in subsidiaries, such that the cumulative expense reﬂects the revised estimate, with a corresponding adjustment to the equity-settled employee beneﬁt reserve. IFRS 2 Share-based Payment does not address whether an increase in equity recognized in connection with a share-based payment transaction should be presented in a separate component within equity or within retained earnings. Such an increase is presented in the line “Employee beneﬁt reserve” in these ﬁnancial statements, left for the disposition of the general shareholders meeting. Share - based payment transactions with non-employees (Advisory agreement as described in the Note 14 Share-based payment arrangements to these ﬁnancial statements) Share-based payment transactions with non-employees include the transactions in which non-employees provide services to the Company in exchange for free options which entitle them to purchase the shares in the Company. In accordance with IFRS 2, the Company measures the services received, and the corresponding increase in equity, directly, at the fair value of the goods or services received, unless that fair value cannot be estimated reliably. If the fair value of the services received cannot be estimated reliably, the Company measures their value, and the corresponding increase in equity, indirectly, by reference to the fair value of the equity instruments granted (indirect method). Since the service is received on more than one date, the fair value of the equity instruments granted should be measured on each date when the services are received. The Company measures expense to be recognised in the proﬁt on a quarterly basis using the average share price, as the changes in the share price over that period are not signiﬁcant. The Company recognizes the expense charge in the Company’s separate statement of comprehensive income over the vesting period for which the related services are provided with the corresponding increase in equity in the line “Employee beneﬁt reserve”. HUUUGE INC. Separate ﬁnancial statements as at and for the year ended December 31, 2023 (all amounts in tables presented in thousand USD, except where stated otherwise) This version is a pdf of executed xHTML Separate ﬁnancial statements as at and for the year ended December 31, 2023. In case of any discrepancies xHTML version shall prevail 17 Other employee beneﬁts Short-term employee beneﬁt obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognized for the amount expected to be paid under short-term cash bonus or proﬁt-sharing plans if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably. l) Provisions A provision is recognized when the Company, as a result of a past event, has a present obligation (legal or constructive) that can be estimated reliably and it is probable that the Company will be required to settle that obligation (an outﬂow of economic beneﬁts will be required). Provisions are measured at management’s best estimate of the expenditure required to settle the obligation at the end of the reporting period and are discounted to present value where the effect is material. For more details on the Company's litigations please refer to Note 16 Contingencies . m) Research and development expenses In the position “Research and development expenses”, the Company recognizes costs related to game design of the existing and the new games. n) Sales and marketing expenses In the position “Sales and marketing expenses”, the Company recognizes mostly costs of remuneration. o) Finance income and expense Foreign currency gains and losses are reported on a net basis as either ﬁnance income or ﬁnance cost depending on whether foreign currency movements are in a net gain or net loss position unless material, where separate presentation is required. Finance income comprises mainly interest income on funds invested. Interest income is recognized as it accrues in proﬁt or loss, using the effective interest method. Finance expenses comprise interest expenses from banks and leases. HUUUGE INC. Separate ﬁnancial statements as at and for the year ended December 31, 2023 (all amounts in tables presented in thousand USD, except where stated otherwise) This version is a pdf of executed xHTML Separate ﬁnancial statements as at and for the year ended December 31, 2023. In case of any discrepancies xHTML version shall prevail 18 4) Adoption of new and revised Standards The EU IFRS include all International Accounting Standards, International Financial Reporting Standards and Interpretations as approved by the European Union. As at the date of approving these ﬁnancial statements for publication, considering the pending process of introducing IFRSs in the EU and the operations conducted by the Company, the EU IFRS applicable to these ﬁnancial statements might differ from IFRS adopted by the International Accounting Standards Board. In preparing these ﬁnancial statements the Company’s management has analyzed new Standards which have already been adopted by the European Union and which should be applied for periods beginning on or after January 1, 2023. New International Financial Reporting Standards and Interpretations published but not yet effective: ● Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets Between an Investor and its Associate or Joint Venture (issued on September 11, 2014): the endorsement process of these Amendments has been postponed by the EU – the effective date was deferred indeﬁnitely by the International Accounting Standards Board; ● Amendments to IAS 1: Presentation of Financial Statements: Classiﬁcation of Liabilities as Current or Non-current – Deferral of Effective Date and Non-current Liabilities with Covenants ( issued on January 23, 2020 and subsequently amended on July 15, 2020 and October 31, 2022): effective for ﬁnancial years beginning on or after January 1, 2024; ● Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback (issued on September 22, 2022): effective for ﬁnancial years beginning on or after January 1, 2024; ● Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures: Supplier Finance Arrangements (Issued on May 25, 2023): not yet endorsed by the EU at the date of approval of these ﬁnancial statements for issue – effective for ﬁnancial years beginning on or after January 1, 2024; ● Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability (issued on August 15, 2023): not yet endorsed by the EU at the date of approval of these ﬁnancial statements for issue – effective for ﬁnancial years beginning on or after January 1, 2025. These standards and amendments are not expected to have a material impact on the Company in the current or future reporting periods and on foreseeable future transactions. New International Financial Reporting Standards and Interpretations effective for the ﬁrst time for ﬁnancial year 2023: During the year 2023, the following IFRS and amendments to IFRS or interpretations entered into force: ● IFRS 17: Insurance Contracts (issued on 18 May 2017): effective for annual periods beginning on or after 1 January 2023; ● Amendments to IFRS 17 and an amendment to IFRS 4 (issued on 25 June 2020): effective for annual periods beginning on or after 1 January 2023; ● Transition option to insurers applying IFRS 17 – Amendments to IFRS 17 (issued on 9 December 2021): effective for annual periods beginning on or after 1 January 2023; ● Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of Accounting policies (issued on 12 February 2021): effective for annual periods beginning on or after 1 January 2023. These changes have been implemented and reﬂected in these ﬁnancial statements. ● Amendments to IAS 8: Deﬁnition of Accounting Estimates (issued on 12 February 2021): effective for annual periods beginning on or after 1 January 2023); ● Deferred tax related to assets and liabilities arising from a single transaction – Amendments to IAS 12 (issued on 7 May 2021): effective for annual periods beginning on or after 1 January 2023); ● Amendments to IAS 12 Income taxes: International Tax Reform – Pillar Two Model Rules (issued 23 May 2023): effective for annual periods beginning on or after 1 January 2023). The amendments listed above did not have any impact on the amounts recognized in prior periods and are not expected to signiﬁcantly affect the current or future periods. HUUUGE INC. Separate ﬁnancial statements as at and for the year ended December 31, 2023 (all amounts in tables presented in thousand USD, except where stated otherwise) This version is a pdf of executed xHTML Separate ﬁnancial statements as at and for the year ended December 31, 2023. In case of any discrepancies xHTML version shall prevail 19 5) Determination of fair values A number of the Company’s accounting policies and disclosures require the determination of fair value, for both ﬁnancial and non-ﬁnancial assets and liabilities. As at December 31, 2023 and as at December 31, 2022 there were no assets or liabilities measured at fair values. At each reporting date, the management analyzes movements in the values of assets and liabilities which are required to be remeasured or re-assessed as per the Company’s accounting policies. a) Trade and other receivables measured at amortized cost For trade and other receivables and deposits, the Company’s management considers their carrying amounts to be the best estimates of fair values, due to the short-term nature and high liquidity of these instruments. This fair value is determined for disclosure purposes. b) Non-derivative ﬁnancial liabilities measured at amortized cost For trade accounts payable, the Company’s management considers their carrying amounts to be the best estimation of their respective fair values, determined for disclosure purposes, due to the short-term nature of these instruments. Fair value of non-derivative ﬁnancial liabilities other than trade accounts payable, is calculated based on the present value of future principal and interest cash ﬂows, discounted at the market rate of interest at the reporting date. For lease liabilities, an interest rate implicit in the lease is used, if that rate can be readily determined; if that rate cannot be readily determined, the lessee's incremental borrowing rate is used. As of December 31, 2023 and December 31, 2022 the Company does not classify any assets or liabilities to be subsequently measured at fair value. 3. Revenue and dividend income The Company’s revenue is generated by services rendered to the other entities in the Group. The Company’s revenue comprises revenues from stewardship activities as well as facilitating the advertisement services on behalf of Huuuge Global Ltd.. The Company as an agent presents revenues from advertising services in net amounts, for further details on the judgment please refer to Note 2.2 Key judgements and estimates - Model of revenue recognition. During the year ended December 31, 2023 the Company’s revenues amounted to USD 1,577 thousand (USD 948 thousand from game design services and USD 629 thousand from stewardship services), and in the year ended December 31, 2022 - USD 2,922 thousand (USD 2,724 thousand from game design services and USD 197 thousand from stewardship services). During the year ended December 31, 2023, the Company recognized dividend income in the amount of USD 159,729 thousand as presented in the line “Dividend income” in the separate statement of comprehensive income. The dividend was paid out of the proﬁts for the years 2019, 2020, 2021 and 2022 of Huuuge Global Limited and proﬁts for the year 2023 of Huuuge Global Limited and Huuuge Games Sp. z o.o.. As at December 31, 2023 there was an outstanding balance of USD 10,000 thousand from Huuuge Global Ltd. The remaining USD 10,000 thousand was received on March 1, 2024. 4. Segment information The Company uses the exemption with respect to the disclosures of segment information in accordance with IFRS 8.4, therefore, the analysis of the activities of the Company's operating segments has been presented in the consolidated ﬁnancial statements as at and for the year ended December 31, 2023. HUUUGE INC. Separate ﬁnancial statements as at and for the year ended December 31, 2023 (all amounts in tables presented in thousand USD, except where stated otherwise) This version is a pdf of executed xHTML Separate ﬁnancial statements as at and for the year ended December 31, 2023. In case of any discrepancies xHTML version shall prevail 20 5. Operating expenses For the years ended December 31, 2023 and December 31, 2022 operating expenses include: Expenses by nature Year ended December 31, 2023 Year ended December 31, 2022 Salaries and employee-related costs 3,056 3,757 Finance and legal services 2,767 5,390 Share-based payment expense 350 774 Other costs 317 478 Total operating expenses 6,490 10,399 Finance and legal services in the year ended December 31, 2023 include costs related to the review of the strategic options of the Company in the amount of USD 530 thousand (USD 3,438 thousand in the year ended December 31, 2022). 6. Finance income Year ended December 31, 2023 Year ended December 31, 2022 Interest earned from banks 2,805 986 Foreign exchange gains, net 64 - Total ﬁnance income 2,869 986 Finance income for the year ended December 31, 2023 amounted to USD 2,869 thousand, which comprises mainly interest from banks on deposits and money market mutual fund investments, including interest accrued in the amount of USD 286 thousand. 7. Income tax As at December 31, 2023 As at December 31, 2022 Deferred tax assets 88 140 Deferred tax liabilities - (28) Net deferred tax asset/(liability) 88 112 Year ended December 31, 2023 Year ended December 31, 2022 Current income tax 1,298 893 Adjustments in respect of current income tax of previous year 236 - Change in deferred income tax 24 (64) Income tax for the year 1,558 829 HUUUGE INC. Separate ﬁnancial statements as at and for the year ended December 31, 2023 (all amounts in tables presented in thousand USD, except where stated otherwise) This version is a pdf of executed xHTML Separate ﬁnancial statements as at and for the year ended December 31, 2023. In case of any discrepancies xHTML version shall prevail 21 The tax on the Company’s proﬁt before tax differs from the theoretical amount that would arise using the statutory tax rate applied to its proﬁt as follows: Effective tax rate reconciliation Year ended December 31, 2023 Year ended December 31, 2022 Proﬁt/(loss) before income tax 155,809 (6,883) Statutory tax rate in the United States 21% 21% Theoretical tax expense/(beneﬁt) according to current tax rate in the United States 32,720 (1,445) Previously taxed earnings - dividend from subsidiary (33,543) - Tax impact of non-deductible costs – ESOP 74 163 GILTI income net of FDII deduction, net of foreign tax credit 2,085 2,128 Tax impact of non-deductible costs – other (14) (17) Correction of the current tax relating to previous years 236 - Tax charge 1,558 829 Effective tax rate 1% (12%) * GILTI – Global Intangible Low-Taxed Income ** FDII – Foreign-Derived Intangible Income. This is a reconciling item since the Company’s policy choice is to recognise any taxes for GILTI as a period cost, i.e. no deferred taxes for temporary differences expected to reverse as GILTI. Please refer to the Note 2.3 Material accounting policies . The tax rate was higher in the year ended December 31, 2023 mainly due to the higher proﬁt before tax off-set by the lower proportion of non-tax deductible costs in comparison to the prior period, as well as due to lower proportion of tax losses without recognized tax beneﬁt. Deferred tax reconciliation Deferred tax assets As at December 31, 2023 As at December 31, 2022 Accrued expenses 89 132 Lease liabilities - 14 Unrealized exchange rate differences (1) (6) Deferred tax assets 88 140 Compensation with deferred tax liabilities - (28) Deferred tax asset presented in the statement of ﬁnancial position 88 112 Deferred tax assets are expected to be recovered within 12 months from the reporting date. Deferred tax liabilities As at December 31, 2023 As at December 31, 2022 Tangible assets - 15 Right of use assets - 13 Deferred tax liabilities - 28 Compensation with deferred tax assets - (28) Deferred tax liability presented in the statement of ﬁnancial position - - Deferred tax liabilities expected to be settled within 12 months from the reporting date. HUUUGE INC. Separate ﬁnancial statements as at and for the year ended December 31, 2023 (all amounts in tables presented in thousand USD, except where stated otherwise) This version is a pdf of executed xHTML Separate ﬁnancial statements as at and for the year ended December 31, 2023. In case of any discrepancies xHTML version shall prevail 22 Year ended December 31, 2023 Year ended December 31, 2022 Net deferred tax assets/(liabilities) at the beginning of the year 112 48 Net deferred tax assets/(liabilities) at the end of the year 88 112 Deferred tax assets/(liabilities) in the net proﬁt for the year 24 (64) As at December 31, 2023 and December 31, 2022 there were no unused tax losses for which no deferred tax would be recognized in the statement of ﬁnancial position. 8. Investments in subsidiaries As at December 31, 2023 As at December 31, 2022 Huuuge Global Ltd 3,593 3,593 Huuuge Games Sp. z o.o. 2,326 2,326 Playable Platform B.V. 1,826 1,826 Huuuge UK 345 345 Huuuge Digital Ltd 0 ** 0 ** Impairment - - Options granted to employees of the Company’s subsidiaries under stock option program * 21,757 21,072 Total investment in subsidiaries 29,847 29,162 * For details, please refer to the Note 14 Share-based payment arrangements ** 0 represents the amount less than USD 1 thousand As at December 31, 2023 and December 31, 2022 there was no impairment of the investment in subsidiaries recognized due to the lack of the impairment indicators. When reviewing the indicators of impairment, the Company’s management has considered the following factors: ● external sources, such as: observable indications that the assets’ value has declined signiﬁcantly more that would be expected; signiﬁcant changes with an adverse effect in the technological, market, economic or legal environment; market capitalization; ● internal sources, such as: evidence of obsolescence or physical damage of the assets; evidence that economic performance of the assets is or will be worse than expected; plans to discontinue or restructure the operation, plans to dispose of the assets before than previously expected. 9. Financial risk management a) Introduction Risk management performed by the Company is aimed at reducing the impact of adverse factors on the ﬁnancial statements. This note presents information about the Company’s exposure to speciﬁc risks arising from ﬁnancial instruments as well as the Company’s objectives aimed at maintaining effective process for risk management. HUUUGE INC. Separate ﬁnancial statements as at and for the year ended December 31, 2023 (all amounts in tables presented in thousand USD, except where stated otherwise) This version is a pdf of executed xHTML Separate ﬁnancial statements as at and for the year ended December 31, 2023. In case of any discrepancies xHTML version shall prevail 23 The Company is exposed in particular to the following risks arising from ﬁnancial instruments: ● credit risk, ● liquidity risk, ● market risk. Risk management framework The Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The Board of Directors continually identiﬁes, evaluates and manages the risks faced by the Company, sets appropriate risk limits and controls and monitors risks. The Company’s management monitors ﬁnancial risks regarding the Group as a whole for the purpose of making risk management related decisions. b) Credit risk Credit risk relating to cash and cash equivalents The Company is exposed to credit risks mainly with regard to cash and cash equivalents, that include investments in money market funds, which could arise if a counterparty becomes insolvent and accordingly is unable to return the deposited funds or execute the obligations as a result of the insolvency. To mitigate this risk, wherever possible the Company’s management conducts transactions and deposits funds with investment grade rated ﬁnancial institutions, as well as monitors and limits the concentration of transactions with any single party. The Company’s management uses Moody’s credit ratings. The information about the credit risk rating grades (applicable for the ﬁnancial institution group) is presented in the table below. Moody's Rating As at December 31, 2023 As at December 31, 2022 Aaa-mf 79,986 9,968 A3 546 76,242 Total cash and cash equivalents 80,532 86,210 Cash and cash equivalents (including investments in money market mutual funds) are kept in ﬁnancial institutions with ratings from Aaa to A3 , which are investment ratings according to Moody’s. Cash and cash equivalents are kept at a limited number of major ﬁnancial institutions. The Company’s management monitors the creditworthiness of the institutions and mitigates concentration risk by not limiting the exposure to a single ﬁnancial fund. Concentration risk is mitigated by ensuring that the maximum concentration in any one ﬁnancial fund does not exceed 30%, at the same time investment funds are diversiﬁed. In this way, the risk of concentration is spread among different funds rather than within individual ﬁnancial institutions. As at December 31, 2023, funds were held in one ﬁnancial institution but in several amounts of mutual funds. As at December 31, 2022, the concentration of funds in two ﬁnancial institutions was respectively 82.4% and 17.6%. Total gross carrying amounts of cash and cash equivalents as of December 31, 2023 and December 31, 2022 were included in Level 1, based on assessment that credit risk has not increased signiﬁcantly since initial recognition. For ﬁnancial assets in Level 1, the Company recognizes 12 month ECL and recognizes interest income on a gross basis – interest will be calculated on the gross carrying amount of the ﬁnancial asset before adjusting for ECL. Management has assessed that the Company’s provision for expected credit losses related to cash and cash equivalents would not be material in any of the periods presented. The carrying amount of cash and cash equivalents balance represents the maximum credit exposure. HUUUGE INC. Separate ﬁnancial statements as at and for the year ended December 31, 2023 (all amounts in tables presented in thousand USD, except where stated otherwise) This version is a pdf of executed xHTML Separate ﬁnancial statements as at and for the year ended December 31, 2023. In case of any discrepancies xHTML version shall prevail 24 Credit risk with respect to trade receivables and other receivables The carrying amount of trade receivables represents the maximum credit exposure. The maximum exposure to credit risk at the reporting dates was as follows: Carrying amount As at December 31, 2023 As at December 31, 2022 Trade receivables from related parties 1,734 1,100 Total 1,734 1,100 The Company’ trade receivables are trade receivables from related parties – mainly Huuuge Global Ltd. and Huuuge UK Ltd. Transactions with related parties are described in Note 18 Related party transactions . Allowance for expected credit losses The Company recognizes allowance for expected credit losses according to IFRS 9 Financial Instruments, considering all reasonable and supportive information (e.g. customer rating, historical recoverability). The Company’s trade receivables are trade receivables from its related parties for each period presented therefore, the Company does not apply the portfolio approach, and instead performs the analysis on the individual basis. Taking into account that Company’s trade receivables are only from related parties and there were no issues with historical recoverability, the related expected credit losses had been assessed as immaterial. There are no trade receivables which are overdue more than 90 days or individually identiﬁed as impaired. The ageing of trade receivables at the reporting dates was as follows: As at December 31, 2023 As at December 31, 2022 Total not due and overdue up to 1 month over 1 month to 6 months over 6 months Total not due and overdue up to 1 month over 1 month to 6 months over 6 months Trade receivables from related parties 1,734 1,734 - - 1,100 1,100 - - Allowance for expected credit losses/ impairment - - - - - - - - Trade receivables, net 1,734 1,734 - - 1,100 1,100 - - c) Liquidity risk Liquidity risk means the risk that the Company may encounter diﬃculty in meeting the obligations associated with its ﬁnancial liabilities that are settled by delivering cash or another ﬁnancial asset. The Company’s management 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 the Company’s reputation. Liquidity risk is assessed in conjunction with the Company’s budgeted cash ﬂows and by managing a proper current liabilities structure. HUUUGE INC. Separate ﬁnancial statements as at and for the year ended December 31, 2023 (all amounts in tables presented in thousand USD, except where stated otherwise) This version is a pdf of executed xHTML Separate ﬁnancial statements as at and for the year ended December 31, 2023. In case of any discrepancies xHTML version shall prevail 25 Unexpected business circumstances that may lead to deteriorating liquidity position are balanced with the demand for the Company’s debt. The method of measuring the liquidity risk consists of the analysis of the cover of current liabilities with available cash resources. There are no bank loan balances and bank loan agreements in force as at December 31, 2023, December 31, 2022 and as at date of approval these ﬁnancial statements for issue, thus also interest rate risk is remote from the Company’s perspective. Moreover, it is not expected that the cash ﬂows included in the maturity analysis could occur signiﬁcantly earlier, or at signiﬁcantly different amounts. The following are the contractual maturities of ﬁnancial liabilities including estimated interest payments as of respective balance sheet dates: As at December 31, 2023 Carrying amount Contractual cash ﬂows 6 months or less over 6 months Trade payables 90 90 90 - Accrued expenses (except taxes and employee-related) 3,287 3,287 3,287 - Lease liabilities - - - - Non derivative ﬁnancial liabilities 3,377 3,377 3,377 - As at December 31, 2022 Carrying amount Contractual cash ﬂows 6 months or less over 6 months Trade payables 107 107 94 13 Accrued expenses (except taxes and employee-related) 2,614 2,614 2,614 - Lease liabilities 67 67 40 27 Non derivative ﬁnancial liabilities 2,788 2,788 2,748 40 There were no derivative ﬁnancial instruments at the end of reported periods. d) Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices may affect the Company’s income or the value of the ﬁnancial instruments held (incl. money market mutual funds investments presented as cash and cash equivalents). The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return. The Company does not apply hedge accounting in order to manage volatility in proﬁt or loss and so far neither has entered into derivatives nor incurred external ﬁnancial liabilities. (i) Currency risk Management of the Company has analyzed currency risk related to variability of exchange rates and did not identify signiﬁcant balances of accounts denominated in foreign currencies (cash and cash equivalents, trade receivables and trade payables) and transactions carried in foreign currencies which would be associated with a signiﬁcant currency risk for the Company. HUUUGE INC. Separate ﬁnancial statements as at and for the year ended December 31, 2023 (all amounts in tables presented in thousand USD, except where stated otherwise) This version is a pdf of executed xHTML Separate ﬁnancial statements as at and for the year ended December 31, 2023. In case of any discrepancies xHTML version shall prevail 26 (ii) Interest rate risk As the Company has not entered in bank loan agreements in the presented periods till December 31, 2023, the interest rate risk is marginal. The Company does not have any signiﬁcant interest bearing liabilities at variable rate which would expose the Company to the cash ﬂow risk. The Company’s interest bearing assets are cash and cash equivalents. The deposits, and the investments in money market funds are at a variable interest rate. These are investments which are either readily available, or with a short-term maturity date. Since the expected reasonable shift of the interest rate is insigniﬁcant during the maturity period of the investments, proﬁt or loss is not sensitive to the changes of interest rates. Therefore the interest bearing assets at variable rate do not expose the Company to cash ﬂow risk. e) Capital management The Board of Directors manages the Company’s capital structure and makes adjustments in light of changes in economic conditions. The Board’s of Directors policy is to maintain a strong capital base so as to maintain investors’ and market conﬁdence and to sustain future development of the business. The Company’s management seeks to maintain a suﬃcient capital base for meeting the Company’s operational and strategic needs, with the objective to safeguard the ability to continue as a going concern, settle the obligations and optimize the capital structure in order to reduce the cost of capital and maximize the return on capital to the shareholders and maintain the level of capital that will ensure the settlement of liabilities. The amount of capital maintained in each reporting period (see table below) met management’s objectives. Managed capital consists of ordinary shares, preferred shares of series A and B, as well as repurchased own shares and options as of December 31, 2023. For the amounts, please refer to Note 13 Share capital, of these ﬁnancial statements. There are no externally imposed capital management requirements (such as covenants or similar). The Company’s management monitors the return on capital on the basis of the basic and diluted earnings per share ratios. Further information on calculation of earnings per share rations is presented in the Group’s consolidated ﬁnancial statements. The objective of the Management is to maximize the return on capital to the shareholders. No dividends were declared and paid by the Company to its shareholders in the years ending December 31, 2023 and December 31, 2022. As at December 31, 2023 As at December 31, 2022 Equity 119,186 112,688 Total capital 119,186 112,688 HUUUGE INC. Separate ﬁnancial statements as at and for the year ended December 31, 2023 (all amounts in tables presented in thousand USD, except where stated otherwise) This version is a pdf of executed xHTML Separate ﬁnancial statements as at and for the year ended December 31, 2023. In case of any discrepancies xHTML version shall prevail 27 10. Accounting classiﬁcations of ﬁnancial instruments and fair values The fair values of ﬁnancial assets and liabilities, together with the carrying amounts shown in the statement of ﬁnancial position are as follows: As at December 31, 2023 Financial assets measured at amortized cost Financial liabilities at amortized cost Financial liabilities out of scope of IFRS 9 Total carrying amount Fair value Assets 82,266 - - 82,266 82,266 Trade receivables from related parties 1,734 - - 1,734 1,734 Cash and cash equivalents 80,532 - - 80,532 80,532 Liabilities - 90 - 90 90 Lease liability - - - - - Trade payables - 90 - 90 90 Net amount 82,266 90 - 82,176 82,176 As at December 31, 2022 Financial assets measured at amortized cost Financial liabilities at amortized cost Financial liabilities out of scope of IFRS 9 Total carrying amount Fair value Assets 87,310 - - 87,310 87,310 Trade receivables from related parties 1,100 - - 1,100 1,100 Cash and cash equivalents 86,210 - - 86,210 86,210 Liabilities - 107 67 174 174 Lease liability - - 67 67 67 Trade payables - 107 - 107 107 Net amount 87,310 107 67 87,136 87,136 As at December 31, 2023 and December 31, 2022 the Company’s management did not identify any ﬁnancial assets measured at fair value – neither through proﬁt or loss nor through other comprehensive income. The Company’s management believes that the fair values of ﬁnancial instruments do not differ signiﬁcantly from their carrying amounts. HUUUGE INC. Separate ﬁnancial statements as at and for the year ended December 31, 2023 (all amounts in tables presented in thousand USD, except where stated otherwise) This version is a pdf of executed xHTML Separate ﬁnancial statements as at and for the year ended December 31, 2023. In case of any discrepancies xHTML version shall prevail 28 11. Trade and other receivables As at December 31, 2023 As at December 31, 2022 Trade receivables and accrued revenues from related parties 1,734 1,100 Other receivables 157 68 Prepaid expenses 70 56 Total trade and other receivables 1,961 1,224 Allowance for expected credit losses/ impairment of trade receivables is not signiﬁcant. Transactions with related parties are described in Note 18 Related party transactions . Other receivables include tax receivables other than from corporate income taxes and advance payments for subscriptions. Prepaid expenses include advance payments for services that will be received in the future. Main types of prepayments are: subscriptions, expenses from cloud computing arrangements which do not include an intangible asset (software as a service contracts), and administration costs. 12. Cash and cash equivalents As at December 31, 2023 As at December 31, 2022 Money market mutual funds 79,986 9,967 Cash at banks (current accounts) 546 1,053 Deposits - 70,090 Money market interest-bearing accounts - 5,100 Total cash and cash equivalents 80,532 86,210 Money market mutual fund investments are classiﬁed as cash equivalents. For the details, please refer to Note 2.2 Key judgements and estimates . Maturity of these investments is three months, and they are repayable on demand, thus the investments are highly liquid, readily convertible to known amounts of cash, and are subject to an insigniﬁcant risk of changes in value, and meet the criteria indicated in IAS 7 Statement of Cash Flows, and have been considered in substance as cash equivalents. During the year ended December 31, 2023, deposits and money market mutual fund investments generated interest income in the total amount of USD 2,805 thousand. This includes the accrued interest from bank deposits in the amount of USD 286 thousand (received before the date of issue of these ﬁnancial statements). For the details, please refer to Note 6 Finance income . As at December 31, 2023, there was restricted cash in the amount of USD 15 thousand (USD 15 thousand as at December 31, 2022). As at December 31, 2022, there was a short-term cash deposit amounting to USD 70,090 thousand. Maturity of this investment is three months, it is repayable on demand, thus the investment is highly liquid, readily convertible to known amounts of cash, is subject to an insigniﬁcant risk of changes in value and meet the criteria indicated in IAS 7 Statement of Cash Flows and have been considered in substance as cash equivalents. HUUUGE INC. Separate ﬁnancial statements as at and for the year ended December 31, 2023 (all amounts in tables presented in thousand USD, except where stated otherwise) This version is a pdf of executed xHTML Separate ﬁnancial statements as at and for the year ended December 31, 2023. In case of any discrepancies xHTML version shall prevail 29 13. Share capital As at December 31, 2023 and December 31, 2022 Company's share capital comprised common shares and preferred shares series A and B. Below are presented movements on different components of equity divided in the categories of shares (nominal values presented in USD, not thousand USD): Shares classiﬁed as equity instruments as at December 31, 2023: Common shares (outstanding) Preferred shares (series A and B) Treasury shares Treasury shares allocated for the existing share-based payment programs Sub-total (issued) Shares allocated for the existing share-based payment programs (not issued) Grand total Number of shares Nominal value Number of shares Nominal value Number of shares Nominal value Number of shares Nominal value Number of shares Nominal value Number of shares Nominal value Number of shares Nominal value As at January 1, 2023 79,183,513 1,584 2 0 5,063,182 102 - - 84,246,697 1,686 11,007,733 220 95,254,430 1,906 Reduction of shares allocated for the existing share-based payment programs (not issued) - - - - - - - - - - (915,554) (18) (915,554) (18) Allocation of shares to Share-based payment program - - - - (915,554) (18) 915,554 18 - - - - - - Exercise of stock options 915,554 18 - - - - (915,554) (18) - - - - - - Share BuyBack (“SBB”) - repurchase of shares (17,121,919) (342) - - 17,121,919 342 - - - - - - - - Retirement of shares purchased during the Share Buyback Scheme ("SBB") - - - - (17,121,919) (342) - - (17,121,919) (342) - - (17,121,919) (342) As at December 31, 2023 62,977,148 1,260 2 0 4,147,628 84 - - 67,124,778 1,344 10,092,179 202 77,216,957 1,546 HUUUGE INC. Separate ﬁnancial statements as at and for the year ended December 31, 2023 (all amounts in tables presented in thousand USD, except where stated otherwise) This version is a pdf of executed xHTML Separate ﬁnancial statements as at and for the year ended December 31, 2023. In case of any discrepancies xHTML version shall prevail 30 Shares classiﬁed as equity instruments as at December 31, 2022: Common shares (outstanding) Preferred shares (series A and B) Treasury shares Treasury shares allocated for the existing share-based payment programs Sub-total (issued) Shares allocated for the existing share-based payment programs (not issued) Grand total Number of shares Nominal value Number of shares Nominal value Number of shares Nominal value Number of shares Nominal value Number of shares Nominal value Number of shares Nominal value Number of shares Nominal value As at January 1, 2022 82,690,347 1,655 2 0 1,556,348 31 - - 84,246,697 1,686 12,467,461 249 96,714,158 1,935 Reduction of shares allocated for the existing share-based payment programs (not issued) - - - - - - - - - - (1,459,728) (29) (1,459,728) (29) Allocation of shares to Share-based payment program - - - - (1,459,728) (29) 1,459,728 29 - - - - - - Exercise of stock options 1,459,728 29 - - - - (1,459,728) (29) - - - - - - Delivery of shares to former owners of Double Star Oy 23,046 0 - - (23,046) (0) - - - - - - - - Repurchase of common shares under Share Buyback Scheme ("SBB") (4,989,608) (100) - - 4,989,608 100 - - - - - - - - As at December 31, 2022 79,183,513 1,584 2 0 5,063,182 102 - - 84,246,697 1,686 11,007,733 220 95,254,430 1,906 HUUUGE INC. Separate ﬁnancial statements as at and for the year ended December 31, 2023 (all amounts in tables presented in thousand USD, except where stated otherwise) This version is a pdf of executed xHTML Separate ﬁnancial statements as at and for the year ended December 31, 2023. In case of any discrepancies xHTML version shall prevail 31 The Company is authorized to issue up to 113,881,420 shares with a par value of USD 0.00002 (113,881,418 common shares and 1 share of series A preferred share and 1 share of series B preferred share), out of which as at December 31, 2023, 21,295,567 shares were allocated to a reserve that could be issued only with majority shareholders’ approval (3,258,094 as at December 31, 2022). As at December 31, 2023, the share capital of the Company comprised 67,124,778 shares (fully paid) with a par value of USD 0.00002 per share and the total value of USD 1,344 (not thousands), including 62,977,148 common shares held by shareholders, two preferred shares (one preferred share of series A and one preferred share of series B), and 4,147,628 common shares reacquired by the Company and not redeemed (treasury shares and treasury shares allocated to the existing share-based payment programs). As at December 31, 2022, the share capital of the Company comprised 84,246,697 shares (fully paid) with a par value of USD 0.00002 per share and a total value of USD 1,686 (not thousands), including 79,183,513 common shares held by shareholders, two preferred shares (one preferred share of series A and one preferred share of series B) and 5,063,182 common shares reacquired by the Company and not redeemed (treasury shares and treasury shares allocated for the existing share-based payment programs). During the year 2023, the number of shares (not issued) allocated to the existing share-based payment programs was reduced by 915,554 shares. This is because 915,554 treasury shares were delivered to employees for the options exercised during the year ended December 31, 2023. As at December 31, 2023, 10,092,179 shares with a par value of USD 0.00002 per share were reserved for two stock option programs established in 2015 and 2019. During the year 2022, the number of shares (not issued) allocated to the existing share-based payment programs was reduced by 1,459,728 shares. This is because 1,459,728 treasury shares were delivered to employees for the options exercised during the year ended December 31, 2022. As at December 31, 2022, 11,007,733 shares with a par value of USD 0.00002 per share were reserved for two stock option programs established in 2015 and 2019. Holders of the two series A and series B preferred shares, which may be converted for a ﬁxed number of common shares, have several rights additional to the ones of the common shareholders, which may vary for series A and B). These rights are stipulated in the corporate documents of Huuuge, Inc., in particular in the Fourth Amended and Restated Certiﬁcate of Incorporation. Essentially, the rights refer to: ● protective provisions in case of liquidation, dissolution, winding up, certain mergers, consolidations and sale of assets of Huuuge, Inc. or conversion to common shares – the holders of series A or B preferred shares shall be entitled to be paid out of the assets of the Company available for distribution to its shareholders before the holders of common shares, ● election of a director for every separate class of preferred shares, one per each series of preferred shares (series A,B); two by the holders of common shares. As at December 31, 2023 and December 31, 2022, no shareholder owned over 50% of the Company’s equity or had more than 50% of voting rights. The Company's major shareholder is Mr. Anton Gauﬃn, founder and Executive Chairman of the Board, who participates in the Company’s ordinary shares indirectly (through shares of Big Bets OU). The supplementary capital derives mainly from the difference between nominal value and the market price on issuance of shares, or the difference between the book value and purchase price on re-issue of treasury shares. HUUUGE INC. Separate ﬁnancial statements as at and for the year ended December 31, 2023 (all amounts in tables presented in thousand USD, except where stated otherwise) This version is a pdf of executed xHTML Separate ﬁnancial statements as at and for the year ended December 31, 2023. In case of any discrepancies xHTML version shall prevail 32 In the year ended December 31, 2023 the following transactions took place: ● Delivery of the treasury shares for options exercised In the year ended December 31, 2023, 1,693,330 share options held by employees under the share-based payment program were exercised, out of which for 915,554 options exercised treasury shares were delivered to employees before December 31, 2023 (the difference is due to cashless exercises). The delivery of treasury shares was presented as a movement from treasury shares to common shares. The movement resulted in an increase in share capital in the amount of the nominal value of the shares delivered, and the difference between the value of treasury shares and the cash consideration received in the amount of USD 3,820 thousand was recognized in supplementary capital. At the same time, the movement decreased the number of shares (not issued) allocated to the existing share-based payment programs. ● Acquisition of shares under share Buyback Scheme ("SBB") As reported in the current report no. 25/2023 dated July 4, 2023, as a result of the settlement of the acquisition and transfer of ownership of the shares offered in response to a time-limited invitation to submit to the Company sale offers relating to shares in the Company, at a pre-determined and ﬁxed price per share, open to all shareholders of the Company (the "Invitation") (the "SBB") announced by the Company on May 30, 2023 in the current report no. 19/2023 (as subsequently amended and announced by the Company in current report no. 23/2023 on June 19, 2023), the Company acquired 17,121,919 of its common shares that represent 20.32% of the share capital of the Company and that entitled their holders to exercise 21.42% of the total number of votes at the general meeting of the Company for a total consideration of USD 149,999,996. The settlement of the SBB took place on July 4, 2023 (the "Settlement Date") outside the organized system of trading in ﬁnancial instruments through IPOPEMA Securities S.A. The acquisition was made at a gross price of USD 8.7607 per share. Amounts due to investors, after withholding of applicable taxes, have been converted from USD to PLN in accordance with the interbank exchange rate applicable as at July 3, 2023 (as the day preceding the Settlement Date), which is 4.0735. The shares were acquired on the basis of the Company's Board of Directors resolution dated May 30, 2023 launching the acquisition of the Company's common shares listed on the Warsaw Stock Exchange by way of a time-limited Invitation to Sell, establishing detailed conditions and procedures for participation in and execution of the SBB. Prior to the SBB settlement, the Company owned 4,314,211 common shares that representing 5.12% of the Company’s share capital and did not entitle the Company to voting rights. Following the settlement of the SBB, the Company owns a total of 21,436,130 shares that represent 25.44% of the Company's share capital and do not entitle the Company to voting rights. Consequently, following the settlement of the SBB, there were 84,246,697 shares of the Company issued and conferring 62,810,567 votes in total at the general meeting of the Company. The Company acquired the shares under the SBB with the intention that the shares will be retired, other than those shares necessary, in the Company’s view, to satisfy its ongoing needs under the Company’s employee stock option plans. Treatment of the acquired shares will be determined in due course by the Issuer’s Board of Directors, in accordance with its Certiﬁcate of Incorporation. ● Retirement of shares purchased by the Company during the share buyback On August 29, 2023, the Company's Board of Directors in accordance with Section 243 of the Delaware General Corporation law, adopted a resolution on the retirement of 17,121,919 shares of common stock of the Company representing 20.3% of the issued share capital of the Company comprising of 84,246,697 shares (as announced in current report no 37/2023). The retirement is effective as of the adoption of the resolution by the Board of Directors. The shares that were subject to the retirement were purchased by the Company during the share buyback (current report no. 25/2023 dated July 4, 2023) with the intention that the shares will be retired, other than those shares necessary, in the Company’s view, to satisfy its ongoing needs under the Company’s employee stock option plans. HUUUGE INC. Separate ﬁnancial statements as at and for the year ended December 31, 2023 (all amounts in tables presented in thousand USD, except where stated otherwise) This version is a pdf of executed xHTML Separate ﬁnancial statements as at and for the year ended December 31, 2023. In case of any discrepancies xHTML version shall prevail 33 Effective as of the adoption of the resolution of the Board of Directors, the retired shares resumed the status of authorized and unissued shares of the common shares of the Company. At the same time, the Company’s issued share capital decreased from 84,246,697 to 67,124,778 shares. In the year ended December 31, 2022 the following transactions took place: ● Share Buyback Scheme ("SBB") On February 15, 2022, the Company decided to repurchase its common shares listed for trading on the Warsaw Stock Exchange. The share buy-back started on March 29, 2022. The purpose of the Share Buyback Scheme was to satisfy the Company's needs related to the exercise of options under its Employee Stock Option Plans in the foreseeable future. On May 22, 2022, the Board of Directors adopted a resolution according to which the number of Company’s shares capable of being repurchased by the Company under the SBB has been set to the 6,500,000 shares. On August 2, 2022, the Company indeﬁnitely suspended the purchase of its own shares, and on May 30, 2023 this share buyback was terminated (announced by the Company on May 30, 2023 in the current report no. 19/2023). The common shares repurchased were presented in treasury shares line in the statement of ﬁnancial position. During the year ended December 31, 2022, 4,989,608 common shares were repurchased under the SBB program and were registered at Central Securities Depository. Payments made for the purchase of own shares in the amount of USD 20,090 thousand were recognized in Equity (Treasury shares). ● Delivery of the treasury shares for options exercised In the year ended December 31, 2022, 2,072,355 share options held by the employees under the share-based payment program were exercised, out of which for 1,459,728 options exercised treasury shares were delivered to employees before December 31, 2022 (the difference is due to cashless exercises). The delivery of treasury shares was presented as a movement from treasury shares to common shares. The movement resulted in an increase in share capital in the amount of nominal value of the shares delivered, and difference between the value of treasury shares and the cash consideration received in the amount of USD 16,251 thousand was recognized in supplementary capital. At the same time, the movement decreased the number of shares (not issued) allocated for the existing share-based payment programs. ● Delivery of the treasury shares to the former owners of Double Star Oy In the year ended December 31, 2022, 23,046 shares were delivered to former owners of Double Star Oy based on the Share Sale and Purchase Agreement, corrected by the First Amendment dated October 19, 2021. For details of the earn-out consideration, please see Note 14 Share-based payment arrangements . The movement resulted in an increase in share capital in the amount of nominal value of the shares delivered, and a decrease in supplementary capital in the amount of USD 311 thousand (amount reﬂects the value of treasury shares, since the shares were delivered with no cash consideration). 14. Share-based payment arrangements As at December 31, 2023 and as at December 31, 2022 the Company had an equity incentive plan, i.e. ESOP. The ﬁrst stock option program (the employee stock option plan or “ESOP 2015”) was established by the Company’s Board of Directors on April 3, 2015, the second one on October 19, 2019 (“ESOP 2019”), the grant dates are determined at the dates when the contracts with eligible employees are signed. The program entitles employees and consultants to purchase shares in the Company. Each option stands for one common or treasury share of the Company. HUUUGE INC. Separate ﬁnancial statements as at and for the year ended December 31, 2023 (all amounts in tables presented in thousand USD, except where stated otherwise) This version is a pdf of executed xHTML Separate ﬁnancial statements as at and for the year ended December 31, 2023. In case of any discrepancies xHTML version shall prevail 34 The vesting condition of both ESOP 2015 and 2019 programs is to provide the service continuously for at least 4 years from the grant date and the following vesting schedule is applicable depending on the particular grant: ● about 25% of the shares options vest and become exercisable on a 12-month anniversary of the vesting commencement date and then after end of each consecutive month 1/36 of the remaining shares options vest and become exercisable; or ● the options vest and become exercisable with respect to 1/48th of the total option shares when the optionee completes each full month of continuous service after the grant date. For such share-based payments staged vesting applies i.e. each instalment with different vesting period is treated as a separate award with a different vesting period. In addition, based on the ESOP 2019 plan, there were several grants with additional vesting conditions: Executive Chairman of the Board options Mr. Anton Gauﬃn, holding the positions of the Executive Chairman of the Board was granted 500,000 share options in total during the year 2021, out of which 75,000 had a vesting condition to provide the service continuously for about four years from the service commencement date and to meet 2021 EBITDA target. These options were forfeited in 2022 as the performance condition was not met. All options can be exercised at a price of PLN 50, i.e., the price of the Company’s shares in the initial public offering. The vesting conditions for the options are the following: ● 50,000 options with a vesting condition to provide the service continuously for about four years from the service commencement date. The Company’s management expects Mr. Anton Gauﬃn to fulﬁl the service condition. ● 375,000 options with a variable vesting period due to the market condition, i.e., condition to meet the Company’s market capitalization milestones. The Company's management estimated that a total of six years of continuous service from the service commencement date will be required for options to vest. Similar to other share-based payments in the Company, for this program, staged vesting applies, i.e., each instalment has a different vesting period and is treated as a separate award with a different vesting period. Advisory agreement Based on the contract executed on September 27, 2021, beginning from January 3, 2022 until October 31, 2024, the advisor shall provide to the Company’s Executive Chairman of the Board consulting services for the consideration payable in options, i.e., options to purchase 206,250 shares in total vesting on a straight-line basis during the period of the agreement. This was concluded to be a transaction with a non-employee, and the Company measures the fair value of the services received, and the corresponding increase in equity, indirectly, by reference to the fair value of the equity instruments granted when the services are performed. Options granted to key management personnel Based on resolutions of the Board of Directors of Huuuge, Inc. 3,145,000 options were granted to key managers of Huuuge, Inc. Group (incl. 2,345,000 options granted to Huuuge, Inc. Oﬃcers) on October 3, 2023. Additionally, 125,000 options were granted on November 6, 2023. HUUUGE INC. Separate ﬁnancial statements as at and for the year ended December 31, 2023 (all amounts in tables presented in thousand USD, except where stated otherwise) This version is a pdf of executed xHTML Separate ﬁnancial statements as at and for the year ended December 31, 2023. In case of any discrepancies xHTML version shall prevail 35 The vesting conditions for the 3,270,000 options in total are the following: ● 1,090,000 options with a vesting condition to provide the service continuously for about four years from the service commencement date. ● 1,090,000 options with a vesting condition to provide the service continuously for about four years from the service commencement date and to meet speciﬁed EBITDA and Revenue targets, i.e. performance condition. ● 1,090,000 options with a vesting condition to provide the service continuously and with a variable vesting period due to market condition, i.e. condition to meet the Company’s market capitalization milestones. Similar to other share-based payments in the Company, for this program, staged vesting applies, i.e., each instalment has a different vesting period and is treated as a separate award with a different vesting period. As at December 31, 2023 there were 10,092,179 shares reserved for the ESOP that were not yet allocated to speciﬁc employees (11,007,733 as at December 31, 2022). This is at the Company discretion whether the unallocated shares will be allocated within the share-based program to the employees or unused or withdrawn from the program. In 2023 the Company’s Board of Directors granted 3,270,000 options (656,971 in 2022). Details of the grants are presented in the table below: Grant date Number of instruments granted Expiry date Granted in 2015 293,292 June 1, 2025 Granted in 2016 175,058 June 1, 2026 – December 1, 2026 Granted in 2017 386,310 February 1, 2027 – December 1, 2027 Granted in 2018 131,000 December 1, 2024 Granted in 2019 243,525 December 1, 2024 – November 6, 2025 Granted in 2020 738,024 April 1, 2027 – November 11, 2027 Granted in 2021 4,111,765 February 2,2028 – September 10, 2028 Granted in 2022 656,971 January 3, 2029 – August 5, 2029 October 3, 2023 3,145,000 October 3, 2030 November 6, 2023 125,000 November 6, 2030 Subtotal granted in 2023 3,270,000 Total 10,005,945 Number of options granted before January 20, 2021 is presented in the amount before the share split on a one for ﬁve basis. HUUUGE INC. Separate ﬁnancial statements as at and for the year ended December 31, 2023 (all amounts in tables presented in thousand USD, except where stated otherwise) This version is a pdf of executed xHTML Separate ﬁnancial statements as at and for the year ended December 31, 2023. In case of any discrepancies xHTML version shall prevail 36 Movements in share options during the period were as follows (weighted average exercise prices are presented in USD, not in thousand USD): Year ended December 31, 2023 Number of options Weighted average exercise price Balance as at January 1 4,778,100 4.46 Granted during the year 3,270,000 5.83 Forfeited during the year (761,374) 3.95 Exercised during the year (1,693,330) 3.13 Expired during the year (58,980) 3.79 Balance as at December 31 5,534,416 5.75 Year ended December 31, 2022 Number of options Weighted average exercise price * Balance as at January 1 8,839,097 5.80 Granted during the year 656,971 3.99 Forfeited during the year (2,345,282) 5.46 Exercised during the year (2,072,355) 2.70 Expired during the year (300,331) 5.56 Balance as at December 31 4,778,100 4.46 * The weighted average exercise price of the balance outstanding as at December 31, 2022 includes the effect of modiﬁcation which took place during the year ended December 31, 2022. The weighted average exercise price of the balance outstanding as at January 1, 2022 is presented in the amount prior to the modiﬁcation. As at December 31, 2023, 757,846 share options were exercisable, with the weighted average exercise price of USD 3.86 per share. As at December 31, 2022, 1,585,019 share options were exercisable, with the weighted average exercise price of USD 3.1 per share. The below table presents a summary of share prices at the exercise dates: Exercise date Grant date Exercise price Fair Market Value on exercise date Number of stock options exercised Exercised in 2020 May 29, 2015 – November 6, 2019 $0.0002 – $13.500 $15.0300 – $18.6200 176,009 Exercised in 2021 (before share split) May 29, 2015 – December 1, 2016 $0.0002 – $0.79 $54.53 6,411 Exercised in 2021 (after share split) May 29, 2015 – November 20, 2020 $0.00004 – $3.72402 $6.2348 – $12.0319 1,851,622 Exercised in 2022 May 29, 2015 – January 3, 2022 $0.11 – $4.13 $3.5835 – $5.6779 2,072,355 Exercised in 2023 May 29, 2015 – August 1, 2022 $0.00004 – $6.18 $5.31 – $7.02 1,693,330 HUUUGE INC. Separate ﬁnancial statements as at and for the year ended December 31, 2023 (all amounts in tables presented in thousand USD, except where stated otherwise) This version is a pdf of executed xHTML Separate ﬁnancial statements as at and for the year ended December 31, 2023. In case of any discrepancies xHTML version shall prevail 37 For share options outstanding at the end of the reporting periods, the range of exercise prices and weighted-average remaining contractual life was as follows: As at December 31, 2023: Exercise price in USD Number of outstanding stock options Weighted average remaining contractual life (in years) 0.00004 - 0.83 127,754 3.88 2.7 - 3.92 1,448,483 4.65 4.13 - 13.51 3,958,179 6.40 Total: 5,534,416 5.89 As at December 31, 2022: Exercise price in USD Number of outstanding stock options Weighted average remaining contractual life (in years) 0.00004 - 0.83 268,694 4.21 2.7 - 3.92 3,448,626 5.58 4.13 - 13.51 1,060,780 6.15 Total: 4,778,100 5.63 The fair value of the employee share options without market conditions has been measured using the Black-Scholes formula by an independent appraiser, assuming no dividends and using the valuation assumptions summarized below. The underlying price of the common stock was determined using the fair value as of the option grant dates. The exercise prices of the options were determined by the Board of Directors of the Company in the contract with the employee. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of each grant date and corresponding to expiration. In assessing the appropriate time to expiration, the appraiser examined the expiration period, the vesting period and the option grant dates. The fair value of the employee share options with market conditions has been measured using the Binomial model by an independent appraiser. This requires building a stock price tree as paths for the future stock prices to follow. The valuation is done in the process of backward induction that allows to price US-type options and ﬂexible adaptation of the model to the speciﬁcs of the valued instrument. The model allows to take into account the term structure of interest rates and volatility, enabling a variable dividend rate to be applied, modelling the vesting period and reﬂecting the conditions restricting the right to exercise an option. Based on the analysis and the factors speciﬁc to the Company, an equity volatility of 53.3%-80.0% (54.2%-80.0% for the year ended December 31, 2022) was used in the option pricing model. Expected volatility was based on historical volatility of a similar industry sector for the year ended December 31, 2022. HUUUGE INC. Separate ﬁnancial statements as at and for the year ended December 31, 2023 (all amounts in tables presented in thousand USD, except where stated otherwise) This version is a pdf of executed xHTML Separate ﬁnancial statements as at and for the year ended December 31, 2023. In case of any discrepancies xHTML version shall prevail 38 The inputs used in the measurement of the fair values at the grant dates of the equity-settled share-based payment plan for the options outstanding as of December 31, 2023 and as of December 31, 2022, were as follows: As at December 31, 2023 As at December 31, 2022 Fair value at grant date 1.59 – 8.66 0.00002 – 8.66 Share price at grant date 2.50 – 10.91 2.5 – 10.91 Exercise price 0.83 – 13.5146 0.00004 – 13.5146 Expected volatility (weighted average) 53.29% – 80% 54.2% – 80% Expected life (weighted average) 0.92 – 9.86 2.42-6.60 Risk-free interest rate 0.21% – 5.04% 0.21% – 3.27% The effect of the fair value measurement is reﬂected in the proﬁt and loss against equity (USD 350 thousand was expensed in 2023 and USD 774 thousand in 2022). These costs were included in the “General and other administrative expenses” and “Research and development expenses” lines in the statement of comprehensive income, booked against equity, “Employee beneﬁt reserve”. The effect of the fair value measurement of options granted to employees of the Company’s subsidiaries is recognised in the Company’s assets as investment in subsidiaries in the amount of USD 685 thousand in 2023 (USD 2,307 thousand in 2022), booked against equity, “Employee beneﬁt reserve”. Please refer to Note 8 Investment in subsidiaries. During the year ended December 31, 2023, 1,693,330 options were exercised under the share-based payment program, and 915,554 treasury shares were delivered for all options exercised (the difference of 777,776 options is due to cashless exercises). Total cash payments received during the year ending December 31, 2023 amounted to USD 470 thousand. During the year ended December 31, 2022, 2,072,355 options were exercised in total under the share-based payment program, and 1,459,728 treasury shares were delivered for all options exercised (the difference of 612,627 options is due to cashless exercises). Cash payments received for the shares delivered to employees before December 31, 2022 amounted to USD 2,540 thousand. Other than the share-based payment arrangements described above, as a result of the acquisition that took place on July 16, 2020, the Company accounted for the earn-out consideration payable in shares dependent on a performance condition and a continuing employment condition as a share-based payment for the sellers of Double Star Oy. On February 21, 2022, 23,046 treasury shares were delivered to the former owners of Double Star Oy as presented in Note 13 Share capital . No additional shares, except for those delivered, would vest under earn-out consideration. HUUUGE INC. Separate ﬁnancial statements as at and for the year ended December 31, 2023 (all amounts in tables presented in thousand USD, except where stated otherwise) This version is a pdf of executed xHTML Separate ﬁnancial statements as at and for the year ended December 31, 2023. In case of any discrepancies xHTML version shall prevail 39 15. Trade and other payables As at December 31, 2023 As at December 31, 2022 Accrued expenses 2,142 3,918 Trade accounts payable including: 90 107 - trade accounts payable to third parties 90 98 - trade accounts payable to related parties - 9 Tax payables other than from corporate income taxes 62 57 Other accounts payable - 10 Trade and other payables 2,294 4,092 As at December 31, 2023 accrued expenses mainly included digital advertising related expenses, ﬁnance and legal services expenses, expenses related to bonuses and remuneration and accrual audit services. As at December 31, 2022 accrued expenses mainly included ﬁnance and legal services expenses (including the costs related to the review of the Company’s strategic options), expenses related to bonuses and accrual for remuneration. 16. Contingencies Tax contingent liabilities Tax settlements are subject to review and investigation by tax authorities, which are entitled to impose severe ﬁnes, penalties and interest charges. Tax regulations in the United States have been changing recently, which may lead to lack of their clarity and integrity. Furthermore, frequent contradictions in tax interpretations, both within government bodies and between companies and government bodies create uncertainties and conﬂicts. Tax authorities may examine accounting records retrospectively: for 3 years in the United States (and up to 6 years in case of substantial errors). Consequently, the Company may be subject to additional tax liabilities, which may arise as a result of tax audits. The Board of Directors of the Company believes that there was no need to record any provisions for known and quantiﬁable risks in this regard as in their assessment there are no such uncertain tax positions for which it would be probable that the taxation authority will not accept the tax treatment applied by the Company. Litigation and other legal proceedings Company operates in a litigious environment. The Company and/or its subsidiaries have and may become involved in legal proceedings, including litigation, arbitration and other claims, and investigations, inspections, audits, claims, inquiries and similar actions. Legal proceedings, in general, can be expensive and disruptive. Some of these suits are class actions and/or involve parties seeking large and/or indeterminate amounts, including punitive or exemplary damages, and may remain unresolved for several years. Player use of our games is subject to our privacy policy and terms of service. If we fail to comply with our posted privacy policy, terms of service or similar agreements, or if we fail to comply with applicable privacy-related or data protection laws and regulations, this could result in litigation, proceedings or investigations against us by governmental authorities, players or others, which could result in ﬁnes or judgments against us, damage our reputation or goodwill, impact our ﬁnancial condition and harm our business. HUUUGE INC. Separate ﬁnancial statements as at and for the year ended December 31, 2023 (all amounts in tables presented in thousand USD, except where stated otherwise) This version is a pdf of executed xHTML Separate ﬁnancial statements as at and for the year ended December 31, 2023. In case of any discrepancies xHTML version shall prevail 40 The Company cannot predict with certainty the outcomes of any legal proceedings and other contingencies, and the costs incurred in litigation can be substantial, regardless of the outcome. As a result, the Company and/or its subsidiaries could from time to time incur judgments, enter into settlements or revise our expectations regarding the outcome of certain matters, and such developments could harm our reputation and have a material adverse effect on our results of operations in the period in which the amounts are accrued and/or our cash ﬂows in the period in which the amounts are paid. In addition, as a result of the ongoing legal proceedings, the Company and/or its subsidiaries may be subject to damages, civil ﬁnes, or other sanctions. Additionally, defending against these lawsuits and proceedings may involve signiﬁcant expense and diversion of management’s attention and resources. As at the date of approval of these ﬁnancial statements for issue, Company has become involved in a number of pending litigations: ● On March 8, 2023, a plaintiff ﬁled a complaint in the Circuit Court of Franklin County Alabama alleging that the Company’s social casino games are unlawful gambling under Alabama law. The plaintiff withdrew the original complaint without prejudice for procedural reasons, and, on September 14, 2023, re-ﬁled an amended complaint. As in the original complaint, the lawsuit seeks to recover all amounts paid by Alabama residents to the Company in those games during the period beginning one year before the ﬁling of the lawsuit (ie. September 14, 2022) until the case is resolved. The Company does not agree with the allegations and requests for relief made in the complaint and believes that there are meritorious legal and factual arguments supporting the Company’s position. On November 1, 2023, the Company ﬁled a motion to dismiss the amended complaint and on December 15, 2023, the Company ﬁled a motion to compel arbitration. Oral arguments for the motions took place on February 26, 2024, and the court has not yet issued a ruling on the motions. As of the date of approval of these annual ﬁnancial statements for issue, to the best of the Company's knowledge, the litigation is not expected to have a material impact on the Company's operations, ﬁnancial condition or cash ﬂows. ● On May 18, 2023, the Company received a demand for arbitration, alleging that the Company’s social casino games are unlawful gambling under Kentucky law. The claimant seeks no monetary damages, only declaratory relief. However, if the arbitrator grants the requested declaratory judgments, the claimant may ﬁle a civil class action and seek to recover treble the total of all amounts paid by Kentucky residents to the Company in those games during the period beginning ﬁve years before the ﬁling of the demand (ie. May 18, 2018) until the case is resolved. An arbitrator has been appointed, and the ﬁrst preliminary management hearing with the arbitrator was held on January 18, 2024. The Company does not agree with the allegations and requests for relief made in the demand and believes that there are meritorious legal and factual arguments supporting the Company’s position. As of the date of approval of these annual ﬁnancial statements for issue, to the best of the Company's knowledge, the arbitration is not expected to have a material impact on the Company's operations, ﬁnancial condition or cash ﬂows. ● On June 2, 2023, plaintiffs ﬁled a complaint in the US Federal District Court for the Central District of California, alleging: (a) that the Company’s social casino games are unlawful gambling under the laws of California, Illinois, and potentially other US states; and (b) that the Company’s display of sale pricing in its social casino games constitutes false advertising under the laws of California, Illinois and potentially other US states. The lawsuit purports to be a nationwide class action, which also includes potential California and Illinois subclasses. The Company does not agree with the allegations and requests for relief made in the complaint and believes that there are meritorious legal and factual arguments supporting the Company’s position. As of the date of approval of these annual ﬁnancial statements for issue, the Company and the plaintiffs have signed an agreement to settle the case in exchange for the distribution to each class member of at least 375 virtual diamonds within the Company’s games, and at least an aggregate total of 412.5 million virtual diamond, and USD 1,700 thousand in cash for attorneys’ fees, costs of claims administration, and named plaintiff incentive awards. The settlement is subject to the approval by the relevant court, thus there is no certainty that any such settlement will be ﬁnally consummated. If the settlement is approved, the resulting class action waiver will bar false advertising claims nationwide, and illegal gambling claims for residents of California and Illinois, from applicable time periods prior to the settlement. The settlement would not as a legal matter preclude the other matters referred to in this section from proceeding. The Company also believes, but cannot make any assurance, that the settlement would not have impact on the other matters referred to in this section, since they pertain to other issues in different states. The Company created a provision in the amount of USD 1,700 thousand, which, to the best belief of the Company’s management, adequately reﬂects the ﬁnancial exposure for the Company as of December 31, 2023 and as of the date of approval of these annual ﬁnancial statements for issue. HUUUGE INC. Separate ﬁnancial statements as at and for the year ended December 31, 2023 (all amounts in tables presented in thousand USD, except where stated otherwise) This version is a pdf of executed xHTML Separate ﬁnancial statements as at and for the year ended December 31, 2023. In case of any discrepancies xHTML version shall prevail 41 ● On June 28, 2023, a claimant ﬁled a demand for arbitration alleging that the Company’s social casino games are unlawful gambling under Kentucky law. The claimant seeks to recover all amounts paid by Kentucky residents to the Company in those games during the period beginning ﬁve years before the ﬁling of the demand (ie. June 28, 2018) until the case is resolved. An arbitrator has not yet been appointed. The Company does not agree with the allegations and requests for relief made in the demand and believes that there are meritorious legal and factual arguments supporting the Company’s position. As of the date of approval of these annual ﬁnancial statements for issue, to the best of the Company's knowledge, the arbitration is not expected to have a material impact on the Company's operations, ﬁnancial condition or cash ﬂows. ● On July 25, 2023, a claimant ﬁled a demand for arbitration alleging that the Company’s social casino games are unlawful gambling under Ohio law. The claimant seeks to recover all amounts they paid to the Company in those games during the period beginning two years before the ﬁling of the demand (ie. July 25, 2021) until the case is resolved. The arbitration is in preliminary stages. The Company does not agree with the allegations and requests for relief made in the demand and believes that there are meritorious legal and factual arguments supporting the Company’s position. As of the date of approval of these annual ﬁnancial statements for issue, to the best of the Company's knowledge, the arbitration is not expected to have a material impact on the Company's operations, ﬁnancial condition or cash ﬂows. ● On July 25, 2023, a claimant ﬁled a demand for arbitration alleging that the Company’s social casino games are unlawful gambling under Massachusetts law. The claimant seeks to recover all amounts they paid to the Company in those games during the period beginning three years before the ﬁling of the demands (ie. July 25, 2020) until the case is resolved. The arbitration is in preliminary stages. The Company does not agree with the allegations and requests for relief made in the demand and believes that there are meritorious legal and factual arguments supporting the Company’s position. As of the date of approval of these annual ﬁnancial statements for issue, to the best of the Company's knowledge, the arbitration is not expected to have a material impact on the Company's operations, ﬁnancial condition or cash ﬂows. ● On November 13, 2023, a plaintiff ﬁled a complaint in the Circuit Court of Coffee County Tennessee alleging that the Company’s social casino games are unlawful gambling under Tennessee law. The lawsuit seeks to recover all amounts paid by Tennessee residents to the Company in those games during the period beginning one year before the ﬁling of the lawsuit (ie. November 13, 2022) until the case is resolved. The Company does not agree with the allegations and requests for relief made in the complaint and believes that there are meritorious legal and factual arguments supporting the Company’s position. On December 21, 2023 the Company removed the case to the US District Court for the Eastern District of Tennessee. On January 22, 2024 plaintiff ﬁled an amended complaint substituting Huuuge Global Limited as defendant in place of the Company, and a motion to remand the case back to the state circuit court. As of the date of approval of these annual ﬁnancial statements for issue, to the best of the Company's knowledge, the litigation is not expected to have a material impact on the Company's operations, ﬁnancial condition or cash ﬂows. Except for the abovementioned proceedings, neither the Company nor any of its subsidiaries were, as at December 31, 2023, or as at the date of approval of these annual ﬁnancial statements, a party to any signiﬁcant court or arbitration proceedings or before any public authority. 17. Pledges and collaterals During the reporting periods and till the date of issuing these ﬁnancial statements the Company did not enter in a pledge or collateral agreement on its assets. HUUUGE INC. Separate ﬁnancial statements as at and for the year ended December 31, 2023 (all amounts in tables presented in thousand USD, except where stated otherwise) This version is a pdf of executed xHTML Separate ﬁnancial statements as at and for the year ended December 31, 2023. In case of any discrepancies xHTML version shall prevail 42 18. Related party transactions The table below presents aggregated balances of transactions with related parties during the reporting and comparative periods. related parties Sales to a related party Dividend income Purchase from a related party Huuuge Global Ltd 2023 6,755 158,972 - 2022 13,850 - - Huuuge Games Sp. z o.o. 2023 5 757 2 2022 3 - 92 Huuuge UK 2023 - - 476 2022 - - 661 Other entities 2023 - - - 2022 - - 8 2023 6,760 159,729 478 2022 13,853 0 761 The table below presents aggregated balances of transactions with related parties during the reporting and comparative periods. Trade receivables from a related party, including dividend receivables As at December 31, 2023 As at December 31, 2022 Huuuge Global Ltd 11,595 648 Huuuge UK 139 449 Other entities - 3 Total 11,734 1,100 There were no Trade liabilities to related parties as at December 31, 2023. Trade liabilities to related parties amounted to USD 9 thousand as at December 31, 2022. The Company is the ultimate parent to its Group. Transactions between related parties took place on terms equivalent to those that apply to transactions concluded on market terms. The Company purchases certain advertisement services from third parties (mostly Facebook), which are subsequently recharged to Huuuge Global Limited. For more information, please refer to Note 2.2 Key judgements and estimates – Model of revenue recognition . The Company recognizes revenue when services are transferred to the customer, at a value that reﬂects the price expected by the entity, in exchange for the transfer of those goods and services. HUUUGE INC. Separate ﬁnancial statements as at and for the year ended December 31, 2023 (all amounts in tables presented in thousand USD, except where stated otherwise) This version is a pdf of executed xHTML Separate ﬁnancial statements as at and for the year ended December 31, 2023. In case of any discrepancies xHTML version shall prevail 43 Therefore, total gross revenue in the years ended December 31, 2023 and December 31, 2022 amounted to USD 6,755 thousand and USD 13,850 thousand respectively. Cost of re-invoiced sales and marketing services in the year ended December 31, 2023 amounted to USD 5,178 thousand (USD 10,839 thousand and USD 89 thousand re-invoiced back-oﬃce services the year ended December 31, 2022), fully netted in the statement of comprehensive income. For more details regarding revenue generated by game design and stewardship in the total amount of USD 1,577 thousand in the year ended December 31, 2023 (USD 2,922 thousand in the year ended December 31, 2022) please refer to Note 3 Revenue. In addition, related parties’ transactions include transactions with the management of the Company. For more details, please refer to Note 19 Transactions with management of the Company . 19. Transactions with management of the Company Transactions with management of the Company for the years ended December 31, 2023 and December 31, 2022 was as follows: Year ended December 31, 2023 Year ended December 31, 2022 Base salaries 1,905 1,156 Bonuses and compensation based on the Group’s ﬁnancial result for the year 562 271 Share-based payments 398 417 Total 2,865 1,844 On March 7, 2023 the agreement was concluded between the Company and Mr. Rod Cousens, governing his board service and executive service as co-Chief Executive Oﬃcer of the Company during the current board term, providing for a 12-month early notice period for termination. This agreement terminated Mr. Rod Cousens’s executive service by mutual agreement, the Company conﬁrmed Mr. Cousens’s entitlement to payment in lieu of advance notice. 20. Audit fees Year ended December 31, 2023 Year ended December 31, 2022 Audit of ﬁnancial statements 170 174 Review of interim ﬁnancial statements 57 64 Total 227 238 Audit of ﬁnancial statements relates to the audit of separate ﬁnancial statements of Huuuge Inc., and the audit of the Group’s consolidated ﬁnancial statements prepared in accordance with IFRS, as well as the audit of separate ﬁnancial statements of the Group’s subsidiaries prepared in accordance with local generally accepted accounting principles, to the extent performed by the Group Auditor. Audit services performed for Huuuge Global Ltd. include standard tax compliance services. HUUUGE INC. Separate ﬁnancial statements as at and for the year ended December 31, 2023 (all amounts in tables presented in thousand USD, except where stated otherwise) This version is a pdf of executed xHTML Separate ﬁnancial statements as at and for the year ended December 31, 2023. In case of any discrepancies xHTML version shall prevail 44 21. Employment structure Average Company’s number of employees for the years ended December 31, 2023 and December 31, 2022 was as follows: Year ended December 31, 2023 Year ended December 31, 2022 Executive and business management 1 1 Sales and marketing - 1 Administration - - Games development 2 9 Total 3 11 22. Subsequent events After December 31, 2023 and up to the date of approval of these separate ﬁnancial statements for issue no signiﬁcant events except the following have occurred. Dividend paid by Huuuge Global Limited As presented in the Note 3 Revenue and dividend income , the outstanding balance of the dividend from Huuuge Global Ltd. in the amount of USD 10,000 thousand was received on March 1, 2024. Options granted to key management personnel Based on the resolutions of the Board of Directors of Huuuge, Inc. 585,000 options were granted to key management personnel of Huuuge, Inc. Group on February 6, 2024. For details regarding share-based payment arrangements, please refer to Note 14 Share-based payment arrangements to these ﬁnancial statements. . Electronically signed Wojciech Wronowski Oﬃcer of Huuuge Inc., CEO March 14, 2024 HUUUGE INC. Separate ﬁnancial statements as at and for the year ended December 31, 2023 (all amounts in tables presented in thousand USD, except where stated otherwise) This version is a pdf of executed xHTML Separate ﬁnancial statements as at and for the year ended December 31, 2023. In case of any discrepancies xHTML version shall prevail 45 HUUUGE, INC. 2300 W Sahara Ave., Suite #680, Mailbox #32, Las Vegas, NV 89102 United States of America Contact for Investors [email protected] https://ir.huuugegames.com http://huuugegames.com

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