TREASURE GLOBAL INC

Previous wording

The following discussion and analysis of our results of operations and financial condition should be read together with our unaudited condensed consolidated financial statements and the notes thereto, which are included elsewhere in this Report and our Annual Report on Form 10-K for the year ended June 30, 2023 (the “Annual Report”) filed with the SEC. Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

Current wording

The following discussion and analysis of our results of operations and financial condition should be read together with our unaudited condensed consolidated financial statements and the notes thereto, which are included elsewhere in this Report and our Annual Report on Form 10-K for the three months ended September 30, 2023 (the “Annual Report”) filed with the SEC. Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

Previous wording

Treasure Global Inc (“TGL,” “we,” “our” or the “Company”) is a holding company incorporated on March 20, 2020, under the laws of the State of Delaware. TGL has no substantive operations other than holding all of the outstanding shares of ZCity Sdn Bhd (“ZCITY”), (formerly known as Gem Reward Sdn. Bhd, underwent a name change on July 20, 2023). It was originally established under the laws of the Malaysia on June 6, 2017, through a reverse recapitalization.

Current wording

Treasure Global Inc (“TGL,” “we,” “our” or the “Company”) is a holding company incorporated on March 20, 2020, under the laws of the State of Delaware. TGL has no substantive operations other than holding all of the outstanding shares of ZCity Sdn Bhd (“ZCITY”), (formerly known as Gem Reward Sdn. Bhd, underwent a name change on July 20, 2023). It was originally established under the laws of the Malaysia on June 6, 2017, through a reverse recapitalization. On August 15, 2022, we had closed our initial underwritten public offering of 32,858 (post 1:70 split) shares of common stock, par value $0.00001 per share, at $280 (as adjusted post 1:70 split) per share. Meanwhile we received net proceeds of approximately $8.2 million, net of underwriting discounts and commissions and fees, and other offering expenses which amounted to approximately $1.0 million.

Previous wording

On November 30, 2023, we closed our underwritten public offering (the “November 2023 Offering”) of (i) 26,014,000 shares of common stock, at a public offering price of $0.10 per share of Common Stock and (ii) 14,000,000 pre-funded warrants (the “Pre-Funded Warrants”), each with the right to purchase one share of Common Stock, at a public offering price of $0.0999 per Pre-Funded Warrant. Upon closing of the November 2023 Offering, we received aggregate net proceed of approximately $3.5 million, after deducting underwriting discounts and commission, andnon-accountable expense.

Current wording

On November 30, 2023, we closed our underwritten public offering (the “November 2023 Offering”) of (i) 371,629 (post 1:70 split) shares of common stock, at a public offering price of $7.00 (as adjusted post 1:70 split) per share of common stock and (ii) pre-funded warrants (the “Pre-Funded Warrants”) to purchase a total of 200,000 shares of common stock, each with the right to purchase one share of common stock at an exercise price of $0.007 per share, sold at a public offering price of $6.993 per Pre-Funded Warrant. Upon closing of the November 2023 Offering, we received aggregate net proceed of approximately $3.5 million, after deducting underwriting discounts and commission andnon-accountable expenses.

Previous wording

On December 19, 2023, VT Smart Venture Sdn Bhd (the “Developer”), a company that is in the business of, among other things, technology services, entered into a Software Development Agreement (the “Software Agreement”), in which the Developer agreed to provide application, services and turnkey solutions on software development in various aspects, including customization, software design layout, creative media platform development, artificial embedded and artificial intelligence related media platform and design in exchange for USD$1,000,000 worth of common stock of the Company, or 10,000,000 shares valued at USD $0.10 per share (the “TGL Shares”).

Current wording

On December 19, 2023, VT Smart Venture Sdn Bhd (the “Developer”), a company that is in the business of, among other things, technology services, entered into a Software Development Agreement (the “Agreement”) with us, in which the Developer shall provide application, services and turnkey solutions on software development in various aspects, including customization, software design layout, creative media platform development, artificial embedded and artificial intelligence related media platform and design in exchange for USD$1,000,000 worth of common stock, par value $0.00001 per share, or 142,858 (post 1:70 split)shares valued at$7.00 (post 1:70 split)per share. The Agreement is for a period of one month.

Previous wording

Our proprietary product is an application branded “ZCITY App,” which was developed through ZCITY. The ZCITY App was successfully launched in Malaysia on June 2020. ZCITY is equipped with the know-how and expertise to develop additional/add-on technology-based products and services to complement the ZCITY App, thereby growing its reach and user base.

Current wording

Our proprietary product is an application branded “ZCITY App,” which was developed through ZCITY. The ZCITY App was successfully launched in Malaysia in June 2020. ZCITY is equipped with the know-how and expertise to develop additional/add-on technology-based products and services to complement the ZCITY App, thereby growing its reach and user base.

Previous wording

Through simplifying a user’s e-payment gateway experience, as well as by providing great deals, rewards and promotions with every use, we aim to make the ZCITY App Malaysia’s top reward and loyalty platform. Our longer-term goal is for the ZCITY App and its ever-developing technology to become one of the most well-known commercialized applications more broadly in Southeast Asia and Japan. As of February 5, 2024, we had 2,663,165 registered users and 2,027 registered merchants.

Current wording

Through simplifying a user’s e-payment gateway experience, as well as by providing great deals, rewards and promotions with every use, we aim to make the ZCITY App Malaysia’s top reward and loyalty platform. Our longer-term goal is for the ZCITY App and its ever-developing technology to become one of the most well-known commercialized applications more broadly in Southeast Asia and Japan. As of May 5, 2024, we had 2,699,216 registered users and 2,027 registered merchants.

Previous wording

We have experienced a decrease in growth rate in registered users, and a decline of active users over the last five quarters as of December 31, 2023. As of December 31, 2023, we recorded 2,683,850 registered users and 156,979 active users on the ZCITY platform. On average, our registered user base has grown by approximately 4.0% over the past five quarters, while our active user numbers have experienced an average decline of 18.1%.

Current wording

We have experienced a decrease in growth rate in registered users, and a decline of active users over the last five quarters as of March 31, 2024. As of March 31, 2024, we recorded 2,696,255 registered users and 41,458 active users on the ZCITY platform. On average, our registered user base has grown by approximately 2.8% over the past five quarters, while our active user numbers have experienced an average decline of 31.6%.

Previous wording

Total revenues decreased by approximately $13.8 million or 67.2% to approximately $6.7 million for the three months ended December 31, 2023 from approximately $20.4 million for the three months ended December 31, 2022. The decrease was mainly attributable to the decrease in product and loyalty program revenue.

Current wording

Total revenues decreased by approximately $16.6 million or 91.2% to approximately $1.6 million for the three months ended March 31, 2024 from approximately $18.2 million for the three months ended March 31, 2023. The decrease was mainly attributable to the decrease in product and loyalty program revenue.

Previous wording

Product revenue was generated through sales of our e-voucher, health care products and other products through our ZCITY platform while loyalty program revenue was recognized when our customers redeem their previously earned reward points from our loyalty program or upon expiration of the reward point. In addition, we also engage in sales of food and beverage products through our newly acquired subsidiaries, Morgan Global Sdn. Bhd (“Morgan”) and AY Food Ventures Sdn. Bhd. (“AY Food”). The product and loyalty program revenue decrease by approximately $13.8 million or 68.0% to approximately $6.5 million for the three months ended December 31, 2023 from approximately $20.3 million for the same period in 2022. The decrease was mainly attributable to our strategic goal to reduce spending related rewards granted to the customers and marketing campaign expenses. Such reduction in incentives grant to customers and the decrease in marketing campaign expenditures had the effect of diminishing the platform's attractiveness to existing and potential customers, ultimately leading to the decrease of revenue in current period.

Current wording

Product revenue was generated through sales of our e-voucher, health care products and other products through our ZCITY platform while loyalty program revenue was recognized when our customers redeem their previously earned reward points from our loyalty program or upon expiration of the reward point. In addition, we also engage in sales of food and beverage products through our newly acquired subsidiaries, Morgan Global Sdn. Bhd (“Morgan”) and AY Food Ventures Sdn. Bhd. (“AY Food”). The product and loyalty program revenue decrease by approximately $16.6 million or 92.0% to approximately $1.5 million for the three months ended March 31, 2024 from approximately $18.1 million for the same period in 2023. The decrease in revenue was primarily attributable to our strategic decision to reduce spending on customer rewards and marketing campaigns in order to enhance cost-effectiveness and profitability in our operations. This reduction in customer incentives and marketing expenditures resulted in a decrease in the platform’s appeal to both existing and potential customers, ultimately leading to a decline in revenue for the current period.

Previous wording

The transaction revenue primarily consists of fees charged to merchants for participating in our ZCITY platform upon successful sales transaction and payment service taken place between the merchants and their customers online. Our transaction revenue decreased by 7.4%. Our average percentage of growth of new merchants was approximately 0.3% throughout the five quarters as of December 31, 2023 since the establishment of ZCITY platform. For the three months ending on December 31, 2023, we have one additional new merchant to join our ZCITY platform.

Current wording

The transaction revenue primarily consists of fees charged to merchants for participating in our ZCITY platform upon successful sales transaction and payment service taken place between the merchants and their customers online. Our transaction revenue decreased by 34.1%. Our average percentage of growth of new merchants was approximately 0.3% throughout the last five quarters as of March 31, 2024. However, for the three months ended on March 31, 2024, we did not have any new merchants join our ZCITY platform.

Previous wording

Member subscription revenue primarily consists of fees charged to customers who signed up for Zmember, a membership program that includes exclusive saving, bonus and referral rewards. Member subscription revenue increased by 11.0% to approximately $150,000 for three months end December 31, 2023 as compared to approximately $134,000 for the same period in 2022 as more customers have joined our Zmember program. As of December 31, 2023 and 2022, we had 28,927 and 15,169 customers who subscribed to our Zmember program, respectively.

Current wording

Member subscription revenue primarily consists of fees charged to customers who signed up for Zmember, a membership program that includes exclusive saving, bonus and referral rewards. Member subscription revenue increased by 201.3% to approximately $84,000 for three months end March 31, 2024 as compared to approximately $28,000 for the same period in 2023 as more customers have joined our Zmember program. As of March 31, 2024 and 2023, we had 28,927 and 18,984 customers who subscribed to our Zmember program, respectively.

Previous wording

As we acquired exclusive worldwide license for right of use in Morganfield’s Trademark, and Abe Yus’s Trademark on May 1, 2023, and June 6, 2023, respectively, for a period of five years, we have generated sublicense revenue consist of fee charged to the customers who sublicensed the right of use of the Trademark from us. For the three months ended December 31, 2023, sublicense revenue was amounted to approximately $61,000 while as of December 31, 2023 we engaged 10 customers as sublicensees who operated their restaurant under Morganfield’s and Abe Yu’s Trademark in Singapore, Malaysia and China.

Current wording

As we acquired exclusive worldwide license for right of use in Morganfield’s Trademark, and Abe Yus’s Trademark on May 1, 2023, and June 6, 2023, respectively, for a period of five years, we have generated sublicense revenue consist of fee charged to the customers who sublicensed the right of use of the Trademark from us. For the three months ended March 31, 2024, sublicense revenue was amounted to approximately $43,000. As of March 31, 2024 we engaged 10 customers as sublicensees who operated their restaurant under Morganfield’s and Abe Yu’s Trademark in Singapore, Malaysia and China. We expect our sublicense revenue remain as insignificant to our operation for 2024 and beyond.

Previous wording

Cost of revenue mainly consists of the purchases of the gift card or “E-voucher” pin code, health care product and food and beverage products which is directly attributable to our product revenue. Cost of revenue also consists of monthly license payment made to our licensor to maintain our good standing for the right of use the Trademark which is attributable to our sublicense revenue. Total cost of revenue decreased by approximately $13.8 million or 68.5% for the three months ended December 31, 2023 compared with the same period in 2022. The decrease was in line with our decrease in revenue.

Current wording

Cost of revenue mainly consists of the purchases of the gift card or “E-voucher” pin code, health care product and food and beverage products which is directly attributable to our product revenue. Cost of revenue also consists of monthly license payment made to our licensor to maintain our good standing for the right of use the Trademark which is attributable to our sublicense revenue. Total cost of revenue decreased by approximately $16.6 million or 92.3% for the three months ended March 31, 2024 compared with the same period in 2023. The decrease was in line with our decrease in revenue.

Previous wording

Selling expenses amounted to approximately $0.5 million and $1.3 million for the three months ended December 31, 2023 and 2022, respectively, representing a decrease of approximately $0.8 million or 59.7%. The decrease was mainly attributable to a decrease in marketing and promotion expense of approximately $0.5 million related to promoting our ZCITY platform. Marketing and promotion expense consists of redemptions of reward points which is generated from non-spending related activities (registration as a new user, referral of a new user and Spin & Win eligibility to receive reward points) in exchange for discounted credit of purchasing our products upon conversion of using the reward points. For the three months ended December 31, 2023 and 2022, we incurred approximately $0.1 million and $0.6 million, respectively, in marketing and promotion expense, and recognized the same amount of product revenue at the time of redemption of the non-spending related activities reward points by our customers. The decrease in marketing and promotion expenses was primarily driven by our strategic goal to optimize the promotional activities, and enhance our cost effectiveness in our operations.

Current wording

Selling expenses amounted to approximately $0.3 million and $1.2 million for the three months ended March 31, 2024 and 2023, respectively, representing a decrease of approximately $0.9 million or 75.1%. The decrease was mainly attributable to a decrease in marketing and promotion expense of approximately $0.6 million related to promoting our ZCITY platform. Marketing and promotion expense consists of redemptions of reward points which is generated from non-spending related activities (registration as a new user, referral of a new user and Spin & Win eligibility to receive reward points) in exchange for discounted credit of purchasing our products upon conversion of using the reward points. For the three months ended March 31, 2024 and 2023, we incurred approximately $49,000 and $0.5 million, respectively, in marketing and promotion expense, and recognized the same amount of product revenue at the time of redemption of the non-spending related activities reward points by our customers. The decrease in marketing and promotion expenses was primarily driven by our strategic goal to optimize the promotional activities, enhance our cost effectiveness, and increase profitability in our operations.

Previous wording

General and administrative expenses amounted to approximately $0.8 million and $0.9 million for the three months ended December 31, 2023 and 2022, respectively, representing an decrease of approximately $0.1 million or 8.1%. The decrease was primarily attributed to a reduction in salary expenses of approximately $0.3 million, as we reallocated some of our labor resources to software development services related to VCI's project, offset by director and officer liability insurance expense of approximately $0.1 million and depreciation expense of approximately $0.1 million as a result of expansion of management and administration team to support our business operation.

Current wording

General and administrative expenses amounted to approximately $1.1 million and $1.4 million for the three months ended March 31, 2024 and 2023, respectively, representing an decrease of approximately $0.3 million or 18.9%. The decrease was primarily attributed to decrease in salary expenses and professional fee expense of approximately $0.4 million and $0.1 million, respectively, to promote our operation effectiveness, offset by increase in depreciation expense of approximately $0.2 million.

Previous wording

Research and development expense amounted to approximately $227,000 and $297,000 for the six months ended December 31, 2023 and 2022, respectively, representing 23.7% decrease which is attribute to we incurred less expense in mobile application or website development.

Current wording

Research and development expense amounted to approximately $182,000 and $110,000 for the three months ended March 31, 2024 and 2023, respectively, representing 71.3% increase which is attribute to we incurred more spending in mobile application or website development.

Previous wording

Provision for income taxes amounted to approximately $6,000 and $11,500 for the three months ended December 31, 2023 and 2022, respectively. The amount was mainly attributable to tax imposed on us from the State of Delaware, as we are required to remit franchise tax to the State of Delaware on an annual basis. We also were subject to controlled foreign corporations Subpart F income (“Subpart F”) tax, which is a tax primarily on passive income from controlled foreign corporations with a tax rate of 35%. In addition, the Tax Cuts and Jobs Act imposed a global intangible low-taxed income (“GILTI”) tax, which is a tax on certain off-shore earnings at an effective rate of 10.5% for tax years (50% deduction of the current enacted tax rate of 21%) with a partial offset for 80% foreign tax credits. If the foreign tax rate is 13.125% or higher, there will be no U.S. corporate tax after the 80% foreign tax credits are applied. For the three months ended December 31, 2023 and 2022, our foreign subsidiaries did not generate any income that are subject to Subpart F tax and GILTI tax.

Current wording

Provision for income taxes amounted to approximately $0 and $11,500 for the three months ended March 31, 2024 and 2023, respectively. The amount was mainly attributable to tax imposed on us from the State of Delaware, as we are required to remit franchise tax to the State of Delaware on an annual basis. We also were subject to controlled foreign corporations Subpart F income (“Subpart F”) tax, which is a tax primarily on passive income from controlled foreign corporations with a tax rate of 35%. In addition, the Tax Cuts and Jobs Act imposed a global intangible low-taxed income (“GILTI”) tax, which is a tax on certain off-shore earnings at an effective rate of 10.5% for tax years (50% deduction of the current enacted tax rate of 21%) with a partial offset for 80% foreign tax credits. If the foreign tax rate is 13.125% or higher, there will be no U.S. corporate tax after the 80% foreign tax credits are applied. For the three months ended March 31, 2024 and 2023, our foreign subsidiaries did not generate any income that are subject to Subpart F tax and GILTI tax.

Previous wording

Our net losses decreased by approximately $0.8 million predominately due to the reasons as discussed above.

Current wording

Our net losses decreased by approximately $1.2 million predominately due to the reasons as discussed above.

Previous wording

Our breakdown of revenues by categories for the six months ended December 31, 2023 and 2022, respectively, is summarized below:

Current wording

Our breakdown of revenues by categories for the nine months ended March 31, 2024 and 2023, respectively, is summarized below:

Previous wording

Total revenues decreased by approximately $15.8 million or 44.0% to approximately $20.2 million for the six months ended December 31, 2023 from approximately $36.0 million for the six months ended December 31, 2022. The decrease was mainly attributable to the decrease in product and loyalty program revenue.

Current wording

Total revenues decreased by approximately $32.4 million or 59.8% to approximately $21.8 million for the nine months ended March 31, 2024 from approximately $54.1 million for the nine months ended March 31, 2023. The decrease was mainly attributable to the decrease in product and loyalty program revenue.

Previous wording

Product revenue was generated through sales of our e-voucher, health care products and other products through our ZCITY platform while loyalty program revenue was recognized when our customers redeem their previously earned reward points from our loyalty program or upon expiration of the reward point. In addition, we also engage in sales of food and beverage products through our newly acquired subsidiaries, Morgan and AY Food. The product and loyalty program revenue decreased by approximately $16.1 million or 44.9% to approximately $19.7 million for the six months ended December 31, 2023 from approximately $35.8 million for the same period in 2022. The decrease was mainly attributable to our strategic goal to reduce spending related rewards granted to the customers and marketing campaign expenses. Such reduction in incentives granted to the customers and the decrease in marketing campaign expenditures had the effect of diminishing the platform’s attractiveness to existing and potential customers, ultimately leading to the decrease of revenue in current period.

Current wording

Product revenue was generated through sales of our e-voucher, health care products and other products through our ZCITY platform while loyalty program revenue was recognized when our customers redeem their previously earned reward points from our loyalty program or upon expiration of the reward point. In addition, we also engage in sales of food and beverage products through our newly acquired subsidiaries, Morgan and AY Food. The product and loyalty program revenue decreased by approximately $32.7 million or 60.7% to approximately $21.2 million for the nine months ended March 31, 2024 from approximately $53.9 million for the same period in 2023. The decrease in revenue was primarily attributable to our strategic decision to reduce spending on customer rewards and marketing campaigns in order to enhance cost-effectiveness and profitability in our operations. This reduction in customer incentives and marketing expenditures resulted in a decrease in the platform’s appeal to both existing and potential customers, ultimately leading to a decline in revenue for the current period.

Previous wording

The transaction revenue primarily consists of fees charged to merchants for participating in our ZCITY platform upon successful sales transaction and payment service taken place between the merchants and their customers online. Our transaction revenue increased by 11.5%. Our average percentage of growth of new merchants was approximately 0.3% throughout the five quarters as of December 31, 2023 since the establishment of ZCITY platform. For the six months ending on December 31, 2023, we have an additional 17 new merchants that joined our ZCITY platform.

Current wording

The transaction revenue primarily consists of fees charged to merchants for participating in our ZCITY platform upon successful sales transaction and payment service taken place between the merchants and their customers online. Our transaction revenue decreased by 6.3%. Our average percentage of growth of new merchants was approximately 0.3% throughout the last five quarters as of March 31, 2024. For the nine months ending on March 31, 2024, we have an additional 17 new merchants that joined our ZCITY platform.

Previous wording

Member subscription revenue primarily consists of fees charged to customers who signed up for Zmember, a membership program that includes exclusive saving, bonus and referral rewards. Member subscription revenue increased by 59.3% to approximately $0.3 million for six months end December 31, 2023 as compared to approximately $0.2 million for the same period in 2022 as we have more customers to join our Zmember program. As of December 31, 2023 and 2022, we had 28,927 and 15,169 customers who subscribed to our Zmember program, respectively.

Current wording

Member subscription revenue primarily consists of fees charged to customers who signed up for Zmember, a membership program that includes exclusive saving, bonus and referral rewards. Member subscription revenue increased by 76.5% to approximately $0.4 million for nine months end March 31, 2024 as compared to approximately $0.2 million for the same period in 2023 as we have more customers to join our Zmember program. As of March 31, 2024 and 2023, we had 28,927 and 18,984 customers who subscribed to our Zmember program, respectively.

Previous wording

As we acquired exclusive worldwide license for right of use in Morganfield’s Trademark, and Abe Yus’s Trademark on May 1, 2023, and June 6, 2023, respectively, for a period of five years, we have generated sublicense revenue consist of fee charged to the customers who sublicensed the right of use of the Trademark from us. For the six months ended December 31, 2023, sublicense revenue was amounted to approximately $0.1 million while as of December 31, 2023 we engaged 10 customers as sublicensees who operated their restaurant under Morganfield’s and Abe Yu’s Trademark in Singapore, Malaysia, and China.

Current wording

As we acquired exclusive worldwide license for right of use in Morganfield’s Trademark, and Abe Yus’s Trademark on May 1, 2023, and June 6, 2023, respectively, for a period of five years, we have generated sublicense revenue consist of fee charged to the customers who sublicensed the right of use of the Trademark from us. For the nine months ended March 31, 2024, sublicense revenue was amounted to approximately $159,000. As of March 31, 2024, we engaged 10 customers as sublicensees who operated their restaurant under Morganfield’s and Abe Yu’s Trademark in Singapore, Malaysia, and China. We expect our sublicense revenue remain as insignificant to our operation for 2024 and beyond.

Previous wording

Our breakdown of cost of revenue by categories for the six months ended December 31, 2023 and 2022, respectively, is summarized below:

Current wording

Our breakdown of cost of revenue by categories for the nine months ended March 31, 2024 and 2023, respectively, is summarized below:

Previous wording

Cost of revenue mainly consists of the purchases of the gift card or “E-voucher” pin code, health care product and food and beverage products which is directly attributable to our product revenue. Cost of revenue also consists of monthly license payment made to our licensor to maintain our good standing for the right of use the Trademark which is attributable to our sublicense revenue. Total cost of revenue decreased by approximately $16.1 million or 44.9% for the six months ended December 31, 2023 compared with the same period in 2022. The decrease was in line with our decrease in revenue.

Current wording

Cost of revenue mainly consists of the purchases of the gift card or “E-voucher” pin code, health care product and food and beverage products which is directly attributable to our product revenue. Cost of revenue also consists of monthly license payment made to our licensor to maintain our good standing for the right of use the Trademark which is attributable to our sublicense revenue. Total cost of revenue decreased by approximately $32.7 million or 60.8% for the nine months ended March 31, 2024 compared with the same period in 2023. The decrease was in line with our decrease in revenue.

Previous wording

For the six months ended December 31, 2023 and 2022

Current wording

Our gross profit for the six months ended March 31, 2024, amounted to approximately $0.7 million, compared to approximately $0.5 million for the same period in 2023, reflecting an increase of approximately $0.3 million or 60.4%. Our gross margin for the same periods improved from approximately 0.8% in 2023 to approximately 3.3% in 2024, representing an enhancement of 2.5% in our gross margin percentage.

Previous wording

Selling expenses amounted to approximately $1.3 million and $2.6 million for the six months ended December 31, 2023 and 2022, respectively, representing a decrease of approximately $1.3 million or 50.3%. The decrease was mainly attributable to the decrease in marketing and promotion expense of approximately $1.0 million related to promoting our ZCITY platform. Marketing and promotion expense consists of redemptions of reward points which is generated from non-spending related activities (registration as a new user, referral of a new user and Spin & Win eligibility to receive reward points) in exchange for discounted credit of purchasing our products upon conversion of using the reward points. For the six months ended December 31, 2023 and 2022, we incurred approximately $0.3 million and $1.0 million, respectively, in marketing and promotion expense, and recognized the same amount of product revenue at the time of redemption of the non-spending related activities reward points by our customers. The decrease in marketing and promotion expenses was primarily driven by our strategic goal to optimize the promotional activities, and enhance our cost effectiveness in our operations.

Current wording

Selling expenses amounted to approximately $1.6 million and $3.7 million for the nine months ended March 31, 2024 and 2023, respectively, representing a decrease of approximately $2.2 million or 58.1%. The decrease was mainly attributable to the decrease in marketing and promotion expense of approximately $2.1 million related to promoting our ZCITY platform. Marketing and promotion expense consists of redemptions of reward points which is generated from non-spending related activities (registration as a new user, referral of a new user and Spin & Win eligibility to receive reward points) in exchange for discounted credit of purchasing our products upon conversion of using the reward points. For the nine months ended March 31, 2024 and 2023, we incurred approximately $0.4 million and $1.5 million, respectively, in marketing and promotion expense, and recognized the same amount of product revenue at the time of redemption of the non-spending related activities reward points by our customers. The decrease in marketing and promotion expenses was primarily driven by our strategic goal to optimize the promotional activities, enhance our cost effectiveness, and increase profitability in our operations.

Previous wording

General and administrative expenses amounted to approximately $2.0 million and $1.7 million for the six months ended December 31, 2023 and 2022, respectively, representing an increase of approximately $0.4 million or 21.4%. The increase was mainly due to increase of director & officer liability insurance expense of approximately $0.2 million, legal and professional expense of approximately $0.1 million and depreciation expense of approximately $0.1 million as a result of expansion of management and administration team to support our business operation.

Current wording

General and administrative expenses amounted to approximately $3.1 million and $3.0 million for the nine months ended March 31, 2024 and 2023, respectively, representing an increase of approximately $0.1 million or 3.2%. The increase was mainly due to increase of director & officer liability insurance expense, depreciation expense, and bad debt expense of approximately $0.1 million, 0.3 million, and 0.3 million, respectively, offset by decreased in salary expenses and professional fee expense of approximately $0.2 million and $0.3 million, respectively, to improve our operation efficiency.

Previous wording

Stock-based compensation expenses amounted to approximately $0 and $0.4 million for the six months ended December 31, 2023 and 2022 respectively, representing decrease of approximately $0.4 million. The stock-based compensation incurred for the six months ended December 31, 2022 are from Exchange Listing LLC (the “Consultant”) related to our initial public offering.

Current wording

Stock-based compensation expenses amounted to $0 and approximately $0.8 million for the nine months ended March 31, 2024, and 2023, respectively. The stock-based compensation incurred for the nine months ended March 31, 2023, includes compensation for Exchange Listing LLC’s service related to our initial public offering, as well as compensation for Voon Him “Victor” Hoo for his service as our former director.

Previous wording

For the six months ended December 31, 2023 and 2022, we incurred other expense, net, amounted to approximately $0.3 million and $0.9 million, respectively, representing a decrease of approximately $0.7 million which was primarily attributable to we incurred other income from software developing service, net of cost of approximately $0.7 million, and a decrease of amortization of debt discount of approximately $0.6 million related to our convertible note payable as we had fewer convertible notes containing debt discount that needed to be amortized for the six months ended December 31, 2023 compare to the same period in 2022, offset by an unrealized loss approximately $0.3 million from marketable securities we received as service consideration in development of an artificial intelligence powered travel platform, redemption premium of approximately $0.3 million remit to our convertible note holder as a result of floor price triggering event.

Current wording

For the nine months ended March 31, 2024 and 2023, we incurred other expense, net, amounted to approximately $0.6 million and $1.0 million, respectively, representing a decrease of approximately $0.4 million which was primarily attributable to we incurred other income from software developing service, net of cost of approximately $0.7 million, and a decrease of amortization of debt discount of approximately $0.7 million related to our convertible note payable as we had fewer convertible notes containing debt discount that needed to be amortized for the nine months ended March 31, 2024 compare to the same period in 2023, offset by an unrealized loss approximately $0.7 million from marketable securities we received as service consideration in development of an artificial intelligence powered travel platform, redemption premium of approximately $0.3 million remit to our convertible note holder as a result of floor price triggering event.

Previous wording

Provision for income taxes amounted to approximately $21,000 and $23,000 for the six months ended December 31, 2023 and 2022, respectively. The amount was mainly attributable to tax imposed on us from the State of Delaware, as we are required to remit franchise tax to the State of Delaware on an annual basis. We also were subject to controlled foreign corporations Subpart F income tax, which is a tax primarily on passive income from controlled foreign corporations with a tax rate of 35%. In addition, the Tax Cuts and Jobs Act imposed a global intangible low-taxed income tax, which is a tax on certain off-shore earnings at an effective rate of 10.5% for tax years (50% deduction of the current enacted tax rate of 21%) with a partial offset for 80% foreign tax credits. If the foreign tax rate is 13.125% or higher, there will be no U.S. corporate tax after the 80% foreign tax credits are applied. For the six months ended December 31, 2023 and 2022, our foreign subsidiaries did not generate any income that are subject to Subpart F tax and GILTI tax.

Current wording

Provision for income taxes amounted to approximately $21,000 and $35,000 for the nine months ended March 31, 2024 and 2023, respectively. The amount was mainly attributable to tax imposed on us from the State of Delaware, as we are required to remit franchise tax to the State of Delaware on an annual basis. We also were subject to controlled foreign corporations Subpart F income tax, which is a tax primarily on passive income from controlled foreign corporations with a tax rate of 35%. In addition, the Tax Cuts and Jobs Act imposed a global intangible low-taxed income tax, which is a tax on certain off-shore earnings at an effective rate of 10.5% for tax years (50% deduction of the current enacted tax rate of 21%) with a partial offset for 80% foreign tax credits. If the foreign tax rate is 13.125% or higher, there will be no U.S. corporate tax after the 80% foreign tax credits are applied. For the nine months ended March 31, 2024 and 2023, our foreign subsidiaries did not generate any income that are subject to Subpart F tax and GILTI tax.

Previous wording

Our net losses decreased by approximately $2.4 million predominately due to the reasons as discussed above.

Current wording

Our net losses decreased by approximately $3.6 million predominately due to the reasons as discussed above.

Previous wording

As of December 31, 2023 and June 30, 2023, we had approximately $1.2 million and $4.6 million, respectively, in cash and cash equivalent which primarily consists of bank deposits, which are unrestricted as to withdrawal and use.

Current wording

As of March 31, 2024 and June 30, 2023, we had approximately $0.3 million and $4.6 million, respectively, in cash and cash equivalent which primarily consists of bank deposits, which are unrestricted as to withdrawal and use.

Previous wording

On August 15, 2022, we had closed our initial underwritten public offering of 2,300,000 shares of common stock, par value $0.00001 per share, at $4.00 per share. Meanwhile we received net proceeds of approximately $8.2 million, net of underwriting discounts and commissions and fees, and other estimated offering expenses amounted to approximately $1.0 million.

Current wording

On August 15, 2022, we had closed our initial underwritten public offering of 32,858 (post 1:70 split) shares of common stock, par value $0.00001 per share, at $280 (as adjusted post 1:70 split) per share. Meanwhile we received net proceeds of approximately $8.2 million, net of underwriting discounts and commissions and fees, and other offering expenses which amounted to approximately $1.0 million.

Previous wording

On November 30, 2023, we closed our November 2023 Offering of (i) 26,014,000 shares of common stock, at a public offering price of $0.10 per share, and (ii) 14,000,000 Pre-Funded Warrants, each with the right to purchase one share of Common Stock, at a public offering price of $0.0999 per Pre-Funded Warrant. Upon closing of the November 2023 Offering, we received aggregate net proceed of approximately $3.5 million, after deducting underwriting discounts, andnon-accountable expense.

Current wording

On November 30, 2023, we closed our underwritten public offering (the “November 2023 Offering”) of (i) 371,629 (post 1:70 split) shares of common stock, at a public offering price of $7.00 (as adjusted post 1:70 split) per share of common stock and (ii) pre-funded warrants (the “Pre-Funded Warrants”) to purchase a total of 200,000 shares of common stock, each with the right to purchase one share of common stock at an exercise price of $0.007 per share, sold at a public offering price of $6.993 per Pre-Funded Warrant. Upon closing of the November 2023 Offering, we received aggregate net proceed of approximately $3.5 million, after deducting underwriting discounts and commission andnon-accountable expenses.

Previous wording

Despite receiving the proceeds from our initial underwritten public offering, November 2023 Offering, and issuance of two convertible notes, management is of the opinion that we will not have sufficient funds to meet the working capital requirements and debt obligations as they become due starting from one year from the date of this report due to our recurring loss. Therefore, management has determined there is substantial doubt about our ability to continue as a going concern. If we are unable to generate significant revenue, we may be required to curtail or cease our operations. Management is trying to alleviate the going concern risk through the following sources:

Current wording

Despite receiving the proceeds from our initial underwritten public offering, the November 2023 Offering, and issuance of two convertible notes, management is of the opinion that we will not have sufficient funds to meet the working capital requirements and debt obligations as they become due starting from one year from the date of this report due to our recurring loss. Therefore, management has determined there is substantial doubt about our ability to continue as a going concern. If we are unable to generate significant revenue, we may be required to curtail or cease our operations. Management is trying to alleviate the going concern risk through the following sources:

Previous wording

The following summarizes the key components of our cash flows for the six months ended December 31, 2023 and 2022:

Current wording

The following summarizes the key components of our cash flows for the nine months ended March 31, 2024 and 2023:

Previous wording

Net cash used in operating activities for the six months ended December 31, 2023 was approximately $3.1 million and was mainly comprised of the net loss of approximately $3.3 million, non-cash other income of approximately $1.0 million from software developing service related to VCI’s project as mentioned in other income, net above, increase of prepayment of approximately $0.1 millionas our vendors required us to make deposit to secure the purchase, offset by non-cash items of depreciation, amortization, allowance for credit losses and unrealized loss on marketable securities amounted to approximately $1.0 million, decrease of inventories of approximately $0.3 million as we reduced our purchase and intended to maintain a more effective inventory level, decrease of approximately $0.2 million in other receivables and other current assets is attributed to the utilization of prepaid information technology and insurance expenses from previous periods in the current period, andincrease of approximately $0.1 million in accounts payable as we made more purchases on account.

Current wording

Net cash used in operating activities for the nine months ended March 31, 2024 was approximately $4.1 million and was mainly comprised of the net loss of approximately $5.0 million, non-cash other income of $1.0 million from software developing service related to VCI Global Limited project as mentioned in other income, net above, increase of prepayment of approximately $0.2 millionas our vendors required us to make deposit to secure the purchase, decrease of customer deposit of approximately $0.1 million as realized more membership subscription revenue from the customer deposit collected from prior period, and decrease of other payables and accrued liabilities of approximately $0.1 million as made timely payment to our service providers, offset by non-cash items of depreciation, amortization, allowance for credit losses and unrealized loss on marketable securities amounted to approximately $1.7 million, decrease of inventories of approximately $0.4 million as we reduced our purchase and intended to maintain a more effective inventory level, decrease of approximately $0.3 million in other receivables and other current assets is attributed to the utilization of prepaid information technology and insurance expenses from previous periods in the current period, andincrease of approximately $0.1 million in accounts payable as we made more purchases on account.

Previous wording

Net cash used in operating activities for the six months ended December 31, 2022 was approximately $4.6 million and was mainly comprised of the net loss of approximately $5.7 million, increase of prepayments of approximately $0.3 million as our vendors required us to make deposit to secure the purchase, and increase of approximately $0.3 million in other receivable and other current assets as we prepaid IT maintenance fee to a third party service provider. The net cash used in operating activities was mainly offset by amortization of debt discount of approximately $1.0 million, stock-based compensation of approximately $0.4 million, decrease of inventories of approximately $18,000 as we improved our inventories turnover rate due to demand of our product, increase in account payable of approximately $59,000 as we made more purchases on account and increase of approximately $81,000 in contract liability as we deferred more revenue due to increase of our customer’s redemption rate in spending related reward points.

Current wording

Net cash used in operating activities for the nine months ended March 31, 2023 was approximately $7.0 million and were mainly comprised of the net loss of approximately $8.6 million, increase of prepayments of approximately $0.2 million as our vendors required us to make deposit to secure the purchase, and increase of approximately $0.3 million in other receivable and other current assets as we prepaid information technology maintenance fee to a third party service provider. The net cash used in operating activities was mainly offset by amortization of debt discount of approximately $1.0 million, and stock-based compensation of approximately $0.8 million.