TREASURE GLOBAL INC

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 September 25, 2024, we had 2,704,306 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 February 10, 2025, we had 2,707,610 registered users and 2,027 registered merchants.

Previous wording

On November 30, 2023, we closed our underwritten public offering (the “November 2023 Offering”) of (i) 371,629 (26,014,000 pre reverse split) shares of common stock, at a public offering price of $7 ($0.10 pre reverse split) per share of Common Stock and (ii) 14,000,000 pre-funded warrants (the “Pre-Funded Warrants”), each with the right to purchase 0.01 (one share pre reverse split) 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 (26,014,000 pre reverse split) shares of common stock, at a public offering price of $7 ($0.10 pre reverse split) per share of Common Stock and (ii) 14,000,000 pre-funded warrants (the “Pre-Funded Warrants”), each with the right to purchase 0.01 (one share pre reverse split) 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, and non-accountable expense.

Previous wording

On October 10, 2024, we entered into a Share Purchase Agreement (the “Purchase Agreement”) with Alumni Capital LP (“Alumni Capital”), a Delaware limited partnership. Pursuant to the Purchase Agreement, we have the right, but not the obligation to cause Alumni Capital to purchase up to $6,000,000 common stock, par value $0.00001 (the “Commitment Amount”), at certain purchase Price during the period beginning on the execution date of the Purchase Agreement and ending on the earlier of (i) the date on which Alumni Capital has purchased $6,000,000 of the Company’s common stock pursuant to the Purchase Agreement or (ii) December 31, 2025.

Current wording

On October 10, 2024, we entered into a Share Purchase Agreement (the “Purchase Agreement”) with Alumni Capital LP (“Alumni Capital”), a Delaware limited partnership. Pursuant to the Purchase Agreement, we have the right, but not the obligation to cause Alumni Capital to purchase up to $6,000,000 common stock, par value $0.00001 (the “Commitment Amount”), at certain purchase Price during the period beginning on the execution date of the Purchase Agreement and ending on the earlier of (i) the date on which Alumni Capital has purchased $6,000,000 of the Company’s common stock pursuant to the Purchase Agreement or (ii) December 31, 2025. As of the date of the issuance of the issuance of the unaudited condensed consolidated financial statement, Alumni Capital has purchased approximately $2.0 million worth of the Company’s common stock, totaling 8,558,993 shares. The Company has received approximately $1.5 million in net proceeds as of that date, with the remaining balance expected to be received by June, 2025.

Previous wording

We have experienced a decrease in growth rate in registered users, and a decline of active users over our last five quarters as of September 30, 2024. As of September 30, 2024, we recorded 2,704,482 registered users and 25,216 active users on the ZCITY platform. On average, our registered user base has grown by approximately 2.0 % over the past five quarters, while our active user numbers have experienced an average decline of 38.3 %.

Current wording

We have experienced a decrease in growth rate in registered users, and a decline of active users over our last five quarters as of December 31, 2024. As of December 31, 2024, we recorded 2,706,498 registered users and 3,293 active users on the ZCITY platform. On average, our registered user base has grown by approximately 0.5% over the past five quarters, while our active user numbers have experienced an average decline of 43.6%.

Previous wording

Total revenues decreased by approximately $13.3 million or 98.5% to approximately $ 0.2 million for the three months ended September 30, 2024 from approximately $13.5 million for the three months ended September 30, 2023. The decrease was mainly attributable to the decrease in product and loyalty program revenue.

Current wording

Total revenues decreased by approximately $6.4 million or 95.5% to approximately $0.3 million for the three months ended December 31, 2024 from approximately $6.7 million for the three months ended December 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 subsidiaries, Morgan and AY Food, despite they were disposed in May 2024. The product and loyalty program revenue decrease by approximately $13.1 million or 99.4% to approximately $82,000 for the three months ended September 30, 2024 from approximately $13.2 million for the same period in 2023. The decline in revenue was primarily driven by the company’s strategic decision to streamline its product line, with a particular focus on eliminating lower-margin products, mainly e-vouchers. In addition, the decrease was attributable 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.

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 subsidiaries, Morgan and AY Food, despite they were disposed in May 2024. The product and loyalty program revenue decrease by approximately $6.2 million or 95.9% to approximately $0.3 for the three months ended December 31, 2024 from approximately $6.5 million for the same period in 2023. The decline in revenue was primarily driven by the company’s strategic decision to streamline its product line, with a particular focus on eliminating lower-margin products, mainly e-vouchers. In addition, the decrease was attributable 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

Transaction revenue primarily consists of fees charged to merchants for participating in our ZCITY platform upon successful sales and service transactions, as well as for payment services facilitated between merchants and their customers online. Our transaction revenue increased by 113.2%, reaching approximately $43,000 for the three months ended September 30, 2024, compared to approximately $20,000 for the same period in 2023. This growth was driven by our recent partnership with Creditlab Sdn. Bhd. (“CLSB”), a third-party credit services provider. Through this partnership, we introduced our portfolio clients from ZCITY to CLSB’s credit service platform. In return, CLSB agreed to pay us a transaction fee upon successful transactions and share 50% of the revenue derived from these Portfolio Clients.

Current wording

Transaction revenue primarily consists of fees charged to merchants for participating in our ZCITY platform upon successful sales and service transactions, as well as for payment services facilitated between merchants and their customers online. Our transaction revenue increased by 79.5%, reaching approximately $13,000 for the three months ended December 31, 2024, compared to approximately $16,000 for the same period in 2023. This growth was driven by our recent partnership with Credilab Sdn. Bhd. (“CLSB”), a third-party credit services provider. Through this partnership, we introduced our portfolio clients from ZCITY to CLSB’s credit service platform. In return, CLSB agreed to pay us a transaction fee upon successful transactions and share 50% of the revenue derived from these Portfolio Clients.

Previous wording

Member subscription revenue primarily consists of fees charged to customers who sign up for Zmember, our membership program that offers exclusive savings, bonuses, and referral rewards. For the three months ended September 30, 2024, member subscription revenue decreased by 52.3% to approximately $83,000, from approximately $0.2 million for the same period in 2023. The decrease was primarily due to we experienced slowdown in acquiring new customers to participate in our Zmember program . As of September 30, 2024 we had 27,620 customers who subscribed to our Zmember program, respectively.

Current wording

Member subscription revenue primarily consists of fees charged to customers who sign up for Zmember, our membership program that offers exclusive savings, bonuses, and referral rewards. For the three months ended December 31, 2024, member subscription revenue decreased by 96.5% to approximately $5,000, from approximately $0.1 million for the same period in 2023. The decrease was primarily due to we experienced slowdown in acquiring new customers to participate in our Zmember program . As of December 31, 2024 and 2023, we had 27,620 and 28,927 customers who subscribed to our Zmember program, respectively.

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 $13.3 million or 99.7% for the three months ended September 30, 2024 compared with the same period in 2023. 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 $6.3 million or 98.8% for the three months ended December 31, 2024 compared with the same period in 2023. The decrease was in line with our decrease in revenue.

Previous wording

Our gross profit for the three months ended September 30, 2024, amounted to approximately $172,000 as compared to approximately $163,000 for the same period in 2023, reflecting an increase of approximately $9,000 or 5.9%. Our gross margin improved from 1.2% for the three months ended September 30, 2023 to 83.0% for the same period in 2024, representing an enhancement of 81.8 % in our gross margin percentage.

Current wording

Our gross profit for the three months ended December 31, 2024, amounted to approximately $0.2 million as compared to approximately $0.3 million for the same period in 2023, reflecting an decrease of approximately $0.1 million or 35.2%. Our gross margin improved from 5.1% for the three months ended December 31, 2023 to 74.2% for the same period in 2024, representing an enhancement of 69.0% in our gross margin percentage.

Previous wording

The increase in both gross profit and gross margin were mainly attributed to strategic measures undertaken during the three months ended September 30, 2024 through streamlined our product line by eliminating products with lower profitability, and reduce spending on customer rewards within our ZCITY platform which resulting in a decrease in deferred revenue. Consequently, leading to higher gross profit and gross margin in the current period.

Current wording

The decrease of gross profit were mainly due to decrease of member subscription revenue while the increase in gross margin were mainly attributed to strategic measures undertaken during the three months ended December 31, 2024 through streamlined our product line by eliminating products with lower profitability, and reduce spending on customer rewards within our ZCITY platform which resulting in a decrease in deferred revenue. Consequently, leading to higher gross profit and gross margin in the current period.

Previous wording

Selling expenses amounted to approximately $78,000 and $0.8 million for the three months ended September 30, 2024 and 2023, respectively, representing a decrease of approximately $0.7 million or 89.8%. The decrease was mainly attributable to a decrease in marketing and promotion expense of approximately $0.7 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 September 30, 2024 and 2023, we incurred approximately $21,000 and $0.2 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.

Current wording

Selling expenses amounted to approximately $40,000 and $0.5 million for the three months ended December 31, 2024 and 2023, respectively, representing a decrease of approximately $0.5 million or 92.2%. The decrease was mainly attributable to a decrease in marketing and promotion expense of approximately $0.3 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, 2024 and 2023, we incurred approximately $9,000 and $0.1 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

Research and development expense amounted to approximately $47,000 and $82,000 for the three months ended September 30, 2024 and 2023, representing 36.2% decrease as we incurred less spending in mobile application or website development.

Current wording

Research and development expense amounted to approximately $33,000 and $138,000 for the three months ended December 31, 2024 and 2023, representing 76.0% decrease as we incurred less spending in mobile application or website development.

Previous wording

Provision for income taxes amounted to approximately $11,391 and $14,925 for the three months ended September 30, 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 September 30, 2024 and 2023, 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 $9,000 and $6,000 for the three months ended December 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 December 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 $1.2 million predominately due to the reasons as discussed above.

Current wording

Our net losses decreased by approximately $1.0 million predominately due to the reasons as discussed above.

Previous wording

General and administrative expenses amounted to approximately $0.8 million and $1.2 million for the three months ended September 30, 2024 and 2023, respectively, representing a decrease of approximately $0.4 million or 36.2%. The decrease was primarily attributed to decrease in salary expenses and professional fee expense of approximately $0.2 million and $0.3 million, respectively, to promote our operation effectiveness.

Current wording

General and administrative expenses amounted to approximately $1.6 million and $2.0 million for the six months ended December 31, 2024 and 2023, respectively, representing a decrease of approximately $0.5 million or 31.8%. The decrease was primarily attributed to decrease in salary expenses and professional fee expense of approximately $0.3 million and $0.2 million, respectively, to promote our operation effectiveness.

Previous wording

Other expense, net, amounted to approximately $0.1 million and $0.2 million for the three months ended September 30, 2024 and 2023, respectively, representing a decrease of approximately $71,000 which was primarily attributable to decrease of amortization of debt discount of approximately $239,000 related to our convertible note payable as all of our convertible notes has been converted during the year ended June 30, 2024, offset by an increased in unrealized loss of approximately $188,000 from marketable securities we received as service consideration in development of an artificial intelligence powered travel platform.

Current wording

Other income, net, amounted to approximately $342,000 for the six months ended December 31, 2024, while other expense, net amounted to approximately $302,000, representing a change of approximately $0.6 million which was primarily attributable to increase in unrealized gain of approximately $0.7 from marketable securities we received as service consideration in exchange for development of an artificial intelligence powered travel platform, and decrease of amortization of debt discount of approximately $0.4 million related to our convertible note payable as all of our convertible notes has been converted during the year ended June 30, 2024, offset by decrease of other income from software developing service, net of cost of approximately $0.7 million as we did not recognized such income for the six months ended December 31, 2024.

Previous wording

As of September 30, 2024 and June 30, 2024, we had approximately $73,000 and $0.2 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 December 31, 2024 and June 30, 2024, we had approximately $0.3 million and $0.2 million, respectively, in cash and cash equivalent which primarily consists of bank deposits, which are unrestricted as to withdrawal and use.

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 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, and non-accountable expense.

Previous wording

On October 10, 2024, we entered into a Share Purchase Agreement (the “Purchase Agreement”) with Alumni Capital LP (“Alumni Capital”), a Delaware limited partnership. Pursuant to the Purchase Agreement, we have the right, but not the obligation to cause Alumni Capital to purchase up to $6,000,000 the Company’s common stock, par value $0.00001 (the “Commitment Amount”), at certain purchase Price during the period beginning on the execution date of the Purchase Agreement and ending on the earlier of (i) the date on which Alumni Capital has purchased $6,000,000 of our common stock pursuant to the Purchase Agreement or (ii) December 31, 2025.

Current wording

On October 10, 2024, we entered into a Share Purchase Agreement (the “Purchase Agreement”) with Alumni Capital LP (“Alumni Capital”), a Delaware limited partnership. Pursuant to the Purchase Agreement, we have the right, but not the obligation to cause Alumni Capital to purchase up to $6,000,000 common stock, par value $0.00001 (the “Commitment Amount”), at certain purchase Price during the period beginning on the execution date of the Purchase Agreement and ending on the earlier of (i) the date on which Alumni Capital has purchased $6,000,000 of the Company’s common stock pursuant to the Purchase Agreement or (ii) December 31, 2025. As of the date of the issuance of the issuance of the unaudited condensed consolidated financial statement, Alumni Capital has purchased approximately $2.0 million worth of the Company’s common stock, totaling 8,558,993 shares. The Company has received approximately $1.5 million in net proceeds as of that date, with the remaining balance expected to be received by June, 2025.

Previous wording

Net cash used in operating activities for the three months ended September 30, 2024 was approximately $1.0 million and was mainly comprised of (i) the net loss of approximately $0.1 million, (ii) increase of other receivable and other current assets of approximately $0.5 million which includes approximately $0.5 million prepayment to certain developer for the development of our internal AI software. (iii) decrease in customer deposits of approximately $70,000, as we recognized member service revenue in the current period from certain merchant prepayments made in the prior period, and (iv) decrease of other payable and accrued liabilities of approximately $34,000 as we pay off some of the accrued operating expenses, offset by (i) non-cash items of depreciation, amortization, allowance for credit losses, stock-based compensation and unrealized loss on marketable securities amounted to approximately $0.5 million, and decrease of prepayment of approximately $33,000 as we received the inventory for resale which we have place order and prepaid in the prior period.

Current wording

Net cash used in operating activities for the six months ended December 31, 2024 was approximately $1.6 million and was mainly comprised of (i) the net loss of approximately $1.2 million, (ii) non-cash item of unrealized holding gain on marketable securities of approximately $0.3 million, (iii) increase of other receivable and other assets of approximately $0.5 million which includes approximately $0.5 million prepayment to certain developers for the development of our internal AI software, (iv) increase in accounts receivable of approximately $0.3 million due to higher sales made on account but not yet collected, (v) decrease in customer deposits of approximately $71,000, as we recognized member service revenue in the current period from certain merchant prepayments made in the prior period, and (vi) decrease of other payable and accrued liabilities of approximately $0.1 million as we pay off some of the accrued operating expenses, offset by (i) non-cash items of depreciation, amortization, allowance for credit losses, stock-based compensation and unrealized loss on marketable securities amounted to approximately $0.8 million, and (ii) decrease of prepayment of approximately $85,000 due to the utilization of prior-period prepayments for inventory purchases.

Previous wording

Net cash used in operating activities for the three months ended September 30, 2023 was approximately $1.9 million and were mainly comprised of the net loss of approximately $2.1 million, increase of other receivable and other current assets of approximately $0.2 million as we make a service deposit to a third party in software developing related to VCI’s project as mentioned in other expenses, net above, increase of noncash unrealized gain on marketable securities of approximately $0.1 million and increase of accounts receivable of approximately $37,000 as a result of offering credit terms to our corporate customers engaged in the sales of nutrition products, and food and beverage products, offset by amortization of debt discount of approximately $0.2 million, allowance for credit losses of approximately $48,000, increase of approximately $0.1 million in accounts payable as we made more purchase on account, and increase of approximately $54,000 in contract liability as we deferred more revenue due to increase of our customer’s redemption rate in spending related reward point.

Current 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 million as 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, and increase of approximately $0.1 million in accounts payable as we made more purchases on account.

Previous wording

Net cash used in investing activities for the three months ended September 30, 2024 was approximately $1.5 million which includes a remittance of approximately $1.5 million to CLSB as a collaboration deposit to support CLSB’s credit service activities for the Portfolio Clients,

Current wording

Net cash used in investing activities for the six months ended December 31, 2024 was approximately $2.2 million which includes a remittance of approximately $2.2 million to CLSB as a collaboration deposit to support CLSB’s credit service activities for the Portfolio Clients,

Previous wording

Net cash used in investing activities for the three months ended September 30, 2023 was approximately $6,000, which mainly due to purchase of equipment of approximately $6,000 for our operations used.

Current wording

Net cash used in investing activities for the six months ended December 31, 2023 was approximately $0.2 million, which was mainly due to purchase of equipment and intangible assets of approximately $15,000, and $0.2 million, respectively, for our operations used.

Previous wording

Net cash provided financing activities the three months ended September , 2024 was approximately $2.5 million, which mainly comprised of payments of insurance loan and related party loan of approximately $20,000, offset by approximately $2.5 million net proceeds received from issuance of common stock through our market offering.

Current wording

Net cash provided financing activities the six months ended December 31, 2024 was approximately $3.9 million, which mainly comprised of approximately $4.0 million net proceeds received from issuance of common stock through market offering and share purchase agreement, offset by payments of insurance loan and related party loan of approximately $41,000.

Previous wording

Accounts receivable are recorded at the invoiced amount, net of an allowance for uncollectible accounts and do not accrue interest. We offer various payments terms to customers from cash due on delivery to 90 days based on their credit history. Accounts receivable encompass amounts due from sales of healthcare products on our ZCITY platform. Starting from July 1, 2023, we adopted ASU No.2016-13 “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASC Topic 326”). We used a modified retrospective approach, and the adoption does not have an impact on our unaudited condensed consolidated financial statements. Management also periodically evaluates individual customer’s financial condition, credit history and the current economic conditions to make adjustments in the allowance when it is considered necessary. Account balances are charged off against the allowance when all collection efforts have been exhausted, and recovery potential is deemed remote. Our management reviews historical accounts receivable collection rates across all aging brackets and has made 100% provision of credit loss for customer balances aged above 120 days for sales of healthcare products on our ZCITY platform. Our management continuously assesses the reasonableness of the credit loss allowance policy and updates it as needed. As of September 30, 2024 and June 30, 2024, we recorded $243 and $1,100 of provision for estimated credit losses, respectively.

Current wording

Accounts receivable are recorded at the invoiced amount, net of an allowance for uncollectible accounts and do not accrue interest. We offer various payments terms to customers from cash due on delivery to 90 days based on their credit history. Accounts receivable encompass amounts due from sales of healthcare products on our ZCITY platform. Starting from July 1, 2023, we adopted ASU No.2016-13 “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASC Topic 326”). We used a modified retrospective approach, and the adoption does not have an impact on our unaudited condensed consolidated financial statements. Management also periodically evaluates individual customer’s financial condition, credit history and the current economic conditions to make adjustments in the allowance when it is considered necessary. Account balances are charged off against the allowance when all collection efforts have been exhausted, and recovery potential is deemed remote. Our management reviews historical accounts receivable collection rates across all aging brackets and has made 100% provision of credit loss for customer balances aged above 120 days for sales of healthcare products on our ZCITY platform. Our management continuously assesses the reasonableness of the credit loss allowance policy and updates it as needed. As of December 31, 2024 and June 30, 2024, we recorded $4,819 and $1,100 of provision for estimated credit losses, respectively.

Previous wording

Our inventories are recorded at the lower of cost or net realizable value, with cost determined using the first-in-first-out (FIFO) method. These costs encompass gift cards or ‘E-voucher’ pin codes, which are acquired from our suppliers as merchandise goods or store credit, as well as healthcare products. Management conducts regular comparisons between the cost of inventories and their net realizable value. If the net realizable value is lower than the cost, an allowance is made for inventory write-down. Ongoing assessments of inventories are carried out to identify potential write-downs due to estimated obsolescence or unmarketability. This determination is based on the difference between the inventory costs and the estimated net realizable value, considering forecasts for future demand and market conditions. Once inventories are written down to the lower of cost or net realizable value, they are not subsequently marked up based on changes in underlying facts and circumstances. Our management has reviewed the aforementioned factors and has applied a 100% write-down for inventories aged above 180 days related to our E-voucher and health care products. For the three months ended September 30, 2024 and 2023, no write-downs for estimated obsolescence or unmarketable inventories were recorded.

Current wording

Our inventories are recorded at the lower of cost or net realizable value, with cost determined using the first-in-first-out (FIFO) method. These costs encompass gift cards or ‘E-voucher’ pin codes, which are acquired from our suppliers as merchandise goods or store credit, as well as healthcare products. Management conducts regular comparisons between the cost of inventories and their net realizable value. If the net realizable value is lower than the cost, an allowance is made for inventory write-down. Ongoing assessments of inventories are carried out to identify potential write-downs due to estimated obsolescence or unmarketability. This determination is based on the difference between the inventory costs and the estimated net realizable value, considering forecasts for future demand and market conditions. Once inventories are written down to the lower of cost or net realizable value, they are not subsequently marked up based on changes in underlying facts and circumstances. Our management has reviewed the aforementioned factors and has applied a 100% write-down for inventories aged above 180 days related to our E-voucher and health care products. For the three and six months ended December 31, 2024, no write-downs for estimated obsolescence or unmarketable inventories were recorded. For the three and six months ended December 31, 2023, we recorded $486 write-down for inventories.

Previous wording

Other receivables and other current assets consist of prepayment to third parties for cyber security service, director & officer liability insurance (“D&O Insurance”), and other professional fee. Other receivables and other current assets also include refundable advance to third party service provider, and other deposits. Starting from July 1, 2023, we had adopted ASC Topic 326 on our other receivables using the modified retrospective approach. The new credit loss guidance replaces the old model for measuring the allowance for credit losses with a model that is based on the expected losses rather than incurred losses. Under the new accounting guidance, we measure credit losses on its other receivables using the current expected credit loss model under ASC 326. As of September 30, 2024 and June 30, 2024, we have provided allowance for credit loss of $233,392 and $212,758, respectively.

Current wording

Other receivables and other current assets consist of prepayment to third parties for cyber security service, director & officer liability insurance (“D&O Insurance”), and other professional fee. Other receivables and other current assets also include refundable advance to third party service provider, and other deposits. Starting from July 1, 2023, we had adopted ASC Topic 326 on our other receivables using the modified retrospective approach. The new credit loss guidance replaces the old model for measuring the allowance for credit losses with a model that is based on the expected losses rather than incurred losses. Under the new accounting guidance, we measure credit losses on its other receivables using the current expected credit loss model under ASC 326. As of December 31, 2024 and June 30, 2024, we have provided allowance for credit loss of $307,061 and $212,758, respectively.

Previous wording

Investments in marketable securities, net, consist of investments in listed shares, which are listed on Nasdaq. Marketable securities are accounted for under ASC 321 and reported at their readily determinable fair values as quoted by market exchanges with changes in fair value recorded in other (expense) income in the unaudited condensed consolidated statements of operations and comprehensive loss. All changes in a marketable security’s fair value are reported in earnings as they occur, as such, the sale of a marketable security does not necessarily give rise to a significant gain or loss. Unrealized gains/(losses) due to fluctuations in fair value are recorded in the consolidated statements of operations and comprehensive loss. Declines in fair value below cost deemed to be other-than-temporary are recognized as impairments in the unaudited condensed consolidated statements of comprehensive income. For the three months ended September 30, 2024, we recorded an unrealized holding loss on marketable securities of approximately $128,000. In comparison, for the same period in 2023, we recognized an unrealized holding gain of approximately $60,000.

Current wording

Investments in marketable securities, net, consist of investments in listed shares, which are listed on Nasdaq. Marketable securities are accounted for under ASC 321 and reported at their readily determinable fair values as quoted by market exchanges with changes in fair value recorded in other (expense) income in the unaudited condensed consolidated statements of operations and comprehensive loss. All changes in a marketable security’s fair value are reported in earnings as they occur, as such, the sale of a marketable security does not necessarily give rise to a significant gain or loss. Unrealized gains/(losses) due to fluctuations in fair value are recorded in the consolidated statements of operations and comprehensive loss. Declines in fair value below cost deemed to be other-than-temporary are recognized as impairments in the unaudited condensed consolidated statements of comprehensive income. For the three and six months ended December 31, 2024, we recorded an unrealized holding gain on marketable securities of approximately $0.5 million and $0.3 million, respectively. In comparison, for the same period in 2023, we recognized an unrealized holding loss of approximately $413,000 and $352,000, respectively.

Previous wording

An uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded.

Current wording

An uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely to be realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded.

Previous wording

We account for stock-based compensation awards to officers in accordance with FASB ASC Topic 718, “Compensation – Stock Compensation”, which requires that stock-based payment transactions with employees be measured based on the grant-date fair value of the equity instrument issued and recognized as compensation expense over the requisite service period. In June 2024, we executed executive employment agreements (“Employment Agreements”) with three individuals, appointing them as the Company’s executive officers. Under the terms of the Employment Agreements, each executive officer is entitled to receive a predetermined monetary value of the Company’s common stock as annual compensation for the first year, with stock compensation for subsequent years contingent upon performance. The stock compensation is prorated on a monthly basis and is subject to the restrictions of Securities Act Rule 144. The fair value of the stock-based compensation which included common stock issued were equivalent to the predetermined monetary value. For the three months ended September 30, 2024 and 2023, we have incurred stock-based compensation from our officer amounted to $70,000 and $0, respectively based on the vesting schedule from the Employment Agreement.

Current wording

We account for stock-based compensation awards to officers in accordance with FASB ASC Topic 718, “Compensation – Stock Compensation”, which requires that stock-based payment transactions with employees be measured based on the grant-date fair value of the equity instrument issued and recognized as compensation expense over the requisite service period. In June 2024, we executed executive employment agreements (“Employment Agreements”) with three individuals, appointing them as the Company’s executive officers. Under the terms of the Employment Agreements, each executive officer is entitled to receive a predetermined monetary value of the Company’s common stock as annual compensation for the first year, with stock compensation for subsequent years contingent upon performance. The stock compensation is prorated on a monthly basis and is subject to the restrictions of Securities Act Rule 144. The fair value of the stock-based compensation which included common stock issued were equivalent to the predetermined monetary value. For the six months ended December 31, 2024 and 2023, we have incurred stock-based compensation from our officer amounted to $140,000 and $0, respectively based on the vesting schedule from the Employment Agreement.