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 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, 2024 (the “Annual Report”) filed with the SEC. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties. 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 year ended June 30, 2024 (the “Annual Report”) filed with the SEC. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties. Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

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, and non-accountable expense.

Current wording

On November 30, 2023, we closed our underwritten public offering (the “November 2023 Offering”) of (i) 7,433 shares of common stock, at a public offering price of $350 per share of Common Stock and (ii) 4000 pre-funded warrants (the “Pre-Funded Warrants”), each with the right to purchase one of Common Stock, at a public offering price of $350 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 March 22, 2024, we entered into a marketing offering agreement (“Marketing Offering Agreement”) with H.C. Wainwright & Co., LLC, (the “Manager”). Pursuant to the Marketing Offering Agreement, the Company intends to issue and sell through or to the Manager, as sales agent and / or principal from time to time of the Company’s common stock at the Market Offering. As of September 30, 2024, we have received an aggregated net proceed of approximately $2.9 million, net of broker fee from issuance of 1,678,307 shares of common stock which sell through or to the Manager.

Current wording

On March 22, 2024, we entered into a marketing offering agreement (“Marketing Offering Agreement”) with H.C. Wainwright & Co., LLC, (the “Manager”). Pursuant to the Marketing Offering Agreement, the Company intends to issue and sell through or to the Manager, as sales agent and / or principal from time to time of the Company’s common stock at the Market Offering. As of March 31, 2025, we have received an aggregated net proceed of approximately $2.9 million, net of broker fee from issuance of 33,566 shares of common stock which sell through or to the Manager.

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. 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.

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 which was subsequently amended by the Modification Agreement on January 21, 2025 . Pursuant to the Purchase Agreement, we have the right, but not the obligation to cause Alumni Capital to purchase up to $50,000,000 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 $50,000,000 of the Company’s common stock pursuant to the Purchase Agreement or (ii) December 31, 2025. As of March 31, 2025, Alumni Capital has purchased approximately $7.5 million worth of the Company’s common stock, totaling 864,180 shares. The Company has received approximately $6.7 million in net proceeds as of March 31, 2025, with the remaining balance received in April 2025 .

Previous wording

On November 27, 2024, we entered into a subscription agreement (the “Subscription Agreement”) with certain investors (the “Investors”). Pursuant to the Subscription Agreement, the Investors agreed to invest an aggregate amount of $1,177,000.00 (the “Investment Amount”) into us for 3,566,668 shares of the Company’s common stock (the “Offered Shares”), par value $0.00001 at a negotiated purchase price of $0.33 (the “Offering”). As of the date of the issuance of the unaudited condensed consolidated financial statements, the Company has issued 3,566,668 shares of Offered Shares to the Investors and received aggregate net proceed of $1,177,000.

Current wording

On November 27, 2024, we entered into a subscription agreement (the “Subscription Agreement”) with certain investors (the “Investors”). Pursuant to the Subscription Agreement, the Investors agreed to invest an aggregate amount of $1,177,000 (the “Investment Amount”) into us for 71,333 shares of the Company’s common stock (the “Offered Shares”), par value $0.00001 at a negotiated purchase price of $16.5 (the “Offering”). As of March 31, 2025, the Company has issued 71,333 shares of Offered Shares to the Investors and received aggregate net proceed of $1,177,000.

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 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%.

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 March 31, 2025. As of March 31, 2025, we recorded 2,707,965 registered users and 10,647 active users on the ZCITY platform. On average, our registered user base has grown by approximately 0.2% over the past five quarters, while our active user numbers have experienced an average decrease of 35.9%.

Previous 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.

Current wording

Total revenues decreased by approximately $1.5 million or 58.2% to approximately $0.6 million for the three months ended March 31, 2025 from approximately $1.6 million for the three months ended March 31, 2024. The decrease was mainly attributable to the decrease in product and loyalty program revenue offset by increase in revenue from customized software development service .

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 $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.

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 $1.4 million or 98.0% to approximately $29,000 for the three months ended March 31, 2025 from approximately $1.5 million for the same period in 2024. 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 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.

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 158.5%, reaching approximately $35,000 for the three months ended March 31, 2025, compared to approximately $13,666 for the same period in 2024. 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 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.

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 March 31, 2025, member subscription revenue decreased by 100.0% to approximately $0, from approximately $0.1 million for the same period in 2024. The decrease was primarily due to we experienced slowdown in acquiring new customers to participate in our Zmember program . As of March 31, 2025 and 2024, 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 $19.6 million or 99.4% for the six months ended December 31, 2024 compared with the same period in 2023. The decrease was in line with our decrease in revenue.

Current wording

Cost of revenue primarily consists of purchases of gift cards or “E-voucher” PIN codes, healthcare products, and food and beverage products, which are directly attributable to our product revenue. It also includes monthly license payments made to our licensor to maintain our right to use the Trademark, which supports our sublicense revenue. In addition, cost of revenue includes both in-house labor and outsourced labor costs related to customized software development services. Total cost of revenue decreased by approximately $1.4 million, or 86.9%, for the three months ended March 31, 2025, compared to the same period in 2024. The decrease was consistent with the decline in our revenue.

Previous 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.

Current wording

Our gross profit for the three months ended March 31, 2025, amounted to approximately $0.5 million as compared to approximately $0.2 million for the same period in 2024, reflecting an increase of approximately $0.3 million or 124.1%. Our gross margin improved from 13.6% for the three months ended March 31, 2024 to 73.0% for the same period in 2025, representing an enhancement of 59.4% in our gross margin percentage.

Previous 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.

Current wording

Selling expenses amounted to approximately $8,000 and $0.3 million for the three months ended March 31, 2025 and 2024, respectively, representing a decrease of approximately $0.3 million or 97.1%. 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 March 31, 2025 and 2024, we incurred approximately $3,000 and approximately $49,000, 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 $774,000 and $786,000 million for the three months ended December 31, 2024 and 2023, respectively, representing a decrease of approximately $12,000 or 1.5%. The decrease was primarily attributed to decrease salary expenses of approximately $0.1 million to promote our operation effectiveness, offset by increase of professional fee of approximately $77,000.

Current wording

General and administrative expenses amounted to approximately $0.4 and $1.1 million for the three months ended March 31, 2025 and 2024, respectively, representing a decrease of approximately $0.7 million or 59.9%. The decrease was primarily attributed to decrease salary expenses of approximately $0.3 million and decrease of professional fee of approximately $0.4 million to promote our operation effectiveness.

Previous 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.

Current wording

Research and development expense amounted to approximately $5,000 and $182,000 for the three months ended March 31, 2025 and 2024, representing 97.1% decrease as we incurred less spending in mobile application or website development.

Previous 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.

Current wording

Other income, net, amounted to approximately $1.3 million for the three months ended March 31, 2025, while other expense, net amounted to approximately $0.3 million for the same period ended March 31, 2024, representing a change of approximately $1.4 million which was primarily attributable to increase in gain from change in fair value of derivative liabilities of approximately $1.7 million, offset by increase in unrealized loss of approximately $0.2 million from marketable securities we received as service consideration in exchange for development of an artificial intelligence powered travel platform.

Previous 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.

Current wording

Provision for income taxes amounted to $0 for the three months ended March 31, 2025 and 2024. 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, 2025 and 2024, our foreign subsidiaries did not generate any income that are subject to Subpart F tax and GILTI tax.

Previous wording

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

Current wording

Our breakdown of revenues by categories for the nine months ended March 31, 2025 and 2024, respectively, is summarized below:

Previous wording

Total revenues decreased by approximately $19.6 million or 97.5% to approximately $0.5 million for the six months ended December 31, 2024 from approximately $20.2 million for the six months ended December 31, 2023. The decrease was mainly attributable to the decrease in product and loyalty program revenue.

Current wording

Total revenues decreased by approximately $20.6 million or 94.6% to approximately $1.2 million for the nine months ended March 31, 2025 from approximately $21.8 million for the nine months ended March 31, 2024. The decrease was mainly attributable to the decrease in product and loyalty program revenue, offset by increase in customized software development service 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 $19.4 million or 98.2% to approximately $0.4 million for the six months ended December 31, 2024 from approximately $19.7 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 $20.8 million or 98.2% to approximately $0.4 million for the nine months ended March 31, 2025 from approximately $21.1 million for the same period in 2024. 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 98.4%, to approximately $72,000 for the six months ended December 31, 2024, compared to approximately $36,000 for the same period in 2023. The increase 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.

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 114.9%, to approximately $107,000 for the nine months ended March 31, 2025, compared to approximately $50,000 for the same period in 2024. The increase 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 six months ended December 31, 2024, member subscription revenue decreased by 72.7% to approximately $88,000, from approximately $0.3 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.

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 nine months ended March 31, 2025, member subscription revenue decreased by 78.4% to approximately $88,000, from approximately $0.4 million for the same period in 2024. The decrease was primarily due to we experienced slowdown in acquiring new customers to participate in our Zmember program. As of March 31, 2025 and 2024, we had 27,620 and 28,927 customers who subscribed to our Zmember program, respectively.

Previous wording

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

Current wording

Our breakdown of cost of revenue by categories for the nine months ended March 31, 2025 and 2024, 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 $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.

Current wording

Cost of revenue primarily consists of purchases of gift cards or “E-voucher” PIN codes, healthcare products, and food and beverage products, which are directly attributable to our product revenue. It also includes monthly license payments made to our licensor to maintain our right to use the Trademark, which supports our sublicense revenue. In addition, cost of revenue includes both in-house labor and outsourced labor costs related to customized software development services. Total cost of revenue decreased by approximately $20.9 million or 94.6% for the nine months ended March 31, 2025 compared with the same period in 2024. The decrease was in line with our decrease in revenue.

Previous wording

Our gross profit for the six months ended December 31, 2024, amounted to approximately $0.4 million as compared to approximately $0.5 million for the same period in 2023, reflecting an decrease of approximately $0.1 million or 22.1%. Our gross margin improved from 2.5% for the six months ended December 31, 2023 to 77.8% for the same period in 2024, representing an enhancement of 75.3 % in our gross margin percentage.

Current wording

Our gross profit for the nine months ended March 31, 2025, amounted to approximately $0.9 million as compared to approximately $0.7 million for the same period in 2024, reflecting an increase of approximately $0.2 million or 21.7%. Our gross margin improved from 3.3% for the nine months ended March 31, 2024 to 75.0% for the same period in 2025, representing an enhancement of 71.7 % in our gross margin percentage.

Previous wording

Selling expenses amounted to approximately $0.1 million and $1.3 million for the six months ended December 31, 2024 and 2023, respectively, representing a decrease of approximately $1.2 million or 90.8%. The decrease was mainly attributable to a decrease in marketing and promotion expense of approximately $1.1 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 six months ended December 31, 2024 and 2023, we incurred approximately $30,000 and $0.4 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 $0.1 million and $1.6 million for the nine months ended March 31, 2025 and 2024, respectively, representing a decrease of approximately $1.5 million or 92.0%. The decrease was mainly attributable to a decrease in marketing and promotion expense of approximately $1.4 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, 2025 and 2024, we incurred approximately $33,000 and $0.4 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 $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.

Current wording

General and administrative expenses amounted to approximately $2.0 million and $3.1 million for the nine months ended March 31, 2025 and 2024, respectively, representing a decrease of approximately $1.2 million or 35.9%. The decrease was primarily attributed to decrease salary expenses of approximately $0.6 million and decrease of professional fee of approximately $0.6 million to promote our operation effectiveness.

Previous wording

Research and development expense amounted to approximately $80,000 and $0.2 million for the six months ended December 31, 2024 and 2023, representing 63.6% decrease as we incurred less spending in mobile application or website development.

Current wording

Research and development expense amounted to approximately $86,000 and $0.4 million for the nine months ended March 31, 2025 and 2024, representing 78.7% decrease as we incurred less spending in mobile application or website development.

Previous wording

Stock-based compensation expenses amounted to $140,000 and $0 for the six months ended December 31, 2024, and 2023, respectively. The stock-based compensation incurred for the six months ended December 31, 2024, was related to compensation paid to our executive officer as part of their compensation plan and third party for professional service.

Current wording

Stock-based compensation expenses amounted to $210,000 and $0 for the nine months ended March 31, 2025, and 2024, respectively. The stock-based compensation incurred for the nine months ended March 31, 2024, was related to compensation paid to our executive officer as part of their compensation plan and third party for professional service.

Previous wording

Other income, net, amounted to approximately $0.5 million for the three months ended December 31, 2024, while other expense, net amounted to approximately $0.1 million for the same period ended December 31, 2023, representing a change of approximately $0.5 million which was primarily attributable to increase in unrealized gain of approximately $0.9 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 $0.1 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 three months ended December 31, 2024.

Current wording

Other income, net, amounted to approximately $1.6 million for the nine months ended March 31, 2025, while other expense, net amounted to approximately $0.6 million for the same period ended March 31, 2024, representing a change of approximately $2.0 million which was primarily attributable to increase in gain from change in fair value of derivative liabilities of approximately $1.7 million, and decrease in unrealized loss of approximately $0.5 from marketable securities we received as service consideration in exchange for development of an artificial intelligence powered travel platform, 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 nine months ended March 31, 2025.

Previous wording

Provision for income taxes amounted to approximately $21,000 for the six 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 six 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.

Current wording

Provision for income taxes amounted to approximately $21,000 for the nine months ended March 31, 2025 and 2024, 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 nine months ended March 31, 2025 and 2024, 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 $1.0 million predominately due to the reasons as discussed above.

Current wording

Our net losses decreased by approximately $5.1 million predominately due to the reasons as discussed above.

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, and non-accountable expense.

Current wording

On November 30, 2023, we closed our November 2023 Offering of (i) 7,433 shares of common stock, at a public offering price of $350 per share of Common Stock and (ii) 4000 pre-funded warrants (the “Pre-Funded Warrants”), each with the right to purchase one of Common Stock, at a public offering price of $350 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 March 22, 2024, we have entered into a marketing offering agreement (“Marketing Offering Agreement”) with H.C. Wainwright & Co., LLC, (the “Manager”). Pursuant to the Marketing Offering Agreement, the Company intends to issue and sell through or to the Manager, as sales agent and / or principal from time to time of the Company’s common stock at the Market Offering. As of December 31, 2024, we have received an aggregated net proceed of approximately $2.9 million, net of broker fee from issuance of 1,678,307 shares of common stock which sell through or to the Manager.

Current wording

On March 22, 2024, we entered into a marketing offering agreement (“Marketing Offering Agreement”) with H.C. Wainwright & Co., LLC, (the “Manager”). Pursuant to the Marketing Offering Agreement, the Company intends to issue and sell through or to the Manager, as sales agent and / or principal from time to time of the Company’s common stock at the Market Offering. As of March 31, 2025, we have received an aggregated net proceed of approximately $2.9 million, net of broker fee from issuance of 33,566 shares of common stock which sell through or to the Manager.

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. 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.

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 which was subsequently amended by the Modification Agreement on January 21, 2025. Pursuant to the Purchase Agreement, we have the right, but not the obligation to cause Alumni Capital to purchase up to $50,000,000 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 $50,000,000 of the Company’s common stock pursuant to the Purchase Agreement or (ii) December 31, 2025. As of March 31, 2025, Alumni Capital has purchased approximately $7.5 million worth of the Company’s common stock, totaling 864,180 shares. The Company has received approximately $6.7 million in net proceeds as of March 31, 2025, with the remaining balance received in April 2025.

Previous wording

On November 27, 2024, we entered into a subscription agreement (the “Subscription Agreement”) with certain investors (the “Investors”). Pursuant to the Subscription Agreement, the Investors agreed to invest an aggregate amount of $1,177,000.00 (the “Investment Amount”) into us for 3,566,668 shares of the Company’s common stock (the “Offered Shares”), par value $0.00001 at a negotiated purchase price of $0.33 (the “Offering”). As of the date of the issuance of the unaudited condensed consolidated financial statements, the Company has issued 3,566,668 shares of Offered Shares to the Investors and received aggregate net proceed of $1,177,000.

Current wording

On November 27, 2024, we entered into a subscription agreement (the “Subscription Agreement”) with certain investors (the “Investors”). Pursuant to the Subscription Agreement, the Investors agreed to invest an aggregate amount of $1,177,000 (the “Investment Amount”) into us for 71,333 shares of the Company’s common stock (the “Offered Shares”), par value $0.00001 at a negotiated purchase price of $16.5 (the “Offering”). As of March 31, 2025, the Company has issued 71,333 shares of Offered Shares to the Investors and received aggregate net proceed of $1,177,000.

Previous wording

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

Current wording

The following summarizes the key components of our cash flows for the nine months ended March 31, 2025 and 2024:

Previous 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.

Current wording

Net cash used in operating activities for the nine months ended March 31, 2025 was approximately $5.8 million and was mainly comprised of (i) non-cash item of gain in change in fair value of derivative liabilities of approximately $1.7 million, (ii) increase in accounts receivable of approximately $0.3 million due to higher sales made on account but not yet collected, (iii) increase of other receivable and other assets of approximately $4.4 million which mainly includes prepayment to certain developers for the development of our internal AI software, (iv) decrease in customer deposits of approximately $75,000, as we recognized member service revenue in the current period from certain merchant prepayments made in the prior period, and (v) 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) the netincome of approximately $0.1 million, (ii) non-cash items of depreciation, amortization, allowance for credit losses, stock-based compensation and unrealized loss on marketable securities amounted to approximately $0.2 million, (ii) decrease of prepayment of approximately $76,000 due to the utilization of prior-period prepayments for inventory purchases, and (iii) increase 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, 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.

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 million as 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, 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 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,

Current wording

Net cash used in investing activities for the nine months ended March 31, 2025 was approximately $8.3 million which includes a remittance of approximately $4.3 million to CLSB as a collaboration deposit to support CLSB’s credit service activities for the Portfolio Clients.