Treasure Global Inc.
02/23/2026 | Press release | Distributed by Public on 02/23/2026 14:50
Quarterly Report for Quarter Ending DECEMBER 31, 2025 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
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, 2025 (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").
Overview
Treasure Global Inc is a holding company incorporated on March 20, 2020, under the laws of the State of Delaware. TGL has no substantive operations other than holding all of the outstanding shares of TADAA Technologies Sdn. Bhd. ("TADAA Technologies"), (formerly known as ZCity Sdn Bhd and Gem Reward Sdn. Bhd, underwent a name change on July 31, 2025 and July 20, 2023, respectively) and TADAA Ventures Sdn. Bhd. (formerly known as VWXYZ Venture Sdn Bhd, underwent a name change on July 29, 2025). It was originally established under the laws of the Malaysia on June 6, 2017, through a reverse recapitalization.
Prior to March 11, 2021, TGL and TADAA Technologies were separate companies under the common control of Kok Pin "Darren," Tan which resulted from Mr. Tan's prior 100% ownership of TGL and his prior 100% voting and investment control over TADAA Technologies pursuant to the Beneficial Shareholding Agreements. For a more detailed description of the Beneficial Shareholding Agreements and Mr. Tan's common control over TGL and TADAA Technologies see Part I, Item 1. "Business - Corporate Structure."
On March 11, 2021, TGL and TADAA Technologies were reorganized into a parent subsidiary structure pursuant to the Share Swap Agreement in which TGL exchanged the swap shares for all of the issued and outstanding equity of TADAA Technologies. Pursuant to the Share Swap Agreement, the purchase and sale of the swap shares was completed on March 11, 2021, but the issuance of the swap shares did not occur until October 27, 2021 when TGL amended its certificate of incorporation to increase the number of its authorized common stock to a number that was sufficient to issue the swap shares. As a result of the Share Swap Agreement, (i) TADAA Technologies became the 100% subsidiary of TGL and Kok Pin "Darren" Tan no longer had any control over the TADAA Technologies ordinary shares and (ii) Kok Pin "Darren" Tan the Initial TADAA Technologies Stockholders and Chong Chan "Sam" Teo owned 100% of the shares of TGL common stock (Kok Pin "Darren" Tan owning approximately 97%). Subsequent to the date of the Share Swap Agreement, Kok Pin "Darren" Tan transferred 9,529,002 of his 10,000,000 shares of TGL common stock to 16 individuals and entities and currently owns less than 5% of our common stock.
-TADAA Technologies Operation
We have created an innovative online-to-offline e-commerce platform business model offering consumers and merchants instant rebates and affiliate cashback programs, while providing a seamless e-payment solution with rebates in both e-commerce (i.e., online) and physical retailers/merchant (i.e., offline) settings.
Our proprietary product is an application branded "ZCITY App," which was developed through TADAA Technologies. The ZCITY App was successfully launched in Malaysia on June 2020. TADAA Technologies is equipped with the know-how and expertise to develop additional/add-on technology-based products and services to complement the ZCITY App, thereby growing its reach and user base.
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 November 10, 2025, we had 2,708,782 registered users and 2,027 registered merchants.
Southeast Asia ("SEA") consumers have access to a plethora of smart ordering, delivery and "loyalty" websites and apps, but in our experience, SEA consumers very rarely receive personalized deals based on their purchases and behavior.
The ZCITY App targets consumer through the provision of personalized deals based on consumers' purchase history, location and preferences. Our technology platform allows us to identify the spending trends of our customers (the when, where, why, and how much). We are able to offer these personalized deals through the application of our proprietary artificial intelligence (or "AI") technology that scours the available database to identify and create opportunities to extrapolate the greatest value from the data, analyze consumer behavior and roll out attractive rewards-based campaigns for targeted audiences. We believe this AI technology is currently a unique market differentiator for the ZCITY App.
We operate our ZCITY App on the hashtag: "#RewardsOnRewards." We believe this branding demonstrates to users the ability to spend ZCITY App-based Reward Points (or "RP") and "ZCITY Cash Vouchers" with discount benefits at checkout. Additionally, users can earn rewards from selected e-Wallet or other payment methods.
ZCITY App users do not require any on-going credit top-up or need to provide bank card number with their binding obligations. We have partnered with Malaysia's leading payment gateway, iPay88, for secure and convenient transactions. Users can use our secure platform and enjoy cashless shopping experiences with rebates when they shop with e-commerce and retail merchants through trusted and leading e-wallet providers such as Touch'n Go eWallet, Boost eWallet, GrabPay eWallet and credit card/online banking like the "FPX" (the Malaysian Financial Process Exchange) as well as more traditional providers such as Visa and Mastercard.
-Customized Software development service
During the year ended June 30, 2025, the Company initiated a new revenue stream in the ordinary course of business by offering customized software development services, primarily targeting enterprise clients. As of January 2025, we have entered into a new service partnership with Reveillon Group Limited to design, develop, and implement a comprehensive digital system. This initiative involves the creation of integrated modules focused on improving administrative processes, data analysis, and user engagement. The system is being built with scalability, customization, and long-term performance in mind, ensuring it meets evolving business needs. This collaboration underscores our ongoing commitment to delivering robust and adaptable digital solutions across various industries. The project is scheduled for completion within 12 months of the agreement's start date.
Recent Development
- Corporate Development
On February 11, 2025, we signed a share purchase agreement to acquire a 51% stake in Tien Ming Distribution Sdn Bhd to expand FMCG fulfilment and logistics capabilities. The transaction is expected to be terminated following the lack of control or significant influence over Tien Ming Distribution Sdn Bhd and no business combination was recognized for the six months ended December 31, 2025.
- Reverse Stock Splits
On April 7, 2025, we effected a 1:50 reverse stock split of its shares of common stock ("April 2025 Reverse Split").
On December 5, 2025, we further effected a 1:20 reverse stock split of its shares of common stock ("December 2025 Reverse Split").
We believed it is appropriate to reflect the above transactions on a retroactive basis similar to those after a stock split or dividend pursuant to ASC 260. All shares and per share amounts used herein Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations have been retroactively stated to reflect the effect of the April 2025 Reverse Split and December 2025 Reverse Split.
- Financing Development
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, we intend to issue and sell through or to the Manager, as sales agent and / or principal from time to time of the our common stock at the Market Offering. As of December 31, 2025, the Company received an aggregated net proceed of approximately $2.9 million, net of broker fee from issuance of common stock which sell through or to the Manager.
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 December 31, 2025, Alumni Capital has purchased aggregated total of 644,956 shares of our common stock, while we received an aggregated net proceed of approximately $18.8 million.
On October 7, 2025, we entered into a subscription agreement (the "Agreement") with two investors for the purchase of 17,242 shares of our common stock for aggregate cash consideration of $400,000.
On December 12, 2025, we closed a registered direct offering with certain institutional investors for the purchase and sale of 250,000 shares of its common stock, resulting in net proceeds of $2,160,000, after deducting offering-related costs of $340,000.
-Business Development
Since July 2024, we formalized agreements to develop and implement a Smart Campus System at ELMU University in Nilai, Malaysia. Leveraging our expertise in infrastructure management, we worked with ELMU University to deploy an automated smart campus system that will enhance resource management across the campus, with a strong focus on optimizing electricity usage through integrated software and hardware solutions. During fiscal 2025, following further discussions on program priorities and timing, the parties concluded the engagement. We have ceased work and demobilized. No further performance obligation remains under this engagement.
Since September 2024, we have been driving the development of credit services within the ZCity App through a strategic partnership with Credilab Sdn Bhd ("CLSB"). We are in the midst of facilitating the integration of CLSB's credit services platform into the ZCity App and developing the customer base for these services. Through the partnership, we intend to collaborate on the creation of a digital wallet, AI-driven chatbot, and customer support systems. The collaboration is designed to drive user engagement and enhance the overall credit services offering within the ZCity App ecosystem. The partnership is scheduled to conclude on September 19, 2029, during which CLSB has also granted TGL a non-exclusive right to use its brand in marketing materials for five years.
Since October 2024, we have been advancing our user engagement strategy by partnering with Octagram Investment Limited ("OCTA") to develop and integrate mini-game modules into the ZCity App. We have worked closely with OCTA to design and customize these interactive modules, ensuring they align with our specifications for game mechanics, branding, and user experience. The integration is optimized for cross-platform compatibility and smooth performance across devices, as well as ensuring ongoing support and timely updates, maintaining the seamless functionality of the mini-games with future ZCity App updates. We believe that this initiative is key to enhancing the app's interactive features and driving user engagement.
In October 2024, we have also been developing a cutting-edge Live Streaming Platform enhanced by AI Digital Human Solutions by partnering with V Gallant Sdn Bhd. We will be overseeing the customization of the platform to meet specific requirements, ensuring seamless integration with third-party platforms and optimizing performance across devices. Ongoing support and updates will also be prioritized to maintain consistent functionality. This initiative is central to our efforts to expand our interactive streaming capabilities and elevate user experiences. The development was completed on December 31, 2025.
On October 29, 2024, we entered into a service agreement with V Gallant Sdn Bhd to provide generative AI solutions and AI digital human technology services. On March 24, 2025, we executed a supplemental letter expanding the scope of that agreement to require V Gallant to provide and manage GPU servers, network infrastructure, cloud integration, security measures, AI tools, and user environments to support AI cloud infrastructure.
On March 24, 2025, we executed a supplemental letter expanding the scope of that agreement to require V Gallant to provide and manage GPU servers, network infrastructure, cloud integration, security measures, AI tools, and user environments to support AI cloud infrastructure. During fiscal 2025 we advanced software and AI infrastructure development.
Key Factors that Affect Operating Results
We believe the key factors affecting our financial condition and results of operations include the following:
Our Ability to Create Value for Our Users and Generate Revenue
Our ability to create value for our users and generate our revenues from merchants is driven by the factors described below:
Number and volume of transactions completed by our consumers.
Consumers are attracted to TADAA Technologies by the breadth of personalized deals/rewards and the interactive user experience our platform offers. The number and volume of transaction completed by our member consumers is affected by our ability to continue to enhance and expand our product and service offerings and improve the user experience.
Empowering data and technology.
Our ability to engage our member consumers and empower our merchants and their brands is affected by the breadth and depth of our data insights, such as the accuracy of our members' shopping preferences, and our technology capabilities and infrastructure, and our continued ability to develop scalable services and upgrade our platform user experience to adapt to the quickly evolving industry trends and consumer preferences.
Our Investment in User Base, Technology, People and Infrastructure
We have made, and will continue to make, significant investments in our platform to attract consumers and merchants, enhance user experience and expand the capabilities and scope of our platform. We expect to continue to invest in our research and development team as well as in our technology capabilities and infrastructure, which will lower our margins but deliver overall long-term growth.
Inflation
Although Malaysia is experiencing a high inflation rate, we do not believe that inflation has had a material adverse effect on our business as December 31, 2025, but we will continue to monitor the effects of inflation on our business in future periods.
Supply Chain Disruptions
Although there have been Russia's February 2022 invasion of Ukraine and the 2023 Middle East conflicts that may have affected the operations of some of our online and offline merchants, these disruptions have not had a material adverse effect on our business as of December 31, 2025, but we will continue to monitor the effects of above mentioned disruptions on our business in future periods.
Key Operating Metrics
Our management regularly reviews a number of metrics to evaluate our business, measures our performance, identifies trends, formulates financial projections and makes strategic decisions. The main metrics we consider, and our results for last five quarters, are set forth in the table below:
| For the Quarters Ended | ||||||||||||||||||||
| December 31, | March 31, | June 30, | September 30, | December 31, | ||||||||||||||||
| 2024 | 2025 | 2025 | 2025 | 2025 | ||||||||||||||||
| Number of new registered user (1) | 2,016 | 1,467 | 88 | 517 | 507 | |||||||||||||||
| Number of active users (2) | 21,734 | 10,647 | 4,887 | 4,378 | 4,799 | |||||||||||||||
| Number of new participating merchants | - | - | - | - | - | |||||||||||||||
| (1) | Registered are persons who have registered on the ZCITY App. |
| (2) | Active users are users who have logged into the ZCITY App at least once. |
| As of | As of | As of | As of | As of | ||||||||||||||||
| December 31, | March 31, | June 30, | September 30, | December 31, | ||||||||||||||||
| 2024 | 2025 | 2025 | 2025 | 2025 | ||||||||||||||||
| Accumulated registered users | 2,706,498 | 2,707,965 | 2,708,053 | 2,708,570 | 2,709,077 | |||||||||||||||
| Accumulated Participating merchants | 2,027 | 2,027 | 2,027 | 2,027 | 2,027 | |||||||||||||||
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, 2025. As of December 31, 2025, we recorded 2,709,077 registered users and 4,799 active users on the ZCITY platform. On average, our registered user base has grown by approximately 0.1% over the past five quarters, while our active user numbers have experienced an average decrease of 23.9%.
The decline in growth of registered users and active users over the past five quarters, as of December 31, 2025, is primarily attributed to reduced E-voucher purchases from our vendor, resulting in fewer E-vouchers available for sale. Additionally, we've implemented reductions in marketing spending and customer rewards to enhance cost-effectiveness and operational profitability. Consequently, this has led to a decrease in new user registrations and lower retention rates among active users on our ZCITY platform.
We continuously monitor the development and participation of active users as a proportion of its total registered user base to ensure the effectiveness of our marketing and feature implantation strategies. Accordingly, the proportion of total registered users that we consider active users at the end last five quarters as of December 31, 2025 is as follows:
| Starting | Ending |
Total registered users |
Total users |
Total active
users
registered |
||||||||||
| October 1, 2024 | December 31, 2024 | 2,706,498 | 21,734 | 0.8 | % | |||||||||
| January 1, 2025 | March 31, 2025 | 2,707,965 | 10,647 | 0.4 | % | |||||||||
| April 1, 2025 | June 30, 2025 | 2,708,053 | 4,887 | 0.2 | % | |||||||||
| July 1, 2025 | September 30, 2025 | 2,708,570 | 4,378 | 0.2 | % | |||||||||
| October 1, 2025 | December 31, 2025 | 2,709,077 | 3,754 | 0.1 | % | |||||||||
We continuously monitor the development of the churn and retention rates of the active user base. Active users churn rate is the percentage of customers who had stop subscribing in our platform while retention rate is the percentage of customers who is retained in our platform. Accordingly, our churn and retention rates of the active user base at the end of last five quarters as of December 31, 2025 is as follows:
| Starting | Ending |
Total active users |
New
active |
Existing active users |
Active users churn rate |
Active users retention rate |
||||||||||||||||
| October 1, 2024 | December 31, 2024 | 21,734 | 2,016 | 19,718 | 21.8 | % | 78.2 | % | ||||||||||||||
| January 1, 2025 | March 31, 2025 | 10,647 | 1,467 | 9,180 | 57.8 | % | 42.2 | % | ||||||||||||||
| April 1, 2025 | June 30, 2025 | 4,887 | 88 | 4,799 | 54.9 | % | 45.1 | % | ||||||||||||||
| July 1, 2025 | September 30, 2025 | 4,378 | 517 | 3,861 | 21.0 | % | 79.0 | % | ||||||||||||||
| October 1, 2025 | December 31, 2025 | 3,754 | 507 | 3,247 | 25.8 | % | 74.2 | % | ||||||||||||||
The retention rate and churn rate for our active users are calculated as follows:
| Retention rate of active users for any quarter | = | Existing active users |
| Total active users in the past quarter |
| Churn rate of active users for any quarter | = | Total active users from past quarter minus current quarter existing active users |
| Total active users in the past quarter |
We have used different strategies to build and maintain our users and increase their engagement. Initially, we focused on mass marketing strategies to attract registered users. Subsequently, we have shifted to a more targeted approach focused on increasing user engagement and user spending.
Results of Operation
For the three months ended December 31, 2025 and 2024
Revenue
Our breakdown of revenues by categories for the three months ended December 31, 2025 and 2024, respectively, is summarized below:
| For the Three Months Ended December 31, | Change | |||||||||||||||||||
| 2025 | % | 2024 | % | % | ||||||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||||||
| Product and loyalty program revenue | $ | 1,078,417 | 99.8 | % | $ | 268,259 | 88.9 | % | 302.0 | % | ||||||||||
| Transaction revenue | 2,575 | 0.2 | % | 28,478 | 9.4 | % | (91.0 | )% | ||||||||||||
| Member subscription revenue | - | - | % | 5,161 | 1.7 | % | (100.0 | )% | ||||||||||||
| Total revenues | $ | 1,080,992 | 100.0 | % | $ | 301,898 | 100 | % | (258.1 | )% | ||||||||||
Total revenues increased by approximately $0.8 million or 258.1% to approximately $1.1 million for the three months ended December 31, 2025 from approximately $0.3 million for the three months ended December 31, 2024. The increase was mainly attributable to increase in revenue from product and loyalty program revenue, offset by decrease in transaction revenue and member subscription revenue offset by.
Product and loyalty program revenue
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. The product and loyalty program revenue increased by approximately $0.8 million or 302.0% to approximately $1.1 million for the three months ended December 31, 2025 from approximately $0.3 million for the same period in 2024. The increase was driven primarily by higher demand for our e-voucher product, which resulted in increased sales volume.
Transaction revenue
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. In addition, transaction revenue includes fees earned through our recent partnership with Credilab Sdn. Bhd. ("CLSB"), a third-party credit services provider. Under that agreement, we refer our portfolio clients from TADAA Technologies Sdn. Bhd. (ZCITY's operating subsidiary) to CLSB's credit service platform; in return CLSB pays us a transaction fee for each successful transaction and agrees to share 50 % of the revenue derived from those portfolio clients.
Our transaction revenue decreased by 91.0%, to approximately $3,000 for the three months ended December 31, 2025, compared to approximately $28,000 for the same period in 2024. This decline was mainly due to less usage from merchants on our ZCITY platform and reduced transaction volume resulting from fewer successful referrals through our partnership with CLSB.
Member subscription revenue
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, 2025, member subscription revenue decreased by 100.0% to $0, from approximately $5,000 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 December 31, 2025 and June 30, 2025, we had 27,620 customers who subscribed to our Zmember program.
Cost of revenue
Our breakdown of cost of revenue by categories for the three months ended December 31, 2025, and 2024, respectively, is summarized below:
|
For the Three Months Ended December 31, |
Change | |||||||||||
| 2025 | 2024 | % | ||||||||||
| (Unaudited) | (Unaudited) | |||||||||||
| Product and loyalty program revenue | $ | 1,080,085 | $ | 77,947 | 1,285.7 | % | ||||||
| Total cost of revenue | $ | 1,080,085 | $ | 77,947 | 1,285.7 | % | ||||||
Cost of revenue primarily consists of purchases of gift cards or "E-voucher" PIN codes, and healthcare products, which are directly attributable to our product revenue. Total cost of revenue increased by approximately $1.0 million, or 1,285.7%, for the three months ended December 31, 2025 compared to the same period in 2024. The increase was mainly due to increase of product and loyalty program revenue and higher product cost.
Gross profit
Our gross profit from our major revenue categories is summarized as follows:
|
For the Three Months Ended December 31, 2025 |
For the
December 31, |
Change |
Percentage Change |
|||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
| Product and loyalty program revenue | ||||||||||||||||
| Gross profit | $ | (1,668 | ) | $ | 190,312 | $ | (191.980 | ) | (100.9 | )% | ||||||
| Gross margin | (0.2 | )% | 70.9 | % | (71.1 | )% | ||||||||||
| Transaction revenue | ||||||||||||||||
| Gross profit | $ | 2,575 | $ | 28,478 | $ | (25.903 | ) | (91.0 | )% | |||||||
| Gross margin | 100.0 | % | 100.0 | % | - | % | ||||||||||
| Member subscription revenue | ||||||||||||||||
| Gross profit | $ | - | $ | 5,161 | $ | (5,161 | ) | (100.0 | )% | |||||||
| Gross margin | - | % | 100.0 | % | (100.0 | )% | ||||||||||
| Total | ||||||||||||||||
| Gross profit | $ | 907 | $ | 223,951 | $ | (223,044 | ) | (99.6 | )% | |||||||
| Gross margin | 0.1 | % | 74.2 | % | (74.1 | )% | ||||||||||
Our gross profit for the three months ended December 31, 2025, amounted to approximately $1,000 as compared to approximately $0.2 million for the same period in 2024, reflecting an decrease of approximately $0.2 million or 99.6%. Our gross margin decreased from 74.2% for the three months ended December 31, 2024 to 0.1% for the same period in 2025, representing a decline of 74.1% in our gross margin percentage.
The decrease in gross profit for the three months ended December 31, 2025 was primarily attributable to a decline in gross profit from product and loyalty program revenue, driven by higher procurement costs for certain popular e-voucher products purchased for resale. In addition, the decrease in gross profit was also impacted by lower transaction revenue and the absence of member subscription revenue during the period.
Operating expenses
Our operating expenses consist of selling expenses, general and administrative expenses, research and development expenses and stock-based compensation expenses.
Selling expenses
Selling expenses amounted to approximately $25,000 and $40,000 for the three months ended December 31, 2025 and 2024, respectively, representing a decrease of approximately $15,000 or 37.8%. The decrease was mainly attributable to decrease of marketing and promotion expense 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, 2025 and 2024, we incurred approximately $328 and $9,000, 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.
General and administrative expenses
General and administrative expenses amounted to approximately $3.8 million and $0.8 million for the three months ended December 31, 2025 and 2024, respectively, representing a increase of approximately $3.0 million or 389.3%. The increase was driven primarily by higher costs associated with administrative functions, including incremental staffing and increased professional service fees to support our operations, and approximately $3.0 million increase in impairment loss from our intangible assets.
Research and development expenses
Research and development expense amounted to approximately $25,000 and $33,000 for the three months ended December 31, 2025 and 2024, respectively, representing 25.5% decrease.
Stock-based compensation expenses
Stock-based compensation expenses amounted to approximately $0.8 million and $70,000 for the three months ended December 31, 2025, and 2024, respectively. The stock-based compensation incurred for the three months ended December 31, 2025 and 2024, was related to compensation paid to our executive officers and other employees as part of their compensation plan and third party for professional service.
Other income, net
Other income, net, amounted to approximately $4.6 and $0.5 million for the three months ended December 31, 2025 and 2024, respectively. This change was primarily attributable to (i) an increase in gain from the change in fair value of derivative liabilities of approximately $4.6 million from issuance of warrant in connection with the Share Purchase Agreement, offset by (ii) a decrease in unrealized gain of approximately $0.5 million on marketable securities as the marketable securities were disposed during the year ended June 30, 2025.
Provision for income taxes
Provision for income taxes amounted to approximately $100,000 and $9,000 for the three months ended December 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 December 31, 2025 and 2024, our foreign subsidiaries did not generate any income that are subject to Subpart F tax and GILTI tax.
Net loss
We generated net loss of approximately $3.1 million and $0.2 million for the three months ended December 31, 2025 and 2024, respectively, representing a change of approximately $2.9 million. The change was primarily attributable to the factors discussed above.
For the six months ended December 31, 2025 and 2024
Revenue
Our breakdown of revenues by categories for the six months ended December 31, 2025 and 2024, respectively, is summarized below:
| For the Six Months Ended December 31, | Change | |||||||||||||||||||
| 2025 | % | 2024 | % | % | ||||||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||||||
| Product and loyalty program revenue | $ | 1,259,936 | 99.7 | % | $ | 350,004 | 68.7 | % | 260.0 | % | ||||||||||
| Transaction revenue | 3,583 | 0.3 | % | 71,558 | 14.1 | % | (95.0 | )% | ||||||||||||
| Member subscription revenue | - | - | % | 87,707 | 17.2 | % | (100.0 | )% | ||||||||||||
| Total revenues | $ | 1,263,519 | 100.0 | % | $ | 509,269 | 100.0 | % | 148.1 | % | ||||||||||
Total revenues increased by approximately $0.8 million or 148.1% to approximately $1.3 million for the six months ended December 31, 2025 from approximately $0.5 million for the six months ended December 31, 2024. The decrease was mainly attributable to increase in revenue from product and loyalty program revenue, offset by the decrease in transaction revenue and member subscription revenue.
Product and loyalty program revenue
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. The product and loyalty program revenue increased by approximately $0.9 million or 260.0% to approximately $1.3 million for the six months ended December 31, 2025 from approximately $0.4 million for the same period in 2024. The increase was driven primarily by higher demand for our e-voucher product, which resulted in increased sales volume.
Transaction revenue
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. In addition, transaction revenue includes fees earned through our recent partnership with Credilab Sdn. Bhd. ("CLSB"), a third-party credit services provider. Under that agreement, we refer our portfolio clients from TADAA Technologies Sdn. Bhd. (ZCITY's operating subsidiary) to CLSB's credit service platform; in return CLSB pays us a transaction fee for each successful transaction and agrees to share 50% of the revenue derived from those portfolio clients.
Our transaction revenue decreased by 95.0%, to approximately $4,000 for the six months ended December 31, 2025, compared to approximately $72,000 for the same period in 2024. This decline was mainly due to less usage from merchants on our ZCITY platform and reduced transaction volume resulting from fewer successful referrals through our partnership with CLSB.
Member subscription revenue
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, 2025, member subscription revenue decreased by 100.0% to $0, from approximately $88,000 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 December 31, 2025 and June 30, 2025, we had 27,620 customers who subscribed to our Zmember program.
Cost of revenue
Our breakdown of cost of revenue by categories for the six months ended December 31, 2025, and 2024, respectively, is summarized below:
|
For the Six Months Ended December 31, |
Change | |||||||||||
| 2025 | 2024 | % | ||||||||||
| (Unaudited) | (Unaudited) | |||||||||||
| Product and loyalty program revenue | $ | 1,261,326 | $ | 113,146 | 1,014.8 | % | ||||||
| Total cost of revenue | $ | 1,261,326 | $ | 113,146 | 1,014.8 | % | ||||||
Cost of revenue primarily consists of purchases of gift cards or "E-voucher" PIN codes, and healthcare products, which are directly attributable to our product revenue. Total cost of revenue increased by approximately $1.1 million, or 1,014.8%, for the six months ended December 31, 2025 compared to the same period in 2024. The increase was mainly due to increase of product and loyalty program revenue and higher product cost.
Gross profit
Our gross profit from our major revenue categories is summarized as follows:
|
For the Six Months Ended December 31, 2025 |
For the
December 31, |
Change |
Percentage Change |
|||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
| Product and loyalty program revenue | ||||||||||||||||
| Gross profit | $ | (1,390 | ) | $ | 236,858 | $ | (238,248 | ) | (100.6 | )% | ||||||
| Gross margin | (0.1 | )% | 67.7 | % | (67.8 | )% | ||||||||||
| Transaction revenue | ||||||||||||||||
| Gross profit | $ | 3,583 | $ | 71,558 | $ | (67,975 | ) | (95.0 | )% | |||||||
| Gross margin | 100.0 | % | 100.0 | % | - | % | ||||||||||
| Member subscription revenue | ||||||||||||||||
| Gross profit | $ | - | $ | 87,707 | $ | (87,707 | ) | (100.0 | )% | |||||||
| Gross margin | - | % | 100.0 | % | (100.0 | )% | ||||||||||
| Total | ||||||||||||||||
| Gross profit | $ | 2,193 | $ | 396,123 | $ | (393,930 | ) | (99.4 | )% | |||||||
| Gross margin | 0.2 | % | 77.8 | % | (77.6 | )% | ||||||||||
Our gross profit for the six months ended December 31, 2025, amounted to approximately $2,000 as compared to approximately $0.4 million for the same period in 2024, reflecting a decrease of approximately $0.4 million or 99.4%. Our gross margin decreased from 77.8% for the six months ended December 31, 2024 to 0.2% for the same period in 2025, representing an decline of 77.6% in our gross margin percentage.
The decrease in gross profit for the three months ended December 31, 2025 was primarily attributable to a decline in gross profit from product and loyalty program revenue, driven by higher procurement costs for certain popular e-voucher products purchased for resale. In addition, the decrease in gross profit was also impacted by lower transaction revenue and the absence of member subscription revenue during the period.
Operating expenses
Our operating expenses consist of selling expenses, general and administrative expenses, research and development expenses and stock-based compensation expenses.
Selling expenses
Selling expenses amounted to approximately $46,000 and $0.1 million for the six months ended December 31, 2025 and 2024, respectively, representing a decrease of approximately $72,000 or 61.2%. The decrease was mainly attributable to decrease in marketing and promotion expense 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, 2025 and 2024, we incurred approximately $1,300 and $30,000, 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.
General and administrative expenses
General and administrative expenses amounted to approximately $4.6 million and $1.6 million for the six months ended December 31, 2025 and 2024, respectively, representing a increase of approximately $3.1 million or 196.3%. The increase was driven primarily by higher costs associated with administrative functions, including incremental staffing and increased professional service fees to support our operations. The increase is also attributable to increase of approximately $0.3 million of impairment loss from our intangible assets.
Research and development expenses
Research and development expense amounted to approximately $0.8 million and $80,000 for the six months ended December 31, 2025 and 2024, respectively, representing 899.0% increase as we incurred more spending in A.I related infrastructure development. The increase primarily reflects costs for software engineering, cloud infrastructure and GPU-related development supporting the live-streaming/AI program described in "Business Development."
Stock-based compensation expenses
Stock-based compensation expenses amounted to approximately $0.9 million and $0.1 million for the six months ended December 31, 2025, and 2024, respectively. The stock-based compensation incurred for the six months ended December 31, 2025 and 2024, was related to compensation paid to our executive officers and employees as part of their compensation plan and third party for professional service.
Other income, net
Other income, net, amounted to approximately $4.3 and 0.3 million for the six months ended December 31, 2025 and 2024, respectively. This change was primarily attributable to (i) an increase in gain from the change in fair value of derivative liabilities of approximately $4.2 million from issuance of warrant in connection with the Share Purchase Agreement, offset by (ii) a decrease in unrealized income of approximately $0.3 million on marketable securities as the marketable securities were disposed during the year ended June 30, 2025.
Provision for income taxes
Provision for income taxes amounted to approximately $100,000 and $21,000 for the six months ended December 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 six months ended December 31, 2025 and 2024, our foreign subsidiaries did not generate any income that are subject to Subpart F tax and GILTI tax.
Net loss
We generated net loss of approximately $5.2 million and $1.2 million for the six months ended December 31, 2025 and 2024, respectively, representing a change of approximately $4.1 million. The change was primarily attributable to the factors discussed above.
Liquidity and Capital Resources
In assessing liquidity, we monitor and analyze cash on-hand and operating expenditure commitments. Our liquidity needs are to meet working capital requirements and operating expense obligations. To date, we financed our operations primarily through cash flows from contribution from stockholders, issuance of convertible notes, related party loans and our completion of initial underwritten public offering.
As of December 31, 2025 and June 30, 2025, we had approximately $5.5 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.
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 December 31, 2025, we have received an aggregated net proceed of approximately $2.9 million, net of broker fee from issuance of 1,678 shares of common stock which sell through or to the Manager.
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 December 31, 2025, Alumni Capital has purchased aggregated total of 644,956 shares of our common stock, while we received an aggregated net proceed of approximately $18.8 million.
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 3,567 shares of the Company's common stock (the "Offered Shares"), par value $0.00001 at a negotiated purchase price of $330 (the "Offering"). As of December 31, 2025, we had issued 3,567 shares of Offered Shares to the Investors and received aggregate net proceed of $1,177,000.
On October 7, 2025, we entered into subscription agreements (the "Subscription Agreement 2") with two investors ("Investors 2") for the purchase of 17,242 shares of the Company's common stock for aggregate cash consideration of $400,000. As of December 31, 2025, we issued all 17,242 shares to the Investors 2 for total consideration of $400,000.
On December 12, 2025, we closed a registered direct offering with certain institutional investors for the purchase and sale of 250,000 shares of its common stock, resulting in net proceeds of $2,160,000, after deducting offering-related costs of $340,000.
Despite receiving the proceeds from various offerings, management is of the opinion that we will not have sufficient funds to meet the working capital requirements and debt obligations as they become due starting from one year from the date of this report due to our recurring loss. Therefore, management has determined there is substantial doubt about our ability to continue as a going concern. If we are unable to generate significant revenue, we may be required to curtail or cease our operations. Management is trying to alleviate the going concern risk through the following sources:
| ● | Equity financing to support our working capital; |
However, there is no guarantee that the substantial doubt about our ability to continue as a going concern will be alleviated.
The following summarizes the key components of our cash flows for the six months ended December 31, 2025 and 2024:
| For the Six Months Ended | ||||||||
|
December 31, 2025 (Unaudited) |
December 31, 2024 (Unaudited) |
|||||||
| Net cash used in operating activities | $ | (4,731,560 | ) | $ | (1,582,518 | ) | ||
| Net cash used in investing activities | (1,037,513 | ) | (2,193,461 | ) | ||||
| Net cash provided by financing activities | 10,960,046 | 3,944,684 | ||||||
| Effect of exchange rate on cash and cash equivalents | 24,587 | (110,140 | ) | |||||
| Net change in cash and cash equivalents | $ | 5,215,561 | $ | 58,565 | ||||
Operating Activities
Net cash used in operating activities for the six months ended December 31, 2025 was approximately $4.7 million and was mainly comprised of (i) the net loss of approximately $5.2 million, (ii) non-cash items of change in fair value of derivative liabilities amounted to approximately $4.2 million, (iii) increase of other receivable and other assets of approximately $1.4 million which due to prepayment to certain developers for the development of our internal AI software, (v) decrease of approximately $88,000 in other payables and accrued liabilities reflecting the timely settlement of certain accrued expenses, and (vi) increase of inventories of approximately $0.1 million as we increase our purchase and intended to maintain a more effective inventory level, offset by (i) non-cash items of depreciation, amortization, loss from disposal of equipment, stock-based compensation, long-live assets impairment and allowance for credits losses amounted to approximately $6.1 million, (ii) decrease in accounts receivable of approximately $0.1 million due to timely collection, an (iii) increase in income tax payable due to additional tax accrued.
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.
Investing Activities
Net cash used in investing activities for the six months ended December 31, 2025 was approximately $1.0 million which mainly due to approximately $1.0 million in purchase of property and equipment, approximately $7,000 prepayment of purchase consideration for acquisition of Tien Ming Distribution Sdn Bhd, and the remittance of approximately $53,000 to CLSB as a collaboration deposit to support CLSB's credit service activities for the Portfolio Clients.
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
Financing Activities
Net cash provided financing activities the six months ended December 31, 2025 was approximately 11.0 million, which mainly comprised of approximately $7.1 million net proceeds received from Share Purchase Agreement, approximately $1.4 million net proceeds received from exercise of warrants into common stock, approximately 2.5 million net proceeds received from direct offering, and approximately $0.4 million net proceeds received from private placement, offset by payments of insurance loan and related party loan of approximately $40,000 and payment of offering cost of approximately $0.3 million.
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.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements including arrangements that would affect our liquidity, capital resources, market risk support and credit risk support or other benefits.
Critical Accounting Estimate
Our consolidated financial statements and accompanying notes have been prepared in accordance with U.S. GAAP. The preparation of these consolidated financial statements and accompanying notes requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We have identified certain accounting estimates that are significant to the preparation of our financial statements. These estimates are important for an understanding of our financial condition and results of operation. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management's current judgments. We believe the following critical accounting estimates involve the most significant estimates and judgments used in the preparation of our financial statements.
The preparation of these consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the periods presented. Significant accounting estimates reflected in our consolidated financial statements include the estimated retail price per point and estimated breakage to calculate the revenue recognized in our loyalty program revenue, the useful lives of property and equipment, impairment of long-lived assets, provision for estimated credit losses, write-down for estimated obsolescence or unmarketable inventories, realization of deferred tax assets and uncertain tax position, fair value of our stock price to determine the beneficial conversion feature ("BCF") within the convertible note, fair value of the stock-based compensation, fair value of the marketable securities and fair value of the warrants issued. Actual results could differ from these estimates.
Accounts receivable, net
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. 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, 2025 and June 30, 2025, we recorded $705,089 and $9,924 of provision for estimated credit losses, respectively.
Inventories
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, 2025 and 2024, no write-downs for estimated obsolescence or unmarketable inventories were recorded.
Other receivables and other current assets, net
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, 2025 and June 30, 2025, we have provided allowance for credit loss of $2,423,937 and $1,078,353, respectively.
Impairment for long-lived assets
Long-lived assets, including property and equipment with finite lives are reviewed for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying value of an asset may not be recoverable. We assessed the recoverability of the assets based on the undiscounted future cash flows the assets are expected to generate and recognize an impairment loss when estimated undiscounted future cash flows expected to result from the use of the asset plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. If an impairment is identified, we would reduce the carrying amount of the asset to its estimated fair value based on a discounted cash flows approach or, when available and appropriate, to comparable market values. $22,562,180 and $19,517,303 impairment for long-lived assets were recorded as of December 31, 2025 and June 30, 2025.
Investment in marketable securities
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 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 consolidated statements of comprehensive income. For the three and six months ended December 31, 2025, we recorded an unrealized holding loss on marketable securities of $0. 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.
Revenue recognition
Loyalty program
| - | Performance obligations at a point in time |
Our TADAA Technologies reward loyalty program allows members to earn points on purchases that can be redeemed for rewards that include discounts on future purchases. When members purchase our product or make purchase with our participated vendor through TADAA Technologies, we allocate the transaction price between the product or service, and the reward points earned based on the relative stand-alone selling prices and expected point redemption. The portion allocated to the reward points is initially recorded as contract liability and subsequently recognized as revenue upon redemption or expiration.
The two primary estimates utilized to record the contract liability for reward points earned by members are the estimated retail price per point and estimated breakage. The estimated retail price per point is based on the actual historical retail prices of product purchased or service obtained through the redemption of reward points. We estimate breakage of reward points based on historical redemption rates. We continually evaluate our methodology and assumptions based on developments in retail price per point redeemed, redemption patterns and other factors. Changes in the retail price per point and redemption rates have the effect of either increasing or decreasing the contract liability through current period revenue by an amount estimated to represent the retail value of all points previously earned but not yet redeemed by loyalty program members as of the end of the reporting period.
Customized Software development Service revenue
| - | Performance obligations satisfied over time |
We recognize revenue from customized software development services over time using the cost-to-cost input method to measure progress toward satisfaction of our performance obligations. This approach requires us to make critical estimates and judgments, including determining total estimated costs to complete each contract and assessing progress toward completion. Changes in project scope, complexity, or estimated costs may significantly impact the timing and amount of revenue we recognize. We also evaluate whether we have an enforceable right to payment for performance completed to date and whether control is transferred continuously to the customer. Any revisions to total estimated contract costs or anticipated losses are recorded in the period in which the changes are identified.
Income taxes
Deferred taxes are accounted for using the asset and liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the consolidated financial statements and the corresponding tax basis used in the computation of assessable tax profit. In principle, deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which deductible temporary differences can be utilized. Deferred tax is calculated using tax rates that are expected to apply to the period when the asset is realized or the liability is settled. Deferred tax is charged or credited in the income statement, except when it is related to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.
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.
Stock-based compensation
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, 2025 and 2024, we have incurred stock-based compensation from our officer and third party service provider amounted to approximately $0.5 million and $0.1 million, respectively.
Warrants
| - | Fair value of Alumni Capital warrants |
We account for the purchase warrants issued to Alumni Capital LP ("Alumni Capital") as liabilities, which are remeasured at fair value at each reporting period, with changes in fair value recognized in our consolidated statements of operations. The fair value of these warrants is estimated using the Black-Scholes option pricing model, which requires the use of significant judgment and assumptions, including expected stock price volatility, risk-free interest rate, expected life of the warrant, and the market price and exercise price of our common stock. These assumptions are highly subjective and inherently uncertain, and changes in any of these inputs can materially affect the estimated fair value of the warrant liability.
The fair value of the warrants issued to Alumni Capital which was determined on grant dates by using the Black Scholes model using the following assumptions: (1) expected volatility of 160.20% to 182.34%, (2) risk-free interest rate of 3.52% to 4.37%, (3) expected life of 2.0 years to 2.8 years, (4) exercise price of $23.37 to $103.00 and (5) stock price of $21.60 to $390.00 on grant date, the date of which the warrants were issued. Based on above assumption, the fair value of the warrants were estimated to be $5,331,798.
As of June 30, 2025, The fair value of the warrants issued to Alumni Capital was determined by using the Black Scholes model using the following assumptions: (1) expected volatility of 162.92% to 167.27%, (2) risk-free interest rate of 3.71%, (3) expected life of 2.3 years, (4) exercise price of $24.00 to $41.00 and (5) stock price of $1.10 on June 30, 2025. Based on above assumption, the fair value of the warrants were estimated to be $383,886.
The fair value of the warrants issued to Alumni Capital which was determined on December 31, 2025 by using the Black Scholes model using the following assumptions: (1) expected volatility of 182.3%, (2) risk-free interest rate of 3.47%, (3) expected life of 1.8 years, (4) exercise price of $5.10 and (5) stock price of $6.13 on December 31, 2025. Based on above assumption, the fair value of the warrants was estimated to be $2,349,273.
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