TGL 10-K & 10-Q changes, risk factors and insider trading

We have incurred substantial operating losses since our inception. For For the year ended June 30, 2024,2025, we had approximately $200,013$0.2 million cash on hand, an accumulated deficit of approximately $38.0$61.4 million at June 30, 2024, a net loss of approximately $6.59$23.4 million for the year ended June 30, 2024,2025, and approximately $4.7$9.5million million net cash used by operating activities for the year ended June 30, 2024.2025. The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. We anticipate incurring additional losses until such time, if ever, that we will be able to effectively market our products.

We have entered into material contracts with a number of companies that directly or indirectly provide the goods and services that appear on our ZCITY App. The majority of these contracts can be terminated by any party with 30 days’ notice. The contract with iPay88 (the “iPay88 Agreement”), which provides the payment gateway for many of the brands that can be accessed through the ZCITY App, has no termination clause which means that iPay88 could terminate the iPay88 Agreement without any notice. If one or more of these contracts were not renewed or were terminated and we were not able to enter into agreements with others that could replace these services, the ZCITY App could lose material features and in turn we could find it harder to maintain and grow our user base, which would have a material adverse effect on our business. For a description of these material contracts See “Business —- About ZCITY App.”

We were founded in 2020 and ZCITYTADAA Technologies was founded in 2017 and since our inception have been creating products for the developing and rapidly evolving market for API-based software platforms, platforms, a market that is largely unproven and is subject to a number of inherent risks and uncertainties. We believe that our future success will depend in large part on the growth, if any, in the market for software platforms that provide features and functionality to create the entire lifestyle ecosystem. It is difficult to predict customer adoption and renewal rates, customer demand for our solutions, the size and growth rate of the overall market that our ZCITY App addresses, the entry of competitive products or the success of existing competitive competitive products. Any expansion of the market our ZCITY App addresses depends upon a number of factors, including the cost, performance and perceived value associated with such solutions. If the market our ZCITY App addresses does not achieve significant additional growth or there is a reduction in demand for such solutions caused by a lack of customer acceptance, technological challenges, competing technologies and and products or decreases in corporate spending, it could have a material adverse effect on our business, results of operations and financial condition.

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 ZCityTADAA SdnTechnologies BhdSdn. Bhd. (“ZCITYTADAA 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 20,29, 20232025). 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 ZCITYTADAA 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 ZCITYTADAA 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 ZCITYTADAA Technologies see Part I, Item 1. “Business – Corporate Structure.”

On March 11, 2021, TGL and ZCITYTADAA 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 ZCITY.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) ZCITYTADAA Technologies became the 100% subsidiary of TGL and Kok Pin “Darren” Tan no longer had any control over the ZCITYTADAA Technologies ordinary shares and (ii) Kok Pin “Darren” Tan the Initial ZCITYTADAA 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.

-ZCITY-TADAA Technologies Operation

Our proprietary product is an application branded “ZCITY App,” which was developed through ZCITY.TADAA Technologies. The ZCITY App was successfully launched in Malaysia on June 2020. ZCITYTADAA Technologies is equipped with the know-how and expertise to develop additional/add-on technology-based products and services to complement the ZCITY App, 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 SeptemberFebruary 25,10, 2024,2025, we had 2,704,3062,707,610 registered users and 2,027 registered merchants.

Recent Development -Financing- Corporate Development

On November 30, 2023, we closed our underwritten public offering (the “November 2023 Offering”) of (i) 371,629 (26,014,000 pre reverse split)7,433 shares of common stock, at a public offering price of $7 ($0.10 pre reverse split)$350 per share of Common Stock and (ii) 14,000,0004000 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 $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.

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. ForAs the year endedof June 30, 2024,2025, we have received an aggregated net proceed of $431,811,approximately $2.9 million, net of broker fee from issuance of 94,88933,566 shares of common stock which sell through or to the Manager.

Consumers are attracted to ZCITYTADAA 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.

We have experienced a decrease in growth rate in registered users, and a decline of active users over our last five quarters as of June 30, 2024.2025. As of June 30, 2024,2025, we recorded 2,701,1892,708,053 registered users and 26,8194,887 active users on the ZCITY platform. On average, our registered user base has grown by approximately 2.0%0.1% over the past five quarters, while our active user numbers have experienced an average declinedecrease of 38.3%.32.0%.

Total revenues decreased by approximately $47.3$19.7 million or 68.2%89.4% to approximately $2.3 million for the years ended June 30, 2025 from approximately $22.1 million for the year ended June 30, 2024 from approximately $69.4 million for the yearyears ended June 30, 2023.2024. The decrease was mainly attributable to the decrease in product and loyalty program revenue.revenue offset by increase in revenue from customized software development service .

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 $47.4$20.8 million or 68.9%97.1% to approximately $21.5$0.6 million for the yearyears ended June 30, 20242025 from approximately $68.9$21.5 million for the same period in 2023.2024. The decreasedecline in revenue was primarily attributabledriven 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.

The transactionTransaction revenue primarily consists of fees charged to merchants for participating in our ZCITY platform upon successful sales transactionand andservice transactions, as well as for payment serviceservices taken placefacilitated between the merchants and their customers online. Our transaction revenue decreasedincreased by 18.6%107.6%, reaching approximately $127,000 for the years ended June 30, 2025, compared to approximately $61,000 for the year ended June 30, 2024 from approximately $75,000 for the same period in 20232024. dueThis 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 TADAA Technologies to lackCLSB’s credit service platform. In return, CLSB agreed to pay us a transaction fee upon successful transactions and share 50% of new enrolment of merchant client. Our average percentage of growth of new merchants was approximately 0.2% throughout the quartersrevenue asderived offrom Junethese 30,Portfolio 2024.Clients.

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 yearyears ended June 30, 2024,2025, member subscription revenue decreased by 2.0%72.5% to approximately $376,000,$0.1 million, from approximately $384,000$0.4 million for the same period in 2023.2024. The decrease was primarily due to we experienced slowdown in acquiring new customers to participate in our Zmember program .program. As of June 30, 20242025 and 2023,2024, we had 28,92727,620 and 22,86128,927 customers who subscribed to our Zmember program, respectively.

As we acquired exclusive worldwide license for right of use in Morganfield’s Trademark, and Abe Yus’s Trademark on May 1, 2023, and June 6, 2023, respectively, for a period of five years, we have generated sublicense revenue consisting of fee charged to the customers who sublicensed the right of use of the Trademark from us. For the years ended June 30, 2024 and 2023, sublicense revenue was amounted to approximately $174,000 and $50,000, respectively. As we had disposed Foodlink and its subsidiaries along with the food distribution and sublicensing operation in May 2024, 2024, we would no longer generate revenue from sublicense going forward.

Cost of revenue mainlyprimarily consists of the purchases of the gift cardcards or “E-voucher” pinPIN code,codes, healthhealthcare care productproducts, and food and beverage productsproducts, which isare directly attributable to our product revenue. Cost of revenueIt also consists ofincludes monthly license paymentpayments made to our licensor to maintain our good standing for the right ofto use the TrademarkTrademark, which is attributable to 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 $47.6 million$21.0 million, or 69.2%96.9%, for the yearyears ended June 30, 2024 2025, compared withto the same period in 2023.2024. The decrease was in lineconsistent with the decline in our decrease in revenue.

Our gross profit for the year ended June 30, 2024,2025, amounted to approximately $0.8$1.7 million as compared to approximately $0.5$0.8 million for the same period in 2023,2024, reflecting an increase of approximately $0.3$0.8 million or 56.0%.104.6%. Our gross margin improved fromto 0.8%71.6% for the year ended June 30, 20232025 from 3.7% for the same period in 2024, representing an enhancement of 2.9%67.9% in our gross margin percentage.

Selling expenses amounted to approximately $1.8$0.1 million and $4.7$1.8 million for the years ended June 30, 20242025 and 2023,2024, respectively, representing a decrease of approximately $3.0$1.6 million or 62.7%.92.6%. The decrease was mainly attributable to a decrease in marketing and promotion expense of approximately $2.8$1.2 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 years ended June 30, 20242025 and 2023,2024, we incurred approximately $0.4 million$34,000 and $1.8$0.4 million, respectively, in marketing and promotion expense, and recognized the same amount of 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 amounted to approximately $4.5 million $3.6 and $4.7$4.5 million for the years ended June 30, 20242025 and 2023,2024, respectively, representing a decrease of approximately $0.2 $0.9 million or 3.4%. 19.5%. The decrease was primarily attributed to decrease in salary expenses andof approximately $0.8 million, decrease of professional fee of approximately $0.4 million, decrease of D&O insurance of approximately $0.6 million, and decrease of depreciation and amortization expense of approximately $0.6$0.2 million and $0.7 million, respectively, to promote our operation effectiveness, offset by the increase in depreciation and amortization expense of approximately $0.6 million as we acquired more intangible assets during the year ended June 30, 2024, and incurred more bad debts expense of approximately $0.4 million due to increase of allowance for credit loss against accounts receivable and other receivables.effectiveness.

Research and development expense amounted to approximately $0.2 million and $0.5 million for the years ended June 30, 20242025 and 2023,2024, respectively, representing 6.5%58.0% decreaseincrease as we incurred lessmore spending in A.I mobilerelated application or websiteinfrastructure 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 amounted to approximately $0.1$0.3 million and $0.8$0.1 million for the years ended June 30, 2024,2025, and 2023,2024, respectively. The stock-based compensation incurred for the years ended June 30, 2025 and 2024, was related to compensation paid to our executive officer as part of their compensation plan and third party for professional service. The increase in stock-based compensation during the year ended June 30, 2025, was primarily attributable to the our decision to grant additional equity incentives to our executive officer in order to align their interests with those of our shareholders and to encourage their continued commitment toward supporting the our long-term growth.

Other expense,income (expense), net

Provision for income taxes amounted to approximately $349,000 $40,000 and $98,000$40,000 for the years ended June 30, 2024 and 2023, respectively.2023. 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 years ended June 30, 20242025 and 2023,2024, our foreign subsidiaries did not generate any any income that are subject to Subpart F tax and GILTI tax.

Net lossesloss

As of June 30, 20242025 and 2023,2024, we had approximately $0.2 million and $4.6 million, respectively, in cash and cash equivalent which primarily consists of bank deposits, which are unrestricted as to withdrawal and use.

On November 30, 2023, we closed our November 2023 Offering of (i) 26,014,0007,433 shares of common stock, at a public offering price of $0.10$350 per share,share of Common Stock and (ii) 14,000,0004000 pre-funded warrants (the “Pre-Funded Warrants, Warrants”), each with the right to purchase one share of Common Stock, at a public offering price of $0.0999$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, discounts and commission, and non-accountable expense.

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. ForAs the year endedof June 30, 2024,2025, we have received an aggregated net proceed of $431,811,approximately $2.9 million, net of broker fee from issuance of 94,88933,566 shares of common stock which sell through or to the Manager.

As a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, and in item 10(f)(1) of Regulation S-K, S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information requested by this item. item. In any event, there have been no material changes in our risk factors as previously disclosed in our Annual Report on Form 10-K for the year ended June 30, 2025, filed with the SEC on October 14,16, 2025, as amended,2025 and our applicable risk factors in our Registration Statement on Form S-1 (File No. 333-275411), initially filed with the SEC on November 8, 2023.

Recent Development - Corporate Development

On February 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 and logistics capabilities. The transaction is expected to be terminated following the lack of control or significant influence over Tien Tien Ming Distribution Sdn Bhd and no business combination was recognized for the sixnine months ended DecemberMarch 31, 2025.2026.

On March March 22, 2024, We entered into a marketing offering agreement (“Marketing Offering Agreement”) with H.C. Wainwright& Co., 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 DecemberMarch 31, 2025,2026, 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 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 DecemberMarch 31, 2025,2026, 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.

Although Malaysia is experiencing a high inflation rate, we do not believe that inflation has had a material adverse effect on our business as DecemberMarch 31, 2025,2026, but we will continue to monitor the effects of inflation on our business in future periods.

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 DecemberMarch 31, 31, 2025,2026, but we will continue to monitor the effects of above mentioned disruptions on our business in future periods.

We have have experienced a decrease in growth rate in registered users, and a decline of active users over our last five quarters as of DecemberMarch 31, 31, 2025.2026. As of DecemberMarch 31, 2025,2026, we recorded 2,709,0772,709,613 registered users and 4,7992,926 active users on the ZCITY platform. On average, our registered registered user base has grown by approximately 0.1%0.02% over the past five quarters, while our active user numbers have experienced an average decrease decrease of 23.9%.29.0%.

The decline decline in growth of registered users and active users over the past five quarters, as of DecemberMarch 31, 2025,2026, is primarily attributed to reduced E-voucher purchases from our vendor, resulting in fewer E-vouchers available for sale. Additionally, we’ve implemented reductions 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 continuously monitor the development and participation of active users as a proportion of its total registered user base to ensure the effectiveness 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 DecemberMarch 31, 20252026 is as follows:

We continuously 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, Accordingly, our churn and retention rates of the active user base at the end of last five quarters as of DecemberMarch 31, 20252026 is as follows:

For the three months ended DecemberMarch 31, 20252026 and 20242025

Our breakdown breakdown of revenues by categories for the three months ended DecemberMarch 31, 20252026 and 2024,2025, respectively, is summarized below:

Total revenues revenues increased by approximately $0.8 millionmillion, or 258.1%125.2%, to approximately $1.1$1.5 million for the three months ended DecemberMarch 31, 2025 2026, from approximately $0.3 $0.7 million for the threesame monthsperiod endedin December2025, 31, 2024. The increase was mainlyprimarily attributable to an increase in revenue from product and loyalty program revenue, offset by a decrease in transaction revenue and memberthe subscriptionabsence of customized software development service revenue offsetfor by.the three months ended March 31, 2026, compared to approximately $0.6 million recognized for the same period in 2025.

Product revenue was generated throughfrom sales of oure-vouchers, e-voucher,healthcare health care productsproducts, and other products through our ZCITY platformplatform, while loyalty program program revenue was recognized whenupon ourredemption customers redeem theirof previously earned reward points from our loyalty program or upon expiration of thesuch rewardpoints. point. The productProduct and loyalty program revenue increased by approximately $0.8$1.5 millionmillion, or 302.0%5,120.7%, to approximately $1.1 $1.5 million for the three months ended DecemberMarch 31, 2025 2026, from approximately $0.3$0.0 million for the same period in 2024.2025. The increase was driven primarilyattributable byto higher demand for our e-voucher product, which resultedproducts, resulting in increaseda significant increase in sales volume.

Our transaction transaction revenue decreased by 91.0%,77.0% to approximately $3,000$8,000 for the three months ended DecemberMarch 31, 2025,2026, compared to approximately $28,000 $35,000 for the same period in 2024.2025. ThisThe decline was mainly dueattributable to lesslower usage fromby merchants on our ZCITY platform and reduced transaction volume resulting from fewer successful referrals through our partnership with CLSB.CLSB..

Our breakdown breakdown of cost of revenue by categories for the three months ended DecemberMarch 31, 2025,2026, and 2024,2025, respectively, is summarized below:

Cost of 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$1.5 million, or 1,285.7%,729.2%, for the three months ended ended DecemberMarch 31, 20252026 compared to the same period in 2024.2025. The increase was mainly due to increase of product and loyalty program revenue and and higher product cost.

Selling expenses amounted to approximately $25,000$51,000 and $40,000$8,000 for the three months ended DecemberMarch 31, 20252026 and 2024,2025, respectively, representing a decreaseincrease of approximately $15,000$42,000 or 37.8%.536.2%. The decrease increase was mainly attributable to decreaseincrease 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 DecemberMarch 31, 2025 2026 and 2024,2025, we incurred approximately $328$13,000 and $9,000, $3,000, 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 amounted to approximately $3.8 million and $0.8$0.5 million for the three months ended DecemberMarch 31, 20252026 and 2024,2025, respectively, representing aan increase of approximately $3.0 million$3.2 million, or 389.3%.722.2%. The increase was driven primarily byattributable higherto costs associated withincreased administrative functions,expenses of approximately $2.2 million, including incrementalsalary staffingexpense, and increased professional service fees to support ourthe Company’s operations, andas well as an approximately $3.0$1.4 million increase in allowance for credit losses mainly related to an increase in impairment lossestimated fromcredit ourlosses intangibleagainst assets.certain other receivables.

Research and development expense amounted to approximately $25,000 $79,000 and $33,000$5,000 for the three months ended DecemberMarch 31, 20252026 and 2024,2025, respectively, representing 25.5%1,376.5% decrease.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 amounted to approximately $0.8$0.3 million and $70,000 for the three months ended DecemberMarch 31, 2025,2026, and 2024,2025, respectively. The stock-based compensation incurred for the three months ended DecemberMarch 31, 20252026 and 2024,2025, 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, amounted to approximately $4.6$1.9 and $0.5$1.3 million for the three months ended DecemberMarch 31, 20252026 and 2024,2025, 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 gainloss of approximately $0.5 million on marketable securities as the marketable securities were disposed during the year ended June 30, 2025.2025, and (ii) an increase of gain from disposal of subsidiaries of approximately $1.0 million, offset by (a) an decrease in gain from the change in fair value of derivative liabilities of approximately $0.6 million from issuance of warrant in connection with the Share Purchase Agreement, and (b) approximately $0.3 million loss from disposal of equipment.

Provision for income taxes amounted to approximately $100,000 $50,000 and $9,000$0 for the three months ended DecemberMarch 31, 20252026 and 2024.2025. 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 DecemberMarch 31, 20252026 and 2024,2025, our foreign subsidiaries did not generate any income that are subject to Subpart F tax and GILTI tax.

We generated net loss of approximately $3.1 million and $0.2$2.3 million for the three months ended DecemberMarch 31, 20252026 and 2024,net respectively,income of approximately $1.3 million for the three months ended March 31, 2025, representing a change of approximately $2.9$3.4 million. The change was primarily attributable to the factors discussed above.

For the sixnine months ended DecemberMarch 31, 20252026 and 20242025

Our breakdown breakdown of revenues by categories for the sixnine months ended DecemberMarch 31, 20252026 and 2024,2025, respectively, is summarized below:

Total revenues revenues increased by approximately $0.8$1.6 millionmillion, or 148.1%135.1%, to approximately $1.3$2.8 million for the sixnine months ended DecemberMarch 31, 20252026, from approximately approximately $0.5$1.2 million for the sixsame monthsperiod endedin December 31, 2024.2025. The decreaseincrease was mainly attributable to a increase in revenue from product and loyalty program revenue, offset by the decreasedecreases in transaction revenue andrevenue, member subscription revenue, and customized software development service revenue.

Product revenue was generated throughfrom sales of oure-vouchers, e-voucher,healthcare health care productsproducts, and other products through our ZCITY platformplatform, while loyalty program program revenue was recognized whenupon ourredemption customers redeem theirof previously earned reward points from our loyalty program or upon expiration of thesuch rewardpoints. point. The productProduct and loyalty program revenue increased by approximately $0.9$2.4 millionmillion, or 260.0%627.1%, to approximately $1.3 $2.8 million for the sixnine months ended DecemberMarch 31, 20252026, from approximately $0.4 million for the same period in 2024.2025. The increase was driven primarily byattributable to higher demand for our e-voucher product, which resultedproducts, resulting in increasedincrease in sales volume.

Our transactionTransaction revenue decreased by 95.0%,approximately $0.1 million, or 89.1%, to approximately $4,000$12,000 for the sixnine months ended DecemberMarch 31, 2025,2026, compared to approximately $72,000 $0.1 million for the same period in 2024.2025. ThisThe declinedecrease was mainly dueattributable to lesslower usage fromby merchants on our ZCITY platform and reduced transaction volume volume resulting from fewer successful referrals through our partnership with CLSB.

Member subscription revenue primarily consists of fees charged to customers who signsubscribe up forto Zmember, our membership program that offersoffering exclusive savings, bonuses, and referral rewards. For the sixnine months ended December March 31, 2025,2026, member subscription revenue decreased by 100.0% to $0, from approximately $0.1 $88,000million for the same period in 2024.2025. The decrease was primarily due to we experienceda slowdown in acquiring new customers to participateparticipating in our the Zmember program. As of December March 31, 20252026 and June 30, 2025, we had 27,620 customers who subscribed to our Zmember program.

Our breakdown breakdown of cost of revenue by categories for the sixnine months ended DecemberMarch 31, 2025,2026, and 2024,2025, respectively, is summarized below:

Cost of of revenue primarily consists of purchases of gift cards or “E-vouchere-voucher” PIN codes,codes and healthcare products, which are directly attributable to our product revenue. Total cost of revenue increased by approximately $1.1$2.5 million, or 1,014.8%,839.3%, to approximately $2.8 million for the sixnine months ended December March 31, 20252026, comparedfrom toapproximately $0.3 million for the same period in 2024.2025. The increase was mainly dueprimarily attributable to increase ofin product and loyalty program revenue andrevenue, as well as higher product cost.

Selling expenses amounted to approximately $46,000$96,000 and $0.1$125,000 million for the sixnine months ended DecemberMarch 31, 20252026 and 2024,2025, respectively, representing a decrease of approximately $72,000$29,000 or 61.2%.23.3%. 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 sixnine months ended DecemberMarch 31, 2025 2026 and 2024,2025, we incurred approximately $1,300$15,000 and $30,000, $33,000, 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 amounted to approximately $4.6$8.4 million and $1.6$2.0 million for the sixnine months ended DecemberMarch 31, 20252026 and 2024,2025, respectively, representing aan increase of approximately $3.1$6.3 million or 196.3%.313.1%. The increase was driven primarily by higherincreased costs associated with administrative functions,expense of approximately $3.3 million, including incrementalsalary staffing expense and increased professional service fees to support our operations. The increase is also attributable to an approximately $3.3 million increase ofin approximatelyallowance $0.3 millionfor ofcredit impairmentlosses lossmainly fromrelated ourto intangiblean assets.increase in estimated credit losses against certain other receivables.

Research and development expense amounted to approximately $0.8$0.9 million and $80,000$86,000 for the sixnine months ended DecemberMarch 31, 20252026 and 2024,2025, respectively, representing 899.0%928.8% 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 compensation expenses amounted to approximately $0.9$1.1 million and $0.1$0.2 million for the sixnine months ended DecemberMarch 31, 2025,2026, and 2024,2025, respectively. The stock-based compensation incurred for the sixnine months ended DecemberMarch 31, 20252026 and 2024,2025, 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, amounted to approximately $4.3$6.2 and 0.31.6 million for the sixnine months ended DecemberMarch 31, 20252026 and 2024,2025, 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$3.6 million from issuance of warrant in connection with the Share Purchase Agreement, offset by (ii) aan increase of gain from disposal of subsidiaries of approximately $1.0 million, and (iii) decrease in unrealized incomeloss of approximately $0.3$0.2 million on marketable securities as the marketable securities securities were disposed during the year ended June 30, 2025.2025, offset by approximately $0.3 million loss from disposal of equipment.

Provision for income taxes amounted to approximately $100,000 $150,000 and $21,000 for the sixnine months ended DecemberMarch 31, 20252026 and 2024.2025. 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 sixnine months ended DecemberMarch 31, 20252026 and 2024,2025, our foreign subsidiaries did not generate any income that are subject to Subpart F tax and GILTI tax.