QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE TRANSITION PERIOD FROM | to |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||
+ | |||
(Address of principal executive offices) (Zip Code) | (Registrant’s telephone number, including area code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Large accelerated filer | ¨ | Accelerated filer | ¨ |
x | Smaller reporting company | ||
Emerging growth company |
Page | ||
2 |
· | Our ability to effectively operate our business. |
· | Our ability to manage our research, development, expansion, growth and operating expenses; |
· | Our ability to evaluate and measure our business, prospects and performance metrics; |
· | Our ability to respond and adapt to changes in technology and customer behavior; |
· | Our ability to protect our intellectual property and to develop, maintain and enhance a strong brand; and |
3 |
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September 30, |
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June 30, |
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||
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|
2022 |
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|
2022 |
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||
|
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(Unaudited) |
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|
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||
ASSETS |
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|
|
|
|
|
||
CURRENT ASSETS |
|
|
|
|
|
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||
Cash and cash equivalents |
|
$ |
|
|
|
$ |
|
|
Accounts receivable, net |
|
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|
|
|
|
- |
|
Inventories |
|
|
|
|
|
|
|
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Other receivable and other current assets |
|
|
|
|
|
|
|
|
Prepayments |
|
|
|
|
|
|
|
|
Total current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER ASSETS |
|
|
|
|
|
|
|
|
Property and equipment, net |
|
|
|
|
|
|
|
|
Operating lease right-of-use asset |
|
|
|
|
|
|
- |
|
Deferred offering costs |
|
|
- |
|
|
|
|
|
Total other assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
TOTAL ASSETS |
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIENCY |
|
|
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
|
|
|
Related party loan, current portion |
|
$ |
|
|
|
$ |
|
|
Convertible notes payable, net of unamortized discounts of $ |
|
|
- |
|
|
|
|
|
Convertible notes payable, related parties |
|
|
- |
|
|
|
|
|
Loans from third parties |
|
|
- |
|
|
|
|
|
Account payable |
|
|
|
|
|
|
|
|
Account payable, related parties |
|
|
|
|
|
|
|
|
Customer deposits |
|
|
|
|
|
|
|
|
Contract liability |
|
|
|
|
|
|
|
|
Other payables and accrued liabilities |
|
|
|
|
|
|
|
|
Other payables, related parties |
|
|
|
|
|
|
|
|
Amount due to related parties |
|
|
|
|
|
|
|
|
Operating lease liability |
|
|
|
|
|
|
|
|
Income tax payables |
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-CURRENT LIABILITIES |
|
|
|
|
|
|
|
|
Operating lease liability, non-current |
|
|
|
|
|
|
|
|
Related party loan, non-current portion |
|
|
|
|
|
|
|
|
Senior note |
|
|
|
|
|
|
|
|
Total non-current liabilities |
|
|
|
|
|
|
|
|
TOTAL LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY (DEFICIENCY) |
|
|
|
|
|
|
|
|
Common stock, par value $ |
|
|
|
|
|
|
|
|
Additional paid-in capital |
|
|
|
|
|
|
|
|
Accumulated deficit |
|
|
( |
) |
|
|
( |
) |
Accumulated other comprehensive income (loss) |
|
|
( |
) |
|
|
|
|
TOTAL STOCKHOLDERS' EQUITY (DEFICIENCY) |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) |
|
$ |
|
|
|
$ |
|
|
4 |
|
|
For the Three Months Ended September 30, |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
|
|
|
|
|
|
|
||
REVENUES |
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
COST OF REVENUES |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
GROSS PROFIT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SELLING |
|
|
( |
) |
|
|
( |
) |
GENERAL AND ADMINISTRATIVE |
|
|
( |
) |
|
|
( |
) |
RESEARCH AND DEVELOPMENT |
|
|
( |
) |
|
|
( |
) |
STOCK-BASED COMPENSATION |
|
|
( |
) |
|
|
( |
) |
TOTAL OPERATING EXPENSES |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
LOSS FROM OPERATIONS |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
OTHER (EXPENSE) INCOME |
|
|
|
|
|
|
|
|
Other income, net |
|
|
|
|
|
|
|
|
Interest expense |
|
|
( |
) |
|
|
( |
) |
Amortization of debt discount |
|
|
( |
) |
|
|
( |
) |
TOTAL OTHER EXPENSE, NET |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
LOSS BEFORE INCOME TAXES |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
PROVISION FOR INCOME TAXES |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
NET LOSS |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
OTHER COMPREHENSIVE LOSS |
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
COMPREHENSIVE LOSS |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
LOSS PER SHARE |
|
|
|
|
|
|
|
|
Basic and diluted |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING |
|
|
|
|
|
|
|
|
Basic and diluted |
|
|
|
|
|
|
|
|
5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ACCUMULATED |
|
|
TOTAL |
|
||||||
|
|
|
|
|
|
|
|
ADDITIONAL |
|
|
|
|
|
OTHER |
|
|
STOCKHOLDERS' |
|
||||||
|
|
COMMON STOCK |
|
|
PAID IN |
|
|
ACCUMULATED |
|
|
COMPREHENSIVE |
|
|
EQUITY |
|
|||||||||
|
|
Number of shares |
|
|
Par value |
|
|
CAPITAL |
|
|
DEFICIT |
|
|
INCOME (LOSS) |
|
|
(DEFICIENCY) |
|
||||||
Balance as of June 30, 2022 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
( |
) |
Beneficial conversion feature from issuance of convertible notes |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
Net loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Issuance of common stock - non-employee stock compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
Conversion of convertible note payable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
Conversion of convertible note payable, related parties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
Issuance of common stock in initial public offering, net of issuance costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
Fair value of warrants issued in initial public offering |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
Issuance of warrants - non- employee stock compensation |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
Cashless exercise of warrants- non- employee stock compensation into common stock |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Foreign currency translation adjustment |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Balance as of September 30, 2022 (Unaudited) |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ACCUMULATED |
|
|
|
|
||||||
|
|
|
|
|
|
|
|
ADDITIONAL |
|
|
|
|
|
OTHER |
|
|
TOTAL |
|
||||||
|
|
COMMON STOCK |
|
|
PAID IN |
|
|
ACCUMULATED |
|
|
COMPREHENSIVE |
|
|
STOCKHOLDERS' |
|
|||||||||
|
|
Number of shares |
|
|
Par value |
|
|
CAPITAL |
|
|
DEFICIT |
|
|
LOSS |
|
|
DEFICIENCY |
|
||||||
Balance as of June 30, 2021 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Net loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Issuance of common stock - non-employee stock compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
Foreign currency translation adjustment |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Balance as of September 30, 2021 (Unaudited) |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
6 |
|
|
For the Three Months Ended September 30, |
|
|||||
|
|
2022 |
|
|
2022 |
|
||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Depreciation |
|
|
|
|
|
|
|
|
Amortization of debt discount |
|
|
|
|
|
|
|
|
Amortization of operating right-of-use asset |
|
|
|
|
|
|
- |
|
Recovery of doubtful accounts, net |
|
|
- |
|
|
|
( |
) |
Stock-based compensation |
|
|
|
|
|
|
|
|
Change in operating assets and liabilities |
|
|
|
|
|
|
|
|
Accounts receivables |
|
|
( |
) |
|
|
|
|
Accounts receivables, a related party |
|
|
- |
|
|
|
|
|
Inventories |
|
|
|
|
|
|
|
|
Other receivable and other current assets |
|
|
( |
) |
|
|
( |
) |
Prepayments |
|
|
( |
) |
|
|
( |
) |
Accounts payable |
|
|
|
|
|
|
|
|
Accounts payable, related parties |
|
|
( |
) |
|
|
( |
) |
Customer deposits |
|
|
|
|
|
|
( |
) |
Customer deposits, related parties |
|
|
- |
|
|
|
( |
) |
Contract liability |
|
|
|
|
|
|
|
|
Other payables and accrued liabilities |
|
|
|
|
|
|
( |
) |
Other payable, related party |
|
|
|
|
|
|
- |
|
Operating lease liability |
|
|
( |
) |
|
|
- |
|
Income tax payables |
|
|
|
|
|
|
|
|
Net cash used in operating activities |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
Purchases of equipment |
|
|
( |
) |
|
|
( |
) |
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Payments of deferred offering cost |
|
|
( |
) |
|
|
- |
|
Proceeds from issuance of common stock in initial public offering |
|
|
|
|
|
|
- |
|
Payments of related party loan |
|
|
( |
) |
|
|
( |
) |
Proceeds from issuance of convertible notes |
|
|
|
|
|
|
|
|
Proceeds from issuance of convertible notes, related parties |
|
|
- |
|
|
|
|
|
Repayment of senior note |
|
|
( |
) |
|
|
- |
|
(Repayment to) proceeds from related parties |
|
|
( |
) |
|
|
|
|
P roceeds from third party loans |
|
|
|
|
|
|
|
|
Repayment to third party loans |
|
|
( |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS, beginning of period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS, end of period |
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL CASH FLOWS INFORMATION |
|
|
|
|
|
|
|
|
Income taxes paid |
|
$ |
|
|
|
$ |
|
|
Interest paid |
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL NON-CASH FLOWS INFORMATION |
|
|
|
|
|
|
|
|
Offering costs paid in the prior period |
|
$ |
|
|
|
$ |
- |
|
Beneficial conversion feature resulted from issuance of convertible notes |
|
$ |
|
|
|
$ |
- |
|
Fair value of warrants issued to underwriter |
|
$ |
|
|
|
$ |
- |
|
Fair value of warrants issued to consultant |
|
$ |
|
|
|
$ |
- |
|
Fair value of common stock issued to consultant |
|
$ |
|
|
|
$ |
- |
|
Recognition of operating right-of-use asset and lease liability |
|
$ |
|
|
|
$ |
- |
|
Conversion of convertible note payable, net of unamortized discounts |
|
$ |
|
|
|
$ |
- |
|
Conversion of convertible note payable, related parties |
|
$ |
|
|
|
$ |
- |
|
7 |
8 |
● |
Equity financing to support its working capital; |
● |
Other available sources of financing (including debt) from Malaysian banks and other financial institutions; and |
● |
Financial support and credit guarantee commitments from the Company’s related parties. |
9 |
|
|
As of |
|
|||||
|
|
September 30, 2022 |
|
|
June 30, 2022 |
|
||
|
|
|
|
|
|
|
||
Period-average MYR: US$1 exchange rate |
|
|
|
|
|
|
|
|
|
|
For the Three Months ended September 30, |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
|
|
|
|
|
|
|
||
Period-average MYR: US$1 exchange rate |
|
|
|
|
|
|
|
|
10 |
Expected useful lives | |
Computer and office equipment | |
Furniture and fixtures | |
Motor vehicles | |
Leasehold improvement |
11 |
12 |
13 |
14 |
|
|
For the three months ended September 30, 2022 |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
|
|
(Unaudited) |
|
|
(Unaudited) |
|
||
Gift card or “E-voucher” revenue (1) |
|
$ |
|
|
|
$ |
|
|
Health care products and computer products revenue (1) |
|
|
|
|
|
|
|
|
Loyalty program revenue (1) |
|
|
|
|
|
|
|
|
Transaction revenue (1) |
|
|
|
|
|
|
|
|
Agent subscription revenue (1) |
|
|
|
|
|
|
|
|
Member subscription revenue (2) |
|
|
|
|
|
|
|
|
Total revenues |
|
$ |
|
|
|
$ |
|
|
(1) |
Revenue recognized at a point in time. |
(2) |
Revenue recognized over time. |
- |
Social Security Organization (“SOSCO”) – |
- |
Employees Provident Fund (“EPF”) – |
- |
Employment Insurance System (“EIS”) – |
15 |
16 |
17 |
● | The lease transfers ownership of the underlying asset to the lessee by the end of the lease term; |
● | The lease grants the lessee an option to purchase the underlying asset that the Company is reasonably certain to exercise; |
● | The lease term is for 75 % or more of the remaining economic life of the underlying asset, unless the commencement date falls within the last 25% of the economic life of the underlying asset; |
● | The present value of the sum of the lease payments equals or exceeds |
● | The underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term. |
18 |
19 |
As of September 30, 2022 | As of June 30, 2022 | |||||||
(Unaudited) | ||||||||
Accounts receivable | $ | $ | ||||||
Allowance for doubtful accounts | ( | ) | ( | ) | ||||
Total accounts receivable, net | $ | $ |
As of September 30, 2022 | As of June 30, 2022 | |||||||
(Unaudited) | ||||||||
Beginning balance | $ | $ | ||||||
Addition (recovery) | ( | ) | ||||||
Exchange rate effect | ( | ) | ( | ) | ||||
Ending balance | $ | $ |
As of September 30, 2022 | As of June 30, 2022 | |||||||
(Unaudited) | ||||||||
Gift card (or E-voucher) | $ | $ | ||||||
Nutrition products | ||||||||
Total | $ | $ |
20 |
As of September 30, 2022 | As of June 30, 2022 | |||||||
(Unaudited) | ||||||||
Deposits (1) | $ | $ | ||||||
Prepaid tax | ||||||||
P re paid expense | ||||||||
Total other receivable and other current assets | $ | $ |
As of September 30, 2022 | As of June 30, 2022 | |||||||
(Unaudited) | ||||||||
Deposits to suppliers | $ | $ |
As of September 30, 2022 | As of June 30, 2022 | |||||||
(Unaudited) | ||||||||
Computer and office equipment | $ | $ | ||||||
Furniture and fixtures | ||||||||
Motor vehicle | ||||||||
Leasehold improvement | ||||||||
Subtotal | ||||||||
Less: accumulated depreciation | ( | ) | ( | ) | ||||
Total | $ | $ |
21 |
22 |
23 |
|
|
Face value of convertible notes payable |
|
|
Unamortized debt discounts |
|
|
Convertible notes payable, net of unamortized discounts |
|
|
Third parties |
|
|
Related parties |
|
|||||
June 30, 2021 balance |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Issuance of convertible notes |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of debt discounts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange rate effect |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
June 30, 2022 balance |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of convertible notes |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of debt discounts |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
Conversion |
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Exchange rate effect |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
September 30, 2022 balance (unaudited) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
As of September 30, 2022 |
|
|
As of June 30, 2022 |
|
||
|
|
(Unaudited) |
|
|
|
|
||
Accrued professional fees (i) |
|
$ |
|
|
|
$ |
|
|
Accrued promotion expenses (ii) |
|
|
|
|
|
|
|
|
Accrued payroll |
|
|
|
|
|
|
|
|
Accrued interest (iii) |
|
|
|
|
|
|
|
|
Payables to merchant from ZCITY platform (iv) |
|
|
|
|
|
|
|
|
Others |
|
|
|
|
|
|
|
|
Total other payables and accrued liabilities |
|
$ |
|
|
|
$ |
|
|
(i) |
Accrued professional fees |
(ii) |
Accrued promotion expense |
24 |
(iii) |
Accrued interest |
(iv) |
Payables to merchants from ZCITY platform |
Name of Related Party |
|
Relationship |
|
|
Nature |
|
|
As of September 30, 202 2 |
|
|
As of June 30, 202 2 |
|
||||
|
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
|
||||
Chuah Su Mei |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
||
Click Development Berhad |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Cloudmaxx Sdn Bhd |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
V Capital Kronos Berhad |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
World Cloud Ventures Sdn Bhd |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Total |
|
|
$ |
|
|
|
$ |
|
|
25 |
Name of Related Party | Relationship | Nature | As of September 30, 2022 | As of June 30, 2022 | ||||||||||||
(Unaudited) | ||||||||||||||||
Ezytronic Sdn Bhd | $ | $ | ||||||||||||||
The Evolutionary Zeal Sdn Bhd | ||||||||||||||||
World Cloud Ventures Sdn Bhd | ||||||||||||||||
Total | $ | $ |
Name of Related Party | Relationship | Nature | As of September 30, 2022 | As of June 30, 2022 | ||||||||||||
(Unaudited) | ||||||||||||||||
True Sight Sdn Bhd | $ | $ | ||||||||||||||
World Cloud Ventures Sdn Bhd | ||||||||||||||||
Total | $ | $ |
Name of Related Party | Relationship | Nature | As of September 30, 2022 | As of June 30, 2022 | ||||||||||||
(Unaudited) | ||||||||||||||||
Chong Chan “Sam” Teo | $ | $ | ||||||||||||||
Kok Pin “Darren” Tan* | ||||||||||||||||
Total | $ | $ |
Name of Related Party | Relationship | Nature | For the Three Months Ended September 30, 2022 | For the Three Months Ended September 30, 2021 | ||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
Ezytronic Sdn Bhd | $ | $ |
Name of Related Party | Relationship | Nature | For the Three Months Ended September 30, 2022 | For the Three Months Ended September 30, 2021 | ||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
Ezytronic Sdn Bhd | $ | $ |
Name of Related Party | Relationship | Nature | For the Three Months Ended September 30, 202 2 | For the Three Months Ended September 30, 2021 | |||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||
Ezytronic Sdn Bhd | $ | $ |
26 |
Name of Related Party | Relationship | Nature | For the Three Months Ended September 30, 2022 | For the Three Months Ended September 30, 2021 | ||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||||
True Sight Sdn Bhd | $ | $ | ||||||||||||||||
Imej Jiwa Communications Sdn Bhd | ||||||||||||||||||
V Capital Investment Limited | ||||||||||||||||||
$ | $ |
27 |
- |
Issuance of warrants - non- employee stock compensation |
- |
Issuance of the underwriters warrants |
28 |
|
|
Shares |
|
|
Weighted Average Exercise Price |
|
|
Weighted Average Remaining Contractual Term (Years) |
|
|||
|
|
|||||||||||
Outstanding at June 30, 2022 |
|
|
|
|
|
$ |
- |
|
|
|
- |
|
Granted |
|
|
|
|
|
|
|
|
|
|
|
|
Exercised |
|
|
( |
) |
|
|
|
|
|
|
|
|
Outstanding at September 30, 2022 (unaudited) |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
For the three months ended |
|
|||||
|
|
September 30, 2022 |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
|
|
(Unaudited) |
|
|
(Unaudited) |
|
||
Tax jurisdictions from: |
|
|
||||||
- Local – United States |
|
$ |
( |
) |
|
$ |
( |
) |
- Foreign – Malaysia |
|
|
( |
) |
|
|
( |
) |
Loss before income tax |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
For the three months ended |
|
|||||
|
|
September 30, 2022 |
|
|||||
|
|
September 30, 2022 |
|
|
June 30, 2022 |
|
||
|
|
(Unaudited) |
|
|
|
|
||
Tax jurisdictions from: |
|
|
||||||
- Local – United States |
|
$ |
|
|
|
$ |
|
|
- Foreign – Malaysia |
|
|
|
|
|
|
|
|
Provision for income taxes |
|
$ |
|
|
|
$ |
|
|
29 |
|
|
As of September 30, 2022 |
|
|
As of June 30, 2022 |
|
||
|
|
|
(Unaudited) |
|
|
|
|
|
Deferred tax assets: |
|
|
||||||
Net operating loss carry forwards in U.S. |
|
$ |
|
|
|
$ |
|
|
Net operating loss carry forwards in Malaysia |
|
|
|
|
|
|
|
|
Stock based compensation |
|
|
|
|
|
|
|
|
Amortization of debt discount |
|
|
|
|
|
|
|
|
Less: valuation allowance |
|
|
( |
) |
|
|
( |
) |
Deferred tax assets |
|
$ |
|
|
|
$ |
|
|
30 |
September 30, | ||||
202 3 | $ | |||
202 4 | ||||
202 5 | ||||
Total undiscounted lease payments | ||||
Less imputed interest | ( | ) | ||
Total lease liabilities | $ |
31 |
- | temporary closure of offices, travel restrictions, financial impact of the Company’s customers may be negatively affected, and could continue to negatively affect the demand for the Company’s product; |
- | the Company may have to provide significant sales incentives to its customers during the outbreak, which may in turn materially adversely affect its financial condition and operating results; and |
- | the Company may experience a slow-down in hiring new personnel which may adversely impact on the Company’s business operation. |
32 |
33 |
· | Number and volume of transactions completed by our consumers . Consumers are attracted to ZCITY 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. |
34 |
· | 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. |
· | new information which may emerge concerning the severity of the disease in Southeast Asia (or “SEA”); |
· | the duration and spread of the outbreak; |
· | the severity of travel restrictions imposed by geographic areas in which we operate, mandatory or voluntary business closures; |
· | regulatory actions are taken in response to the pandemic, including MCOs, which may impact merchant operations, consumer and merchant pricing, and our product offerings; |
· | other business disruptions that affect our workforce; |
· | the impact on capital and financial markets; and |
· | action taken throughout the world, including in markets in which we operate, to contain the COVID-19 outbreak or treat its impact. |
· | Some of our restaurant clients ceased operations permanently and many were closed since June 2020 without any notice of reopening their business to date. |
· | We may face continuing challenges to onboard new merchant clients. |
· | disruptions of operations in SEA where staff have had to work from home; |
35 |
· | on ground Marketing Strategic for new users onboard, is even more difficult; and |
· | marketing events being delayed. |
· | usage of e-wallet technology has widened and become more common to the general public, people prefer to go cashless and utilize the “Scan and Pay” features ZCITY offers; |
· | our teams have transitioned from on-ground marketing strategies to digital marketing strategies in order to maintain and boost user recruitment; |
· | during the pandemic “lockdown phases, our business operations have carried on without significant disruption even as most all of our employees’ work remotely; and |
· | we have taken advantage of the push to digitalization posture taken by the Malaysian government, by providing a platform and channel to meet users daily essential payment needs such as processing bill payments, online shopping vouchers, “gaming pin” and e-wallet top-up vouchers. |
36 |
For the quarters ended | ||||||||||||||||||||||||||||||||
December 31, | March 31, | June 30, | September 30, | December 31, | March 31, | June 30, | September 30, | |||||||||||||||||||||||||
2020 | 2021 | 2021 | 2021 | 2021 | 2022 | 2022 | 2022 | |||||||||||||||||||||||||
Number of new registered user (1) | 44,532 | 281,470 | 262,784 | 245,582 | 288,540 | 364,218 | 466,534 | 234,179 | ||||||||||||||||||||||||
Number of active users (2) | 42,225 | 300,270 | 347,596 | 362,805 | 421,287 | 448,247 | 443,430 | 488,358 | ||||||||||||||||||||||||
Number of new participating merchants | 613 | 651 | 270 | 44 | 15 | 14 | 7 | 13 |
As of | As of | As of | As of | As of | As of | As of | As of | |||||||||||||||||||||||||
December 31, | March 31, | June 30, | September 30, | December 31, | March 31, | June 30, | September 30, | |||||||||||||||||||||||||
2020 | 2021 | 2021 | 2021 | 2021 | 2022 | 2022 | 2022 | |||||||||||||||||||||||||
Accumulated registered users | 58,868 | 340,338 | 603,122 | 848,704 | 1,137,244 | 1,501,462 | 1,967,996 | 2,202,175 | ||||||||||||||||||||||||
Accumulated Participating merchants | 984 | 1,635 | 1,905 | 1,949 | 1,964 | 1,978 | 1,985 | 1,998 |
37 |
Starting | Ending | Total registered users | Total active users | Total active users to total registered users | ||||||||||||
July 1, 2020 | September 30, 2020 | 14,336 | 2,945 | 20.5 | % | |||||||||||
October 1, 2020 | December 31, 2020 | 58,868 | 42,225 | 71.7 | % | |||||||||||
January 1, 2021 | March 31, 2021 | 340,338 | 300,270 | 88.2 | % | |||||||||||
April 1, 2021 | June 30, 2021 | 603,122 | 347,596 | 57.6 | % | |||||||||||
July 1, 2021 | September 30, 2021 | 848,704 | 362,805 | 42.7 | % | |||||||||||
October 1, 2021 | December 31, 2021 | 1,137,244 | 421,287 | 37.0 | % | |||||||||||
January 1, 2022 | March 31, 2022 | 1,501,462 | 448,247 | 29.8 | % | |||||||||||
April 1, 2022 | June 30, 2022 | 1,967,996 | 443,430 | 22.5 | % | |||||||||||
July 1, 2022 | September 30, 2022 | 2,202,175 | 488,358 | 22.2 | % |
Starting | Ending | Total active users | New active users (registered within the quarter) | Existing active users | Active users churn rate | Active users retention rate | ||||||||||||||||||
July 1, 2020 | September 30, 2020 | 2,945 | 2,879 | 66 | N/A | N/A | ||||||||||||||||||
October 1, 2020 | December 31, 2020 | 42,225 | 41,142 | 1,083 | 63.3 | % | 36.7 | % | ||||||||||||||||
January 1, 2021 | March 31, 2021 | 300,270 | 281,432 | 18,838 | 55.4 | % | 44.6 | % | ||||||||||||||||
April 1, 2021 | June 30, 2021 | 347,596 | 262,780 | 84,816 | 71.8 | % | 28.2 | % | ||||||||||||||||
July 1, 2021 | September 30, 2021 | 362,805 | 245,580 | 117,225 | 66.3 | % | 33.7 | % | ||||||||||||||||
October 1, 2021 | December 31, 2021 | 421,287 | 288,536 | 132,751 | 63.4 | % | 36.6 | % | ||||||||||||||||
January 1, 2022 | March 31, 2022 | 448,247 | 361,143 | 87,104 | 78.5 | % | 21.5 | % | ||||||||||||||||
April 1, 2022 | June 30, 2022 | 443,430 | 368,390 | 75,040 | 83.3 | % | 16.7 | % | ||||||||||||||||
July 1,2022 | September 30, 2022 | 448,358 | 146,036 | 342,322 | 22.8 | % | 77.2 | % |
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 |
38 |
For the Three Months Ended September 30, | Change | |||||||||||||||||||
2022 | % | 2021 | % | % | ||||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||||||
Product and loyalty program revenue | $ | 15,472,814 | 99.5 | % | $ | 20,354,432 | 99.8 | % | (24.0 | )% | ||||||||||
Transaction revenue | 15,218 | 0.1 | % | 14,071 | 0.1 | % | 8.2 | % | ||||||||||||
Agent subscription revenue | - | 0.0 | % | 15 | 0.1 | % | (100.0 | )% | ||||||||||||
Member subscription revenue | 68,308 | 0.4 | % | - | - | 100 | % | |||||||||||||
Total revenues | $ | 15,556,340 | 100.0 | % | $ | 20,368,518 | 100.0 | % | (23.6 | )% |
39 |
For the Three Months Ended September 30, | Change | |||||||||||
2022 | 2021 | % | ||||||||||
(Unaudited) | (Unaudited) | |||||||||||
Product and loyalty program revenue | $ | 15,519,247 | $ | 20,296,943 | 23.5 | % | ||||||
Total cost of revenue | $ | 15,519,247 | $ | 20,296,943 | 23.5 | % |
For the Three Months Ended September 30, 2022 | For the Three Months Ended September 30, 2021 | Change | Percentage Change | |||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
Product and loyalty program revenue | ||||||||||||||||
Gross profit (loss) | $ | (46,433 | ) | $ | 57,489 | $ | (103,922 | ) | (180.8 | )% | ||||||
Gross margin | (0.3 | )% | 0.3 | % | (0.6 | )% | ||||||||||
Transaction revenue | ||||||||||||||||
Gross profit | $ | 15,218 | $ | 14,071 | $ | 1,147 | 8.2 | % | ||||||||
Gross margin | 100.0 | % | 100.0 | % | - | % | ||||||||||
Agent subscription revenue | ||||||||||||||||
Gross profit | $ | - | $ | 15 | $ | (15 | ) | (100.0 | )% | |||||||
Gross margin | - | % | 100.0 | % | - | % | ||||||||||
Member subscription revenue | ||||||||||||||||
Gross profit | $ | 68,308 | $ | - | $ | 68,308 | 100.0 | % | ||||||||
Gross margin | 100.0 | % | - | % | 100.0 | % | ||||||||||
Total | ||||||||||||||||
Gross profit | $ | 37,093 | $ | 71,575 | $ | (34,482 | ) | (48.2 | )% | |||||||
Gross margin | 0.2 | % | 0.4 | % | (0.2 | )% |
40 |
41 |
● | Equity financing to support its working capital; |
● | Other available sources of financing (including debt) from Malaysian banks and other financial institutions; and |
● | Financial support and credit guarantee commitments from the Company’s related parties. |
42 |
For the Three Months Ended | ||||||||
September 30, 2022 | September 30, 2021 | |||||||
(Unaudited) | (Unaudited) | |||||||
Net cash used in operating activities | $ | (2,456, 896 | ) | $ | (2,708,406 | ) | ||
Net cash used in investing activities | (34,399 | ) | (157,541 | ) | ||||
Net cash provided by financing activities | 7,811,008 | 1,090,150 | ||||||
Effect of exchange rate on cash and cash equivalents | ( 157,130 | ) | (35,003 | ) | ||||
Net change in cash and cash equivalents | $ | 5,162,583 | $ | (1,810,800 | ) |
43 |
44 |
45 |
46 |
∙ | we did not have sufficient full-time personnel with appropriate levels of accounting knowledge and experience to monitor the daily recording of transactions, address complex United States of America generally accepted accounting principles (“U.S. GAAP”) accounting issues and to prepare and review financial statements and related disclosures under U.S. GAAP; |
∙ | we lack of a functional internal audit department or personnel that monitors the consistencies of the preventive internal control procedures and lack of adequate policies and procedures in internal audit function to ensure that our policies and procedures have been carried out as planned; | |
∙ | we lack of proper procedures developed and implemented for IT risk assessment and vulnerability management; |
47 |
∙ | we lack of proper procedures developed and implemented for access to systems and date, which include user account management and password management; |
∙ | we lack of proper procedures developed and implemented for segregation of duties and related monitoring; and |
∙ | we lack of proper procedures identified related party transaction which lead to revision of previously issued financial statements |
∙ | we lack of proper procedures developed and implemented for third party IT service vendor risk assessment and management. |
∙ | hiring more qualified accounting personnel with relevant U.S. GAAP and SEC reporting experience and qualifications to strengthen the financial reporting function and to set up a financial and system control framework; |
∙ | implementing regular and continuous U.S. GAAP accounting and financial reporting training programs for our accounting and financial reporting personnel; |
∙ | develop policies and procedures for IT risk assessment; |
∙ | develop policies and procedures for user account management and password management compliance ; |
∙ | develop policies and procedures for IT risk assessment for segregation of duties and related monitoring; |
∙ | establishing internal audit function by engaging an external consulting firm to assist us with assessment of Sarbanes-Oxley Act compliance requirements and improvement of overall internal control; and |
∙ | strengthening corporate governance. |
48 |
49 |
Exhibit No. | Description | |
10.8* | ||
10.9* | ||
50 |
TREASURE GLOBAL INC | |
Dated: December 19, 2022 | /s/ Chong Chan “Sam” Teo |
Chong Chan “Sam” Teo | |
Chief Executive Officer and President, Director | |
(Principal Executive Officer) | |
Dated: December 19, 2022 | /s/ Yee Fei “Jaylvin” Chan |
Yee Fei “Jaylvin” Chan | |
Chief Financial Officer | |
(Principal Financial and Accounting Officer) |
51 |