Treasure (TGL) - 2025 Q1 - Quarterly Report

User Engagement and Growth - As of September 30, 2024, the company recorded 2,704,482 registered users and 25,216 active users on the ZCITY platform, reflecting a growth rate of approximately 2.0% in registered users but a decline of 38.3% in active users over the last five quarters [226]. - The company experienced a decrease in the number of new registered users, with only 3,293 new users in the quarter ending September 30, 2024, compared to 102,752 in the previous year [226]. - As of September 30, 2024, the total registered users on the ZCITY platform reached 2,704,482, with only 25,216 active users, resulting in an active user rate of 0.9% [230]. - The active user churn rate improved to 18.3% by September 30, 2024, while the retention rate increased to 81.7% [231]. Financial Performance - Total revenues for the three months ended September 30, 2024, decreased by approximately $13.3 million or 98.5$207,371 compared to $13,463,895 for the same period in 2023 [233]. - Product and loyalty program revenue dropped by approximately$13.1 million or 99.4% to $81,745 for the three months ended September 30, 2024, primarily due to a strategic decision to streamline the product line [235]. - Transaction revenue increased by 113.2$43,080 for the three months ended September 30, 2024, driven by a partnership with Creditlab Sdn. Bhd. [236]. - Member subscription revenue decreased by 52.3% to approximately $82,546 for the three months ended September 30, 2024, attributed to a slowdown in acquiring new customers [237]. - Total cost of revenue decreased by approximately$13.3 million or 99.7% to $35,199 for the three months ended September 30, 2024, in line with the decrease in revenue [239]. - Gross profit for the three months ended September 30, 2024, amounted to approximately$172,172, reflecting an increase of approximately $9,538 or 5.9$0.7 million or 89.8% to $78,000 for the three months ended September 30, 2024, due to reduced marketing and promotion expenses [244]. - General and administrative expenses decreased by approximately$0.4 million or 36.2% to $800,000 for the three months ended September 30, 2024, primarily due to lower salary and professional fee expenses [245]. - Other expense, net decreased by approximately$71,000 to $0.1 million for the three months ended September 30, 2024, primarily due to a decrease in amortization of debt discount [248]. - Provision for income taxes decreased to approximately$11,391 for the three months ended September 30, 2024, from $14,925 in 2023 [249]. - Net cash used in operating activities was approximately$976,319 for the three months ended September 30, 2024, compared to $1,916,603 in 2023 [258]. - Net cash used in investing activities was approximately$1.5 million for the three months ended September 30, 2024, primarily due to a collaboration deposit [263]. - Net cash provided by financing activities was approximately $2.5 million for the three months ended September 30, 2024, mainly from the issuance of common stock [264]. Strategic Initiatives - The company successfully launched the ZCITY App in Malaysia in June 2020, which aims to become the top rewards and loyalty platform in Malaysia and expand its reach in Southeast Asia and Japan [202]. - The company is integrating credit services into the ZCITY App through a partnership with Credilab Sdn Bhd, aiming to enhance user engagement and overall credit services offering [217]. - The company has partnered with Octagram Investment Limited to develop mini-game modules for the ZCITY App, enhancing interactive features and user engagement [218]. - The company is developing a Live Streaming Platform enhanced by AI Digital Human Solutions in partnership with V Gallant Sdn Bhd, scheduled for completion by December 31, 2025 [219]. - The company is developing a Smart Campus System at ELMU University, focusing on optimizing electricity usage, expected to be fully deployed within 12 months from the contract's commencement date [216]. Financial Health and Concerns - Management expressed substantial doubt about the company's ability to continue as a going concern due to recurring losses and insufficient funds to meet obligations [257]. - As of September 30, 2024, cash and cash equivalents were approximately$73,000, down from $0.2 million as of June 30, 2024 [253]. - The November 2023 Offering generated approximately$3.5 million in net proceeds after underwriting discounts [254]. - The company recorded a material weakness in internal control over financial reporting due to inadequate U.S. GAAP expertise among the current accounting staff [288]. - The company lacks a functional internal audit department, which is a material weakness in internal control over financial reporting [288]. - The company has not identified any changes in internal control over financial reporting that materially affected its internal control during the quarter ended September 30, 2024 [290]. Other Financial Metrics - The company recorded a provision for estimated credit losses of $243, down from$1,100 as of June 30, 2024 [269]. - For the three months ended September 30, 2024, the company recorded an unrealized holding loss on marketable securities of approximately $128,000, compared to an unrealized holding gain of approximately$60,000 for the same period in 2023 [275]. - Stock-based compensation for the three months ended September 30, 2024 amounted to $70,000, while there was no stock-based compensation incurred for the same period in 2023 [281]. - The estimated retail price per point for the loyalty program is based on actual historical retail prices, and changes in redemption rates affect the contract liability [278]. - The company issued 14,000,000 Pre-Funded Warrants in connection with the November 2023 Offering, with$1,398,600 allocated to the Pre-Funded Warrants recorded as additional paid-in capital [285]. - Deferred tax assets are recognized only if it is probable that taxable profit will be available against which deductible temporary differences can be utilized [279].