Treasure (US:TGL)2025-11-14 21:01User Engagement and App Performance - As of November 10, 2025, the ZCITY App had 2,708,782 registered users and 2,027 registered merchants[208] - The number of new registered users for the ZCITY App in the quarter ended September 30, 2025, was 517, while the number of active users was 4,378[231] - As of September 30, 2025, the company recorded 2,708,570 registered users, with an average growth rate of approximately 0.1% over the past five quarters, while active users decreased by an average of 27.1%[233] - The decline in active users is attributed to reduced E-voucher purchases and decreased marketing spending, leading to lower new user registrations and retention rates[234] Financial Performance - Total revenues for the three months ended September 30, 2025, decreased by approximately $25,000 or 12.0% to approximately $182,527 compared to $207,371 for the same period in 2024[237] - Product and loyalty program revenue increased by approximately $0.1 million or 122.1% to approximately $181,519 for the three months ended September 30, 2025, driven by higher demand for e-vouchers[238] - Transaction revenue decreased by 97.7% to approximately $1,008 for the three months ended September 30, 2025, compared to approximately $43,080 for the same period in 2024[240] - Member subscription revenue decreased by 100% to approximately $0 for the three months ended September 30, 2025, from approximately $82,546 for the same period in 2024[241] - Gross profit for the three months ended September 30, 2025, was approximately $1,286, reflecting a decrease of approximately $171,000 or 99.3% compared to approximately $172,172 for the same period in 2024[244] Expenses and Losses - Selling expenses decreased by approximately $57,000 or 73.2% to approximately $21,000 for the three months ended September 30, 2025, primarily due to reduced marketing expenses[247] - General and administrative expenses increased by approximately $54,000 or 6.8% to approximately $843,000 for the three months ended September 30, 2025, driven by higher administrative costs[248] - Research and development expenses increased by approximately $0.8 million or 1,547.9% to support A.I. related infrastructure development for the three months ended September 30, 2025[249] - Net loss for the three months ended September 30, 2025, was approximately $2.0 million, an increase of $1.0 million compared to a net loss of $1.0 million for the same period in 2024[253] Cash Flow and Financing - As of September 30, 2025, the company had approximately $1.3 million in cash and cash equivalents, primarily consisting of unrestricted bank deposits[255] - Net cash used in operating activities for the three months ended September 30, 2025, was approximately $1.8 million, compared to $1.0 million for the same period in 2024[260] - Net cash provided by financing activities for the three months ended September 30, 2025, was approximately $3.5 million, primarily from the Share Purchase Agreement[265] - The company issued 33,566 shares of common stock, resulting in net proceeds of approximately $2.9 million as of September 30, 2025[256] Acquisitions and Partnerships - On February 11, 2025, the company signed a share purchase agreement to acquire a 51% stake in Tien Ming Distribution Sdn Bhd, although the transaction is expected to be terminated due to lack of control[214] - The company initiated a new revenue stream by offering customized software development services, targeting enterprise clients, with a partnership established in January 2025[213] - The company has partnered with Credilab Sdn Bhd to develop credit services within the ZCITY App, with the partnership scheduled to conclude on September 19, 2029[221] - The company aims to enhance user engagement through the integration of mini-game modules into the ZCITY App, in partnership with Octagram Investment Limited[222] Stock and Valuation - A reverse stock split of 1:50 was executed on April 7, 2025[215] - The fair value of warrants issued to Alumni Capital was estimated at $2,687,863 based on assumptions including expected volatility of 160.20% to 171.88% and an exercise price of $1.17 to $5.15[282] - The fair value of warrants on June 30, 2025, was estimated at $383,886, with an expected volatility of 162.92% to 167.27% and an exercise price of $1.20 to $2.05[283] - The fair value of warrants on September 30, 2025, was estimated at $1,037,695, with an expected volatility of 162.53% and an exercise price of $0.65 to $1.10[284] Internal Controls and Compliance - Management identified material weaknesses in internal control over financial reporting, including inadequate U.S. GAAP expertise and lack of an internal audit function[289] - Plans for remedial measures include hiring qualified accounting personnel and establishing an internal audit function to improve financial reporting and compliance[289] Impairments and Concerns - The company recorded an impairment for long-lived assets amounting to $19,517,303 as of September 30, 2025[273] - The company has substantial doubt about its ability to continue as a going concern due to recurring losses and insufficient funds to meet working capital requirements[259] Other Financial Information - The company has provided an allowance for credit loss of $1,078,475 for other receivables as of September 30, 2025[272] - For the three months ended September 30, 2025, the company recorded an unrealized holding loss on marketable securities of $0, compared to approximately $128,000 for the same period in 2024[274] - Deferred tax liabilities are recognized for all taxable temporary differences, while deferred tax assets are recognized only if it is probable that taxable profit will be available[278] - Revenue from customized software development services is recognized over time using the cost-to-cost input method, with significant estimates impacting revenue timing and amounts[277] - Stock-based compensation for the three months ended September 30, 2025, amounted to approximately $100,000, compared to $70,000 for the same period in 2024[280]