What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-09-30 compared with 2023-09-28 · 386 added, 366 removed, 309 unchanged (71% of the section changed)

Management’s Discussion and Analysis

of Financial Condition and Results of Operations.

Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion

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Our financial statements have been prepared in accordance with U.S.

In addition, our financial statements and the financial information included in this Report reflect our organizational transactions and

have been prepared as if our current corporate structure had been in place throughout the relevant periods.

Treasure Global Inc (“TGL,” “we,”

“our” or the “Company”) 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 Gem Reward Sdn.

(“GEM”), which

was established under the laws of the Malaysia on June 6, 2017, through a reverse recapitalization.

to March 11, 2021, TGL and GEM were separate companies under the common control of Kok Pin

“Darren,” which resulted from Mr.

Tan’s prior 100% ownership of TGL and

his prior 100% voting and investment control over GEM pursuant to the Beneficial Shareholding

For a more detailed description of the Beneficial Shareholding Agreements and

Tan’s common control over TGL and GEM see Part

“Business – Corporate Structure.”

On March 11, 2021, TGL and GEM were reorganized

addition, our financial statements and the financial information included in this Report reflect our organizational transactions and have

been prepared as if our current corporate structure had been in place throughout the relevant periods.

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 ZCity Sdn Bhd (“ZCITY”), (formerly known as Gem Reward Sdn.

Bhd, underwent a name change on July 20, 2023).

originally established under the laws of the Malaysia on June 6, 2017, through a reverse recapitalization.

Prior to March 11, 2021, TGL and ZCITY 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 ZCITY 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 ZCITY see Part I, Item 1.

– Corporate Structure.”

On March 11, 2021, TGL and ZCITY 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 GEM.

outstanding equity of ZCITY.

Pursuant to the Share Swap Agreement, the purchase and sale of the swap shares was completed on March 11,

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As a result of the Share Swap Agreement,

(i) GEM became the 100% subsidiary of TGL and Kok Pin “Darren” no longer had any control over the GEM ordinary shares and

(ii) Kok Pin “Darren,” the Initial GEM Stockholders and Chong Chan “Sam” Teo owned 100% of the shares of

TGL common stock (Kok Pin “Darren” owning approximately 97%).

Subsequent to the date of the Share Swap Agreement, Kok Pin

“Darren” 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.

On August 15, 2022, we had closed our initial

underwritten public offering of 2,300,000 shares of common stock, par value $0.00001 per share, at $4.00 per share.

Meanwhile we received

net proceeds of approximately $8.2 million, net of underwriting discounts and commissions and fees, and other estimated offering expenses

amounted to approximately $1.0 million.

(i) ZCITY became the 100% subsidiary of TGL and Kok Pin “Darren” Tan no longer had any control over the ZCITY ordinary shares

and (ii) Kok Pin “Darren” Tan the Initial ZCITY 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 Operation

We have created an innovative online-to-offline

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Our proprietary product is an application branded

“ZCITY App,” which was developed through GEM.

“ZCITY App,” which was developed through ZCITY.

The ZCITY App was successfully launched in Malaysia on June 2020.

GEM 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.

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 September 13, 2023, we had 2,642,404 registered users and 2,025 registered merchants.

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 September 25, 2024, we had 2,704,306 registered users and 2,027 registered

Southeast Asia (“SEA”) consumers

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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.

“#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

ZCITY App users do not require any on-going credit

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as more traditional providers such as Visa and Mastercard.

On May 1, 2023, we entered into a worldwide master

license agreement (“License Agreement 1”) with Morganfield’s Holdings Sdn Bhd (“Licensor 1”), an unrelated

Pursuant to the License Agreement 1, the Licensor 1 agreed to grant us the exclusive worldwide license for the right to use

the Morganfield’s Trademark (“Trademark 2”) for a period of five years.

During the five-year license period, we agree

to pay Licensor 1 for monthly license fee throughout the license period, with minimum aggregate payments of approximately $1.5 million

or 40% of the total monthly collections from our sub-licensees, whichever is higher.

On June 6, 2023, we entered into a worldwide master

license agreement (“License Agreement 2”) with Sigma Muhibah Sdn Bhd (“Licensor 2”), an unrelated third party.

Pursuant to the License Agreement 2, Licensor 2 agreed to grant the AY Food Ventures Sdn Bhd with the exclusive worldwide license for

right of use in Abe Yus’s Trademark (“Trademark 2”) for a period of five years.

During the five years license period,

we agree to pay the licensor 2 for monthly license fee throughout the license period, with minimum aggregate payments of approximately

$1.2 million or 40% of the total monthly collection from our sub-licensees, whichever is higher.

-Food Distribution Operation

On April 12, 2023, we have acquired 100% equity

interest in Foodlink Global Sdn.

(“Foodlink”), along with its two wholly-owned subsidiaries, Morgan Global Sdn.

Bhd (“Morgan”)

and AY Food Ventures Sdn.

(“AY Food”), for a consideration of approximately $3,000 from DBH.

Through Foodlink, Morgan,

and AY Food, we have been engaged in the operation of sub-licensing restaurant branding and the selling and trading of food and beverage

On May 24, 2024, we had disposed Foodlink and

its subsidiaries along with the food distribution operation to a third party for a consideration of $148,500.

The disposal of Foodlink

and its subsidiaries did not have material impact to our operation.

Recent Development

-Financing Development

On August 15, 2022, we had closed our initial

underwritten public offering of 32,858 (2,300,000 pre reverse split) shares of common stock, par value $0.00001 per share, at $280 ($4.00

pre reverse split) per share.

Meanwhile we received net proceeds of approximately $8.2 million, net of underwriting discounts and commissions

and fees, and other estimated offering expenses amounted to approximately $1.0 million.

On November 30, 2023, we closed our underwritten

public offering (the “November 2023 Offering”) of (i) 371,629 (26,014,000 pre reverse split) shares of common stock, at a

public offering price of $7 ($0.10 pre reverse split) per share of Common Stock and (ii) 14,000,000 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

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.

22, 2024, we have entered into a marketing offering agreement (“Marketing Offering Agreement”) with H.C.

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.

year ended June 30, 2024, we have received an aggregated net proceed of $431,811, net of broker fee from issuance of 94,889 shares of

common stock which sell through or to the Manager.

-Business Development

Since December 2022, we have been developing the

TAZTE Smart F&B system (“TAZTE”), a comprehensive solution designed to facilitate digital transformation for registered

food and beverage (“F&B”) outlets across Malaysia.

TAZTE was conceived as a merchant-centric program, intended to leverage

user data to drive substantial business growth for our merchant clientele.

We initially offered a complimentary trial period to merchants,

which was scheduled to conclude on December 31, 2023.

This trial period was later extended until June 2024.

However, due to insufficient

participation from merchant clients, management has decided to discontinue the program as of June 2024.

Key Factors that Affect Operating Results

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Supply Chain Disruptions

Although there have been global supply chain disruptions

as a result of the COVID-19 pandemic and Russia’s February 2022 invasion of Ukraine 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 June 30, 2023, but

we will continue to monitor the effects of supply chain disruptions 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 June 30, 2024, but we will continue to monitor the effects

of above mentioned disruptions on our business in future periods.

Key Operating Metrics

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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 each quarter since we launched ZCITY platform, are set forth in the table below:

the quarters ended

September 30,

The main metrics we consider, and our results for last five quarters, are set forth in the table below:

For the Quarters Ended

September 30,

of new registered user (1)

of new participating merchants

Number of new registered user (1)

Number of active users (2)

Number of new participating merchants

Registered are persons who have registered on the ZCITY App.

(2) Active users are users who have logged into the ZCITY App at least

September 30,

Active users are users who have logged into the ZCITY App at least once.

September 30,

registered users

Participating merchants

We have experienced substantial growth in registered

users and active users since we launched ZCITY platform in June 2020.

As of June 30, 2023, we recorded 2,542,164 registered users and

378,414 active users from ZCITY platform.

Our average percentage of growth of register and active users from the establishment of

the ZCITY platform to the year ended June 30, 2023 was approximately 93.7% and 179.3%, respectively.

However, the average percentage of growth of registered

and active users decreased in the last ten quarters up to June 30, 2023 which was a result of decrease in purchasing of E-voucher from

our vendor, eventually reduce the E-voucher available for sales, and attract less new registered and active user to join our ZCITY platform.

Since our product and loyalty program revenue mainly consist of sales of E-voucher which bear a low profit margin, reduce in purchasing

of E-voucher will allow us to reserve more working capital in developing our TAZTE Smart F&B system (“TAZTE”), which is

a system that provides a one stop solution and digitalization transformation for all registered food and beverage (“F&B”)

outlets located in Malaysia.

As TAZTE is a merchant-oriented program, we intend to utilize our user data to help our merchant customers

to achieve higher business growth as well as increase our transaction revenue while we launch TAZTE in late December 2022.

As we provided

extended 365 days free trial for merchant participate in TAZTE, we have not generated any revenue from TAZTE for the year ended June 30,

For 2023 and beyond, we do not expect to experience exponential growth rate in our registered and active users as we intend to maintain

our E-voucher for sales in a steady level and increase our user’s retention rate.

Accumulated registered users

Accumulated Participating merchants)

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.

As of June 30, 2024, we recorded 2,701,189

registered users and 26,819 active users on the ZCITY platform.

On average, our registered user base has grown by approximately 2.0% over

the past five quarters, while our active user numbers have experienced an average decline of 38.3%.

The decline in growth of registered users and

active users over the past five quarters, as of June 30, 2024, 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

Accordingly, the proportion of total registered users that we consider active users at the end of each quarter is as follows:

September 30, 2020

October 1, 2020

December 31, 2020

January 1, 2021

March 31, 2021

April 1, 2021

June 30, 2021

September 30, 2021

October 1, 2021

December 31, 2021

January 1, 2022

March 31, 2022

Accordingly, the proportion of total registered users that we consider active users at the end last five quarters as of June

30, 2024 is as follows:

registered users

Total active users

to total registered

April 1, 2023

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Accordingly, our churn and retention

rates of the active user base at the end of each quarter is as follows:

September 30, 2020

October 1, 2020

December 31, 2020

January 1, 2021

March 31, 2021

April 1, 2021

June 30, 2021

September 30, 2021

October 1, 2021

December 31, 2021

January 1, 2022

March 31, 2022

rates of the active user base at the end of last five quarters as of June 30, 2024 is as follows:

April 1, 2023

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Total active users in the past quarter

Over the last 24 months, 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.

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

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Transaction revenue

Agent subscription revenue

Member subscription revenue

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Total revenues

Total revenues decreased by approximately $10.3 million

or 12.9% to approximately $69.4 million for the year ended June 30, 2023 from approximately $79.7 million for the year ended June

The decrease was mainly attributable to decrease in product and loyalty program revenue.

Total revenues decreased by approximately $47.3

million or 68.2% to approximately $22.1 million for the year ended June 30, 2024 from approximately $69.4 million for the year ended

June 30, 2023.

The decrease was mainly attributable to the decrease in product and loyalty program revenue.

Product and loyalty program revenue

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In addition, we

also engage in sales of food and beverage products through our newly acquired subsidiaries, Morgan Global Sdn.

Bhd (“Morgan”)

and AY Food Ventures Sdn.

The product and loyalty program revenue decrease by approximately $10.5 million

or 13.2% to approximately $68.9 million for the year ended June 30, 2023 from approximately $79.4 million for the same period in 2022.

The decrease was mainly attributable to decrease in E-voucher purchasing which resulted in less E-voucher available for sales during the

year ended June 30, 2023.

Such decrease in purchasing activities was due to our management’s decision to reserve more working capital

for developing TAZTE within the ZCITY platform as discussed in the key operating metrics section above.

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 million or 68.9% to approximately $21.5 million for the year ended

June 30, 2024 from approximately $68.9 million for the same period in 2023.

The decrease in revenue was primarily attributable to 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.

Transaction revenue

The transaction revenue primarily consists of fees charged to merchants

for participating in our ZCITY platform upon successful sales transaction and payment service taken place between the merchants and their

customers online.

Our transaction revenue increased by 40.3% to approximately $75,000 for the year ended June 30, 2023 from approximately

$54,000 for the same period in 2022.

The increase was mainly attributable to the fact that we engaged with 2,010 local merchants to connect

them with their customers through our ZCITY platform as of June 30, 2023 compared to 1,985 as of June 30, 2022.

The transaction revenue primarily consists of

fees charged to merchants for participating in our ZCITY platform upon successful sales transaction and payment service taken place between

the merchants and their customers online.

Our transaction revenue decreased by 18.6% to approximately $61,000 for the year ended June

30, 2024 from approximately $75,000 for the same period in 2023 due to lack of new enrolment of merchant client.

Our average percentage

of growth of new merchants was approximately 25.3% throughout the quarters as of June 30, 2023 since the establishment of ZCITY platform.

Despite of the slowdown in adding new merchants to our platform during the last eight quarters ended as of June 30, 2023, we expect our

transaction revenue to increase as soon as the free trial period from TAZTE expires in December 2023.

Agent subscription revenue

Agent subscription revenue primarily consists

of fees charged to the agents in exchange for rights by introducing merchants to join our merchant network and to earn a future fixed

percentage of commission fees upon completion of each sales transaction between the referred merchants and their customers.

recognize any agent subscription revenue for the year end June 30, 2023 mainly due to our shift of business strategies to Zmember subscription

revenue which is a member oriented program designated to attract more customer to engage with our ZCITY platform.

As we abandoned the

agent subscription program, we will not generate any agent subscription revenue going forward.

of growth of new merchants was approximately 0.2% throughout the quarters as of June 30, 2024.

Member subscription revenue

Member subscription revenue primarily consists

of fees charged to customers who signed up for Zmember, a membership program that includes exclusive saving, bonus, and referral

Member subscription revenue increased by 81.4% to approximately $0.4 million for the year end June 30, 2023 as compared

to approximately $0.2 million for the same period in 2022 as we launched the Zmember program for the quarter ended in March 31, 2022

to enhance our customer engagement with our ZCITY platform.

As of June 30, 2023, we had 22,861 customers who subscribed to our Zmember

of fees charged to customers who sign up for Zmember, our membership program that offers exclusive savings, bonuses, and referral rewards.

For the year ended June 30, 2024, member subscription revenue decreased by 2.0% to approximately $376,000, from approximately $384,000

for the same period in 2023.

The decrease was primarily due to we experienced slowdown in acquiring new customers to participate in our

Zmember program .

As of June 30, 2024 and 2023, we had 28,927 and 22,861 customers who subscribed to our Zmember program, respectively.

Sublicense revenue

As we acquired exclusive worldwide license for

right of use in Morganfield’s Trademark on May 1, 2023 for a period of five years, we have generated sublicense revenue consist

of fee charged to the customers who sublicensed the right of use of the Trademark from us.

For the year ended June 30, 2023, sublicense

revenue was amounted to approximately $50,000 while as of June 30, 2023 we engaged 7 customers as sublicensees who operated their restaurant

under Morganfield’s Trademark in Singapore, Malaysia, and China.

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,

we would no longer generate revenue from sublicense going forward.

Cost of revenue

Our breakdown of cost of revenue by categories for the years ended

June 30, 2023 and 2022, respectively, is summarized below:

Our breakdown of cost of revenue by categories

for the years ended June 30, 2024, and 2023, respectively, is summarized below:

For the Years Ended

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Cost of revenue also consists of monthly license payment made to our licensor to maintain our good standing for

the right of use in Trademark which is attributable to our sublicense revenue.

the right of use the Trademark which is attributable to our sublicense revenue.

Total cost of revenue decreased by approximately $47.6

million or 69.2% for the year ended June 30, 2024 compared with the same period in 2023.

The decrease was in line with our decreased of

The decrease was in line with our decrease in

Our gross profit from our major revenue categories

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Transaction revenue

Agent subscription revenue

Member subscription revenue

Sublicense revenue

Our gross profit for the year ended June 30, 2023 amounted to approximately

$523,000 as compared to approximately $476,000 for the year ended June 30, 2022 which represents an increase of approximately $47,000

The increase in gross profit was primarily due to the growth in member subscription revenue, as we had more customers subscribed

to our Zmember program as of June 30, 2023

The gross margin was approximately 0.8% and 0.6% for the years ended

June 30, 2023, and 2022, respectively.

The 0.2% increase in gross margin attributed to the rise in gross profit from Member subscription

revenue, which has a higher gross margin compared to our other revenue streams.

Gross (loss) profit

Our gross profit for the year ended June 30, 2024,

amounted to approximately $0.8 million as compared to approximately $0.5 million for the same period in 2023, reflecting an increase of

approximately $0.3 million or 56.0%.

Our gross margin improved from 0.8% for the year ended June 30, 2023 from 3.7% for the same period

in 2024, representing an enhancement of 2.9% in our gross margin percentage.

The increase in both gross profit and gross margin

were mainly attributed to our decision to reduce spending on customer rewards within our ZCITY platform, resulting in a decrease in deferred

revenue and consequently leading to higher gross profit and gross margin in the current period.

Operating expenses

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Selling expenses amounted to approximately $1.8

million and $6.3 million for the years ended June 30, 2023 and 2022, respectively.

Representing a decrease of approximately $1.6 million

The decrease was mainly attributable to decrease in marketing and promotion expense of approximately $1.4 million related to

promoting our ZCITY platform.

million and $4.7 million for the years ended June 30, 2024 and 2023, respectively, representing a decrease of approximately $3.0 million

The decrease was mainly attributable to a decrease in marketing and promotion expense of approximately $2.8 million related

to promoting our ZCITY platform.

Marketing and promotion expense consists of redemptions of reward points which is generated from non-spending

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for discounted credit of purchasing our products upon conversion of using the reward points.

For the years end June 30, 2023 and 2022,

For the years ended June 30, 2024 and 2023,

we incurred approximately $0.4 million and $1.8 million, respectively, in marketing and promotion expense, and recognized the same amount

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The decrease in marketing

and promotion expense was mainly due to decrease of new registered user, and eventually resulted in less redemption in non-spending related

activities reward points by our customers.

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 $4.7

million and $2.8 million for the years ended June 30, 2023 and 2022, respectively.

Representing an increase of approximately $1.9 million

The increase was mainly due to increase in salary expense of approximately $0.5 million, director & officer liability insurance

expense of approximately $0.1 million, and professional fee of approximately $1.0 million as a result of expansion of management and administration

team to support our business operation.

General and administrative expenses amounted to

approximately $4.5 million and $4.7 million for the years ended June 30, 2024 and 2023, respectively, representing a decrease of approximately

$0.2 million or 3.4%.

The decrease was primarily attributed to decrease in salary expenses and professional fee expense of approximately

$0.6 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.

Research and development expenses

Research and development expense amounted to approximately $0.5 million

and $0.3 million for the years ended June 30, 2023 and 2022, respectively, representing 105.9% increase as we increase spending to maintain

and enhance our mobile application or website to ensure our customers to have exceptional user experience while navigating within the

ZCITY platform.

Research and development expense amounted to approximately

$0.5 million for the years ended June 30, 2024 and 2023, representing 6.5% decrease as we incurred less spending in mobile application

or website development.

Stock-based compensation expenses

Stock-based compensation expenses amounted to approximately $0.8 million and $1.3 million for the years ended June 30, 2023 and 2022

respectively, representing decrease of approximately $0.5 million.

The stock-based compensation incurred for the year ended June 30, 2022

are from Exchange Listing LLC (the “Consultant”).

The decreased was mainly due to the Consultant completed its service

during the quarter ended December 31, 2022.

The decrease was offset by additional stock-based compensation issued to Voon Him “Victor”

Hoo for his service as our former director amounted to approximately $0.4 million for the year ended June 30, 2023.

Other expenses, net

Other expenses, net amounted to approximately

$1.4 million and $1.6 million for the years ended June 30, 2023 and 2022, respectively.

Representing a decrease of approximately $0.2 million

The decrease was mainly attributable to decrease of interest expenses of approximately $0.3 million as we have less interest-bearing

convertible note outstanding as of June 30, 2023.

Stock-based compensation

expenses amounted to approximately $0.1 million and $0.8 million for the years ended June 30, 2024, and 2023, respectively.

The stock-based

compensation incurred for the years ended June 30, 2024, was related to compensation paid to our executive officer as part of their compensation

plan and third party for professional service .

Other expense, net

Other expense, net, amounted to approximately

$0.5 million and $1.4 million for the years ended June 30, 2024 and 2023, respectively, representing

a decrease of approximately $0.9 million which was primarily attributable to we incurred other income from software developing service,

net of cost of approximately $0.7 million, other income of approximately $0.2 million from disposal of Foodlink and its subsidiaries,

and a decrease of amortization of debt discount of approximately $0.9 million related to our convertible note payable as we had fewer

convertible notes containing debt discount that needed to be amortized for the year ended June 30, 2024 compare to the same period in

2023, offset by an unrealized loss approximately $0.8 million from marketable securities we received as service consideration in development

of an artificial intelligence powered travel platform, redemption premium of approximately $0.3 million remit to our convertible note

holder as a result of floor price triggering event.

Provision for income taxes

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$40,000 and $98,000 for the years ended June 30, 2024 and 2023, respectively.

The amount was attributable to tax imposed on Treasure

Global Inc from the State of Delaware, as we are required to remit franchise tax to the State of Delaware on an annual basis.

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, 2023 and 2022,

our foreign subsidiaries did not generate any income that are subject to Subpart F tax and GILTI tax.

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.

tax after the 80% foreign tax credits are applied.

For the years ended June 30, 2024 and 2023, our foreign subsidiaries did not generate

any income that are subject to Subpart F tax and GILTI tax.

Our net losses decreased by approximately $5.1

predominately due to the reasons as discussed above.

million predominately due to the reasons as discussed above.

Liquidity and Capital Resources

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underwritten public offering of 2,300,000 shares of common stock, par value $0.00001 per share, at $4.00 per share.

We had received aggregate

We received aggregate

net proceeds from the closing of approximately $8.2 million, after deducting underwriting discounts and commissions and fees, and other

estimated offering expenses which amounted to approximately $1.0 million.

From February to June 2023, we issued two convertible notes to a third

party in an aggregate principal amount of $5,500,000.

We received $5,060,000 in proceeds from the third-party net of discount.

The convertible

notes accrue or will accrue interest at 4% per annum and has a 12-months term.

Despite receiving the proceeds from our initial

underwritten public offering and issuance of two convertible notes, 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:

financing to support our working capital;

available sources of financing (including debt) from Malaysian banks and other financial institutions;

support and credit guarantee commitments from our related parties.

However, there is no guarantee that the substantial doubt about our

ability to continue as a going concern will be alleviated.

From February to June 2023, we issued two convertible

notes to a third party in an aggregate principal amount of $5,500,000.

We received $5,060,000 in proceeds from the third-party net of

The convertible notes accrued interest at 4% per annum and had a 12-month term.

On December 6, 2023, we paid a total of $2,102,909.59

which represented the outstanding balance of one of the convertible notes issued pursuant to the securities purchase agreement.

convertible note had already been fully converted into shares of our common stock prior to December 6, 2023.

On November 30, 2023, we closed our November 2023

Offering of (i) 26,014,000 shares of common stock, at a public offering price of $0.10 per share, and (ii) 14,000,000 Pre-Funded Warrants,

each with the right to purchase one share of Common Stock, at a public offering price of $0.0999 per Pre-Funded Warrant.

of the November 2023 Offering, we received aggregate net proceed of approximately $3.5 million, after deducting underwriting discounts,

and non-accountable expense.

22, 2024, we have entered into a marketing offering agreement (“Marketing Offering Agreement”) with H.C.

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.

year ended June 30, 2024, we have received an aggregated net proceed of $431,811, net of broker fee from issuance of 94,889 shares of

common stock which sell through or to the Manager.

From July to September 2024,

the Company received net proceed of $2,457,456, net of broker fee from issuance of 1,583,418 shares of common stock which sell through

or to the Manager related to the Marketing Offering Agreement.

Despite receiving the proceeds from offerings,

and issuance of convertible notes, 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

Equity financing to support our working capital;

Financial support and credit guarantee commitments from our related parties.

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

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Net change in cash and cash equivalents

$ (4,393,621 )

Operating Activities

Net cash used in operating activities for the years ended June 30,

2023 was approximately $9.6 million and were mainly comprised of the net loss of approximately $11.7 million, increase of prepayments

of approximately $0.1 million as our vendors required us to make deposit to secure the purchase, increase of accounts receivable of approximately

$0.2 million as a result of offering credit terms to our corporate customers engaged in the sales of nutrition products, and food and

beverage products, increase in inventory of approximately $0.2 million as we increase our inventory level on June 30, 2023 to meet with

the demand of our product, and increase of approximately $0.4 million in other receivables and other current assets as we prepaid IT maintenance

fee to a third party service provider, offset by amortization of debt discount of approximately $1.3 million, stock-based compensation

of approximately $0.8 million, increase of approximately $0.1 million in customer deposits as we incurred deferred revenue related to

member subscription revenue for the remaining subscribed period as of June 30, 2023, increase of

approximately $0.1 million in contract liability as we deferred more revenue due to increase of our customer’s redemption rate in

spending related reward point, and increase of approximately $0.5 million in other payables and accrued liabilities mainly

related to the accrued professional expenses.

Net cash used in operating activities

for the year ended June 30, 2022 was approximately $8.7 million and were mainly comprised of the net loss of approximately $11.7 million,

decrease of accounts payable (including related parties) of approximately $0.2 million as we had pay out some of the accounts payable

balance to the third parties or related parties vendors timely, decrease of customer deposits, related parties of approximately $0.2

million as we had returned the deposit related to I.T professional service back to the related parties due to projects abandoned,

and decrease of other payables, related parties as we paid out the remaining balance of professional fee incurred from two related parties

of approximately $0.1 million.

The net cash used in operating activities was mainly offset by amortization of debt discount of approximately

$1.3 million, stock-based compensation of approximately $1.3 million, increase of inventories of approximately $0.2 million as we improved

our inventories turnover rate due to demand of our product, and the increase in other payables and accrued liability of approximately

$0.7 million mainly related to the accrued professional expenses.

Net cash used in operating activities for the

year ended June 30, 2024 was approximately $4.7 million and was mainly comprised of the net loss of approximately $6.6 million ,

non-cash other incomes of approximately $1.0 million from software developing service related to VCI’s project, and approximately

$0.2 million from disposal of Foodlink and its subsidiaries as mentioned above in other expense, net, increase

of prepayments of approximately $0.1 million as our vendors required us to make deposit to secure the purchase, decrease of customer deposit

of approximately $0.1 million as we realized more membership subscription revenue from the customer deposit collected from prior period,

and decrease of other payables and accrued liabilities of approximately $0.1 million as made timely payment to our service providers,

offset by non-cash items of depreciation, amortization, allowance for credit losses, stock-based compensation and unrealized loss on marketable

securities amounted to approximately $2.4 million, decrease of inventories of approximately $0.3 million as we reduced our purchase and

intended to maintain a more effective inventory level, decrease of approximately $0.4 million in other receivables and other current assets

is attributed to the utilization of prepaid information technology and insurance expenses from previous periods in the current period,

and increase of approximately $0.3 million in accounts payable as we made more purchases on account.

used in operating activities for the years ended June 30, 2023 was approximately $9.6 million and were mainly comprised of the net loss

of approximately $11.7 million, increase of prepayments of approximately $0.1 million as our vendors required us to make deposit

to secure the purchase, increase of accounts receivable of approximately $0.2 million as a result of offering credit terms to our corporate

customers engaged in the sales of nutrition products, and food and beverage products, increase in inventory of approximately $0.2 million

as we increase our inventory level on June 30, 2023 to meet with the demand of our product, and increase of approximately $0.4 million

in other receivables and other current assets as we prepaid IT maintenance fee to a third party service provider, offset by amortization

of debt discount of approximately $1.3 million, stock-based compensation of approximately $0.8 million, increase of approximately $0.1

million in customer deposits as we incurred deferred revenue related to member subscription revenue for the remaining subscribed period

as of June 30, 2023, increase of approximately $0.1 million in contract liability as we deferred more revenue due to increase of

our customer’s redemption rate in spending related reward point, and increase of approximately $0.5 million in other payables

and accrued liabilities mainly related to the accrued professional expenses.

Investing Activities

Net cash used in investing activities for the year ended June 30, 2023

was approximately $61,000, which mainly due to purchase of equipment of approximately $87,000 for our operations used, and offset with

proceeds of approximately $26,000 received from disposal of our office equipment.

Net cash used in investing activities for the

year ended June 30, 2022 was approximately $0.3 million, mainly due to purchase of equipment for our operations.

year ended June 30, 2024 was approximately $0.3 million, which was mainly due to purchase of equipment and intangible assets of approximately

$17,000, and $0.2 million, respectively, for our operations used, and approximately $45,000 of cash released, net of cash received from

disposal of Foodlink and its subsidiaries.

used in investing activities for the year ended June 30, 2023 was approximately $61,000, which mainly due to purchase of equipment of

approximately $87,000 for our operations used, and offset with proceeds of approximately $26,000 received from disposal of our office

Financing Activities

Net cash provided by financing activities for the year ended June 30,

2023 was approximately $12.7 million, which mainly comprised of proceeds received from the issuance of convertible notes to third parties

of approximately $7.7 million, proceeds received from our initial public offering of approximately $8.2 million, and proceeds received

from third parties loans of approximately $0.6 million, offset by repayment to related parties, third parties loans, and insurance

loan of approximately $3.8 million, repayment of senior note of $65,000, and $15,000 payment of deferred offering costs.

provided by financing activities for the year ended June 30, 2022 was approximately $8.2 million, which were mainly comprised of proceeds

received from the issuance of convertible note from third parties and related parties of approximately $8.6 million, and proceeds received

from third parties loans of approximately $1.5 million, offset by repayment to related parties loan of approximately $1.8 million, and

approximately $0.1 million payment of deferred offering costs.

Net cash provided financing activities for the

year ended June 30, 2024 was approximately $0.4 million, which mainly comprised of repayment to convertible notes, insurance loan and

related party loan of approximately $3.6 million, offset by approximately $3.5 million net proceeds received from issuance of common stock

and Pre-Funded Warrants related to the November 2023 Offering, approximately $0.4 million net proceeds received from issuance of common

stock related to the Marketing Offering, and approximately $16,000 capital contribution.

provided by financing activities for the year ended June 30, 2023 was approximately $12.7 million, which mainly comprised of proceeds

received from the issuance of convertible notes to third parties of approximately $7.7 million, proceeds received from our initial public

offering of approximately $8.2 million, and proceeds received from third parties loans of approximately $0.6 million, offset by repayment

to related parties, third parties loans, and insurance loan of approximately $3.8 million, repayment of senior note of $65,000, and $15,000

payment of deferred offering costs.

Off-Balance Sheet Arrangements

As of the date of this Annual Report, we have

the following off-balance sheet arrangements that are likely to have a future effect on our financial condition, revenues or expenses,

results of operations and liquidity:

On May 1, 2023, our subsidiary Morgan enter into a worldwide master

license agreement (“License Agreement”) with Morganfield’s Holdings Sdn Bhd (“Licensor”), an unrelated third

Pursuant to the License agreement, the Licensor agreed to grant Morgan with the exclusive worldwide license for right of use in

Morganfield’s Trademark (“Trademark”) for a period of five years.

During the five years license period, Morgan is obligated

to pay the licensor for license fee on monthly basis in an aggregate total of minimum payment of approximately $1.5 million or 40% of

the total monthly collection from Morgan’s sub-licensees, whichever is higher.

On June 6, 2023, we entered into a worldwide master license agreement

(“License Agreement 2”) with Sigma Muhibah Sdn Bhd (“Licensor 2”), an unrelated third party.

Pursuant to the License

Agreement 2, the Licensor 2 agreed to grant the AY Food Ventures Sdn Bhd with the exclusive worldwide license for right of use in Abe

Yus’s Trademark (“Trademark 2”) for a period of five years.

During the five years license period, we agree to pay the

licensor 2 for license fee on monthly basis in an aggregate total of minimum payment of approximately $1.2 million or 40% of the total

monthly collection from our sub-licensees, whichever is higher.

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

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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, allowance for doubtful accounts, write-down

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, and fair value of the warrants issued.

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 agent subscription revenue, sales of healthcare

products on our ZCITY platform, sublicensing revenue, and sales of food and beverage products.

Management regularly assesses the adequacy

of the allowance for doubtful accounts by considering historical collection trends and aging of receivables.

Additionally, management

periodically evaluates individual customer financial conditions, credit histories, and current economic conditions to make necessary adjustments

to the allowance.

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 for customer balances aged above 120 days for sales of healthcare products on our ZCITY platform and 100% provision for

customer balances aged above 60 days for sublicensing revenue and sales of food and beverage products.

Our management continuously assesses

the reasonableness of the valuation allowance policy and updates it as needed.

As of June 30, 2023, and 2022, our allowance for accounts

receivable was $214 and $227, respectively.

Our inventories are recorded at the lower of

cost or net realizable value, with cost determined using the first-in-first-out (FIFO) method.

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, sublicensing revenue and sales of food and beverage products.

Starting from July 1, 2023, we adopted ASU No.2016-13

“Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments” (“ASC

We used a modified retrospective approach, and the adoption does not have an impact on our unaudited condensed consolidated

financial statements.

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 and 100% provision for customer balances aged above 60 days for sublicensing

revenue and sales of food and beverage products.

Our management continuously assesses the reasonableness of the credit loss allowance

policy and updates it as needed.

As of June 30, 2024 and 2023, we recorded $1,100 and $214 of provision for estimated credit losses,

respectively.

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’

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and health care products.

For the years ended June 30, 2023 and 2022, $0, and $8,805 write-downs for estimated obsolescence or unmarketable

inventories were recorded, respectively.

For the years ended June 30, 2024 and 2023, $483 and $0 write down for inventories were recorded, respectively.

Other receivables and other current assets, net

Other receivables and other current assets primarily include refundable

advance to third party service provider and other deposits.

Management regularly reviews the aging of receivables and changes in payment

trends and records allowances when management believes collection of amounts due are at risk.

Accounts considered uncollectable are written

off against allowances after exhaustive efforts at collection are made.

No allowance of other receivables and other current assets were

recorded as of June 30, 2023 and 2022.

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 June 30, 2024 and 2023, we have provided

allowance for credit loss of $212,759 and $0, respectively.

Prepayments and deposits are mainly cash deposited

10 unchanged sentences

allowance policy and updates it if necessary.

No allowance of prepayments were recorded as of June 30, 2023 and 2022.

No allowance of prepayments was recorded as of June 30, 2024 and June 30, 2023.

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.

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.

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

No impairment for long-lived assets were recorded as of June 30, 2024 and 2023.

Investment in marketable

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

Unrealized gains/(losses) due to fluctuations in fair value are recorded in the consolidated statements of operations and comprehensive

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 years ended June 30, 2024 and 2023, we incurred unrealized holding loss on marketable securities amounted

to approximately $828,367 and $0, respectively.

Revenue recognition

Loyalty program

- Performance obligations satisfied over time

- Performance obligations satisfied

Our ZCITY reward loyalty program allows members

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Stock-based compensation

We recognize compensation costs resulting from the issuance of stock-based

awards to third party consultant and former director as an expense in the statements of operations over the requisite service period based

on a measurement of fair value for each stock-based award.

The fair value of each warrants granted are estimated as of the grant date

using the Black-Scholes-Merton option-pricing model while the fair value of each common stock granted are estimated using the Company’s

closing stock price on the grant date.

The fair value is amortized as compensation cost on a straight-line basis over the requisite service

period of the awards.

The Black-Scholes-Merton option-pricing model includes various assumptions, including the fair market value of the

common stock of the Company, expected life of stock options, the expected volatility and the expected risk-free interest rate, among others.

These assumptions reflect the Company’s best estimates, but they involve inherent uncertainties based on market conditions generally

outside the control of the Company.

The fair value of the stock-based compensation which included warrants and common stock issued were

estimated to be $819,332 and $1,283,994 for the years ended June 30, 2023 and 2022, respectively.

We recognize compensation costs resulting from

the issuance of stock-based awards to third party consultant and former director as an expense in the statements of operations over the

requisite service period based on a measurement of fair value for each stock-based award.

The fair value of each warrants granted are

estimated as of the grant date using the Black-Scholes-Merton option-pricing model while the fair value of each common stock granted are

estimated using the Company’s closing stock price on the grant date.

The fair value is amortized as compensation cost on a straight-line

basis over the requisite service period of the awards.

The Black-Scholes-Merton option-pricing model includes various assumptions, including

the fair market value of the common stock of the Company, expected life of stock options, the expected volatility and the expected risk-free

interest rate, among others.

These assumptions reflect the Company’s best estimates, but they involve inherent uncertainties based

on market conditions generally outside the control of the Company.

The fair value of the stock-based compensation which included warrants

and common stock issued were estimated to be $11,111 and $819,332 for the years ended June 30, 2024 and 2023, respectively.

Convertible notes

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instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative

If the conversion features of conventional convertible debt provide

for a rate of conversion that is below market value at issuance, this feature is characterized as a beneficial conversion feature (“BCF”).

A BCF is recorded by us as a debt discount pursuant to ASC Topic 470-20 “Debt with Conversion and Other Options.” In those

circumstances, the convertible debt is recorded net of the discount related to the BCF, and we amortize the discount to interest expense,

over the life of the debt.

We account for warrants as equity-classified instruments in accordance

with ASC 480 and ASC 815.

The fair value of each warrant granted is estimated as of the date of grant using the Black-Scholes-Merton option-pricing

The fair value is amortized as compensation cost on a straight-line basis over the requisite service period of the awards.

Black-Scholes-Merton option-pricing model includes various assumptions, including the fair market value of our common stock, expected

life of stock options, the expected volatility and the expected risk-free interest rate, among others.

These assumptions reflect our best

estimates, but they involve inherent uncertainties based on market conditions generally outside our control.

Based on the above assumption,

the fair value of the warrants issued were estimated to be $175,349 for the year ended June 30, 2023.

If the conversion features of conventional convertible

debt provide for a rate of conversion that is below market value at issuance, this feature is characterized as a beneficial conversion

A BCF is recorded by us as a debt discount pursuant to ASC Topic 470-20 “Debt with Conversion and Other Options.”

In those circumstances, the convertible debt is recorded net of the discount related to the BCF, and we amortize the discount to interest

expense, over the life of the debt.

We account for warrants as equity-classified instruments

in accordance with ASC 480 and ASC 815.

The fair value of each warrant granted is estimated as of the date of grant using the Black-Scholes-Merton

option-pricing model.

The fair value is amortized as compensation cost on a straight-line basis over the requisite service period of the

The Black-Scholes-Merton option-pricing model includes various assumptions, including the fair market value of our common stock,

expected life of stock options, the expected volatility and the expected risk-free interest rate, among others.

These assumptions reflect

our best estimates, but they involve inherent uncertainties based on market conditions generally outside our control.

Based on the above

assumption, the fair value of the warrants issued during the years ended June 30, 2024 and 2023 were estimated to be $0 and $175,349,

respectively.

For the year ended June 30, 2024, 14,000,000 Pre-Funded

Warrants were issued in connection with the November 2023 Offering.

The Pre-Funded Warrants are classified as a component of permanent

stockholders’ equity within additional paid-in capital and were recorded at the issuance date using a relative fair value allocation

We valued the Pre-Funded Warrants at issuance concluding the purchase price approximated the fair value and allocated net proceeds

from the purchase proportionately to the common stock and Pre-Funded Warrants, of which $1,398,600 was allocated to the Pre-Funded Warrants

and recorded as a component of additional paid in capital.

Recent Accounting Pronouncements

1 unchanged sentence

statements included elsewhere in this report for a discussion of recently issued accounting standards.

Quantitative and Qualitative Disclosures

About Market Risk.

and Qualitative Disclosures About Market Risk.

The Company is a smaller reporting company as

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis