What changed in TREASURE GLOBAL INC's 10-K — 2022 vs 2023

Business Our Mission Our mission is to bring together the worlds of online e-commerce and offline physical retailers; widening consumer choice and rewarding loyalty, while sustaining and enhancing our earning potential.

Our Company We have created an innovative online-to-offline (“O2O”) e-commerce platform business model offering consumers and merchants instant rebates and affiliate cashback programs, while providing a seamless e-payment solution with rebates in both e-commerce (i.e., online) and physical retailers/merchant (i.e., offline) settings.

Our proprietary product is an internet application (or “App”) branded “ZCITY App”, which was developed through our wholly owned subsidiary, Gem Reward Sdn. Bhd. (“GEM”). The ZCITY App was successfully launched in Malaysia in 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.

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 payment gateway 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 December 5, 2022, we had over 2,312,114 registered users and over 1,998 registered merchants.

Corporate Structure T reasure Global, Inc. is a Delaware corporation that was incorporated on March 20, 2020. We issued 10,000,000 shares to Kok Pin “Darren” Tan, our founder and former Chief Executive Officer on July 1, 2020, who as a result became our sole shareholder. As of December 5 , 2022, we had a total of 92 full time employees.

Gem Reward Sdn. Bhd. (“GEM”), a Malaysia private limited company was incorporated on June 6, 2017.

Prior to the incorporation of GEM, Kok Pin “Darren” Tan entered into a Beneficial Shareholding Agreement (“Beneficial Shareholding Agreement 1”) with two individuals, one of which is a vice president of the Company (the “Initial GEM Shareholders”), which provided for the Initial Shareholders to hold the GEM shares issued to them in equal amounts and for the sole benefit of Kok Pin “Darren” Tan and provided Kok Pin “Darren” Tan with control over the voting and disposition over such shares as well as control over the issuance of additional GEM shares in consideration for equity in a company that had not been determined on the date of Beneficial Shareholding Agreement 1.

On November 10, 2020, Kok Pin “Darren” Tan instructed the Initial GEM Shareholders to issue 1 million additional GEM shares to shares to Chong Chan “Sam” Teo, currently our Chief Executive Officer, and as a result each Initial GEM Shareholder and Chong Chan “Sam” Teo held 1 million shares of GEM.

On November 10, 2020 Chong Chan “Sam” Teo entered into a Beneficial Shareholding Agreement with Kok Pin “Darren” Tan with terms similar to Beneficial Shareholding Agreement 1 (“Beneficial Shareholding Agreement 2” and together with the Beneficial Shareholding Agreement 1, “Beneficial Shareholding Agreements”).

As a result of Kok Pin “Darren” Tan’s 100% ownership of our common stock and the Beneficial Shareholding Agreements, TGI and GEM were both under the sole control of Kok Pin “Darren” Tan. 3 TGI and GEM were reorganized into a parent subsidiary structure pursuant to a Share Swap Agreement, dated March 11, 2021, as amended on March 11, 2021 among TGI, the Initial GEM Shareholders and Chong Chan “Sam” Teo (the “Share Swap Agreement”), in which TGI exchanged 321,585 shares of its common stock (the “Swap Shares”) for all equity of GEM.

Pursuant to the Share Swap Agreement, the purchase and sale of the Swap Shares was completed on March 11, 2021, but the issuance of the Swap Shares did not occur until October 27, 2021 when TGI amended its certificate of incorporation to increase the number of its authorized common stock to a number that was sufficient to issue the Swap Shares.

As a result of the Share Swap Agreement, (i) GEM became the 100% subsidiary of TGI and Kok Pin “Darren” Tan no longer had any control over GEM’s ordinary shares; and (ii) Kok Pin “Darren” Tan, the Initial GEM Shareholders and Chong Chan “Sam” Teo owned 100% of the TGI common stock (Kok Pin “Darren” Tan owning 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 TGI common stock to 16 individuals and entities and currently owns less than 5% of our common stock. We operate solely through GEM.

GEM owns all intellectual property rights to copyrightable, patentable, and other protectable intangible assets relating to our business, including trademarks. Corporate Information Our principal executive offices are located at 276 5th Avenue, Suite 704 #739, New York, New York 10001 and. No.29, Jalan PPU 2A, Taman Perindustrian Pusat Bandar Puchong, 47100 Puchong, Selangor, Malaysia. Our corporate website address is https://treasureglobal.co.

Our ZCITY website address is https://zcity.io. Market Opportunity We expect that continued strong economic expansion, robust population growth, rising level of urbanization, the emergence of the middle class and the increasing rate of adoption of mobile technology provide market opportunities for our Company in Southeast Asia (“SEA”).

SEA is a large economy and, as of 2020, its gross domestic product (“GDP”) was US$3.08 trillion 1 . In comparison, the respective GDP for both the European Union (“EU”) and the United States (“US”) totalled US$15 trillion and US$20.89 trillion16 2 in 2020.

SEA has experienced rapid economic growth rates in recent years, far exceeding growth in major world economies such as Japan, the EU and the US.

According to the IMF, Malaysia’s GDP growth averaged more than 4.3% from 2016 to 2019, but contracted by 6.0% in 2020 due to the COVID-19 pandemic and is expected to average 5.7% growth for the next five years (including 2021). 3 The GDP of Malaysia amounted to US$337 billion in 2020 and is projected to reach approximately US$500 billion by 2025. 4 SEA continues to enjoy robust population growth.

The United Nations Population Division estimates that the population of the SEA countries in 2000 was approximately 525 million people growing to 668 million in 2020.

According to the World Bank, Malaysia had a population of approximately 32 million people in 2020 compared to 23 million people in 2000. 5 A high percentage of Malaysians have lived in cities for the last decade and that percentage is increasing. Since 2010, 6 Malaysia’s urbanization has increased from approximately 71% to approximately 77% in 2020.

By comparison, in 2020 the urbanization rates for China, Vietnam and India were approximately 64%, 37% and 35%, respectively. 7 1 https://www.statista.com/statistics/796245/gdp-of-the-asean-countries/ 2 https://www.statista.com/statistics/263591/gross-domestic-product-gdp-of-the-united-states/ 3 https://www.imf.org/en/News/Articles/2021/03/17/pr2172-malaysia-imf-executive-board-concludes-2021-article-iv-consultation-with-malaysia 4 IMF Staff Report March 2021 5 https://www.worldometers.info/world-population/south-eastern-asia-population/; https://www.worldometers.info/world-population/malaysia-population/; https://data.worldbank.org/indicator/SP.POP.TOTL?locations=MY 6 Statista.com 7 Statista.com 4 Urbanization is highly correlated with the size and growth of the middle class.

Simply put, urbanization drives middle class consumption demand. According to the World Bank, Malaysia is likely to transition from an upper-middle-income economy to a high-income economy between 2024 and 2028, a reflection of the country’s economic transformation development trajectory over past decades.

In fact, Malaysia’s gross national income per capita is at US$11,200 according to latest estimates, only US$1,335 short of the current threshold level that defines a high-income economy. 8 And despite the ongoing effects from the Covid-19 pandemic, the Internet economy continues to boom in SEA.

According to Google Temasek e-Conomy SEA 2021 Report (the “Google Report”), internet usage in the region increased with 40 million new users added in 2021 for a total of 440 million compared to 360 million in 2019 and 400 million in 2020.24 9 Eighty nine percent of Malaysia’s population is now online, compared to approximately fifty six percent in 2010.25 10 81% and 80% of Malaysia and SEA’s internet users, respectively, have made at least one purchase online.

E-commerce, online media and food delivery adoption and usage surged with the total value of goods and services sold via the Internet, or gross merchandise value (“GMV”), in SEA, expected to reach approximately US$170 billion by year end 2021 according to the Google Report.

In fact, according to the Google Report, the SEA Internet sector GMV is forecast to grow to over US$360 billion by 2025 up from the $300 billion forecast in the Google, Temasek, Bain SEA Report 2020. 11 Malaysia’s internet economy has grown from $14 billion in 2020 to $21 billion in 2021 (47% growth) and is expected to grow to $35 billion in 2025. 12 As consumers in these markets that gradually shifting towards online platforms model, the total value of internet-based transactions has grown tremendously and is expected to keep doing so.

According to the Google Report, total GMV of South Asia’s Internet economy is expected to skyrocket from US$174 billion in 2021 to US$363 billion in 2025. We believe that these ongoing positive economic and demographic trends in SEA and South Asia propel demand for our e-commerce platform.

About the ZCITY App SEA consumers have access to a plethora of smart ordering, delivery and “loyalty” websites and apps, but in our experience, SEA consumers very rarely receive personalized deals based on their purchases and behavior. The ZCITY App targets consumers through the provision of personalized deals based on consumers’ purchase history, location and preferences.

Our technology platform allows us to identify the spending trends of our customers (the when, where, why, and how much).

We are able to offer these personalized deals through the application of our proprietary artificial intelligence (or “AI”) technology that scours the available database to identify and create opportunities to extrapolate the greatest value from the data, analyze consumer behavior and roll out attractive rewards-based campaigns for targeted audiences.

We believe this AI technology is currently a unique market differentiator for the ZCITY App. 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 use RP while they earn rewards from selected e-Wallet or other payment methods. ZCITY App users do not require any on-going credit top-up or need to provide bank card number with their binding obligations. We have partnered with Malaysia’s leading payment gateway, IPAY88, for secure and convenient transactions.

Users can use our secure platform and enjoy cashless shopping experiences with rebates when they shop with e-commerce and retail merchants through trusted and leading e-wallet providers such as Touch’n Go eWallet, Boost eWallet, GrabPay eWallet and credit card/online banking like the “FPX” (the Malaysian Financial Process Exchange) as well as more traditional providers such as Visa and Mastercard. 8 The World Bank Press Release dated March 16, 2021, https://www.worldbank.org/en/news/press-release/2021/03/16/aiminghighmalaysia 9 https://services.google.com/fh/files/misc/e_conomy_sea_2021_report.pdf 10 https://www.statista.com/statistics/975058/internet-penetration-rate-in-malaysia/ 11 https://www.bain.com/globalassets/noindex/2020/e_conomy_sea_2020_report.pdf 12 https://www.digitalnewsasia.com/digital-economy/e-conomy-sea-report-2021-malaysias-internet-economy-crosses-us21-bil 5 Our ZCITY App also provides the following functions: 1.

Registration and Account verification Users may register as a ZCITY App user simply, using their mobile device. They can then verify their ZCITY App account by submitting a valid email address to receive new user “ZCITY Newbie Rewards”. 2.

Geo-location-based Homepage Based on users’ location, nearby merchants and exclusive offers are selected and directed to them on their homepage for a smooth, user-friendly interaction. 3. Affiliate Partnership Our ZCITY App is affiliated with more than 5 local services providers such as Shopee and Lazada.

The ZCITY App allows users to enjoy more rewards when they navigate from the ZCITY App to a partner’s website. 4. Bill Payment & Prepaid service Users can access and pay utility bills, such as water, phone, internet and TV bills, while generating instant discounts and rewards points with each payment. 5.

Branded e-Vouchers Users can purchase their preferred e-Vouchers with instant discounts and rewards points with each checkout. 6. User Engagement through Gamification Users can earn daily rewards by playing our ZCITY App minigame “Spin & Win” where they can earn further ZCITY RP, ZCITY e-Vouchers as well as monthly grand prizes. 7.

Charity CSR program Users can make cashless donations through our ZCITY App to the Kentang Charity, which we have collaborated with, or apply donations to other charitable entities. 8. Tazte Smart F&B system ZCITY App offers a “Smart F&B” system that provides a one stop solution and digitalization transformation for all registered Food and Beverage (“F&B”) outlets located in Malaysia.

It also allows merchants to easily record transactions with QR Digital Payment technology, set discounts and execute RP redemptions and rewards online on the ZCITY App. By utilizing our CRM analytics software to attract and retain consumers through personalized promotions, we believe that data-driven engagement can be more efficiently harnessed to generate greater profitability. 9.

Zstore e-Mall Zstore is ZCITY App’s e-mall service that offers group-buys and instant rebate to users with embedded AI and big data analytics to provide an express shopping experience.

The functionality and benefit of users to use the Zstore can be summarized within the chart below: 6 Buy Now, Pay Later (“BNPL”) is a value-added feature that is not yet operational, but which we intend to add to the ZCITY App and launch during the third quarter of 2023.

Any credit provided to users through BNPL will be provided by a third-party credit provider. Management is currently in the process of determining who would be an appropriate and regulatory compliant provider of such services. In no instance will we provide credit to our users.

Set out below is an illustration of some of our key partnerships by category: Retail Merchant Agreements . We have retail merchant agreements with Morganfield’s Holdings Sdn. Bhd., Hui Lau Shan and the Alley which together own more than 100 offline food and beverage franchises in Malaysia.

Each of these retail merchants have signed our standard retail merchant agreement which allow merchants to sell their products on the ZCITY App for which we receive a commission ranging from 1% to 10% depending on the category of goods or services being purchased on the ZCITY App.

These agreements also provide that each party may use the intellectual property marks of the other party without charge. These agreements may be terminated by either party with 30 days’ notice. Services Partners Agreements . We have service provider agreements with Coup Marketing Asia Pacific Sdn. Bhd. D/B/A Pay’s Gift and MOL Access Portal Sdn. Bhd.

D/B/A Razor Gold in which Pay’s Gift and Razor Gold provide us with e-vouchers for use on the ZCITY App that provide users with discounts on goods and services of many top multinational and lifestyle brands, including gas, clothing, fast food, movie theatres and others. We pay the service partner for the cost of the e-voucher plus a service fee.

These contracts provide for the use by us of the trademarks of the service providers and may be terminated at any time with 30 days’ notice. Local Strategic Partner Agreements . We have local strategic partner agreements with iPay88 (M) Sdn. Bhd. (“iPay88”), TNG Digital Sdn. Bhd. (“TNG”) and Public Bank Berhad (“Public Bank”).

The agreements we enter into with these local strategic partners provide us with payment gateways (i.e. online “checkout” portals) used to enter credit card information for payment of goods and services. 7 The iPay88 agreement was entered into on August 6, 2021 and provides our users with payment gateways that include credit card processing, online banking services from certain banks in Malaysia and eWallet payment processing for certain brands for which iPay88 receives a fee ranging from 1.0% to 1.6% of the processed transaction depending on the credit card used or if the transaction is online banking or eWallet.

The TNG agreement was entered into on November 16, 2021 and provides our users with eWallet payment gateway services that was accepted from January 1, 2022 to March 31, 2022.

TNG eWallet users on the ZCITY App will also receive RM2.00 cash back vouchers from TNG (which can only be used on the ZCITY App and certain other limitations apply) for each transaction of at least RM2.00. TNG provides cash back for up to 75,000 transactions and bill us monthly for the subsidy (up to RM150,000).

The agreement provides for 75,000 eWallet transactions for which transactions for which iPay was entered into on August 6, 2021, but has no termination provision. We have entered into an extended agreement with TNG dated March 21, 2022 that is effective for the period beginning on April 1, 2022 and ended on June 30, 2022.

We have entered another agreement with TNG dated August 17, 2022 that is effective for the period beginning on August 24 to 27, 2022. TNG eWallet users can earn 1 cash voucher worth RM5, RM10 and RM20 with a minimum spending of RM15, RM30 and RM50 respectively in bill payment.

We provide the cash back for up to 3,000 transactions and total allocation amount of RM60,000. Another extended agreement with TNG was entered on October 10, 2022, that is effective from October 15, 2022 to December 14, 2022. In this campaign agreement, the ZCITY’s user could get RM2.00 cashback with minimum spend of RM30.00 in a single transaction.

The FamilyMart (registered under QL Maxincome Sdn Bhd) agreement was entered May 31, 2022 that is effective for 1 year period beginning on June 3, 2022. Company has deposited RM100,000 to FamilyMart to get the cash voucher or product voucher whenever is required. Family Mart will provide discount of 1% for cash voucher and 3% for product voucher.

The Public Bank agreement was entered into on February 8, 2022 and commenced on March 1, 2022 and terminates on May 31, 2022. ZCITY App users can win RM50 worth of ZCITY cash back vouchers if the spend a minimum of RM50 using the Public Bank credit/debit card on the ZCITY App.

The 100 users with the highest spending during the effective time of the agreement are selected. These vouchers are funded by us.

We have continuously entered into three-month agreements with Public Bank since August 1, 2021 We have extended the collaboration and have signed the renewal agreement dated June 21, 2022 for the period beginning July 1 to September 30, 2022 and subsequently on September 12, 2022 for the period beginning on October 15, 2022 to January 15, 2023.

Local Demands Agreements . We have local demand agreements with Digi Telecommunication Sdn. Bhd. (“Digi”) and ATX Distribution Sdn. Bhd. (“ATX”) which provide ZCITY App users bill payment services. The Digi agreement was entered on December 16, 2021 and provides our users with bill payment services for all of its telecommunication products and services to postpaid subscribers.

We receive a commission from Digi of 0.5% for each transaction. ZCITY App users may also use us Digi’s prepaid automatic internet payment service for which we receive a commission from Digi of 2.5% for each reload. The Digi agreement may be terminated by either party with 30 days’ notice.

The ATX agreement was entered into on November 8, 2021 whereby ATX and provides our users with bill payment services for many companies in Malaysia, including but not limited to, certain utilities, telecommunication companies, insurance companies, entertainment companies and charities.

We receive a commission on each transaction from AXT at different rates depending on the company for which the bill is being paid. The ATX agreement may be terminated by either party with 30 days’ notice. The Company has both direct and indirect relationships with merchants and service providers.

In terms of the Company’s indirect relationships, through the Pay’s Gift agreement the Company is able to offer mobile e-vouchers for leading brands including SHELL, PUBG, Giant, Lotus, Lazada, Zalora and Watsons; while via the ipay88 agreement, the Company gains access to other e-wallet providers, such as Boost and GrabPay.

Additionally, through the company’s agreement with ATX Distribution, it is able to gain access to bill payment services provided by Astro and Air Selangor. 8 Download ZCITY App ZCITY App is free to download from the Google Play Store, Apple iOS Store, and Huawei AppGallery.

ZCITY Apps’s Reward Points Program Operating under the hashtag #RewardsOnRewards, we believe the ZCITY App reward points program encourages users to sign up the app, as well as increasing user engagement and spending on purchases/repeat purchases and engenders user loyalty.

Furthermore, we believe the simplicity of the steps to obtaining Reward Points (or “RP”) is an attractive incentive to user participation in that participants receive: · 200 RP for registration as a new user; · 100 RP for referral of a new user; · Conversion of Malaysian ringgit spent into RP; · 50% RP of every referred user paid amount as a result of the referral; and · Spin & Win eligibility to receive RP (which may be “doubled up” when participants share the Spin & Win program on social media).

The key objectives of our RP are: · Social Engagement: RP are offered to users for increased social engagement. · Spending: RP incentivizes users with every MYR spent in order to increase the spending potential and to build users loyalty. · Sign-up: Drives loyalty and greater customer engagement.

Every new user onboarded will get 200 RP as welcoming gift. · Referral Program: Rewards users with RP when they refer a new user. 9 Offline Merchant When using our ZCITY App to make payment to a registered physical merchant, the system will automatically calculate the amount of RP to deduct.

The deducted RP amount is based on the percentage of profit sharing as with the merchant and the available RP of the user.

Online Merchant When using our ZCITY App to pay utility bills or purchase any e-vouchers, our system shows the maximum RP deduction allowed and the user determines the amount of discount deducted subject to maximum deductions described below and the number of RP owned by such user. Different features have different maximum deduction amounts.

For example, for bill payments, the maximum deduction is up to 3% of the bill amount. For e-vouchers, the maximum deduction is up to 5% of the voucher amount. In order to increase the spending power of the user, our ZCITY App RP program will credit RP to the user for all MYR paid.

Merchant Facing Business At present, our ZCITY merchants are concentrated in the F&B and lifestyle sectors. Moving forward, we plan to expand our product/service offering to include grocery stores, convenience stores, “micro-SME” (“small to medium size enterprises”) loan programs, affiliate programs and advertising agencies.

We believe that ZCITY’s Tazte Smart F&B System, which we plan to launch in the fourth quarter of 2022, will provide merchants with a one-stop automated solution to digitalize their business.

It will offer an innovative and integrated technology ecosystem that addresses and personalizes each merchant’s technological needs and will be at the forefront of creating a smart consumer experience, thereby eliminating conventional and outdated standalone point of sale (or “POS”) systems.

Tazte will allow merchants to effortlessly record transactions with online payment or QR digital payment technology, set discounts and execute RP redemptions and rewards online, all via our ZCITY App. It utilizes ZCITY App’s CRM analytics software to attract and retain consumers through personalized, data-driven engagement to generate greater profitability.

Tazte Smart F&B System will also feature a ‘Deviceless Queue System’ that reduces staff headcount and a private domain delivery service that will allow merchants access to multiple dedicated delivery partners to ensure outstanding delivery service to consumers. 10 Marketing Strategy - Consumer With the number of available apps for download from the world’s leading app stores totaling over four million, we believe that structured and innovative user marketing strategy is the only way to stand out in today’s app market.

Aside from focusing on app development and building our app features properly, we believe we need to get our app featured on the leading platforms to most successfully extend our reach and user base.