Exhibit 99.1
STARBOX GROUP HOLDINGS LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of March 31, 2024 (Unaudited) | As of September 30, 2023 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Prepayments and other current assets | ||||||||
| Short-term deposits | ||||||||
| Due from related parties | ||||||||
| Total current assets | ||||||||
| NON-CURRENT ASSETS | ||||||||
| Property and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Right-of-use assets, net | ||||||||
| Long-term deposits | ||||||||
| Goodwill | ||||||||
| Total non-current assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | $ | $ | ||||||
| Taxes payable | ||||||||
| Deferred revenue | ||||||||
| Accrued liabilities and other current liabilities | ||||||||
| Operating lease liabilities, current | ||||||||
| Loans payable | ||||||||
| Due to related parties | ||||||||
| Total current liabilities | ||||||||
| NON-CURRENT LIABILITIES | ||||||||
| Deferred tax liabilities, net | ||||||||
| Operating lease liabilities, non-current | ||||||||
| Loans payable | ||||||||
| Total non-current liabilities | ||||||||
| TOTAL LIABILITIES | ||||||||
| COMMITMENT AND CONTINGENCY | ||||||||
| SHAREHOLDERS’ EQUITY | ||||||||
| Preferred shares, par value $, shares authorized, shares issued and outstanding | ||||||||
| Ordinary shares, par value $, shares authorized, shares and shares issued and outstanding as of March 31, 2024 and September 30, 2023, respectively | ||||||||
| Additional paid in capital | ||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Retained earnings (accumulated deficit) | ( | ) | ||||||
| Total company shareholders’ equity | ||||||||
| Non-controlling interest | ||||||||
| TOTAL EQUITY | ||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
STARBOX GROUP HOLDINGS LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
| SIX MONTHS ENDED MARCH 31, | ||||||||
| 2024 | 2023 | |||||||
| Operating revenue | ||||||||
| Advertising services | $ | $ | ||||||
| Cash rebate and payment solution services and media booking | ||||||||
| Software licensing | ||||||||
| Production service | ||||||||
| Marketing and promotional campaign services | ||||||||
| Total operating revenue | ||||||||
| Cost of revenue | ||||||||
| Gross Profit | ||||||||
| Operating expenses | ||||||||
| Selling expenses | ||||||||
| R&D expenses | ||||||||
| General and administrative expenses | ||||||||
| Total operating expenses | ||||||||
| (Loss) income from operations | ( | ) | ||||||
| Other income, net | ||||||||
| Interest income (expense), net | ( | ) | ||||||
| Other income | ||||||||
| Total other income, net | ||||||||
| (Loss) income before income tax | ( | ) | ||||||
| Income tax expense | ||||||||
| (Loss) income before noncontrolling interest | ( | ) | ||||||
| Less: loss attributable to noncontrolling interest | ( | ) | ||||||
| Net (loss) income to the Company | $ | ( | ) | $ | ||||
| Other Comprehensive income | ||||||||
| Foreign currency translation (loss) gain attributable to the Company | ( | ) | ||||||
| Foreign currency translation gain attributable to noncontrolling interest | ||||||||
| Comprehensive (loss) income attributable to the Company | $ | ( | ) | $ | ||||
| Comprehensive loss attributable to noncontrolling interest | $ | ( | ) | $ | ||||
| Net (loss) income per share - basic and diluted | $ | ) | $ | |||||
| Weighted average number of ordinary shares outstanding - basic and diluted | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
STARBOX GROUP HOLDINGS LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
SIX MONTHS ENDED MARCH 31 2024 AND 2023
(UNAUDITED)
| Ordinary Shares | Additional paid-in | Retained earnings | Accumulated other | Total Starbox’s | Non-controlling | |||||||||||||||||||||||||||
| Shares | Amount |
capital |
(accumulated deficit) |
comprehensive loss |
Shareholders’ |
interests | Total equity | |||||||||||||||||||||||||
| Balance at October 1, 2023 | $ | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||
| - | ||||||||||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
| - | - | |||||||||||||||||||||||||||||||
| Shares issued for equity financing, net of expenses | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Shares issued for R&D expense | ||||||||||||||||||||||||||||||||
| - | ||||||||||||||||||||||||||||||||
| Foreign currency translation (loss) income | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance at March 31, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||
| Balance at October 1, 2022 | $ | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||
| Net income | - | |||||||||||||||||||||||||||||||
| Shares issued for equity financing | ||||||||||||||||||||||||||||||||
| Foreign currency translation income | - | |||||||||||||||||||||||||||||||
| Balance at March 31, 2023 | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
The accompany notes are an integral part of these consolidated financial statements.
STARBOX GROUP HOLDINGS LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| SIX MONTHS ENDED MARCH 31, | ||||||||
| 2024 | 2023 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income (loss) | $ | ( | ) | $ | ||||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| R&D expense | ||||||||
| Operating lease expenses | ||||||||
| Disposal of fixed assets | ||||||||
| Changes in deferred tax | ||||||||
| Changes in operating assets / liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Prepaid income tax | ( | ) | ||||||
| Prepaid expenses and other current assets | ( | ) | ( | ) | ||||
| Accounts payable | ( | ) | ||||||
| Customer deposits | ( | ) | ||||||
| Deferred revenue | ||||||||
| Taxes payable | ( | ) | ( | ) | ||||
| Operating lease liabilities | ( | ) | ( | ) | ||||
| Accrued expenses and other current liabilities | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Long term deposit | ( | ) | ||||||
| Purchase of fixed assets | ( | ) | ( | ) | ||||
| Purchase of intangible assets | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from equity financing | ( | ) | ||||||
| Changes in due from related parties | ( | ) | ||||||
| Proceeds from loans | ||||||||
| Repayment to related parties | ( | ) | ( | ) | ||||
| Net cash provided by financing activities | ||||||||
| EFFECT OF EXCHANGE RATE CHANGES ON CASH | ||||||||
| NET DECREASE IN CASH & EQUIVALENTS | ( | ) | ( | ) | ||||
| CASH & EQUIVALENTS, BEGINNING OF PERIOD | ||||||||
| CASH & EQUIVALENTS, END OF PERIOD | ||||||||
| Supplemental Cash Flow Data: | ||||||||
| Income tax paid | $ | $ | ||||||
| Interest paid | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
STARBOX GROUP HOLDINGS LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024 (UNAUDITED) AND SEPTEMBER 30, 2023
NOTE 1 — ORGANIZATION AND BUSINESS DESCRIPTION
Business
Starbox Group Holdings Ltd., through its subsidiaries (“Starbox Group” or the “Company”), is engaged in connecting retail merchants with individual online and offline shoppers (“retail shoppers”) to facilitate transactions through cash rebates offered by retail merchants, providing digital advertising services to retail merchants, and providing payment solution services to merchants. The Company has also expanded its business to marketing and software development sectors, as well as online and offline advertisement services to business clients. The Company’s current principal operations and geographic markets are substantially located in Malaysia.
Organization
Starbox Group was incorporated as an exempted company limited by shares under the laws of the Cayman Islands on September 13, 2021.
Prior
to the reorganization on May 23, 2023 described below, Starbox Group owned
Starbox Group and Starbox Berhad are currently not engaged in any active business operations and are merely acting as holding companies.
Starbox
Berhad owns
Reorganization
A
reorganization of the Company’s legal structure was completed on November 17, 2021. The reorganization involved the incorporation
of Starbox Group, and the transfer of
The reorganization on November 17, 2021 has been accounted for as a recapitalization among entities under common control since the same controlling shareholders controlled all these entities before and after the Reorganization. The consolidation of the Company and its subsidiaries has been accounted for at historical cost and prepared on the basis as if the aforementioned transactions had become effective as of the beginning of the first period presented in the accompanying consolidated financial statements. Results of operations for the periods presented comprise those of the previously separate entities combined from the beginning of the period to the end of the period, eliminating the effects of intra-entity transactions.
On May 23, 2023, Starbox Group completed a further reorganization. The reorganization consisted of (i) the acquisitions of Starbox International Ltd., a British Virgin Islands company (“Starbox International”), and Starbox Global Ltd., a British Virgin Islands company (“Starbox Global”), both of which became wholly owned by the Company (the acquisitions of Starbox International and Starbox Global, collectively, the “Starbox Acquisitions”), and (ii) share transfer transactions between the Company and Starbox International, in which the Company transferred all of the issued share capital in Starbox Berhad to Starbox International in exchange for RM. On April 19, 2023, in connection with the Starbox Acquisitions, the Company entered into two share transfer agreements with Choo Keam Hui, whereby Choo Keam Hui transferred shares of US$ par value each in the capital of Starbox International to the Company, and Choo Keam Hui transferred shares of US$ par value each in the capital of Starbox Global to the Company.
The reorganization on May 23, 2023 has been accounted for as a recapitalization among entities under common control since the same controlling shareholders controlled all these entities before and after the reorganization. The consolidation of the Company and its subsidiaries has been accounted for at historical cost and prepared on the basis as if the aforementioned transactions had become effective as of the beginning of the first period presented in the accompanying consolidated financial statements. Results of operations for the periods presented comprise those of the previously separate entities combined from the beginning of the period to the end of the period, eliminating the effects of intra-entity transactions.
On June 26, 2023, the Company, as the issuer, and its wholly owned subsidiary, Starbox Global, as the buyer, entered into a share purchase agreement (the “One Eighty Share Purchase Agreement”), with the then shareholders of One Eighty Holdings Ltd (the “One Eighty Shareholders”), as the sellers, with respect to One Eighty Holdings Ltd (“One Eighty Ltd”), as the target company.
Pursuant
to the One Eighty Share Purchase Agreement, Starbox Global agreed to acquire ordinary shares, par value US$ per share,
of One Eighty Ltd (the “One Eighty Sale Shares”), representing
On September 7, 2023, One Eighty Ltd incorporated Benefit Pointer Limited (“Benefit Pointer”) in the British Virgin Islands. Benefit Pointer does not have any operations as of the date of this report.
On September 7, 2023, Starbox International incorporated Irace Technology Limited (“Irace Technology”) in the British Virgin Islands. Irace Technology is engaged in software development, marketing, and licensing.
On
October 26, 2023, the Company, as the issuer, and Starbox International, as the purchaser, entered into a share sale agreement (the “ProSeeds
Share Sale Agreement”), with the three then shareholders of ProSeeds Limited (collectively, the “ProSeeds Shareholders”),
as the sellers, with respect to ProSeeds Limited, a company incorporated in Seychelles (“ProSeeds”). Pursuant to the ProSeeds
Share Sale Agreement, Starbox International agreed to acquire shares of ProSeeds (the “ProSeeds Sale
Shares”), representing
On
January 26, 2024, the Company, as the issuer, and Starbox International, as the purchaser, entered into a share sale agreement (the “Trade
Router Share Sale Agreement”) with the four then shareholders of Trade Router Ltd. (collectively, the “Trade Router Shareholders”),
as the sellers, with respect to Trade Router Ltd., a company incorporated in Seychelles (“Trade Router”). Pursuant to the
Trade Router Share Sale Agreement, Starbox International agreed to acquire shares of Trade Router (the “Trade Router
Sale Shares”), representing
On
March 7, 2024, the Company, as the issuer, and Irace Technology, as the purchaser, entered into a share sale agreement (the “Carnegie
Hill Share Sale Agreement”) with the four then shareholders of Carnegie Hill Limited (collectively, the “Carnegie Hill Shareholders”),
as the sellers, with respect to Carnegie Hill Limited, a company incorporated in Seychelles (“Carnegie Hill”). Pursuant to
the Carnegie Hill Share Sale Agreement, Irace Technology agreed to acquire shares of Carnegie Hill, representing
ProSeeds, Trade Router, and Carnegie Hill have no operations but own a series of advanced multi-level marketing software, an Artificial Intelligent Generated Content (“AIGC”) system, and an Advanced Intelligent system. ProSeeds, Trade Router, and Carnegie Hill are not considered a business under ASC 805-10, because they do not have any process or system to create the output from the software system any of them owns. Since the assets acquired are not deemed to be a business, the Company accounts for the transactions as asset acquisitions in accordance with ASC 805-50. The assets acquired were measured based on their cost to the acquiring entities, which included consideration the acquiring entities transfer to the seller and direct transaction costs.
The consolidated financial statements of the Company as of March 31, 2024 include the following entities:
| Entity | Date
of Formation | Place
of Incorporation | %
of Ownership | Major business activities | ||||
| Starbox Group | ||||||||
| Starbox International | ||||||||
| Starbox Global | ||||||||
| Starbox Berhad | ||||||||
| StarboxGB | ||||||||
| StarboxSB | ||||||||
| StarboxPB | ||||||||
| Irace Technology | ||||||||
| One Eighty Ltd | ||||||||
| One Eighty Holdings Sdn Bhd | ||||||||
| Benefit Pointer | ||||||||
| 180 Degrees Brandcom Sdn Bhd (“180 Degrees”) | ||||||||
| Media Elements Sdn Bhd (“Media Elements”) | ||||||||
| Trade Router | ||||||||
| ProSeeds | ||||||||
| Carnegie Hill |
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation and principles of consolidation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The accompanying consolidated financial statements include the financial statements of the Company and its subsidiaries. All inter-company balances and transactions are eliminated upon consolidation. The results of subsidiaries acquired or disposed of are recorded in the consolidated income statements from the effective date of acquisition or up to the effective date of disposal, as appropriate.
A subsidiary is an entity in which (i) the Company directly or indirectly controls more than 50% of the voting power; or (ii) the Company has the power to appoint or remove the majority of the members of the board of directors or to cast a majority of votes at the meetings of the board of directors or to govern the financial and operating policies of the investee pursuant to a statute or under an agreement among the shareholders or equity holders.
Uses of estimates
In preparing the consolidated financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. These estimates are based on information as of the date of the consolidated financial statements. Significant estimates required to be made by management include the valuation of accounts receivable, useful lives of property and equipment and intangible assets, the recoverability of long-lived assets, the discount rate used to calculate lease liabilities, the amount of worldwide tax provision, realization of deferred tax assets, provision necessary for contingent liabilities, and revenue recognition. Actual results could differ from those estimates.
Risks and uncertainties
The main operations of the Company are located in Malaysia. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by changes in political, economic, social, regulatory, and legal environments in Malaysia, as well as by the general state of the economy in Malaysia. Although the Company has not experienced losses from these situations and believes that it complies with existing laws and regulations, including its organization and structure disclosed in Note 1, this may not be indicative of future results.
The Company’s business, financial condition, and results of operations may also be negatively impacted by risks related to natural disasters, extreme weather conditions, health epidemics, and other catastrophic incidents, which could significantly disrupt the Company’s operations.
Noncontrolling interests
The Company follows FASB (Financial Accounting Standards Board) ASC (Accounting Standards Codification) Topic 810, “Consolidation,” governing the accounting for and reporting of noncontrolling interests (“NCI”) in partially owned consolidated subsidiaries and the loss of control of subsidiaries. Certain provisions of this standard indicate, among other things, that NCI be treated as a separate component of equity, not as a liability, that increases and decreases in the parent’s ownership interest that leaves control intact to be treated as equity transactions rather than as step acquisitions or dilution gains or losses, and that losses of a partially-owned consolidated subsidiary be allocated to noncontrolling interests even when such allocation might result in a deficit balance.
The net income attributed to NCI were separately designated in the accompanying statements of operations. Losses attributable to an NCI in a subsidiary may exceed such NCI’s interest in the subsidiary’s equity. The excess attributable to an NCI is attributed to those interests. NCI shall continue to be attributed their share of losses, even if that attribution results in a deficit NCI balance.
As
of March 31, 2024 and September 30, 2023, the Company had NCIs of $
Cash and cash equivalents
Cash
and cash equivalents include currency on hand and deposits held by banks that can be added or withdrawn without limitation. The
Company maintains all of its bank accounts in Malaysia. Cash deposits with financial institutions in Malaysia are subject
to certain protection under the requirement of the deposit insurance system. The maximum insurance coverage limit is MYR
Accounts receivable, net
Accounts receivable primarily include service fees generated from providing online and offline advertising services, branding services and payment solution services to retail merchant customers (see Note 3).
Accounts
receivable are presented net of allowance for doubtful accounts. The Company determines the adequacy of allowance for doubtful accounts
based on individual account analysis, historical collection trend, and the best estimate of specific losses on individual exposures.
The Company establishes a provision for doubtful receivables when there is objective evidence that the Company may not be able to collect
amounts due. Actual amounts received may differ from management’s estimate of credit worthiness and the economic environment. Delinquent
account balances are written off against the allowance for doubtful accounts after management has determined that the likelihood of collection
is not probable. As of March 31, 2024 and September 30, 2023, the bad debt allowance was $
Short-term/long-term deposits
All
deposits owned by the Company are fixed deposits held in its banks. Deposits with original maturities of
Property and equipment
Property and equipment are stated at cost less accumulated depreciation. Depreciation of property and equipment are provided using the straight-line method over their expected useful lives, as follows:
| Useful life | ||
| Office equipment and furniture | ||
| Motor vehicles | ||
| Property - office building and office suite |
Expenditures for maintenance and repair, which do not materially extend the useful lives of the assets, are charged to expenses as incurred. Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the consolidated statements of operations and comprehensive income (loss) in other income (expenses).
Intangible assets
The Company’s intangible assets primarily consist of purchased and customized computer software and applications used in conducting the Company’s cash rebate, digital advertising, and software licensing business. Intangible assets also include content assets, which are licensed movies and television series acquired from third-party content providers in order to offer members unlimited viewing of such content to drive traffic on the Company’s SEEBATS website and mobile app. Intangible assets are carried at cost less accumulated amortization and any recorded impairment (see Note 6).
Intangible assets are amortized using the straight-line method with the following estimated useful lives:
| Useful life | ||
| Computer software and applications | ||
| Computer system - AI calculation engine | ||
| Trademark | ||
| Technology | ||
| Customer relationship | ||
| Content assets-licensed movies and television series |
Goodwill
Goodwill is the excess of purchase price and related costs over the value assigned to the net tangible and identifiable intangible assets of businesses acquired. In accordance with ASC Topic 350, “Intangibles-Goodwill and Other,” goodwill is not amortized but is tested for impairment, annually or more frequently when circumstances indicate a possible impairment may exist. Impairment testing is performed at a reporting unit level.
Generally, the Company first performs a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If factors indicate that this is the case, the Company then estimates the fair value of the related reporting unit determined using discounted cash flow (“DCF”) analysis. A number of significant assumptions and estimates are involved in the application of the DCF analysis to forecast operating cash flows, including the discount rate, the internal rate of return and projections of realizations and costs to produce. Management considers historical experience and all available information at the time the fair values of its reporting units are estimated.
If
the fair value is less than the carrying value, the goodwill of the reporting unit is determined to be impaired and the Company will
record an impairment equal to the excess of the carrying value over its fair value. The Company did
Impairment of long-lived assets
Long-lived
assets with finite lives, including intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. If the estimated future undiscounted cash flows from the use of the asset
and its eventual disposition are below the asset’s carrying value, the asset is deemed to be impaired and written down to its fair
value. There were
Fair value of financial instruments
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
| ● | Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. | |
| ● | Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable and inputs derived from or corroborated by observable market data. | |
| ● | Level 3 — inputs to the valuation methodology are unobservable. |
Unless otherwise disclosed, the fair value of the Company’s financial instruments, including cash, accounts receivable, prepaid expenses and other current assets, deferred revenue, taxes payable, due to a related party, and accrued expenses and other current liabilities approximate the fair value of the respective assets and liabilities as of March 31, 2024 and September 30, 2023, based upon the short-term nature of the assets and liabilities.
The following table presents information about the Company’s financial assets that are measured at fair value on a recurring basis as of March 31, 2024 by level within the fair value hierarchy:
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets: | ||||||||||||||||
| Short-term/long-term deposits | $ | $ | $ | $ | ||||||||||||
The Company measures certain non-financial assets on a non-recurring basis:
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets: | ||||||||||||||||
| Intangible assets acquired from the acquisition of One Eighty Ltd | $ | $ | $ | $ | ||||||||||||
| Goodwill arising from the acquisition of One Eighty Ltd | $ | $ | $ | $ | ||||||||||||
The fair value of the intangible assets and goodwill from the business combination (see Note 16) were determined based on the discounted cash flow method, which is an income approach, and required the use of inputs that were unobservable in the marketplace (Level 3), including a discount rate that would be used by a market participant, projections of revenue and cash flows.
Foreign currency translation
The functional currency for Starbox Group, Starbox International, Starbox Global, Irace Technology, ProSeeds, Trade Route, Carnegie Hill, One Eighty Ltd, and Benefit Pointer are the U.S Dollar (“US$”). Starbox Berhad, StarboxGB, StarboxSB, StarboxPB, One Eighty Holdings Sdn Bhd, 180 Degrees, and Media Elements use Malaysian Ringgit (“MYR”) as their functional currency. The Company’s consolidated financial statements have been translated into and reported in US$. Assets and liabilities accounts are translated using the exchange rate at each reporting period end date. Equity accounts are translated at historical rates. Income and expense accounts are translated at the average rate of exchange during the reporting period. The resulting translation adjustments are reported under other comprehensive income. Gains and losses resulting from the translations of foreign currency transactions and balances are reflected in the results of operations.
The following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this report:
| March 31, 2024 | March 31, 2023 | September 30, 2023 | ||||
| Period-end spot rate | US$ | US$ | US$ | |||
| Average rate | US$ | US$ | US$ |
Comprehensive income (loss)
Comprehensive income (loss) consists of two components, net income (loss) and other comprehensive income (loss). The foreign currency translation gain or loss resulting from the translation of the financial statements expressed in MYR to US$ is reported in other comprehensive income (loss) in the consolidated statements of operations and comprehensive income (loss).
Revenue recognition
To determine revenue recognition for contracts with customers, the Company performs the following five steps: (i) identify the contract(s) with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation.
The Company currently generates its revenue from the following main sources:
Revenue from advertising services
a) Digital advertising services
The Company’s advertising service revenue is derived principally from advertising contracts with retail merchant customers (the “advertisers”), which allow advertisers to place advertisements on the Company’s websites and mobile apps and third-party social media channels over a particular period of time. The advertising contracts specify the related fees and payment terms and provide evidence of the arrangements. The Company’s digital advertising services are to (i) provide advertisement design and consultation services to help advertisers precisely shape their digital advertising strategies and optimize the design, content, and layout of their advertisements and (ii) the displaying of advertisers’ advertisements of products and services on the Company’s websites and mobile apps and third-party social media channels over a particular period of time and in a variety of forms, such as logos, banners, push notification, and posts by accounts of influencers and bloggers, to help promote advertisers’ products and services and enhance their brand awareness. Advertisers may elect to engage with the Company for only advertisement display services or both advertisement design and consultation services and advertisement display services.
In
connection with these digital advertising services, the Company charges retail merchant customers nonrefundable digital advertising service
fees. For advertisement design and consultation services, the Company’s stand-alone selling price ranges from approximately $
The Company identifies advertisement design and consultation services and advertisement display services as two separate performance obligations, as each is a service that is capable of being distinct and distinct in the context of advertising contracts. Each of the service commitments in advertisement design and consultation services, including advice on advertising strategies, customization and optimization of the desired content, length, color tone, layout, format, and presentation of the advertisements, are not distinct in the context of advertising contracts, because they are inputs to deliver the combined output of advertisements to be displayed as specified by the customer. Therefore, advertisement design and consultation services are identified as a single performance obligation. The Company allocates revenue to each performance obligation based on its stand-alone selling price, which is specified in the contracts.
The Company’s advertisement design and consultation services are normally rendered within a short period of time, ranging from a few days to a month. As all the benefits enjoyed by the customers can be substantially realized at the time when the design and consultation services are completed, the Company recognizes revenue at the point when designated services are rendered and accepted by the customers. The Company does not provide rights of return, credits or discounts, price protection, or other similar privileges to customers for such services and accordingly no variable consideration included in such services.
The majority of the Company’s advertising contracts are for the provision of advertisement display on the Company’s websites and mobile apps and social media channels for a fixed period of time (ranging from a few weeks to a few months) without a guaranteed minimum impression level. In instances where certain discounts are provided to customers for advertisement displays, such discounts are reported as deduction of revenue. Revenue from advertisement services is recognized over the period the advertisement is displayed. Advances from customers are deferred first and then recognized as revenue upon the completion of the contract. There are no future obligations after the completion of the contract and no rights of refund related to the impression levels.
b) Brand-building-related consulting services
The Company’s advertising service revenue is derived principally from its advertising and brand-building-related consulting service agreements with customers, pursuant to which the Company provides creative ideas, strategies, proposals, and solutions to customers for advertising and brand positioning, helping them create appropriate advertising languages or images, identifying appropriate communication media channels, incorporating advertising and brand promotion strategies into their marketing plans, and recommending and coordinating the customers with relevant media channels for advertisement display or broadcasting. The Company’s advertising and brand-building-related consulting service agreements with customers are fixed-price agreements, and the service fees depend on the job scope and complexity of each project. It normally takes a few months to one year to complete a project, including market research, advertisement idea conceptualization, brand positioning proposals, and final delivery of customer-accepted proposals and solutions.
Each of the service promises in an advertising and brand-building-related consulting service agreement is not distinct in the context because they are the inputs to deliver the combined output. Therefore, these performance obligations are identified as a combined single performance obligation. Once a customer accepts the final deliverables, which marks the completion of an agreement, there are no future obligations and no rights of refund. The Company allocates contract price to such single performance obligation over the service period. Revenue from such services is recognized over the period. Advances or deposits from customers are deferred first and then recognized as revenue until the completion of the service.
The Company is acting as a principal in these transactions and records revenue earned and costs incurred related to these transactions on a gross basis, because the Company has discretion in establishing prices, and is responsible for fulfilling the promises and transferring services to the customer and assumes fulfilment risk.
Revenue from cash rebate, payment solution services, and media booking
a) Cash rebate services
The
Company also utilizes its websites and mobile apps to connect retail merchants and retail shoppers and facilitate retail shoppers to
purchase consumer products or services from retail merchants online or offline under the cash rebate programs offered by retail merchants.
The cash rebate offered by retail merchants range from
The Company merely acts as an agent in this type of transactions. The Company does not have control of the goods or services under the sales transactions between the retail merchants and retail shoppers, has no discretion in establishing prices, and does not have the ability to direct the use of the goods or services to obtain substantially all the benefits. The Company recognizes cash rebate revenue at the point when retail merchants and retail shoppers are connected and the sales transactions are facilitated and completed. Revenue is reported net of service taxes.
b) Payment solution services
In
May 2021, the Company started to provide payment solution services to retail merchant customers by referring them to VE Services Sdn
Bhd (“VE Services”), a Malaysian Internet payment gateway company and a related-party entity controlled by one of the shareholders
of the Company. The Company entered into an appointment letter with VE Services and started to refer retail merchant customers to VE
Services to process payments through multiple payment methods, such as FPX, Alipay, Maybank QR Pay, Boost, Touch ‘n Go, and GrabPay.
VE Services first charges retail merchants a service fee ranging from
c) Media booking
The Company also sells media companies’ advertising spaces to merchant customers on behalf of media companies. Media channel booking includes press media booking, TV commercial airtime booking, broadcasting or radio media booking, billboard media booking, and digital media booking. The Company signs agency agreements with media companies to sell their advertising spaces to merchant customers who have advertising needs. The Company’s performance obligations include referring merchant customers to media companies and getting paid by media companies referral fees or commissions at pre-determined rates negotiated with the media companies, which are rates based on advertising amounts purchased or spent by merchant customers. Revenue is recognized at the point when merchant customers have posted their advertisements on the media channels. The Company is acting as an agent in these transactions, as it does not have discretion in establishing prices, and is not responsible for fulfilling the promise and providing customers the specified services and deliverables.
Revenue from software licensing
In 2023, the Company started its software licensing business, in which the Company develops software, such as the data management system, licenses the use right of the software to customers for certain periods of time for licensing income, and provides related technology support and system maintenance services on a monthly basis. A software licensing contract with a customer includes promises to transfer software products and provide technical support and system maintenance services, which are generally capable of being distinct performance obligations. Software licensing is considered a distinct performance obligation and is accounted for separately from the technical support and system maintenance services. Revenue from distinct software licensing is recognized at the point in time when the software is delivered to the customers. Revenue from technical support, system maintenance, and upgrades is recognized over the period in which the service is provided. The stand-alone sales prices (“SSPs”) for distinct performance obligations are based on directly observable pricing. In instances where the SSP is not directly observable, such as when the Company does not sell the product or service separately, the Company determines the SSP using information that may include market conditions and other observable inputs.
Revenue from photograph, commercial video and audio recording, and production services (“production services”)
The Company signs fixed-price agreements with customers who already have their own concept or ideas for the commercial photo, video, and audio, but need professionals and talents to help turn their unique vision, voice, and expression into displayable and captivating advertisements in photograph, video, or audio format. The Company’s performance obligations include identifying, organizing, and coordinating with professional teams (including qualified photographers, videographers, film directors, actors or models, commercial voiceover talents, stylists, makeup artists, editors, video and audio engineers, and music mixing engineers) to perform such services, shooting location rental, equipment and transportation vehicle rental, developing the script for the dialog for photographing and video and audio recording, post production editing, and the delivery of final quality products to customers to satisfy their advertising needs. As a result of these combined performance obligations, the Company delivers the final photograph, video, or audio recording outputs to customers when the related services are rendered. These services are not distinct in the context of the service agreements because they are the inputs to deliver the combined output to the customers. The agreement with customers for such photograph, commercial video and audio recording, and production services specifies the service fees, payment terms, work scope, and arrangements. Once customers accept the final deliverables, which marks the completion of the agreements, there are no future obligations and no rights of refund. The Company allocates a contract price to such single performance obligations at the point when the services are rendered and the photograph, video, or audio recording products are delivered to customers. Revenue is recognized at the point when the final products are delivered to customers and are accepted by them.
The Company is acting as a principal and records revenue earned and costs incurred related to these transactions on a gross basis, because the Company has the discretion in establishing prices, is responsible for fulfilling the promises and delivering the final products to the customer, assumes fulfilment risk having latitude in selecting third-party professional teams to complete the advertising production job, and bears the risk for services that are not fully paid for by customers.
Revenue from marketing and promotional campaign services and others
The Company assists merchants in planning, arranging, and executing seasonal on-the-ground sales and promotional campaigns, normally in shopping malls. The Company’s services include providing sales campaign proposals, coordinating with shopping mall owners for location rental, assisting merchant clients with equipment rental, advising the clients on site layout arrangements and decorations, and providing product display strategies. The Company considers these a single performance obligation. It usually takes a few days to a few weeks from the preparation of the marketing and sales campaign event to the execution. The service agreement with a merchant client is a fixed-price agreement, and the Company is entitled to receive the payment when the related services are rendered. Contract price is allocated to one single performance obligation upon rendering the services. Revenue is recognized at the point when the marketing and promotion event is organized and related services are performed.
The Company is acting as a principal for such service and records revenue earned and costs incurred related to these services on a gross basis, because the Company has latitude in establishing prices, and is responsible for fulfilling the promise and providing customers with the specified services.
Disaggregation of revenue
The Company disaggregates its revenue from contracts by service types, as the Company believes it best depicts how the nature, amount, timing, and uncertainty of the revenue and cash flows are affected by economic factors. The summary of the Company’s disaggregation of revenue by service types for the six months ended March 31, 2024 and 2023 is as follows:
| For the six months ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Revenue from advertising services | $ | $ | ||||||
| Revenue from cash rebate, payment solution services, and media booking | ||||||||
| Revenue from software licensing | ||||||||
| Revenue from production services | ||||||||
| Revenue from marketing and promotional campaign service | ||||||||
| Total operating revenue | $ | $ | ||||||
Cost of revenue
Cost of revenue mainly consisted of labor costs and production costs for advertisement consultation, design, and production services of One Eight Ltd.
Deferred revenue (contract liabilities)
In
accordance with ASC 606, the Company recognizes revenue when a customer obtains control or satisfaction of the related performance obligation.
Amounts in deferred revenue at period-end reflect orders for which cash payments are received or due prior to the transfer of control
or satisfaction of the related performance obligation. Contract liabilities within the Company’s consolidated balance sheets
as of March 31, 2024 and September 30, 2023 primarily consisted of deferred revenue. The Company’s performance obligations
are generally satisfied within 12 months of the initial contract date. As of March 31, 2024 and September 30, 2023, deferred revenue
amounted to $
Operating leases
On May 1, 2020, the Company adopted Accounting Standards Update (“ASU”) 2016-02, Lease (FASB ASC Topic 842). The adoption of ASC Topic 842 resulted in the presentation of operating lease right-of-use (“ROU”) assets and operating lease liabilities on the consolidated balance sheet.
The Company determines if an arrangement contains a lease at the inception of a contract under ASC Topic 842. At the commencement of each lease, management determines its classification as an operating or finance lease. For leases that qualify as operating leases, ROU assets and liabilities are recognized at the commencement date based on the present value of any remaining lease payments over the lease term. For this purpose, the Company considers only payments that are fixed and determinable at the time of commencement. As most of its leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The ROU assets include adjustments for accrued lease payments. The ROU asset also includes any lease payments made prior to commencement and is recorded net of any lease incentives received. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that it will exercise such options.
A short-term lease is defined as a lease that, at the commencement date, has a lease term of 12 months or less and does not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise. When determining whether a lease qualifies as a short-term lease, the Company evaluates the lease term and the purchase option. Hence, the Company does not recognize any operating lease ROU assets and operating lease liabilities for short-term leases.
The Company evaluates the carrying value of ROU assets if there are indicators of impairment and reviews the recoverability of the related asset group. If the carrying value of the asset group is determined to not be recoverable and is in excess of the estimated fair value, the Company will record an impairment loss in other expenses in the consolidated statements of operations. There was no impairment for right-of-use lease assets as of March 31, 2024 and September 30, 2023.
Operating expenses
The Company’s operating costs primarily consist of (i) marketing and promotional expenses to develop members, merchants, and advertisers, (ii) website and facility maintenance expenses to upgrade, optimize, and maintain its websites and mobile apps, (iii) employee salary and benefit expenses, (iv) professional and business consulting expenses, and (v) other general office expenses for administrating the Company’s business. Operating costs are expensed as incurred. Judgment is required to determine whether to separately present cost of revenue, selling expenses, and general and administrative expenses. The Company considers materiality, the manner that operating costs can be separately identified, and what is most useful to financial statement users, and elects to present all costs and operating expenses as a single line item “cost, selling, general, and administrative expenses” as reflected in the consolidated statements of operations. Management believes that such presentation is meaningful when considering the nature of the Company’s operations and the manner in which the Company manages its business.
Software development costs (research and development expenses)
The Company expenses software development costs as research and development (“R&D”) expenses for software that it intends to sell or lease (external-use), under ASC 985-20, as such expenses are incurred until technological feasibility is established, at which time such expenses are capitalized until the product is available for general release to customers. The Company capitalizes the software that is for internal use under ASC 350-40.
Research
and development expenses included in operating costs amounted to $
Income taxes
The Company accounts for current income taxes in accordance with the laws of the relevant tax authorities. Deferred income taxes are recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the consolidated financial statements. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
An
uncertain tax position is recognized only if it is “more likely than not” that the tax position would be sustained in a tax
examination.
The Company’s operating subsidiaries in Malaysia are subject to the income tax laws of Malaysia. No significant income was generated outside Malaysia for the six months ended March 31, 2024 and 2023. As of March 31, 2024, all of the Company’s tax returns of its Malaysian subsidiaries remain open for statutory examination by relevant tax authorities for seven years from the date the corporate income tax return was filed.
Service taxes
Service
tax is a consumption tax levied by Malaysian tax authorities and is charged on any taxable service income (including digital services)
provided in Malaysia by a registered company in carrying on their business. The rate of service tax is
The Company computes earnings (loss) per share (“EPS”) in accordance with ASC 260, “Earnings per Share” (“ASC 260”). ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income (loss) divided by the weighted average common shares outstanding for the period. Diluted EPS presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options, and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. For the six months ended March 31, 2024 and 2023, there were dilutive shares due to the feature of anti-dilutive.
Statement of cash flows
In accordance with ASC 230, “Statement of Cash Flows,” cash flows from the Company’s operations are formulated based upon the local currencies using the average exchange rate in the period. As a result, amounts related to assets and liabilities reported on the consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets.
Related parties and transactions
The Company identifies related parties, and accounts for, discloses related party transactions in accordance with ASC 850, “Related Party Disclosures” and other relevant ASC standards.
Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operational decisions. Companies are also considered to be related if they are subject to common control or common significant influence. Transactions between related parties commonly occurring in the normal course of business are considered to be related party transactions. Transactions between related parties are also considered to be related party transactions even though they may not be given accounting recognition. While ASC does not provide accounting or measurement guidance for such transactions, it nonetheless requires their disclosure.
Recent accounting pronouncements
The Company considers the applicability and impact of all ASUs. Management periodically reviews new accounting standards that are issued.
In November 2023,the FASB issued ASU 2023-07 - Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which is to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses. The update will require disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and included within segment profit and loss. Require that an entity disclose, on an annual and interim basis, an amount for other segment items by reportable segment and a description of its composition. The other segment items category is the difference between segment revenue less significant expenses disclosed and each reported measure of segment profit or loss. The amendments are effective for the Company as of the beginning of 2024 fiscal year, and interim periods beginning 2025, with early adoption permitted, and will be applied retrospectively to all prior periods presented. The Company is currently evaluating the impact of the adoption of this standard to determine its impact on its disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which requires disclosure of incremental income tax information within the rate reconciliation and expanded disclosures of income taxes paid, among other disclosure requirements. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company’s management does not believe the adoption of ASU 2023-09 will have a material impact on its financial statements and disclosures.
Except as mentioned above, the Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company’s consolidated balance sheets, statements of operations and comprehensive income, and statements of cash flows.
NOTE 3 — ACCOUNTS RECEIVABLE, NET
Accounts receivable, net, consisted of the following:
| March 31, 2024 | September 30, 2023 | |||||||
| Accounts receivable | $ | $ | ||||||
| Less: allowance for doubtful account | ( | ) | ( | ) | ||||
| Accounts receivable, net | $ | $ | ||||||
Approximately
| Accounts receivable by aging bucket | Balance as of March 31, 2024 | Subsequent collection | % of subsequent collection | |||||||||
| Less than 6 months | $ | $ | % | |||||||||
| From 7 to 9 months | % | |||||||||||
| From 10 to 12 months | % | |||||||||||
| Over 1 year | % | |||||||||||
| Total gross accounts receivable | % | |||||||||||
| Allowance for doubtful accounts | ( | ) | - | |||||||||
| Accounts receivable, net | $ | $ | % | |||||||||
NOTE 4—PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current assets consisted of the following:
| March 31, 2024 | September 30, 2023 | |||||||
| Prepaid expenses and other current assets: | ||||||||
| Speedprop Global Sdn. Bhd. (1) | $ | $ | ||||||
| ARX Media Sdn. Bhd. (2) | ||||||||
| Boring Lark Sdn Bhd. (3) | ||||||||
| Teclutions Sdn. Bhd. (4) | ||||||||
| Sky Top Asis Pacific Limited (5) | ||||||||
| Prime King Investment Limited (6) | ||||||||
| Others (7) | ||||||||
| Total prepaid expenses and other current assets | $ | 25,571,859 | $ | 16,067,467 | ||||
The Company currently operates its business through its GETBATS, SEEBATS, and PAYBATS websites and mobile applications, 180 Degrees, and Media Elements. The satisfactory performance, reliability, and availability of the Company’s information technology systems are critical to its ability to drive more internet traffic to its advertising websites and mobile apps and provide effective digital advertising services for brands and retailers, especially when the Company starts to expand its business from Malaysia to neighboring countries such as Indonesia, Philippine, and Thailand.
| (1) |
| (2) |
In
October 2022, the Company signed a new contract with ARX, to conduct a software application design and development project.
Total contract price amounted to MYR |
| On
June 12, 2023, the Company entered into a new project agreement with ARX, for ARX to provide software support services for a term
of 12 months, and to develop a full set of AI advertisement engine and analytical system. The total contract price amounted
to MYR | |
| (3) |
| (4) |
On
March 15, 2023, the Company entered into another agreement with Teclutions to design and develop a Conversational AI Chatbot Integration
VR headgear platform. A total contract price of $
On
July 10, 2023, the Company entered into another agreement with Teclutions to develop a GETBATS descriptive analysis system. A total
contract price of $
In
addition, on July 15, 2023, the Company entered into another agreement with Teclutions to develop a promotion and advertisement system
aimed at attracting online customers to physical stores through augmented reality technology. A total contract price of $
|
| (5) |
|
| (6) |
|
| (7) |
As of March 31, 2024 and September 30, 2023, there was no allowance for doubtful accounts recorded as the Company considers all of the prepayments fully realizable.
NOTE 5 — PROPERTY AND EQUIPMENT, NET
Property and equipment, net, consisted of the following:
| March 31, 2024 | September 30, 2023 | |||||||
| Office equipment and furniture | $ | $ | ||||||
| Motor vehicles | ||||||||
| Property - office building and office suite | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
Depreciation
expenses were $
NOTE 6 — INTANGIBLE ASSETS, NET
Intangible assets, net, consisted of the following:
| March 31, 2024 | September 30, 2023 | |||||||
| Computer software and applications (1) | $ | $ | ||||||
| Computer system – AI calculation engine (2) | ||||||||
| Content assets – licensed movies and television series (3) | ||||||||
| Trademark (4) | ||||||||
| Technology (4) | ||||||||
| Customer relationships (4) | ||||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||
| Intangible asset, net | $ | $ | ||||||
| (1) |
| (2) |
| (3) | |
| Based on factors, including historical and estimated viewing patterns, the Company amortizes the content assets in “operating costs-license costs” on a straight-line basis over its license period or estimated period of use, beginning with the month of first availability. | |
On
November 1, 2021, the Company entered into a Service and Licensing Agreement with a third-party content provider, Shenzhen Yunshidian
Information Technology Ltd. (“Shenzhen Yunshidian”), to license movies and television series in various genres, such as action,
comedy, fantasy, historical, and romance. The agreement has a term from November 1, 2021 to October 31, 2023 and may be terminated by
either party in the event of a material breach by the other party of the agreement. The Company agreed to pay a content and service fee
of $ |
| (4) |
Total
amortization of above-mentioned intangible assets amounted to $
As of March 31, 2024, the estimated future amortization expenses of the intangible assets were as follow:
| 12 months ending March 31, | Amortization expenses | |||
| 2025 | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Thereafter | ||||
| Total | $ | |||
NOTE 7 — ACCRUED LIABILITIES AND OTHER PAYABLES
Accrued liabilities and other payables, consisted of the following:
| March 31, 2024 | September 30, 2023 | |||||||
| Accrued expenses | $ | $ | ||||||
| Service payables | ||||||||
| Other payables | ||||||||
| Accrued liabilities and other payables | $ | $ | ||||||
Service payable represented the advertisement fee the Company collects on behalf of the media companies for customers posting the advertisement on the media channels. The Company submits the advertisement fee to media companies within a short period of time when the Company receives a service statement and invoice from the media companies. Other payables were mainly advances from customers.
NOTE 8 — LOANS PAYABLE
The Company had the following bank loans as of March 31, 2024, which arose from acquisition of One Eighty Ltd on June 26, 2023:
| Bank | Loan Agreement Date | Loan Amount | Interest Rate | Loan Term | Purpose of loan | Balance at March 31, 2024 | ||||||||||||
| CIMB BANK BERHAD | $ | BLR*- | % | $ | ||||||||||||||
| BLR*- | % | |||||||||||||||||
| Hong Leong Islamic Bank | IFR**- | % | ||||||||||||||||
| IFR**- | % | |||||||||||||||||
| IFR**- | % | |||||||||||||||||
| IFR**- | % | |||||||||||||||||
| IFR**- | % | |||||||||||||||||
| Hong Leong Islamic Bank | % | |||||||||||||||||
| Total | $ | $ | ||||||||||||||||
| Bank | Loan Agreement Date | Loan Amount | Interest Rate | Loan Term | Purpose of loan | Balance at September 30, 2023 | ||||||||||||
| CIMB BANK BERHAD | $ | BLR*- | % | $ | ||||||||||||||
| BLR*- | % | |||||||||||||||||
| Hong Leong Islamic Bank | IFR**- | % | ||||||||||||||||
| IFR**- | % | |||||||||||||||||
| IFR**- | % | |||||||||||||||||
| IFR**- | % | |||||||||||||||||
| IFR**- | % | |||||||||||||||||
| Hong Leong Islamic Bank | % | |||||||||||||||||
| Total | $ | $ | ||||||||||||||||
| * | |
| ** |
The above bank loans were for the acquisition of freehold office buildings and working capital purposes, and were secured by the following:
| a. | A facility agreement as principal instrument; |
| b. | Joint and several guarantee by the directors of 180 Degrees; |
| c. | A corporate guarantee by 180 Degree Strategic Communications Sdn Bhd.; |
| d. | A deed of assignment over the properties, power of attorney, and other documents or security documents may be required by the banks from time to time; |
| e. | First-party/third-party upfront fixed deposit; |
| f. | A memorandum of deposit (creating a charge) and letter of authorization by the directors of 180 Degrees in favor of the banks in respect of fixed deposits together with all interest accruing from time to time in respect of the fixed deposits; and |
| g. | A guarantee from Credit Guarantee Corporation Bhd. |
Loans from a third party
On October 27, 2023, the Company entered into a loan agreement with a third-party for $, with an annual interest rate of %. The loan is unsecured and required to be repaid on . As of March 31, 2024, the outstanding loan balance was $with accrued interest of $.
On October 30, 2023, the Company entered into another loan agreement with the same third-party for $, with an annual interest rate of %. The loan is unsecured and required to be repaid on , and the Company repaid $to this unrelated party on February 19, 2024. As of March 31, 2024, the outstanding loan balance was $.
On January 31, 2024, the Company entered into another new loan agreement with the same third-party for $, with an annual interest rate of % The loan is unsecured and required to be repaid on . As of March 31, 2024, the outstanding loan balance was $.
As of March 31, 2024, the future minimum loan payments to be paid by the year are as follows:
| 12 months ending March 31, | Loan payment | |||
| 2025 | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Thereafter | ||||
| Total future minimum loan payments | ||||
| Less: imputed interest | ( | ) | ||
| Present value of loan liabilities | $ | |||
The
Company recorded interest expenses of $
NOTE 9 — TAXES
| a. | Corporate Income Taxes (“CIT”) |
Cayman Islands and BVI
Under the current tax laws of the Cayman Islands and BVI, the Company is not subject to tax on its income or capital gains. In addition, no Cayman Islands withholding tax will be imposed upon the payment of dividends by the Company to its shareholders.
Republic of Seychelles
ProSeeds,
Trade Router, and Carnegie Hill are incorporated in the Republic of Seychelles.
Malaysia
Starbox
Berhad, StarboxGB, StarboxSB, and StarboxPB are governed by the income tax laws of Malaysia. The income tax provision in respect of operations
in Malaysia is calculated at the applicable tax rates on the taxable income for the periods based on existing legislation, interpretations,
and practices. Under the Income Tax Act of Malaysia, enterprises incorporated in Malaysia are usually subject to a unified
The components of the income tax provision were as follows:
| For the Six Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Current tax provision: | ||||||||
| Cayman Islands | $ | $ | ||||||
| Republic of Seychelle | ||||||||
| Malaysia | ||||||||
| Deferred tax provision: | ||||||||
| Cayman Islands | ||||||||
| Malaysia | ||||||||
| Income tax provision | $ | $ | ||||||
Reconciliation of the differences between the income tax provision computed based on the Malaysia unified statutory income tax rate and the Company’s actual income tax provision for the six months ended March 31, 2024 and 2023, respectively, were as follows:
| For the Six Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Income tax provision computed based on Malaysia unified income tax statutory rate | $ | ( | ) | $ | ||||
| Tax rate difference | ||||||||
| Permanent difference | ( | ) | ||||||
| Change in valuation allowance | ||||||||
| Actual income tax provision | $ | $ | ||||||
Deferred tax assets
The Company’s deferred tax assets were comprised of the following:
As of March 31, 2024 | As of September 30, 2023 | |||||||
| Deferred tax assets derived from net operating loss carry forwards | $ | $ | ||||||
| Less: valuation allowance | ( | ) | ( | ) | ||||
| Effect of foreign currency translation | ( | ) | ||||||
| Deferred tax assets | $ | $ | ||||||
Movement of valuation allowance:
As of March 31, 2024 | As of September 30, 2023 | |||||||
| Balance at beginning of the period | $ | $ | ||||||
| Current period change | ||||||||
| Effect of foreign currency translation | ( | ) | ||||||
| Balance at end of the period | $ | $ | ||||||
The
Company periodically evaluates the likelihood of the realization of deferred tax assets and reduces the carrying amount of the deferred
tax assets by a valuation allowance to the extent it believes a portion will not be realized. Management considers new evidence, both
positive and negative, that could affect the Company’s future realization of deferred tax assets including its recent cumulative
earnings experience, expectation of future income, the carry forward periods available for tax reporting purposes and other relevant
factors. The Company has four subsidiaries in Malaysia, namely Starbox Berhad, StarboxGB, StarboxSB, and StarboxPB. Other than StarboxSB
and StarboxGB, which have generated taxable income through providing advertising services to customers, Starbox Berhad and StarboxPB
have reported recurring operating losses since their inception. Management concluded that the chances for these three entities that suffered
recurring losses in prior periods to become profitable in the foreseeable near future and to utilize their net operating loss carry forwards
were remote. Accordingly, the Company provided valuation allowance of $
Deferred tax liability
The Company’s deferred tax liability was comprised of the following:
As of March 31, 2024 | As of September 30, 2023 | |||||||
| Difference between tax and book basis of depreciation and amortization expense | $ | $ | ||||||
| Intangible assets acquired through the acquisition of One Eighty Ltd. | ||||||||
| Less: deferred tax assets | ( | ) | ( | ) | ||||
| Deferred tax liability, net | $ | $ | ||||||
| b. | Taxes payable |
As of March 31, 2024 and September 30, 2023, taxes payable consisted of the following:
As of March 31, 2024 | As of September 30, 2023 | |||||||
| Income tax payable | $ | $ | ||||||
| Service tax payable | ||||||||
| Less: Tax prepaid | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
NOTE 10 — RELATED PARTY TRANSACTIONS
| a. | Name of related parties |
| Name of Related Party | Relationship to the Company | |
| Choo Keam Hui | ||
| Zenapp Sdn Bhd (“Zenapp”) | ||
| Bizguide Corporate Service Sdn Bhd | ||
| KH Advisory Sdn Bhd | ||
| VE Services | ||
| Chan Chee Hong | ||
| Chan Foong Ming | ||
| 180 Degrees Strategic Communications Sdn Bhd | ||
| 181 Degree Holding Sdn Bhd | ||
| Infinity Elements Sdn Bhd |
| b. | Due from related parties |
Due from related parties consisted of the following:
| Name | March 31, 2024 | September 30, 2023 | ||||||
| 181 Degree Holding Sdn Bhd | $ | $ | ||||||
| Chan Foong Ming | ||||||||
| Chan Chee Hong | ||||||||
| Infinity Elements Sdn Bhd | ||||||||
| Total | $ | $ | ||||||
As of March 31, 2024 and September 30, 2023, the balances due from Chan Foong Ming and Chan Chee Hong were short-term advances, unsecured, bear no interest and were payable upon demand, and the balance due from Infinity Elements Sdn Bhd was ordinary trade in nature between Media Elements Sdn Bhd and Infinity Elements Sdn Bhd.
| c. | Due to related parties |
Due to related parties consisted of the following:
| Name | March 31, 2024 | September 30, 2023 | ||||||
| Bizguide Corporate Service Sdn Bhd | $ | $ | ||||||
| KH Advisory Sdn Bhd | ||||||||
| 180 Degrees Strategic Communications Sdn Bhd | ||||||||
| 181 Degree Holding Sdn Bhd | ||||||||
| Chan Foong Ming | ||||||||
| Choo Keam Hui | ||||||||
| Chan Chee Hong | ||||||||
| Total | $ | $ | ||||||
As of March 31, 2024, the balance due to Chan Foong Ming and Choo Keam Hui were short-term advances, unsecured, bearing no interest and payable upon demand, and the balance due to 180 Degrees Strategic Communications Sdn Bhd was ordinary trade in nature.
As of September 30, 2023, the balance due to Bizguide Corporate Service Sdn Bhd and KH Advisory Sdn Bhd was the fee to be paid for secretarial and tax consulting services, and the balance due to 180 Degree Holding Sdn Bhd and 180 Degrees Strategic Communications Sdn Bhd was ordinary trade in nature.
| d. | Revenue from a related party |
In
May 2021, the Company started to provide payment solution services to merchants by referring them to VE Services. As of March 31, 2024
and September 30, 2023, the Company referred 39 and 37 merchants to VE Services for payment processing and earned an accumulative
total in commission fees of $
| e. | Office leases |
Prior
to August 2021, the Company had not directly entered into any office lease agreements. The lease expenses were paid by Zenapp on behalf
of the Company, with an estimated amount of $
NOTE 11 — SHAREHOLDERS’ EQUITY
Ordinary Shares
The Company was incorporated under the laws of the Cayman Islands on September 13, 2021. The original authorized share capital of the Company was $ divided into shares, comprised of (i) ordinary shares, par value $ per share, and (ii) preferred shares, par value $ per share. The preferred shares have not been issued. The Company issued ordinary shares with par value of $ per share to its shareholders prior to the reverse split as described below.
On
June 8, 2022, the Company’s shareholders approved (i) an increase in the Company’s authorized share capital from $
to $, divided into shares, comprised of ordinary shares, par value $ per share, and
preferred shares, par value $ per share,
As a result of such corporate actions, (i) the number of the Company’s authorized preferred shares has been reduced from the original shares to shares at par value of $ per share, of which preferred shares have been issued and outstanding and (ii) the number of authorized ordinary shares has been increased from shares to shares, and the number of issued and outstanding ordinary shares has been reduced from the original shares to shares at par value of $ per share. Unless otherwise indicated, all references to preferred shares, ordinary shares, options to purchase ordinary shares, share data, per share data, and related information have been retroactively adjusted, where applicable, to reflect the above-mentioned reverse split and share capital change as if it had occurred at the beginning of the earlier period presented (see Note 1).
Initial Public Offering
On
August 23, 2022, the Company’s ordinary shares commenced trading on the Nasdaq Capital Market under the symbol “STBX.”
On August 25, 2022, the Company closed its initial public offering (“IPO”) of ordinary shares at a public offering
price of $ per ordinary share. The Company raised approximately $
Underwriter Representative Warrants
In
connection with the Company’s IPO, the Company also agreed to issue warrants to the underwriter, to purchase
Private Placement
On
October 26, 2022, the Company entered into certain subscription agreements (the “Subscription Agreements”) with four investors
(the “Subscribers”). Pursuant to the Subscription Agreements and in reliance on Rule 902 of Regulation S (“Regulation
S”) promulgated under the Securities Act of 1933, as amended, the Company agreed to sell and the Subscribers agreed to purchase
an aggregate of ordinary shares of the Company at a price of $ per share (the “Private Placement”). On November
3, 2022, the Company closed the Private Placement and issued and sold an aggregate of ordinary shares to the Subscribers at
a price of $ per share for the gross proceeds of $
Acquisition of One Eighty Ltd
On July 10, 2023, the Company issued the first tranche of consideration shares, an aggregate of ordinary shares, to the then shareholders of One Eighty Ltd in connection with the acquisition of % of the issued share capital in One Eighty Ltd.
On September 1, 2023, the Company issued the second tranche of consideration shares, an aggregate of ordinary shares, to the then shareholders of One Eighty Ltd in connection with the acquisition of % of the issued share capital in One Eighty Ltd.
At-the-market offering
In
October 2023, the Company sold a total of ordinary shares of the Company through at-the-market offerings for net proceeds of
$
Shares issued for R&D expenses
The
Company issued ordinary shares on November 13, 2023, at the
share price of $per share for a total fair value of $
The
Company issued ordinary shares on February 19, 2024, at the
share price of $per share for a total fair value of $
The
Company issued ordinary shares on March 22, 2024, at the share
price of $per share for a total fair value of $
ProSeeds, Trade Router, and Carnegie Hill have no operations but own a series of advanced multi-level marketing software, AIGC system, and Advanced Intelligent system. ProSeeds, Trade Router, and Carnegie Hill are not considered a business under ASC 805-10, because they do not have any process or system to create the output from the software systems they own. Accordingly, the Company accounts for the transactions as asset acquisitions in accordance with ASC 805-50. The Company will integrate these intangible assets into a comprehensive and advanced AI system along with other modules and software the Company is going to acquire or develop. Therefore, the Company expensed these intangible assets they acquired as R&D expenses as the feasibility stage of the comprehensive and advanced AI system has not been reached.
NOTE 12 — CONCENTRATIONS AND CREDIT RISK
As of March 31, 2024 and September 30, 2023, the Company’s substantial assets were located in Malaysia and the Company’s substantial revenue was derived from its subsidiaries located in Malaysia.
For
the six months ended March 31, 2024, two customers accounted for
For
the six months ended March 31, 2023, one customer accounted for
As
of March 31, 2024, one customer accounted for more than
As
of September 30, 2023, three customers accounted for approximately
For
the six months ended March 31, 2024 and 2023, no single vendor accounted for more than
NOTE 13 — CONTINGENCIES
From time to time, the Company is a party to various legal actions arising in the ordinary course of business. The Company accrues costs associated with these matters when they become probable and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. For the six months ended March 31, 2024 and 2023, the Company did not have any material legal claims or litigation that, individually or in aggregate, could have a material adverse impact on the Company’s consolidated financial position, results of operations, and cash flows.
NOTE 14 — LEASES
Supplemental balance sheet information related to the Company’s operating leases was as follows:
| March 31, 2024 | September 30, 2023 | |||||||
| Operating lease right-of-use assets | $ | $ | ||||||
| Right-of-use assets - accumulated amortization | ( | ) | ( | ) | ||||
| Right-of-use assets, net | $ | $ | ||||||
| Operating lease liabilities – current | $ | $ | ||||||
| Operating lease liabilities – non-current | ||||||||
| Total operating lease liabilities | $ | $ | ||||||
During
the six months ended March 31, 2024 and 2023, the Company incurred total ASC 842 operating lease expenses of $
Office leases
Prior
to August 2021, the Company had not directly entered into any office lease agreements. The lease expenses were paid by Zenapp on behalf
of the Company, with an estimated amount of $
The weighted average remaining lease terms and discount rates for all of office leases were as follows as of March 31, 2024 and September 30, 2023:
| March 31, 2024 | September 30, 2023 | |||||||
| Remaining lease term and discount rate: | ||||||||
| Weighted average remaining lease term | ||||||||
| Weighted average discount rate * | % | % | ||||||
| * |
As of March 31, 2024, the maturities of operating lease liabilities were as follows:
| 12 months ending March 31, | Lease payment | |||
| 2025 | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| Total future minimum lease payments | ||||
| Less: imputed interest | ( | ) | ||
| Total | $ | |||
Equipment leases
Effective
as of June 20, 2020, the Company entered into a
The weighted average remaining lease terms and discount rates for all of operating leases were as follows as of March 31, 2024 and September 30, 2023:
| March 31, 2024 | September 30, 2023 | |||||||
| Remaining lease term and discount rate: | ||||||||
| Weighted average remaining lease term (years) | ||||||||
| Weighted average discount rate * | % | % | ||||||
| * |
As of March 31, 2024, the maturities of operating lease liabilities were as follows:
| 12 months ending March 31, | Lease payment | |||
| 2024 | $ | |||
| 2025 | ||||
| Total future minimum lease payments | ||||
| Less: imputed interest | ( | ) | ||
| Total | $ | |||
NOTE 15 — SEGMENT REPORTING
An operating segment is a component of the Company that engages in business activities from which it may earn revenue and incur expenses and is identified on the basis of the internal financial reports that are provided to and regularly reviewed by the Company’s chief operating decision maker (the “CODM”) in order to allocate resources and assess the performance of the segment.
In accordance with ASC 280, Segment Reporting, operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the CODM or decision-making group, in deciding how to allocate resources and in assessing performance. The Company uses the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s CODM for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. Management, including the CODM, reviews operating results by the revenue of different services. Based on management’s assessment, the Company has determined that it has following operating segments as defined by ASC 280, including advertising services, cash rebate and payment solution and media booking services, software licensing income from software development services, advertisement production income, and promotional campaign services.
Revenue by service categories
The following tables present summary information by segment for the six months ended March 31, 2024 and 2023, respectively:
| For the Six Months ended March 31, 2024 | ||||||||||||||||||||||||
Cash rebate and payment solution and media booking | Advertising services | Software licensing | Production income | Promotional campaign services | Total | |||||||||||||||||||
| Revenue | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Operating expenses | ||||||||||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Income tax expense (benefit) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Net income | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Capital expenditure | ||||||||||||||||||||||||
| Total assets | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| For the Six Months Ended March 31, 2023 | ||||||||||||||||
| Cash rebate and payment services | Digital
advertising services | Software licensing | Total | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Operating costs | ||||||||||||||||
| Income (loss) from operations | ( | ) | ||||||||||||||
| Income tax expense | ||||||||||||||||
| Net income (loss) | ( | ) | ||||||||||||||
| Capital expenditure | $ | $ | $ | $ | ||||||||||||
| Total assets | $ | $ | $ | $ | ||||||||||||
NOTE 16 - ACQUISITIONS OF SUBSIDIARIES
On June 26, 2023, the Company, as the issuer, and Starbox Global, as the purchaser, entered into the One Eighty Share Purchase Agreement with the One Eighty Shareholders, as the sellers, with respect to One Eighty Ltd, as the target company.
Pursuant
to the One Eighty Share Purchase Agreement, Starbox Global acquired ordinary shares, par value US$per share, of One Eighty Sale Shares, representing
The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition. Goodwill as a result of the acquisition of One Eighty Ltd is calculated as follows:
| Total purchase considerations
for | $ | |||
| Fair value of assets acquired: | ||||
| Cash & cash equivalents | ||||
| Accounts receivable, net | ||||
| Deposit and prepayments | ||||
| Other receivables | ||||
| Short-term deposit | ||||
| Due from related parties | ||||
| Tax receivable | ||||
| Deferred tax | ||||
| Long-term deposit | ||||
| Right-of-use assets, net | ||||
| Property, plant and equipment, net | ||||
| Intangible assets acquired | ||||
| Total assets acquired | ||||
| Fair value of liabilities assumed: | ||||
| Accounts payable | ( | ) | ||
| Advance from customer | ( | ) | ||
| Accrued liabilities and other payables | ( | ) | ||
| Due to related parties | ( | ) | ||
| Lease Liability - current | ( | ) | ||
| Loan payable | ( | ) | ||
| Lease Liability -noncurrent | ( | ) | ||
| Deferred tax liability | ( | ) | ||
| Total liabilities assumed | ( | ) | ||
| Total net assets acquired | ||||
| Goodwill as a result of the acquisition | $ |
The following condensed unaudited pro forma consolidated results of operations for the Company and One Eighty Ltd for the six months ended March 31, 2023 present the results of operations of the Company and One Eighty Ltd as if the acquisitions occurred on October 1, 2022.
The pro forma results are not necessarily indicative of the actual results that would have occurred had the acquisitions been completed as of the beginning of the periods presented, nor are they necessarily indicative of future consolidated results.
| For
the Six Months Ended March 31, 2023 | ||||
| (Unaudited) | ||||
| Revenue | $ | |||
| Operating costs and expenses | ||||
| Income from operations | ||||
| Other income | ||||
| Income tax expense | ||||
| Net income | ||||
| Less: net income attributable to non-controlling interests | ||||
| Net income attributable to the Company | $ | |||
NOTE 17 — SUBSEQUENT EVENTS
The Company evaluated the subsequent events through the date of this report, and determined the following subsequent events that need to be disclosed:
On
April 4, 2024, the Company, as the issuer, and Irace Technology, as the purchaser, entered into a share sale agreement, with the four
then shareholders of Rainbow Worldwide Co., Ltd (collectively, the “Rainbow Worldwide Shareholders”), as the sellers, with
respect to Rainbow Worldwide Co., Ltd, a company incorporated in Samoa (“Rainbow Worldwide”). Irace Technology acquired shares of Rainbow Worldwide, representing
On April 5, 2024, the Company entered a loan agreement with a third-party company for $, with an annual interest of %, the loan was required to be repaid on April 4, 2029.
On April 25, 2024, the Company entered a loan agreement with a third-party company for $, with an annual interest of %, the loan was required to be repaid on April 24, 2029.
On
May 3, 2024, the Company, as the issuer, Irace Technology, as the purchaser, entered into a software purchase agreement with Bella Bambina
Limited (“Bella Bambina”), as the seller, with respect to certain shopping rebate and loyalty software and related assets
(the “Loyalty Engine Software”). Irace Technology acquired all of the rights, title, and interests in the Loyalty Engine
Software. In consideration, on May 21, 2024, the Company issued to the four shareholders of Bella Bambina an aggregate of ordinary shares (per share price of US$)
with a fair value of $
On May 27, 2024, the Company entered a loan agreement with a third-party company for $ (MYR ), with no interest, the loan was required to be repaid on May 26, 2027.
On May 27, 2024, the Company entered a loan agreement with a third -party company for $ (MYR ), with no interest, the loan was required to be repaid on May 26, 2027.
On
May 28, 2024, the Company, as the issuer, Irace Technology, as the purchaser, entered into a software purchase agreement with Raetia
Holdings Limited (“Raetia Holdings”), as the seller, with respect to certain virtual reality software and related assets
(the “Virtual Reality Software”). Irace Technology acquired from Raetia Holdings all of the rights, title, and interests
in the Virtual Reality Software. In consideration, on June 13, 2024, the Company issued to the four shareholders of Raetia Holdings an
aggregate of ordinary shares (per share price of US$)
with a fair value of $
On June 1, 2024, the Company entered a loan agreement with a third-party company for $ (MYR ), with no interest, the loan was required to be repaid on November 30, 2024.
On June 1, 2024, the Company entered a loan agreement with a third-party company for $ (MYR), with no interest, the loan was required to be repaid on November 30, 2024.
On June 1, 2024, the Company entered a loan agreement with a third-party company for $ (MYR ), with no interest, the loan was required to be repaid on November 30, 2024.
On June 11, 2024, the Company entered a loan agreement with a third-party company for $, with an annual interest of %, the loan was required to be repaid on June 10, 2029.
On
June 14, 2024, the Company, as the issuer, Irace Technology, as the purchaser, entered into a software purchase agreement with Bardi
Equity Limited (“Bardi Equity”), as the seller, with respect to certain virtual space rebates mall module software and related
assets (the “Virtual Space Software”). Irace Technology agreed to acquire from Bardi Equity all of the rights, title, and
interests in the Virtual Space Software for consideration of an aggregate of ordinary shares (per share price of US$)
of the Company with an aggregate value of US$
At
the 2024 annual general meeting of shareholders of the Company held on June 27, 2024, at 8:30 a.m., Eastern Time, the shareholders of
the Company approved and adopted, among other resolutions, (1) as an ordinary resolution, to authorize, establish, and designate two
new classes of ordinary shares of the Company, being Class A Ordinary Shares and Class B Ordinary Shares; and (2) as an ordinary resolution,
to redesignate: (i) the authorized and issued ordinary shares
held by Nevis International B & T Sdn Bhd (the “Nevis Shares”) as Class B Ordinary Shares; (ii) of the authorized and issued ordinarysShares,
not including the Nevis Shares, as Class A Ordinary Shares; and (iii) of the authorized but unissued ordinary shares
as Class A Ordinary Shares. Pursuant to the resolutions,