Summary of significant accounting policies

(b)	Principles of consolidation

The consolidated financial statements include the financial statements of the Company, its subsidiaries, the VIEs for which the Company is the ultimate primary beneficiary, the subsidiaries of the VIEs and the entities controlled by the Company (see Note 4).

All significant intercompany transactions and balances between the Company, its consolidated subsidiaries and the consolidated VIEs have been eliminated upon consolidation.

Use of estimates

(d)	Use of estimates

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires the Group to make estimates and assumptions that affect the reported amounts of assets and liabilities and related disclosure of contingent assets and liabilities at the balance sheet dates, and the reported revenues and expenses during the reporting periods and disclosed in the consolidated financial statements and accompanying notes. Changes in facts and circumstances may result in revised estimates.

Discontinued operations

(f)	Discontinued operations

A discontinued operation may include a component of an entity or a group of components of an entity, or a business or nonprofit activity. A disposal of a component of an entity or a group of components of an entity is required to be reported in discontinued operation if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when any of the following occurs: (1) the component of an entity or group of components of an entity meets the criteria to be classified as held for sale; (2) the component of an entity or group of components of an entity is disposed of by sale; (3) the component of an entity or group of components of an entity is disposed of other than by sale (for example, by abandonment or in a distribution to owners in a spinoff).

Fair value measurement

(h)	Fair value measurement

Accounting guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability.

Accounting guidance establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Accounting guidance establishes three levels of inputs that may be used to measure fair value:

●	Level 1 applies to assets or liabilities for which there are quoted prices, in active markets for identical assets or liabilities.

●

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical asset or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

●	Level 3 applies to asset or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The carrying amount of cash and cash equivalents, accounts receivable, other receivables included in prepayments and other current assets, accounts payable, other payables included in accrued expenses and other current liabilities approximates fair value because of their short-term nature. The Group’s non-financial assets would be measured at fair value only if they were determined to be impaired.

Accounts receivable, net

(j)	Accounts receivable, net

Accounts receivable represent amounts due from customers and are stated at the original amount less allowance for credit losses. Accounts receivable are recognized in the period when the Company has provided services to its customers and when its right to consideration is unconditional. The Company performs ongoing credit evaluation of its customers, and assesses allowance for credit losses of accounts receivable based on credit loss model on portfolio basis. Accounts receivable balances are written off after all collection efforts have been exhausted.

On January 1, 2023, the Group adopted ASC 326, Financial Instruments—Credit Losses, which requires recognition of allowances upon origination or acquisition of financial assets at an estimate of expected credit losses over the contractual term of the financial assets (the current expected credit loss or the “CECL” model) using the modified retrospective transition method. The Group’s financial assets subject to the CECL model include: accounts receivable and other receivables which are recorded as a component of the prepayments and other current assets.

For accounts receivable, the Group estimates the loss rate based on historical experience, the age of the receivable balances, credit quality of its customers, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect its ability to collect from customers. For other receivables, the Group reviews other receivables on a periodic basis and makes allowances on an individual basis when there is doubt as to the collectability.

Prepayments and other current assets

(l)	Prepayments and other current assets

Prepayments and other current assets primarily include prepayment to suppliers, advances to employees and deposits. Prepayments and other current assets are stated at the historical carrying amount net of the allowance for credit losses. The Group reviews other receivables, which include advances to employees and deposits, on a periodic basis and makes allowances on an individual basis when there is doubt as to the collectability. Other receivables are written off after all collection efforts have been exhausted.

Intangible assets, net

(n)	Intangible assets, net

The Group performs valuation of the intangible assets arising from business combination to determine the relative fair value to be assigned to each asset acquired. The acquired intangible assets are recognized and measured at fair value. Intangible assets with useful lives are amortized using the straight-line approach over the estimated economic useful lives of the assets as follows:


Category		Estimated useful life
Software copyright		6 years
Customer relationship		7 years

Revenue recognition

(p)	Revenue recognition

The Group’s revenues are mainly generated from payment platform partnership, Software-as-a-Service (“SaaS”) subscription services and other revenue which includes hardware sales and installment services, and software development services.

The Group recognizes revenue pursuant to ASC 606, Revenue from Contracts with Customers (“ASC 606”). In accordance with ASC 606, revenue is recognized when the control of the promised goods or services is transferred to the customers, and the performance obligations under the contract have been satisfied, in an amount that reflects the consideration expected to be entitled to in exchange for those goods or services (excluding sales taxes collected on behalf of government authorities).

The Group determines revenue recognition through the following steps: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the entity satisfies a performance obligation.

The Group considers itself a principal and recognizes revenues on a gross basis as it controls the products or services based on that the Group is primarily responsible for fulfilling the promise to provide the specified good or service, has inventory risk before the specified good or service has been transferred to a customer and has discretion in establishing the price for the specified good or service.

Revenues from payment platform partnership

The Group establishes referral partnership with third-party payment platforms, providing referral services associated with each individual transaction generated by the merchants that Ziitech has successfully referred to the payment platform in exchange for incentive fees. The Group identifies one performance obligation as referral of each individual transaction. The transaction price is based on fixed percentage of referred transaction amounts, which is variable and constrained as such price is contingent upon the referred merchants’ transaction amounts. The Group recognizes revenue at point in time when the referred merchants have been approved by the payment platforms and when the variable consideration is not constrained after the periodic reconciliation report is agreed with payment platforms.

Revenues from SaaS subscription services

The Group provides SaaS subscription services to merchants for food and beverage solutions and retail solutions, enabling the merchants to improve order efficiency and better payment experience. The Group identifies SaaS subscription services as distinct and separately identifiable performance obligation. The monthly SaaS subscription service fee is fixed and pre-determined in the contracts. However, if the merchant’s monthly transaction volume meets certain threshold as pre-determined in the contract, that month’s SaaS subscription fee is waived by the Group. Therefore, the transaction price of SaaS subscription service is variable and constrained by the monthly transaction volume. The Group recognizes revenue from SaaS subscription service overtime on a monthly basis when it is probable that a significant reversal will not occur.

Other revenues

Other revenue is mainly generated from hardware sales and installment services and software development services.

For hardware sales and installment services, the Group sells POS-related hardware and POS related installment services to customers. The Group’s performance obligation is to deliver products to customers and/or complete installment services based on the customers’ demand. Prices listed in the contract are fixed amounts and no other financial elements are identified. Revenues from hardware sales and installment services are recognized at the point when customer acceptance is completed.

For software development services, the Group offers end-to-end white label software that enables customers to launch their own branded POS platform. The Group recognizes revenue from customization of platform service at point in time upon acceptance.

Contract balance

Contract balances include advance from customers, which are presented in accrued expenses and other current liabilities on the consolidated balance sheet. As of December 31, 2024 and 2025, the Group had nil and US$123 of advance from customers, respectively. The difference between the opening and closing balances of the Group’s contract liabilities primarily results from the timing difference between the Group’s satisfaction of performance obligation and the customer’s payment.

The Group elected the practical expedient to not disclose the transaction price allocated to the performance obligations that are unsatisfied, or partially unsatisfied, as substantially all of the contracts have an original expected duration of one year or less.

Revenue disaggregation

The Group disaggregates revenue into revenue streams as follows:


		For the years ended December 31,
		2023		2024		2025
		US$		US$		US$
Payment platform partnership		—		—		740
SaaS subscription services		—		—		367
Other revenue
Hardware sales and installment services		—		—		436
Software development services		—		—		55
Subtotal		—		—		491
Total		—		—		1,598

Selling and marketing expenses

(r)	Selling and marketing expenses

Selling and marketing expenses primarily include staff expenses, commission expenses and entertainment expenses. During the years ended December 31, 2024 and 2025, the promotional and advertising expenses were nil.

Research and development expenses

(t)	Research and development expenses

Research and development expenses consist primarily of IT consulting expenses and staff expenses. All research and development costs have been expensed as incurred as the costs qualifying for capitalization have been insignificant.

Leases

(v)

Leases

The Group accounts for leases under ASC 842. The Group categorizes leases with contractual terms longer than 12 months as either operating or finance lease. The Group elected not to present short-term leases on the consolidated balance sheets as these leases have a lease term of 12 months or less at commencement date of the lease. The Group did not enter into finance leases for any of the periods presented. The lease terms of operating leases vary from one year to three years.

At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is or contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for a consideration. To assess whether a contract is or contains a lease, the Group assesses whether the contract involves the use of an identified asset, whether it has the right to obtain substantially all the economic benefits from the use of the asset and whether it has the right to control the use of the asset.

The Group estimates its incremental borrowing rate for its leases at the commencement date to determine the present value of future lease payments when the implicit rate is not readily determinable in the lease. In estimating its incremental borrowing rate, the Group considers its credit rating and publicly available data of borrowing rates for loans of similar amount, currency and term as the lease.

Right-of-use (“ROU”) assets represent the Group’s rights to use underlying assets for the lease term and lease liabilities represent the Group’s obligation to make lease payments arising from the lease. Operating lease ROU assets and lease liabilities are recognized at commencement date. After lease commencement, operating lease liabilities are measured at the present value of the remaining lease payments using the discount rate determined at lease commencement. ROU assets are measured at the amount of the lease liabilities and further adjusted for prepaid or accrued lease payments, the remaining balance of any lease incentives received, unamortized initial direct costs and impairment of the ROU assets, if any. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Lease renewal periods are considered on a lease-by-lease basis and are generally not included in the initial lease terms.

Segment reporting

(x)	Segment reporting

Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s Chief Executive Officer (“CEO”) is the Company’s CODM. The CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance. As such, the Company has determined that it operates as one operating segment. The Company has concluded that consolidated net loss is the measure of segment profitability. The CODM assesses performance for the Company, monitors budget versus actual results, and determines how to allocate resources based on consolidated net loss as reported in the consolidated statements of operations. See Note 17 for significant expenses regularly provided to the Group’s CODM.

The Group’s long-lived assets are all located in Australia and substantially all of the Group’s revenues from continuing operations are derived from within Australia. Therefore, no geographical segments are presented.

Comprehensive loss

(z)	Comprehensive loss

Comprehensive loss is defined to include all changes in shareholders’ deficit of the Group during a period arising from transactions and other events and circumstances excluding transactions resulting from investments by shareholders and distributions to shareholders. Accumulated other comprehensive income, as presented on the consolidated balance sheets, consists of accumulated foreign currency translation adjustments.