OPERATING AND FINANCIAL REVIEW AND PROSPECTS
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and related notes included in this Annual Report beginning on page F-1. The following discussion and analysis contain forward-looking statements that involve risks and uncertainties. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under "Risk Factors" and elsewhere in this Annual Report.
BLACK TITAN'S MANAGEMENT'S DISCUSSION AND ANALYSIS OF
CONDITION AND RESULTS OF OPERATIONS
Black Titan (the "Company"), incorporated on July 11, 2024 in the Cayman Islands, was formed solely to facilitate the Business Combination between TTNP and TalenTec. Other than activities related to the Business Combination, the Company has not conducted any operations and has generated no revenues since inception.
Pursuant to the Merger Agreement, Black Titan is responsible for settling certain Company Transaction Expenses and Parent Transaction Expenses at closing. Mr. Choong Choon Hau, a shareholder of Black Titan Corporation has also agreed to use commercially reasonable efforts to fund working capital to the combined company.
Results of Operations
For the period from July 11, 2024 (inception) to July 31, 2024, the Company incurred a net loss of US$3,947, consisting of administrative expenses charged by a related party.
For the year ended July 31, 2025, the Company incurred a net loss of US$163,173, primarily related to increased legal, accounting, and administrative expenses incurred in connection with the Business Combination. The Company does not expect to generate revenues unless and until the Business Combination is completed.
Liquidity and Capital Resources
As of July 31, 2024, the Company had total liabilities of US$3,947 and a working capital deficit of the same amount.
As of July 31, 2025, the Company had total liabilities of US$167,120 and a working capital deficit of US$167,120, reflecting additional related-party advances used to fund transaction costs. The Company has no cash, no revenue-generating activities, and no material assets.
Management expects Black Titan to continue relying on related-party support and anticipated Transaction Financing until completion of the Business Combination.
Going Concern
The Company has incurred recurring losses, has no operations, and has a working capital deficit, which raise substantial doubt about its ability to continue as a going concern. Management expects that financial support commitment from its shareholder will resolve these uncertainties. The financial statements do not include adjustments that may be necessary if the Company is unable to continue as a going concern.
Commitments
Other than obligations under the Merger Agreement and administrative fees payable to related parties, the Company has no long-term commitments, debt, or off-balance sheet arrangements.
Subsequent Events
We have evaluated events that have occurred subsequent to September 30, 2025 and through the date that the financial statements are issued. Based on this evaluation, other than as set forth below, no events have occurred that require disclosure or adjustment in the financial statements.
On October 1, 2025, the Company successfully closed its previously announced merger with Black Titan and Talentec. Following the merger, on October 2, 2025, the combined company's ordinary shares, $0.0001 par value per share, began trading on the Nasdaq stock exchange under the ticker symbol NASDAQ: BTTC. Pursuant to the Merger and Contribution and Share Exchange Agreement dated August 19, 2024, Titan has become a wholly owned subsidiary of Black Titan Corporation, effective as of October 1, 2025. As part of the transaction, each issued and outstanding share of Titan common stock was automatically converted into ordinary shares of Black Titan on a one-for-one basis. Trading of Titan's common stock on the Nasdaq Capital Market ceased trading at the close of business on October 1, 2025, and Black Titan's ordinary shares commenced trading on Nasdaq on October 2, 2025.
TALENTEC'S MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Unless the context otherwise requires, for purposes of this section, the terms "we," "us," or "our," refer to TalenTec and its subsidiary. You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and related notes included elsewhere in this prospectus. Some of the information contained in this discussion and analysis is set forth elsewhere in this prospectus, including information with respect to our plans and strategy for our business, and includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in this proxy statement/prospectus titled "Risk Factors." Our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Overview
TalenTec seeks to deliver effective and cost-efficient human capital management ("HCM") solutions to customers who have different levels of need and challenges. We work closely with our clients as one unit focusing on designing and implementing different applications for financial management, spend management, human capital management, planning, and analytics. We believe post implementation support is essential to customers, hence both our in-house expertise and the provision of maintenance, training and other support services to meet the different needs of customers. As a leading provider of HCM software in Malaysia, TalenTec has introduced numerous cutting-edge HCM solutions to that market, such as Oracle PeopleSoft HCM, Oracle PeopleSoft Financials, Sunfish Workplaze HR, DayForce HCM, and MiHCM Cloud, through our holistic, integrated and reliable services. The services and solutions offered encompass a wide range of human resource management needs, catering to various industries and supporting key aspects of the HR lifecycle.
We have applied our expertise with PeopleSoft Human Resource and Payroll and PeopleSoft Financials since 1993. With a 30-year plus track record, we have a strong, diverse client base, from medium-sized and large organizations within numerous industry categories, including financial services, hospitality, public sector, telecommunications, education, healthcare, and manufacturing. We operate directly in Malaysia and Singapore and with services partners in other parts of the Asia Pacific region. While we continue to expand our services partner arrangements to further support our customers, we are participating in development of an HCM cloud solution directed at the hospitality industry. We also intend to enlarge our regional presence in Southeast Asia by expanding our operations in Indonesia and to the Philippines; however these plans depend on successful completion of the HCM cloud solution and successful conclusion of discussions with a major vendor and successful completion of development of the HCM solution in which TalenTec is participating. See, "Information Related to TalenTec-Business-Growth Strategies."
The HCM market in this region is changing significantly through the adoption of mobile applications, digitalization, and AI. We expect opportunities not only from existing and new client adoption of cloud-based software solutions, but also in providing the corresponding services that they require.
Certain Factors Affecting Our Performance
Impact of New Customer Acquisition
Our future growth is significantly contingent upon our capacity to attract new clients. If our efforts to attract new customers are insufficiently successful, our revenue and rate of revenue growth may also decline. From our experience, our strategy of providing incident response and proactive services help tremendously our drive for new customers. Many organizations in Southeast Asia region have not yet adopted cloud-based HCM solutions, and, given our broad range of products and services tailored to organizations of varying sizes across multiple industries, we are optimistic about available expansion opportunities.
Impact of Maintaining Customer Retention and Increasing Sales
Our ability to increase revenue also depends in large part on our ability to retain our existing customers. We are dedicated to growing sales through our existing customer base by expanding our product offerings, augmenting support and enhancement services, and providing upgrade services. For the years ended July 31, 2024 and 2025, our subscription renewal rate for our existing customers was 100%.
Impact of Number of Consultants on Implementation and Maintenance
Our ability to increase revenue is heavily influenced by the number of consultants dedicated to implementation and maintenance services in the projects. These professionals are crucial in ensuring the punctual delivery of projects to our clients. Augmenting our team in these areas can significantly shorten the project implementation and sales cycles. Additionally, a strong sales force is indispensable for broadening our customer base by actively engaging with a larger pool of potential clients. As of July 31, 2024, and 2025, we had 29 and 30 consultants, respectively.
Key Financial and Operating Measures
We measure our business using annual recurring revenue and non-GAAP financial measures to manage our business and monitor results of operations. We believe that the financial statements and the other financial data included in this proxy statement/prospectus have been prepared in a manner that complies, in all material respects, with generally accepted accounting principles in the United States, or GAAP, and the regulations published by the SEC.
Annual Recurring Revenue
| July 31, | ||||||||
| 2024 | 2025 | |||||||
| Software Maintenance Annual Recurring Revenue | $ | 1,056,766 | $ | 965,437 | ||||
| Cloud-Subscription Annual Recurring Revenue | 291,565 | 342,071 | ||||||
| Total Annual Recurring Revenue | $ | 1,348,331 | $ | 1,307,508 | ||||
Annual Recurring Revenue ("ARR") represents the expected annual billing amounts from all active maintenance and subscription agreements. ARR is calculated based on the contract Monthly Recurring Revenue ("MRR") multiplied by 12. MRR is calculated based on the accounting adjusted total contract value divided by the number of months of the agreement based on the start and end dates of each contracted line item. The aggregate ARR calculated at the end of each reported period represents the value of all contracts that are active as of the end of the period, including those contracts that have expired but are still under negotiation for renewal. We typically allow for a grace period of up to six months past the original contract expiration quarter during which we engage in the renewal process before we report the contract as lost / inactive. This grace-period ARR amount has been less than 2% of the reported ARR in each period presented. If there is an actual cancellation of an ARR contract, we remove that ARR value at that time.
We believe ARR is an important metric for understanding our business since it tracks the annualized cash value collected over a 12-month period for all of our recurring contracts, irrespective of whether it is a maintenance contract on a perpetual license or a SaaS subscription contract. ARR should be viewed independently of total revenue and deferred revenue related to our software and services contracts and is not intended to be combined with or to replace either of those items.
Maintenance Annual Recurring Revenue
Maintenance Annual Recurring Revenue ("Maintenance ARR") represents the portion of ARR only attributable to our maintenance contracts.
We believe that the Maintenance ARR is a helpful metric for understanding our business since it represents the approximate annualized cash value collected over a 12-month period for all our maintenance contracts. Maintenance ARR comes basically from maintenance contracts supporting our perpetual licenses. Maintenance ARR is recognized on the 12 months cycle. Any contracted maintenance revenue beyond the 12 months is considered as deferred revenue. As we continue to shift our focus from perpetual licenses to cloud-based subscriptions, we expect Maintenance ARR will decrease in future quarters.
Subscription Annual Recurring Revenue
Subscription Annual Recurring Revenue ("Subscription ARR") represents the portion of ARR only attributable to our subscription contracts.
We believe that Subscription ARR is a helpful metric for understanding our business since it represents the approximate annualized cash value collected over a 12-month period for all of our recurring subscription contracts. Subscription ARR, which excludes maintenance contracts on our perpetual licenses, provides an insight to our periodic performance and overall size and scale of our subscription business. This is especially important, as the Company continues to focus efforts on subscription-based licensing. Subscription ARR should be viewed independently of subscription revenue and deferred revenue related to subscription contracts and is not intended to be combined with or to replace either of those items.
Components of Results of Operations
Revenues
We provide our customers with HCM solutions using Oracle PeopleSoft HCM, Oracle PeopleSoft Financials, Sunfish Workplaze HR, Dayforce HCM, and MiHCM Cloud, all of which are third party HCM software, developed and owned by different corporations. We derive our revenues from maintenance services, implementation services, SaaS subscription services, licensing and other services, including training services, sales of hardware and other supporting activities related to software.
Maintenance services revenues are generally recognized over time using an output-based method. The maintenance services provided to customers are based on Software Maintenance and Support Service Agreements signed with our customers. The duration of the services is normally between one to three years. Customers are generally billed in advance before the services are provided. Customers will have up to 45 days to make payments from the date of receipt of the original invoice. The fees vary based on different applications in use and the support model that is adopted, including the degree of support activities involved. The maintenance services can be either bundled with other relevant services or on its own. The maintenance and support services include troubleshooting, addressing and resolving a customer's legitimate concerns. Maintenance services revenue accounted for approximately 42.5% and 36.0% of our total revenue for the years ended July 31, 2024 and 2025, respectively. Approximately 92% of the revenue generated from maintenance services is from the Oracle PeopleSoft HCM, with a small contribution from Oracle PeopleSoft Financials; the rest of the revenues were generated from Sunfish Workplaze HR and MiHCM Cloud solutions.
Implementation services revenues are recognized over time as services involve setting the system, configuration, customization work, loading customers' data, testing and certification for production of the software, which are considered to be part of delivery activities. As each customer has different HR policies such as overtime wage rates, leave entitlements, claim metrics, performance appraisals, policy matters and statutory compliance, we deliver solutions that are highly configured and tailored to the different business needs of different customers. Our implementation contracts run typically from six to 18 months, with firm commitments for performance from both parties. We generally charge the customers based on the milestones listed in our scope of services. We may provide certain customers with flexible payment terms, and the timing of revenue recognition may differ from the timing of invoicing to our customers. Implementation services revenue accounted for approximately 39.3% and 38.2% of our total revenue for the years ended July 31, 2024 and 2025, respectively.
SaaS Subscription services revenues are generally recognized over time. The contract we sign with clients also includes relevant consultancy and implementation services bundled into a single performance obligation. Customers are typically charged a one-time upfront access fee for the use of the software solution. Our SaaS subscription contracts typically have a term of one to three years with very restrictive cancellation clauses. We generally invoice our customers quarterly, semi-annually or annually in advance for SaaS subscriptions. Subscription revenues are driven primarily by the number of user access, the headcount of the organization, and the specific application modules subscribed. Over time, these revenue variables will continue to expand, as the business of the customer grows. Subscription revenue accounted for approximately 13.0% and 12.7% of our total revenue for the years ended July 31, 2024 and 2025, respectively.
Licensing fee revenues are based on the conventional licensing model, in which the license to use the software is charged only once, up front. Subsequent revenues for the licensing are annual support and maintenance charges for the licensed software. The revenue from licensing fees is recognized at the point in which the software licenses are made available to a customer. The charging parameters for the licensing include the number of user access, the headcount, and the relevant licensed modules purchased. Over time, the revenues will continue to expand so long as the business and the needs of the customer grow. Licensing fee revenue accounted for approximately 4.5% and 4.2% of our total revenue for the years ended July 31, 2024 and 2025, respectively.
Other revenues are derived mainly from training services, sales of hardware and other support activities associated with software. Revenue is generally recognized over the service period. Revenues from these sources augment our core activities, i.e., implementation, maintenance, SaaS subscription services and licensing. Other revenues also generated from sales of hardware, for example, Facial Recognition ("FR") access and attendance systems and closed-circuit television ("CCTV"). Other revenues accounted for approximately 0.8% and 8.9% of our total revenue for the years ended July 31, 2024 and 2025, respectively.
Our charging matrix depends on the types of services and activities provided to clients. We employ fixed charges with the option for variation orders for services related to a specific scope of work. For time and materials-based services, we charge usually by man-days utilized. For secondment services, we apply fixed charges based on the number of workdays, and we bill clients either weekly or monthly. We generally invoice our customers in arrears for our professional services. For contracts billed on a time and materials basis, revenues are recognized over time as the professional services are performed. For contracts billed on a fixed price basis, revenues are recognized over time based on the proportion of the professional services performed. In some cases, we supplement our consulting teams by subcontracting resources from our service partners and deploying them on customer engagements.
The mix of applications to which each customer subscribes can affect our financial performance, due to price differentials in our applications. Pricing for our applications varies based on many factors, including the number of users, the relevant application modules purchased or subscribed for, the size of the company in terms of head count, and in some cases the revenue of the company. New products or services offered by competitors in the future could also impact on the mix and pricing of our offerings.
Cost of Revenue and Expenses
Cost of revenues are comprised of the following:
In-house employee costs are primarily salaries and other personnel-related costs, including employee benefits and bonuses, for employees providing services to our customers.
Direct costs consist of costs of third-party intellectual property fees (that is basically licensing fee and related maintenance) that we sell to the customer, the amortization of services costs, an allocation of general overhead costs and referral fees. Direct costs of third-party intellectual property fees include amounts paid for third-party licenses and related maintenance that we sell as part of our solutions. We also purchase software licenses from software vendors on a wholesale basis and resell them to our customers with a mark-up. We also outsource some implementation work to third-party IT companies, depending on project requirements or in the event of resource constraints.
Sales and marketing expenses. Sales and marketing expenses consist primarily of salaries and employee-related expenses, marketing and advertising expenses, and depreciation and rental expenses related to marketing functions.
General and administrative expenses. General and administrative expenses consist of salaries and employee-related expenses for finance and accounting, legal, human resources, information systems personnel, professional service fees, and rental expenses related to general and administrative personnel.
Results of Operations
The following table sets forth our consolidated statement of operations data for the periods indicated:
For the years ended July 31, | ||||||||
| 2024 | 2025 | |||||||
| Revenues | $ | 2,124,496 | $ | 2,683,126 | ||||
| Cost of revenues | 1,437,661 | 1,798,198 | ||||||
| Gross profit | 686,835 | 884,928 | ||||||
| Operating expenses: | ||||||||
| Selling and marketing expenses | 16,822 | 24,773 | ||||||
| General and administrative expenses | 551,353 | 634,105 | ||||||
| Total operating expenses | 568,175 | 658,878 | ||||||
| Income from operations | 118,660 | 226,050 | ||||||
| Interest expense (income) | (48,329 | ) | 13,905 | |||||
| Other expenses, net | 82,896 | 2,234 | ||||||
| Total other expenses (income) | (34,567 | ) | 16,139 | |||||
| Income before income taxes | 153,227 | 209,911 | ||||||
| Income tax expense | - | |||||||
| Net income | $ | 153,227 | $ | 209,911 | ||||
Operations in Malaysia accounted for 98.6% and 97.7% of revenue for the years ended July 31, 2024 and 2025, respectively.
Comparison of years ended July 31, 2024 and 2025
Revenues
Our total revenues for the years ended July 31, 2024, and 2025, consist of revenues generated from maintenance services, implementation services, SaaS Subscription services, licensing and other services based on different types of software clients chose to implement and subscribe. Revenue generated from licensing services is one-time revenue and influenced by the number of new clients acquired. Once the new clients have licensed to a software product, they would have perpetual rights to use the software. If clients require upgrade version of the product or new function, TalenTec will offer implementation and maintenance services. Hence, the revenue from implementation and maintenance services are highly generated by existing customers. Given the market's continuing momentum shift to cloud-based digitalization solutions, more new clients are looking for cloud-based solutions.
Revenue sources are as follows:
For the years ended July 31, | ||||||||||||
| 2024 | 2025 | Change | ||||||||||
| Maintenance services | $ | 902,821 | $ | 965,437 | 6.9 | % | ||||||
| Oracle PeopleSoft HCM/Oracle PeopleSoft Financials | 840,164 | 881,696 | 4.9 | % | ||||||||
| Sunfish HR Solution | 50,441 | 69,335 | 37.5 | % | ||||||||
| MiHCM Cloud | 12,216 | 14,406 | 17.9 | % | ||||||||
| Implementation services | 833,886 | 1,025,021 | 22.9 | % | ||||||||
| Oracle PeopleSoft HCM/Oracle PeopleSoft Financials | 742,276 | 906,361 | 22.1 | % | ||||||||
| Sunfish HR Solution | 86,339 | 96,297 | 11.5 | % | ||||||||
| MiHCM Cloud | 351 | 19,280 | 5392.9 | % | ||||||||
| Dayforce HCM | 4,920 | 3,083 | (37.3 | )% | ||||||||
| SaaS Subscription services | 277,109 | 342,071 | 23.4 | % | ||||||||
| Sunfish HR | 170,735 | 229,352 | 34.3 | % | ||||||||
| MiHCM | 106,374 | 112,719 | 6.0 | % | ||||||||
| Licensing | 94,727 | 112,607 | 18.9 | % | ||||||||
| Oracle PeopleSoft HCM/Oracle PeopleSoft Financials | 93,431 | 103,908 | 11.2 | % | ||||||||
| Sunfish HR Solution | 1,296 | 8,699 | 571..2 | % | ||||||||
| Other | 15,952 | 237,990 | 1,391.9 | % | ||||||||
| Total revenues | $ | 2,124,496 | $ | 2,683,126 | 26.3 | % | ||||||
Revenues
Total revenues were $2,124,496 for the year ended July 31, 2024, compared to $2,683,126 for the year ended July 31, 2025, an increase of $558,630, or 26.3%, due principally to the increase in revenue generated from maintenance, implementation, SaaS, licensing and hardware. To continue with the up-going trend, the Company will continue to acquire new clients by expanding the sales force and network and to ensure the consultants reduce time lags on delivery projects.
Maintenance services revenues were $902,821 for the year ended July 31, 2024, compared to $965,437 for the year ended July 31, 2025 An increase of $62,616 or 6.9 %. The increase primarily reflects improved client retention and higher demand for post-implementation support services. As customers required ongoing system updates and optimizations, the Company experienced growth in maintenance-related engagements. Additionally, the gradual expansion of the Company's client base contributed to higher recurring revenue from existing client contracts.
Implementation services revenues were $833,886 for the year ended July 31, 2024, compared to $1,025,021 for the year ended July 31, 2025, an increase of $191,135, or 22.9%. TalenTec has secured a new project for Sunfish Workplaze and two Oracle PeopleSoft upgrade services projects in 2024 that spilled over to 2025 has contributed to the increased of implementation revenue for the year ended July 31, 2025.
Revenues generated from SaaS subscription services were $277,109 for the year ended July 31, 2024, compared to $342,071 for the year ended July 31, 2025, an increase of $64,962 or 23.4%. The increase in revenue show the market shift towards adoption of cloud solutions, and also a record show that the 100% retention of SaaS renewal.
Revenue generated in licensing services was $94,727 for the year ended July 31, 2024, compared to $112,607 for the year ended July 31, 2025, an increase of $17,880 or 18.9%. The increase in licensing services revenues was due to one upgraded project from Oracle PeopleSoft in year 2024 with partial license fees spilled over to year 2025.
Revenue generated from other services was $15,953 for the year ended July 31, 2024, compared to $237,990 for the year ended July 31, 2025, an increase of $222,037 or 1,391.8%. The revenue increase in other services was mainly derived from sales of hardware infrastructure and on-going maintenance of the device..
Cost of Revenues and Expenses
Our costs and expenses for the years ended July, 2024, and 2025, were as follows:
| Years Ended July31, | ||||||||||||
| 2024 | 2025 | Change % | ||||||||||
| Costs of revenue | ||||||||||||
| In-House Employee costs | ||||||||||||
| Salaries | $ | 642,568 | $ | 768,303 | 19.4 | % | ||||||
| Benefits and bonus | 122,832 | 145,005 | 18.1 | % | ||||||||
| Disbursements | 134 | - | ||||||||||
| Direct costs | ||||||||||||
| Third-party licenses | 661,006 | 859,893 | 30.1 | % | ||||||||
| Referral fees | 11,121 | 24,997 | 124.8 | % | ||||||||
| Total costs of revenue | $ | 1,437,661 | $ | 1,798,198 | 25.1 | % | ||||||
| Selling and marketing expenses | 16,822 | 24,773 | 47.3 | % | ||||||||
| General and administrative expenses | 551,353 | 634,105 | 15.0 | % | ||||||||
| Total Operating expenses | $ | 568,175 | $ | 658,878 | 16.0 | % | ||||||
| Total Costs of revenue and operating expenses | $ | 2,005,836 | $ | 2,457,076 | 22.5 | % | ||||||
Total costs and expenses were $ 2,005,836 for the year ended July 31, 2024, compared to $2,457,076 for the year ended July 31, 2025, an increase of $451,239, or 22.5%. The increase in total costs and expenses was primarily due to an increase of $ 107,040 in general and administrative expenses, due to the expansion of sales & marketing staff force in Malaysia & support staff in Singapore, also the overall increase due to higher office rental & etc. Costs of revenue were $ 1,437,661 for the year ended July 31, 2024, compared to $1,798,198 for the year ended July 31, 2025, an increase of $360,537, or 25.1%, due to higher in third party license cost.
Sales and Marketing
Sales and marketing expenses were $16,822 for the year ended July 31, 2024, compared to $24,773 for the year ended July 31, 2025, an increase of $7,951, or 47.3%.
We expect sales and marketing expenses to increase in absolute terms as we continue to invest in our domestic and international selling and marketing activities to expand awareness of our brand and product offerings to attract new and existing customers. In Malaysia, the digitalization of HR processes indicates that the data center market size could reach $2.252 billion by 2028, up from $1.31 billion in 2022, growing at a CAGR of 9.41% during this period. In the Philippines, software and service sales are forecasted to reach $95 million by 2025. Indonesia aims to achieve digital integration for 30 million micro, small, and medium enterprises (MSMEs) by 2024. With the growing number of data centers being built, the demand for systems software such as security and networking solutions and cloud-based HCM solutions will increase. The significant push for digital transformation by local businesses is expected to further bolster the adoption of HCM solutions, as organizations seek to streamline HR processes and adapt to evolving work environments. Consequently, our management team is expanding services related to digitalization, leading to increased sales and marketing expenses.
General and Administrative
General and administrative expenses were $551,353 for the year ended July 31, 2024, compared to $634,105 for the year ended July 31, 2025, an increase of $82,752, or 15.0%.
Liquidity and Capital Resources
We have been financing our operations through existing cash and bank balances, cash generated from our operations and external sources of funds, which consists of equity and debt financing. As of July 31, 2024 and 2025, the Group had cash and restricted cash of $1,234,034 and $1,183,931, respectively; and funding from the existing financial institutions credit lines available as of July 31, 2024 and 2025, totaled approximately $ 403,892 and $ 150,448, respectively. TalenTec had working capital of $696,397 as of July 31, 2024 and working capital of $782,509 as of July 31, 2025. We generated a net profit of $209,911 and net cash provided by operating activities of $394,218 for the year ended July 31, 2025.
Our long-term future capital requirements depend on many factors, including the effects of macroeconomic trends, customer growth rates, subscription renewal activity, the expansion of sales and marketing activities, and the introduction of new and enhanced services offerings. Given the post-pandemic growth of economic in APAC region and the trend on developing high-standard digital trade rules that promote cross-border data flows and discourage data localization, management has embarked on a development HCM cloud solution and scheduled to roll out the beta version of the software in the 2026 second fiscal quarter.
Our cash flows for the years ended July 31, 2024 and 2025 were as follows:
For the Years Ended July 31, | ||||||||
| 2024 | 2025 | |||||||
| Net cash provided by (used in): | ||||||||
| Operating activities | $ | 191,554 | $ | 394,218 | ||||
| Investing activities | (1,526 | ) | (123,425 | ) | ||||
| Financing activities | 556,460 | (417,205 | ) | |||||
| Effect of exchange rate changes | (60,531 | ) | 96,314 | |||||
| Net increase/(decrease) in cash, cash equivalents, and restricted cash | $ | 685,957 | $ | (50,098 | ) | |||
Operating Activities
Cash provided by operating activities was $191,554 and $394,218 for the years ended July 31, 2024 and 2025, respectively. For the year ended July 31, 2025, cash flow provided by operating activities was improved from accounts receivable billings and improvement of cash collections from customer advances.
Investing Activities
Cash used in investing activities was $1,526, and $123,425, due to property and equipment for the years ended July 31, 2024 and 2025, respectively.
Financing Activities
For the year 2024, cash provided by financing activities was $566,460, which was mainly due to proceeds from issuance of common stock of $800,000 and loans provided by a director of $111,690, offset a $119,594 repayment of long-term borrowings, a $127,106 repayment of bank overdraft, and $143,602 repayment to a director.
For the fiscal 2025, cash used by financing activities was $417,205, which was mainly due to repayment of notes payable of 208,467 and payment for deferred offering cost of 124,542.
Borrowings
Our borrowings primarily consist of short-term bank overdrafts and long-term term loans from commercial banks. The short-term bank overdraft arises from a credit facility agreement that the Company entered into with Alliance Bank Malaysia Berhad on November 22, 2010, with subsequent revisions to the agreement on February 15, 2013, April 13, 2015, April 20, 2017, January 22, 2021, August 11, 2023, and most recently on February 19, 2025. As of January 31, 2025, key terms regarding the credit facility are disclosed under Note 8 to the Consolidated Financial Statements.
Critical Accounting Policies and Estimates
Our consolidated financial statements are prepared in accordance with GAAP. The preparation of these consolidated financial statements requires us to make estimates, judgments, and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and related disclosures. On an ongoing basis, we evaluate our estimates, judgments, and assumptions. Our actual results may differ from these estimates under different assumptions or conditions.
We believe that of our significant accounting policies, which are described in Note 2, Summary of Significant Accounting Policies, of Notes to Consolidated Financial Statements, the following accounting policies and specific estimates involve a greater degree of judgment and complexity. Accordingly, these are the policies and estimates we believe are the most critical to aid in fully understanding and evaluating our consolidated financial condition and operating results.
Revenue Recognition
TalenTec's revenue is generated from maintenance services, implementation services, SaaS subscription fees, licensing fees and other supporting services. TalenTec generally recognizes revenue from the sale of services as the services are performed, which is typically ratably over the term of a contract, which the Group believes to be the best measure of progress. The Group recognizes revenues as it satisfies performance obligations to its customers in an amount reflecting the total consideration it expects to receive from the customer.
TalenTec adopted ASC Topic 606, "Revenue from Contracts with Customers ("ASC 606")" for revenue recognition. The core principle of the guidance requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply these five steps:
Step 1: Identify the contract with the customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when the company satisfies a performance obligation
Identification of Performance Obligations
A performance obligation is a promise in a contract with a customer to transfer products or services that are distinct. Our contracts with customers may include multiple promises to transfer services to a customer. Determining whether products and services are distinct performance obligations that should be accounted for separately or combined as a single performance obligation may require significant judgment that requires the Company to assess the nature of the promise and the value delivered to the customer.
The Company's primary performance obligations consist of maintenance services, implementation services, SaaS subscription services, licensing and others. We satisfy these performance obligations over time as we transfer the promised services to our customers, except for the licensing fee. Revenue for a licensing fee is recognized at the point in which software licenses are made available to a customer. Maintenance, implementation, SaaS subscription and other supporting services consist of daily requirements to deliver service to the customer. Each day, the delivery of the service provides value to the customer, and each day represents a measure toward completion of the service. As such, these professional services meet the criteria to be a series of distinct services. In determining whether these professional services are distinct, we consider the following factors for each professional services agreement: availability of the services from other vendors, the nature of the professional services, the timing of when the professional services contract was signed in comparison to the subscription start date, and the contractual dependence of the service on the customer's satisfaction with the professional services work. To date, we have concluded that the above-mentioned professional services included in contracts with multiple performance obligations are generally distinct services. As such, we view professional services as a performance obligation to the customer.
At contract inception, we evaluate whether two or more contracts should be combined and accounted for as a single contract and whether the combined or single contract includes more than one performance obligation. We combine contracts entered into at or near the same time with the same customer if we determine that the contracts are negotiated as a package with a single commercial objective; the amount of consideration to be paid in one contract depends on the price or performance of the other contract; or the services promised in the contracts are a single performance obligation.
Income Taxes
We account for income taxes under ASC 740, "Income Taxes." The charge for taxation is based on the results for the fiscal year as adjusted for items, which are non-assessable or disallowed. The expense is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. Provision for income taxes consists of taxes currently due plus deferred taxes. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. 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.
The provisions of ASC 740-10-25, "Accounting for Uncertainty in Income Taxes," prescribe a more-likely-than-not threshold for consolidated financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return. This interpretation also provides guidance on the recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and related disclosures.
TalenTec did not accrue any liability, interest or penalties related to uncertain tax positions in its provision for income taxes for the years ended July 31, 2023 and 2024, respectively. TalenTec does not expect that its assessment regarding unrecognized tax positions will materially change over the next 12 months. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred.
Recent Accounting Pronouncements
See Note 2, Accounting Standards and Significant Accounting Policies, of the Notes to Consolidated Financial Statements for a full description of recent accounting pronouncements.