What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-02-14 compared with 2024-11-14 · 186 added, 151 removed, 195 unchanged (63% of the section changed)

43 unchanged sentences

complexities involved in shipping goods across borders.

Specifically, when a foreign consumer places an order online, it can

take a long time for the goods to be delivered from one country to another (especially for bulky items), while facing high damage rates

and congestion during peak seasons.

Specifically, when a foreign consumer places an order online, it can take

a long time for the goods to be delivered from one country to another (especially for bulky items), while facing high damage rates and

congestion during peak seasons.

One of the solutions to such problems is to set up overseas warehouses, which are local storage facilities

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who seek to sell in the U.S.

We currently operate nine

We currently operate ten

warehouses across the country, with an aggregate gross floor area of approximately 3,858,667 square feet.

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(f) third-party distribution coordination, and (g) other value-added services.

We also provide warehousing and logistics

services to our U.S.-based commercial customers, who are typically domestic e-commerce merchants seeking efficient and reliable warehousing

and logistics solutions to support their operations.

We also provide warehousing and logistics services

to our U.S.-based commercial customers, who are typically domestic e-commerce merchants seeking efficient and reliable warehousing and

logistics solutions to support their operations.

In general, the warehousing and logistics services we provide to our domestic customers

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need domestic or international warehousing and logistics support.

As of September 30, 2024 and June 30, 2024 and 2023, we had an active

As of December 31, 2024 and June 30, 2024 and 2023, we had an active

customer base of 298, 105, and 83, respectively, for our warehousing and logistics services.

the three months ended September 30, 2024 and 2023, we had total revenue of $42.5 million and $41.2 million, and net loss of $4.6 million

and net income of $2.8 million, respectively.

While we do not have any subsidiaries, assets, or employees in the PRC, we generate a significant

portion of our revenue from customers based in China.

During the three months ended September 30, 2024 and 2023, we generated approximately

85% and 95% of our revenue from PRC-based customers, respectively.

For the six months ended December 31, 2024 and

2023, we had total revenue of $93.6 million and $83.2 million, and net loss of $6.3 million and net income of $6.5 million, respectively.

While we do not have any subsidiaries, assets, or employees in the PRC, we generate a significant portion of our revenue from customers

based in China.

During the six months ended December 31, 2024 and 2023, we generated approximately 86% and 96% of our revenue from

PRC-based customers, respectively.

Results of Operations

The following table outlines our consolidated

statements of operations for the three months ended September 30, 2024 and 2023:

September 30,

statements of operations for the three and six months ended December 31, 2024 and 2023:

For Three Months

For Six Months

Costs of sales

Gross profit (loss)

Operating costs and expenses:

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Other (income) expenses:

Other income, net

Loss on disposal of assets

Finance costs

Total other (income) expenses

Income (loss) before provision for income taxes

Current income tax expense (recovery)

Income before provision for income taxes

Current income tax expense

Deferred income tax expense (recovery)

Total income tax expenses (recovery)

Total income tax expenses

Net income (loss)

Total comprehensive income (loss)

Total comprehensive income

Basic & diluted net earnings per share

Weighted average number of shares of common stock-basic

Weighted average number of shares of common stock-diluted

Weighted average number of shares of common stock-basic and diluted

Revenue, costs of sales, and gross profit

The following table sets forth our revenue for

the three months ended September 30, 2024 and 2023:

September 30,

the three and six months ended December 31, 2024 and 2023:

Costs of sales

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Gross profit (loss) margin %

The following table outlines the compositions

of our revenue streams:

September 30,

The following table outlines the compositions of our revenue streams:

Transportation services

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Other services

Three Months Ended December 31, 2024

Our revenue increased by $9.1 million, or

3.0%, to $42.5 million during the three months ended September 30, 2024, compared to $41.2 million for the same period

21.8%, to $51.1 million during the three months ended December 31, 2024, compared to $42.0 million for the same period

The increase was due to the following factors:

1) Revenue from our transportation services decreased by $1.2 million,

or 4.2%, due to decreases in customer order volumes.

Several major customers have significantly decreased serviced volume for the three months ended September 30, 2024.

2) Revenue from our

warehousing services increased by $2.7 million, or 23.8%, driven by the addition of new warehouses acquired in the last fiscal

from our transportation services increased by $6.2 million, or 20.8%, due to the addition of new warehouse locations, which has enabled

an increase in shipment volume compared to the same period in the 2023.

from our warehousing services increased by $3.1 million, or 25.7%, driven by the addition of new warehouses acquired in the last fiscal

from other services decreased by $0.2 million, or 96%.

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and trucking expenses.

Costs of sales increased by $10.1 million, or 28.0%, during the three months ended September 30,

2024, compared with the same period in 2023.

Costs of sales increased by $16.3 million, or 47.6%, during the three months ended December 31, 2024, compared

with the same period in 2023.

The increase was driven by two main factors.

First , there was a rise in freight expenses

due to higher UPS shipping charges.

Second , lease expenses, employee salary and benefits, and temporary labor costs increased

as we expanded our warehouse and operations team to support growth.

First , there was a rise in freight expenses due to higher

UPS shipping charges.

Second , lease expenses, employee salary and benefits, and temporary labor costs increased as we expanded

our warehouse and operations team to support growth.

Six Months Ended December 31, 2024 and

Our revenue increased by $10.4 million, or

12.5%, to $93.6 million during the six months ended December 31, 2024, compared to $83.2 million for the same period in

The increase was due to the following factors:

Revenue from our transportation services increased by $5.0 million, or 8.3%, due to due to the addition of new warehouse locations, which has enabled an increase in shipment volume compared to the same period in the 2023.

Revenue from our warehousing services increased by $5.7 million, or 24.7%, driven by the addition of new warehouses acquired in the last fiscal quarter.

Revenue from other services decreased by $0.4 million, or 93.7%.

Other revenue mainly consisted of revenue from our customs brokerage services.

Our costs of sales mainly represented the costs

incurred for the use of third-party direct freight service carriers, such as FedEx and UPS, warehouse rental expenses, costs of labor,

and trucking expenses.

Costs of sales increased by $26.4 million, or 37.5%, during the six months ended December 31, 2024, compared

with the same period in 2023.

The increase was driven by two main factors.

First , there was a rise in freight expenses due to higher

UPS shipping charges.

Second , lease expenses, employee salary and benefits, and temporary labor costs increased as we expanded

our warehouse and operations team to support growth.

The following table sets forth a breakdown of

our costs of sales for the three months ended September 30, 2024 and

September 30,

our costs of sales for the three months and six months ended December 31, 2024 and 2023:

Lease expenses

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Other expenses

Our lease expenses (primarily warehouse operating

lease expenses), freight expenses, temporary labor expenses, and salary and benefits increased significantly by $2.3 million, $3.2 million,

$2.8 million, and $1.0 million, respectively, during the three months ended September 30, 2024 compared to the same period

The increases in lease expenses are due to the additional operating leases acquired in the last fiscal quarter.

The increases

in freight expenses are due to the increase of the surcharge by FedEx.

The increase in temporary labor expenses and salary and benefits

is due to the expansion of the warehouse operations.

Our overall gross profit (loss) margin

decreased from 12.7% for the for the three months ended September 30, 2023 to (8.5%) for the same period in 2024,

primarily due to the increase of the surcharge by UPS and the decreases in customer order volume, as well as some of the recently

leased warehouses that are not fully utilized.

Three Months Ended December 31, 2024 and 2023

Our freight expenses, lease expenses (primarily

warehouse operating lease expenses), temporary labor expenses, warehouse expenses, and salary and benefits increased significantly by

$8.3 million, $2.5 million, $2.9 million, $1.2 million and $0.7 million, respectively, during the three months ended December 31,

2024, compared to the same period in 2023.

The increases in lease expenses were due to the additional operating leases acquired in the

last and current fiscal quarter.

The increases in freight expenses were due to the increase in UPS expenses.

The increases in temporary

labor expenses, warehouse expenses, and salary and benefits were due to the expansion of the warehouse operations.

Our overall gross profit margin decreased from

18.3% for the three months ended December 31, 2023 to 0.9% for the same period in 2024, primarily due to the increase of the

surcharge by UPS and the decreases in customer order volume, as well as some of the recently leased warehouses that are not fully utilized.

Six Months Ended December 31, 2024 and

Our freight expenses, lease expenses (primarily

warehouse operating lease expenses), temporary labor expenses, warehouse expenses, and salary and benefits increased significantly by

$11.5 million, $4.8 million, $5.7 million, $1.8 million and $1.6 million, respectively, during the six months ended December 31,

2024 compared to the same period in 2023.

The increases in lease expenses were due to the additional operating leases acquired in the

last and current fiscal quarter.

The increases in freight expenses were due to the increase in UPS expense.

The increases in temporary

labor expenses, warehouse expenses, and salary and benefits were due to the expansion of the warehouse operations.

Our overall gross profit (loss) margin decreased

from 15.5% for the for the six months ended December 31, 2023 to (3.3%) for the same period in 2024, primarily due to the increase

of the surcharge by UPS and the decreases in customer order volume, as well as some of the recently leased warehouses that are not fully

Operating expenses

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and administrative expenses.

The following table sets forth a breakdown of our general and administrative expenses for the three months

ended September 30, 2024 and 2023:

September 30,

The following table sets forth a breakdown of our general and administrative expenses for the three and

six months ended December 31, 2024 and 2023:

Office expenses

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Credit loss expenses (recovery)

Three Months Ended December 31, 2024

Our general and administrative expenses decreased by $0.2 million,

or 9%, from $2.9 million for the three months ended December 31, 2023 to $2.7 million for the same period in 2024.

increase was due to the net of the following factor:

Professional fees increased by $0.8 million, or 1,686.7%, mainly due

to fees for the consulting services of an investment financial advisor.

Office expenses decreased by $0.3 million, or 47.4%, mainly due to

the large insurance refund received during the period.

Salary expenses decreased by $0.4 million, or 35.0%, mainly due

to a decrease in bonus payout, a lower salary range adjustment for one employee and the resignation of several employees during the

Credit loss expenses decreased by $0.2 million, or 67.4%, mainly due

to the better receivable collection (low loss rate) during the period.

Six Months Ended December 31, 2024

Our general and administrative expenses increased

by $1.8 million, from $1.9 million for the three months ended September 30, 2023 to $3.7 million for the same

period in 2024, representing an increase of 92%.

by $1.5 million, or 31%, from $4.8 million for the three months ended December 31, 2023 to $6.3 million for the

same period in 2024.

The increase was due to the following factors:

expenses increased by $0.6 million, or 106%, mainly due to an increase in general insurance

by $0.5 million associated with the rapid expansion of our business.

Repairs and maintenance expenses increased by $0.2 million, or 109%, as a result of the growth in our transportation services.

Professional fees increased by $0.3 million, or 485%, mainly due to

increase of audit fees.

Our income tax expense decreased by $2.5 million

for the three months ended September 30, 2024 compared to the same period in 2023, mainly due to the decrease in profit before

tax by $10 million during the three months ended September 30, 2024.

Office expenses increased by $0.3 million, or 23%, mainly due to an

increase in general insurance associated with the rapid expansion of our business.

Professional fees increased by $1.1 million, or 987%, mainly due to the fees for the consulting services of an investment financial advisor and audit fees.

Our income tax expense decreased by $1.5 million for the three months

ended December 31, 2024, compared to the same period in 2023, mainly due to the decrease in profit before tax by $6.9 million during the

three months ended December 31, 2024.

Our income tax expense decreased by $4.0 million for the six months

ended December 31, 2024, compared to the same period in 2023, mainly due to the decrease in profit before tax by $17.0 million during

the six months ended December 31, 2024.

Net income (loss)

As a result of the foregoing, our net income (loss)

for the three months ended September 30, 2024 was $(4.6) million, compared with the net income of $2.8 million for

the same period in 2023, representing a decrease by $7.4 million.

As a result of the foregoing, our net (loss) income for the three months

ended December 31, 2024 was $(1.7) million, compared with the net income of $3.7 million for the same period in 2023, representing

a decrease by $5.4 million.

Our net (loss) income for the six months

ended December 31, 2024 was $(6.3) million, compared with the net income of $6.5 million for the same period in 2023, representing

a decrease by $12.8 million.

Liquidity and Capital Resources

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As of the date of this Quarterly Report, we have financed our operations primarily through cash generated by operating activities

and capital contributions from stockholders.

As of September 30, 2024 and June 30, 2024, we had cash and restricted cash of $5.0 million

and $10.0 million, respectively, which primarily consisted of cash deposited in banks.

working capital requirements mainly consist of costs of sales and general and administrative expenses.

We expect that our capital requirements

will be met by cash generated from our operating activities and financing activities.

believe that our current cash and cash generated from our operating activities will be sufficient to meet our current and anticipated

working capital requirements and capital expenditures for at least the next 12 months.

We may, however, need additional cash resources

in the future if we experience changes in our business conditions or other developments.

Cash Flows for the three months Ended

September 30, 2024 and 2023

September 30,

and proceeds from the Convertible Note.

As of December 31, 2024 and June 30, 2024, we had cash and restricted cash of $7.4 million and

$10.0 million, respectively, which primarily consisted of cash deposited in banks.

Our working capital requirements mainly consist

of costs of sales and general and administrative expenses.

We expect that our capital requirements will be met by cash generated from

our financing activities.

On November 25, 2024, we entered into the SEPA with the Investor, pursuant to which we have the right to sell

to the Investor up to $50.0 million of our common stock.

We believe that our current cash and cash generated from our financing activities

will be sufficient to meet our current and anticipated working capital requirements and capital expenditures for at least the next 12 months.

We may, however, need additional cash resources in the future if we experience changes in our business conditions or other developments.

Cash Flows for the Six Months Ended December

31, 2024 and 2023

Net cash provided by (used in) operating activities

Net cash used in investing activities

Net cash provided by (used in) financing activities

Net increase (decrease) in cash

Cash and restricted cash at beginning of year

Cash and restricted cash at end of year

had a balance of cash and restricted cash of $5.0 million as of September 30, 2024, compared with a balance of

$10.0 million as of June 30, 2024.

During the three months ended September 30, 2024, changes in our cashflow were mainly

due to the following activities:

Net cash provided by financing activities

Net increase (decrease) in cash and restricted cash

Cash and restricted cash at beginning of six months period

Cash and restricted cash at end of six months period

We had a balance of cash and restricted cash of

$7.4 million as of December 31, 2024, compared with a balance of $10.0 million as of June 30, 2024.

During the six months ended

December 31, 2024, changes in our cashflow were mainly due to the following activities:

Operating Activities

Net cash used in operating activities was $9.2

million for the three months ended September 30, 2024, compared to net cash provided by operating activities of $3.1 million

for the same period in 2023, representing a $6.7 million decrease in the net cash inflow provided by operating activities.

was primarily due to the following:

had net loss of $4.6 million for the three months ended September 30, 2024.

For the three months ended September 30, 2023,

we had net income of $2.8 million, which led to a $7.4 million decrease in net cash inflow from operating activities.

in accounts receivable and other receivables were $0.2 million cash inflow for the three months ended September 30, 2024.

the three months ended September 30, 2023, changes in accounts receivable and other receivables were $0.6 million cash inflow,

which led to a $0.4 million decrease in net cash outflow from operating activities.

(iii) Changes

in accounts payable and accrued liabilities used $1.9 million net cash outflow for the three months ended September 30, 2024.

the three months ended September 30, 2023, changes in accounts payable and accrued liabilities provided net cash outflow of $2.1 million,

which led to a $0.2 million decrease in net cash outflow from operating activities.

in tax payable provided $0.1 million net cash outflow for the three months ended September 30, 2024.

For the three months

ended September 30, 2023, changes in tax payable provided net cash inflow of $0.6 million, which led to a $0.7 million decreased

in net cash inflow from operating activities.

in non-cash items provided $2.0 million net cash inflow for the three months ended September 30, 2024.

For the three months

ended September 30, 2023, changes in non-cash items provided net cash inflow of $1.0 million, which led to a $1.0 million increase

in net cash inflow from operating activities.

million for the six months ended December 31, 2024, compared to net cash provided by operating activities of $3.5 million for

the same period in 2023, representing a $12.7 million decrease in the net cash inflow provided by operating activities.

The decrease was

primarily due to the following:

We had net loss of $6.3 million for the six months ended December 31, 2024.

For the six months ended December 31, 2023, we had net income of $6.5 million, which led to a $12.8 million decrease in net cash inflow from operating activities.

Changes in accounts receivable and other receivables were $6.0 million cash outflow for the six months ended December 31, 2024.

For the six months ended December 31, 2023, changes in accounts receivable and other receivables were $7.7 million cash outflow, which led to a $1.7 million decrease in net cash outflow from operating activities.

Changes in accounts payable and accrued liabilities used $2.0 million net cash outflow for the six months ended December 31, 2024.

For the six months ended December 31, 2023, changes in accounts payable and accrued liabilities provided net cash outflow of $2.0 million, which led to a $0.1 million decrease in net cash outflow from operating activities.

Changes in tax payable provided used $0.1 million net cash outflow for the six months ended December 31, 2024.

For the six months ended December 31, 2023, changes in tax payable provided net cash inflow of $1.7 million, which led to a $1.8 million decrease in net cash inflow from operating activities.

Changes in contract liabilities provided $1.0 million net cash inflow for the six months ended December 31, 2024.

For the six months ended December 31, 2023, changes in contract liabilities used net cash outflow of $0.2 million, which led to a $1.2 million increase in net cash inflow from operating activities.

Changes in non-cash items provided $4.4 million net cash inflow for the six months ended December 31, 2024.

For the six months ended December 31, 2023, changes in non-cash items provided net cash inflow of $4.7 million, which led to a $0.3 million decrease in net cash inflow from operating activities.

Investing Activities

Net cash used in investing activities was $1.0 million

for the three months ended September 30, 2024, primarily attributable to $1.4 million cash used for the purchase of property

and equipment, $1.0 million cash used for loans extended to others, and $1.0 million proceeds received from loan repayments.

For the three months ended September 30,

for the six months ended December 31, 2024, primarily attributable to $2.1 million cash used for the purchase of property and

equipment, $1.0 million cash used for loans extended to others, and $2.0 million proceeds received from loan repayments.

For the six months ended December 31, 2023,

net cash used in investing activities was $3.9 million, primarily attributable to $2.9 million cash used for the purchase of property

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Financing Activities

For the three months ended September 30,

2024, we had net cash used in financing activities of $0.05 million, which was primarily attributable to the net effects of $0.05 million

used to repay finance lease liabilities.

the three months ended September 30, 2023, we had net cash provided from financing activities of $1.0 million, which was primarily

attributable to the net effects of:

(i) $0.5 million collected from related parties for the repayments of loans the Company

previously advanced to them;

(ii) $0.5 million lent from related parties;

(iii) $0.1 million used for expenses relating to

the initial public offering;

(iv) $0.05 million used to repay finance lease liabilities;

and (v) $0.1 million in

capital contributions from stockholders.

For the six months ended December 31, 2023, we had net cash provided

by financing activities of $0.9 million, which was primarily attributable to the net effects of:

(i) $1.0 million collected

from related parties for the repayments of loans we previously advanced to them;

(ii) $0.3 million used for expenses relating

to the initial public offering;

(iii) $0.1 million used to repay finance lease liabilities;

and (iv) $0.3 million

in capital contributions from stockholders.

For the six months ended December 31, 2024,

we had net cash provided from financing activities of $7.7 million, which was primarily attributable to the net effects of:

(i) $0.4 million

repayment related parties;

(ii) $8.1 million of net proceeds from the Pre-Paid Advance under the SEPA.

Commitments and Contractual Obligations

As of September 30, 2024, we had operating and

finance leases for office space, warehouse space, and forklifts.

Lease terms expire at various dates through February 2025 to July 2034

with options to renew for varying terms at our sole discretion.

We have not included these options to extend or terminate in the calculation

of ROU assets or lease liabilities, as there is no reasonable certainty, as of the date of this Quarterly Report, that these options will

be exercised.

As of September 30, 2024, maturities of lease

liabilities for each of the following fiscal years ending June 30 and thereafter were as follows:

As of December 31, 2024, we had operating and finance leases for office

space, warehouse space, and forklifts.

Lease terms expire at various dates through February 2025 to November 2034 with options to renew

for varying terms at our sole discretion.

We have not included these options to extend or terminate in the calculation of ROU assets or

lease liabilities, as there is no reasonable certainty, as of the date of this Quarterly Report, that these options will be exercised.

As of December 31, 2024, maturities of lease liabilities

for each of the following fiscal years ending June 30 and thereafter were as follows:

2029 and beyond

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Other than the above leases, we did not have significant

commitments, long-term obligations, or guarantees as of September 30, 2024.

commitments, long-term obligations, or guarantees as of December 31, 2024.

Off-balance Sheet Commitments and Arrangements

Other than two standby letters of credit with

Other than three standby letters of credit with

Eastwest Bank in the aggregate amount of $2,259,932, we did not have during the period presented, and we do not currently have, any off-balance

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for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

As of September 30,

As of December 31, 2024,

we still have unused credit of $2,259,932 with Eastwest Bank.

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Shorter of lease term or 15 years

As of September 30, 2024 and June 30, 2024, the

As of December 31, 2024 and June 30, 2024, the

historical cost of property and equipment was $16,736,612 and $14,773,842, respectively.

We recorded depreciation expenses of $1,216,422

and $388,929 during the three months ended September 30, 2024 and 2023, respectively.

and $919,272 during the six months ended December 31, 2024 and 2023, respectively.

Specifically, $1,108,175 and $786,466 of the depreciation

expenses were recorded in costs of sales for the three months ended September 30, 2024 and 2023, respectively.

$142,064 and $64,080 of

the depreciation expenses were recorded in general and administrative expenses for the three months ended September 30, 2024 and 2023,

expenses were recorded in costs of sales for the six months ended December 31, 2024 and 2023, respectively, $108,247 and $132,806

of the depreciation expenses were recorded in general and administrative expenses for the six months ended December 31, 2024 and 2023,

respectively.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis