What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-14 compared with 2025-02-14 · 127 added, 122 removed, 259 unchanged (49% of the section changed)

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factors that could cause actual results or outcomes to differ materially from those contained in the forward-looking statements include

those factors set forth in the “Risk Factors” section included in our registration statement on Form S-1 (File No.

which was initially filed with the U.S.

Securities and Exchange Commission (the “SEC”) on September 25, 2023, as amended,

and declared effective by the SEC on May 13, 2024.

those factors set forth in the “Item 1A.

Risk Factors” included in our annual report on Form 10-K (File No.

001-42099) (the

“Annual Report”), which was filed with the SEC on September 26, 2024.

Although we believe that the expectations reflected

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financial statements and the notes included in this Quarterly Report, and the audited consolidated financial statements and notes and

Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our annual report on Form 10-K

001-42099), filed with the SEC on September 26, 2024.

Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in the Annual Report

We are a fast-growing U.S.-based warehousing and

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need domestic or international warehousing and logistics support.

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.

For the six months ended December 31, 2024 and

As of March 31, 2025 and June 30, 2024 and 2023, we had an active customer

base of 395, 105, and 83, respectively, for our warehousing and logistics services.

For the nine months ended March 31, 2025 and 2024,

we had total revenue of $139.5 million and $121.7 million, and net loss of $10.1 million and net income of $7.2 million, respectively.

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based in China.

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

During the nine months ended March 31, 2025 and 2024, we generated approximately 87.0% and 94.2% of our revenue from

PRC-based customers, respectively.

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The following table outlines our consolidated

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

For Three Months

For Six Months

statements of operations for the three and nine months ended March 31, 2025 and 2024:

Costs of sales

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Income (loss) from operations

(13,646,472 )

Other (income) expenses:

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Total other (income) expenses

Income before provision for income taxes

Income (loss) before provision for income taxes

(11,569,133 )

Current income tax expense

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Net income (loss)

Total comprehensive income

(10,062,164 )

Total comprehensive income (loss)

(10,062,164 )

Basic & diluted net earnings per share

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The following table sets forth our revenue for

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

the three and nine months ended March 31, 2025 and 2024:

Costs of sales

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Other services

Three Months Ended December 31, 2024

Three Months Ended March 31, 2025 and

Our revenue increased by $7.4 million, or

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

19.3%, to $45.8 million during the three months ended March 31, 2025, compared to $38.4 million for the same period in

The increase was due to the following factors:

from our transportation services increased by $3.5 million, or 13.8%, due to the addition of new warehouse locations, which has enabled

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

an increase in shipment volume compared to the same period in 2024.

from our warehousing services increased by $4.0 million, or 29.7%, driven by the addition of new warehouses acquired in the last fiscal

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and trucking expenses.

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

Costs of sales increased by $10.5 million, or 30.0%, during the three months ended March 31, 2025, compared

with the same period in 2024.

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our warehouse and operations team to support growth.

Six Months Ended December 31, 2024 and

Nine Months Ended March 31, 2025 and

Our revenue increased by $17.8 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

14.6%, to $139.5 million during the nine months ended March 31, 2025, compared to $121.7 million for the same period in 2024.

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%.

from our transportation services increased by $8.4 million, or 10%, 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 2024.

from our warehousing services increased by $9.7 million, or 26.5%, driven by the addition of new warehouses acquired in the last fiscal

from other services decreased by $0.4 million, or 89.5%.

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

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and trucking expenses.

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

Costs of sales increased by $36.9 million, or 35.0%, during the nine months ended March 31, 2025, compared

with the same period in 2024.

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The following table sets forth a breakdown of

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

our costs of sales for the three months and nine months ended March 31, 2025 and 2024:

March 31, 2025

March 31, 2024

March 31, 2025

March 31, 2024

Lease expenses

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Other expenses

Three Months Ended December 31, 2024 and 2023

Three Months Ended March 31, 2025 and 2024

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.

warehouse operating lease expenses), temporary labor, salary benefits, and warehouse expenses increased significantly by $2.5 million,

$2.8 million, $2.9 million, $0.8 million, and $0.7 million, respectively, during the three months ended March 31, 2025, compared

to the same period in 2024.

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.

The increases in 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

8.6% for the three months ended March 31, 2024 to 0.6% for the same period in 2025, primarily due to the increase in lease expenses,

temporary labor expense for new warehouses, and UPS expenses.

Nine Months Ended March 31, 2025 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,

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

$14.0 million, $7.6 million, $8.6 million, $2.4 million and $2.6 million, respectively, during the nine months ended March 31,

2025 compared to the same period in 2024.

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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

from 13.3% for the for the nine months ended March 31, 2025 to (2.0%) for the same period in 2025, primarily due to the increase

in lease expenses, temporary labor expense for new warehouses, and UPS expenses.

Operating expenses

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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:

nine months ended March 31, 2025 and 2024:

March 31, 2025

March 31, 2024

March 31, 2025

March 31, 2024

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

Three Months Ended March 31, 2025 and

Our general and administrative expenses increased

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

by $1.2 million, or 36.8%, from $3.3 million for the three months ended March 31, 2025 to $4.5 million for the same period

The increase was mainly due to the following factor:

Professional fees increased by $0.9 million, or 843.9%, mainly due to fees for the consulting services of two investment financial advisors.

Nine Months Ended March 31, 2025 and

Our general and administrative expenses increased

by $2.7 million, or 33%, from $8.1 million for the nine months ended March 31, 2025 to $10.8 million for the

same period in 2025.

The increase was due to the following factors:

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.

The increase was mainly due to the following factors:

Office expenses increased by $0.4 million, or 19%, mainly due to an increase in general insurance associated with the rapid expansion of our business.

Professional fees increased by $2.0 million, or 918%, mainly due to the fees for the consulting services of two investment financial advisors and audit fees.

Our income tax expense decreased by $0.3 million

for the three months ended March 31, 2025, compared to the same period in 2024, mainly due to the decrease in profit before tax by

$4.4 million during the three months ended March 31, 2025.

Our income tax expense decreased by $4.3 million

for the nine months ended March 31, 2025, compared to the same period in 2024, mainly due to the decrease in profit before tax by

$21.3 million during the nine months ended March 31, 2025.

Net income (loss)

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

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

for the three months ended March 31, 2025 was $(3.8) million, compared with the net income of $0.7 million for the same

period in 2024, representing a decrease by $4.4 million.

Our net (loss) income for the nine months

ended March 31, 2025 was $(10.1) million, compared with the net income of $7.2 million for the same period in 2024, representing

a decrease by $17.3 million.

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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

As of March 31, 2025 and June 30, 2024, we had cash and restricted cash of $9.4 million and $10.0

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

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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

Cash Flows for the Nine Months Ended March

31, 2025 and 2024

Net cash provided by (used in) operating activities

March 31, 2025

March 31, 2024

Net cash (used in) provided by operating activities

Net cash used in investing activities

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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

Cash and restricted cash at beginning of nine months period

Cash and restricted cash at end of nine 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:

$9.4 million as of March 31, 2025, compared with a balance of $10.0 million as of June 30, 2024.

During the nine months ended

March 31, 2025, changes in our cashflow were mainly due to the following activities:

Operating Activities

Net cash used in operating activities was $5.6

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

million for the nine months ended March 31, 2025, compared to net cash provided by operating activities of $4.0 million for

the same period in 2024, representing a $9.6 million decrease in the net cash inflow provided by operating activities.

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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.

had net loss of $10.1 million for the nine months ended March 31, 2025.

For the nine months ended March 31, 2024, we had net

income of $7.2 million, which led to a $17.3 million decrease in net cash inflow from operating activities.

in accounts receivable and other receivables were $1.6 million cash outflow for the nine months ended March 31, 2025.

months ended March 31, 2024, changes in accounts receivable and other receivables were $7.7 million cash outflow, which led to a $6.1 million

decrease in net cash outflow from operating activities.

(iii) Changes

in accounts payable and accrued liabilities used $0.6 million net cash outflow for the nine months ended March 31, 2025.

nine months ended March 31, 2024, changes in accounts payable and accrued liabilities provided net cash outflow of $2.2 million,

which led to a $1.6 million decrease in net cash outflow from operating activities.

Changes in tax payable provided used $0.1 million net cash outflow for the nine months ended March 31, 2025.

For the nine months ended March 31, 2024, changes in tax payable provided net cash inflow of $1.9 million, which led to a $2.0 million decrease in net cash inflow from operating activities.

Changes in non-cash items provided $6.7 million net cash inflow for the nine months ended March 31, 2025.

For the nine months ended March 31, 2024, changes in non-cash items provided net cash inflow of $5.6 million, which led to a $1.2 million increase in net cash inflow from operating activities.

Investing Activities

Net cash used in investing activities was $1.5 million

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

for the nine months ended March 31, 2025, primarily attributable to $2.6 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,

For the nine months ended March 31, 2024,

net cash used in investing activities was $4.7 million, primarily attributable to $3.1 million cash used for the purchase of property

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Financing Activities

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;

For the nine months ended March 31, 2024,

we had net cash provided by financing activities of $0.2 million, which was primarily attributable to the net effects of:

(i) $0.5 million

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

(ii) $0.6 million used for expenses

relating to the initial public offering;

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

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in capital contributions from stockholders.

For the six months ended December 31, 2024,

For the nine months ended March 31, 2025,

we had net cash provided from financing activities of $6.6 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.

repayment to related parties;

(ii) $8.1 million of net proceeds from the Pre-Paid Advance under the SEPA, (iii) $0.9 million repayment

of SEPA, (iv) $0.1 million repayment of finance lease liabilities, and (v) $0.2 million repayment of commitment fee payable.

Commitments and Contractual Obligations

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

As of March 31, 2025, we had operating and finance

leases for office space, warehouse space, and forklifts.

Lease terms expire at various dates through September 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 March 31, 2025, maturities of lease liabilities

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

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Other than the above leases, we did not have significant

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

commitments, long-term obligations, or guarantees as of March 31, 2025.

Off-balance Sheet Commitments and Arrangements

Other than three standby letters of credit with

Other than the standby letters of credit with

Eastwest Bank in the aggregate amount of $3,779,572, 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 December 31, 2024,

As of March 31, 2025,

we still have unused credit of $3,779,572 with Eastwest Bank.

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Shorter of lease term or 15 years

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.

As of March 31, 2025 and June 30, 2024, the historical

cost of property and equipment was $17,259,298 and $14,773,842, respectively.

We recorded depreciation expenses of $1,874,681

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

and $1,313,684 during nine months ended March 31, 2025 and 2024, respectively.

Specifically, $1,717,363 and $1,091,795 of the depreciation

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.

expenses were recorded in costs of sales for the nine months ended March 31, 2025 and 2024, respectively, $157,318 and $221,889 of

the depreciation expenses were recorded in general and administrative expenses for the nine months ended March 31, 2025 and 2024, respectively.

Our significant accounting policies are more fully

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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