What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-13 compared with 2025-05-14 · 228 added, 278 removed, 108 unchanged (82% of the section changed)

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

Management’s Discussion and Analysis

of Financial Condition and Results of Operations

The following discussion and analysis should

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This Quarterly Report on Form 10-Q contains “forward-looking

statements.” All statements other than statements of historical fact are “forward-looking statements” for purposes of

federal and state securities laws, including, but not limited to:

statements.” All statements other than statements of historical fact are “forward-looking statements” for purposes

of federal and state securities laws, including, but not limited to:

any projections of earnings, revenue, or other financial items;

statements regarding the adequacy, availability, and sources of capital, any statements of the plans, strategies, and objectives of management

for future operations;

any statements regarding the adequacy, availability, and sources of capital, any statements of the plans, strategies, and objectives

of management for future operations;

any statements concerning proposed new products, services, or developments;

any statements regarding future economic

conditions or performance;

any statements regarding

future economic conditions or performance;

any statements of belief;

and any statements of assumptions underlying any of the foregoing.

Forward-looking

statements may include the words “may,” “will,” “estimate,” “intend,” “continue,”

“believe,” “expect,” “plan,” “project,” or “anticipate,” and other similar

In addition to any assumptions and other factors and matters referred to specifically in connection with such forward-looking statements,

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 “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.

Forward-looking statements may include the words “may,” “will,” “estimate,” “intend,”

“continue,” “believe,” “expect,” “plan,” “project,” or “anticipate,”

and other similar words.

In addition to any assumptions and other factors and matters referred to specifically in connection with such

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

statements include those factors set forth under “Item 1A.

Risk Factors” included in our annual report on Form 10-K (File

001-42099) for the fiscal year ended June 30, 2025, filed with the U.S.

Securities and Exchange Commission (the “SEC”)

on September 25, 2025 (the “Annual Report”).

Although we believe that the expectations reflected

in our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed.

Our future financial

condition and results of operations, as well as any forward-looking statements, are subject to change and to inherent risks and uncertainties,

such as those disclosed in this Quarterly Report.

We do not intend, and undertake no obligation, to update any forward-looking statement,

except as required by law.

financial condition and results of operations, as well as any forward-looking statements, are subject to change and to inherent risks

and uncertainties, such as those disclosed in this Quarterly Report.

We do not intend, and undertake no obligation, to update any forward-looking

statement, except as required by law.

The information included in this Management’s

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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

logistics service provider that offers a comprehensive package of supply-chain solutions relating to warehouse management and order fulfillment.

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

and logistics service provider that offers a comprehensive package of supply-chain solutions relating to warehouse management and order

With the boom of e-commerce and Internet technology,

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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.

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

established in a foreign country where the cross-border merchants intend to sell their goods.

Cross-border e-commerce merchants can export

goods in batches in advance to overseas warehouses, which can then be delivered to overseas consumers once orders are placed via e-commerce

As a result, the delivery time and the rate of damaged and lost packages may be reduced significantly, therefore enhancing

the shopping experience of consumers.

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 established in a foreign country where the cross-border merchants intend to sell their goods.

Cross-border e-commerce merchants

can export goods in batches in advance to overseas warehouses, which can then be delivered to overseas consumers once orders are placed

via e-commerce platforms.

As a result, the delivery time and the rate of damaged and lost packages may be reduced significantly, therefore

enhancing the shopping experience of consumers.

We provide one-stop warehousing and logistics

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are similar to those we provide to our overseas customers.

This allows us to provide integrated solutions for our customers, whether they

need domestic or international warehousing and logistics support.

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

This allows us to provide integrated solutions for our customers, whether

they need domestic or international warehousing and logistics support.

As of September 30, 2025 and June 30, 2025, we had an active customer

base of 607, and 505, 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.

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

PRC-based customers, respectively.

For the three months ended September 30, 2025

and 2024, we had total revenue of $49.5 million and $42.5 million, and net loss of $6.5 million and $4.6 million, respectively.

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

During the three months ended September 30, 2025 and 2024, we generated approximately 83% and 85% of our revenue from PRC-based

customers, respectively.

Results of Operations

The following table outlines our consolidated

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

Costs of sales

statements of operations for the three months ended September 30, 2025 and 2024:

September 30,

Costs of services

Operating costs and expenses:

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Total operating costs and expenses

Income (loss) from operations

(13,646,472 )

Loss from operations

Other (income) expenses:

Other income, net

Loss on disposal of assets

Finance costs

Total other (income) expenses

Income (loss) before provision for income taxes

(11,569,133 )

Current income tax expense

Deferred income tax expense (recovery)

Total income tax expenses

Net income (loss)

(10,062,164 )

Total comprehensive income (loss)

(10,062,164 )

Basic & diluted net earnings per share

Loss before provision for income taxes

Current income tax recovery

Deferred income tax recovery

Total income tax recovery

Total comprehensive loss

Basic & diluted net loss per share

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

Revenue, costs of sales, and gross profit

Revenue, costs of services, and gross profit

The following table sets forth our revenue for

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

Costs of sales

Gross profit (loss)

Gross profit (loss) margin %

The following table outlines the compositions of our revenue streams:

the three months ended September 30, 2025 and 2024:

September 30,

Costs of services

Gross loss margin %

The following table outlines the compositions

of our revenue streams:

September 30,

Transportation services

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Other services

Three Months Ended March 31, 2025 and

Our revenue increased by $7.0 million, or

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 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

from other services decreased by $0.03 million, or 67.3%.

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 $10.5 million, or 30.0%, during the three months ended March 31, 2025, compared

with the same period in 2024.

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.

Nine Months Ended March 31, 2025 and

Our revenue increased by $17.8 million, or

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.

16.5%, to $49.5 million during the three months ended September 30, 2025, compared to $42.5 million for the same

period in 2024.

The increase was due to the following factors:

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.

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 $36.9 million, or 35.0%, during the nine months ended March 31, 2025, compared

with the same period in 2024.

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 and nine months ended March 31, 2025 and 2024:

March 31, 2025

March 31, 2024

March 31, 2025

March 31, 2024

Revenue from our transportation services increased by $3.6 million,

or 12.6%, for the three months ended September 30, 2025, compared with the same period in 2024, due to the addition of new warehouse

locations, which resulted in an increase in shipment volume for the three months ended September 30, 2025.

Revenue from our warehousing services increased by $3.4 million, or

24.4%, for the three months ended September 30, 2025, compared with the same period in 2024.

As an integrated part of our one-stop

warehousing and logistics services, revenue increase from our warehousing services was driven by the growth in our transportation

services and the addition of new warehouses acquired in 2025.

The following table sets forth a breakdown of our costs of services

for the three months ended September 30, 2025 and 2024:

September 30,

Lease expenses

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Other expenses

Three Months Ended March 31, 2025 and 2024

Our freight expenses, lease expenses (primarily

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 salary and benefits were

due to the expansion of the warehouse operations.

Our overall gross profit margin decreased from

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, 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.

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 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.

Our costs of services 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 services increased by $5.9 million, or 12.7%, during the three months ended September 30, 2025, compared with

the same period in 2024.

The increase was primarily driven by the following two factors:

Between September 30, 2024 and September 30, 2025, the Company expanded its operations through opening two new warehouses,

including a new warehouse in the State of Illinois.

These new facilities focused less on the traditional drop-shipping model, instead

operating as hubs for lower profit margin services such as transfers or returns.

These dynamics resulted in a notable increase in warehouse

labor, rental, and other related operating expenses.

Freight costs increased in line with the increase in revenue from transportation

In addition, the Company’s gross profit margin on FedEx shipments increased to 6% during the three months ended September

30, 2025, compared to 2% during the same period in 2024.

This increase is largely driven by the transition of part of the freight volume

to third-party vendors shipping through FedEx that provided more competitive pricing for different shipment size and weight brackets,

lowering costs, increasing shipping options, and stabilizing the cost structure.

Our overall gross loss margin improved from (8.5%) for the three months

ended September 30, 2024 to (5.0%) for the same period in 2025, primarily due to expanded shipping options and lowered shipping costs.

Working with several different third-party FedEx vendors has allowed us to provide competitive shipping prices across a wider range of

shipment sizes and weights compared to working only with FedEx directly.

Although revenue increased by $7.0 million during this period,

the Company was unable to generate profit from warehouse-related expenditures.

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 and

nine months ended March 31, 2025 and 2024:

March 31, 2025

March 31, 2024

March 31, 2025

March 31, 2024

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

ended September 30, 2025 and 2024:

September 30,

Office expenses

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Other expenses

Credit loss expenses (recovery)

Three Months Ended March 31, 2025 and

Our general and administrative expenses increased

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

Credit loss expenses

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 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 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.

by $0.5 million, from $3.7 million for the three months ended September 30, 2024 to $4.2 million for the same

period in 2025, representing an increase of 14.9%.

The increase was due to the following factors:

Rental expenses increased by $0.5 million, or 462.7%.

The increase is mainly due to the reclassification

of abnormal capacity portion of new warehouses (EWS1 and ONT1) from cost to general and administrative expenses.

Repairs and maintenance expenses increased by $0.4 million, or 107.9%,

as a result of the growth in our transportation services.

Salary and benefits decreased by $0.3 million, or 28.9%, mainly due to the Company being overcharged

for workers’ comp insurance in the three months ended September 30, 2024, which was refunded in December 2024.

Our income tax recovery decreased by $1.4 million

for the three months ended September 30, 2025 compared to the same period in 2024, mainly due to the non-recurring reversal

of previously recognized deferred tax liabilities during the three months ended September 30, 2024.

As a result of the foregoing, our net loss for

the three months ended September 30, 2025 was $6.5 million, compared with $4.6 million for the same period in 2024,

representing an increase in net loss by $1.9 million.

Liquidity and Capital Resources

Going Concern

These financial statements have been

prepared on a going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities

in the normal course of business.

The Company incurred a net loss of $6.5 million during the three months ended September 30, 2025

and as of that date, had a net current liability of $11.1 million.

Without additional financing, the Company may not be able to fund

its ongoing operations.

The Company is expanding its service offerings to new customers, optimizing warehouse utilization, and

developing higher-margin logistics solutions to improve profitability and cash generation.

Management is executing a cost

optimization plan, including delaying certain non-essential capital expenditures, reducing third-party service costs, and improving

operational efficiency across warehouse operations to preserve cash flow.

In addition, the Company is in discussions with several

financial institutions and investors to secure additional credit facilities and other forms of financing to strengthen working

There is no assurance that the Company will be able to obtain financings or obtain them on favorable terms.

uncertainties may cast significant doubt on the Company’s ability to continue as a going concern.

The Company will need to

raise sufficient working capital to maintain operations.

These financial statements do not include any adjustments related to the

recoverability of assets and classification of liabilities that might be necessary should the Company be unable to continue as a

going concern.

Such adjustments could be material.

In assessing our liquidity, management monitors

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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 proceeds from the Convertible Note.

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.

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 Nine Months Ended March

31, 2025 and 2024

March 31, 2025

March 31, 2024

Net cash (used in) provided by operating activities

Net cash used in investing activities

Net cash provided by financing activities

Net increase (decrease) in cash and restricted cash

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

$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:

and capital contributions from stockholders.

As of September 30, 2025 and June 30, 2025, we had cash and cash equivalents and restricted

cash of $10.8 million and $13.6 million, respectively, which primarily consisted of cash deposited in banks.

Our working capital requirements mainly consist of costs of services

and general and administrative expenses.

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

and financing activities.

We 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, 2025 and 2024

September 30,

Net cash used in operating activities

Net cash provided by (used in) investing activities

Net cash used in financing activities

Net decrease in cash and cash equivalents and restricted cash

Cash and cash equivalents and restricted cash at beginning of

Cash and cash equivalents and restricted cash at end of the

We had a balance of cash and cash equivalents

and restricted cash of $10.8 million as of September 30, 2025, compared with a balance of $13.6 million as of June 30, 2025.

During the three months ended September 30, 2025, changes in our cashflow were mainly due to the following activities:

Operating Activities

Net cash used in operating activities was

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.

The decrease was

$1.9 million for the three months ended September 30, 2025, compared to net cash used in operating activities of $3.6 million

for the same period in 2024, representing a $1.7 million increase in the net cash inflow from operating activities.

The increase was

primarily due to the following:

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.

We had net loss of $6.5 million for the three months ended

September 30, 2025.

For the three months ended September 30, 2024, we had net loss of $4.6 million, which led to a $1.9 million

decrease in net cash inflow from operating activities.

Changes in accounts receivable and other receivables were $3.8 million

cash inflow for the three months ended September 30, 2025.

For the three months ended September 30, 2024, changes in accounts

receivable and other receivables were $0.2 million cash inflow, which led to a $3.6 million increase in net cash inflow

from operating activities.

Changes in accounts payable and accrued liabilities used $1.6 million

net cash outflow for the three months ended September 30, 2025.

For the three months ended September 30, 2024, changes

in accounts payable and accrued liabilities provided net cash outflow of $1.9 million, which led to a $0.4 million increase

in net cash inflow from operating activities.

Changes in non-cash items provided $2.5 million net cash inflow

for the three months ended September 30, 2025.

For the three months ended September 30, 2024, changes in non-cash items

provided net cash inflow of $2.0 million, which led to a $0.5 million increase in net cash inflow from operating activities.

Investing Activities

Net cash used in investing activities was $1.5 million

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 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

and equipment and $1.6 million used for loans extended to others.

Net cash provided by investing activities was

$1.3 million for the three months ended September 30, 2025, primarily attributable to $0.06 million cash used for the purchase

of property and equipment, $2.4 million cash used for loans extended to others, and $3.7 million proceeds received from loan repayments.

For the three months ended September 30,

2024, net cash used in investing activities was $1.3 million, 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.

Financing Activities

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;

and (iv) $0.5 million

in capital contributions from stockholders.

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 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.

For the three months ended September 30,

2025, we had net cash used in financing activities of $2.1 million, which was primarily attributable to the $0.1 million used to

repay finance lease liabilities and $2.02 million used to repay convertible notes.

For the three months ended September 30,

2024, we had net cash used in financing activities of $0.04 million, which was primarily attributable to the net effects of $0.04 million

used to repay finance lease liabilities.

Commitments and Contractual Obligations

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:

As of September 30, 2025, we had operating and

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

Lease terms expire at various dates through October 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 September 30, 2025, maturities of lease

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

2030 and beyond

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Non-current portion

Other than the above leases, we did not have significant

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

Other than the above leases, we did not have

significant commitments, long-term obligations, or guarantees as of September 30, 2025.

Off-balance Sheet Commitments and Arrangements

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

sheet financing arrangements as defined under the rules and regulations of the SEC, or any relationships with unconsolidated entities

or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities, that were established

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

As of March 31, 2025,

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

Other than two standby letters of credit with Eastwest Bank in the

aggregate amount of $4,391,165, we did not have during the period presented, and we do not currently have, any off-balance sheet financing

arrangements as defined under the rules and regulations of the SEC, or any relationships with unconsolidated entities or financial partnerships,

including entities sometimes referred to as structured finance or special purpose entities, that were established for the purpose of facilitating

off-balance sheet arrangements or other contractually narrow or limited purposes.

As of September 30, 2025, we still have an unused line

of credit of $4,391,165 with Eastwest Bank.

Critical Accounting Policies and Estimates

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judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.

Actual outcomes could differ

materially from those estimates in a manner that could have a material effect on our consolidated financial statements.

Actual outcomes could

differ materially from those estimates in a manner that could have a material effect on our consolidated financial statements.

Despite that management determines that there

are no critical accounting estimates, the one that requires relatively significant estimates relates to useful lives of property and equipment.

Property and equipment are recorded at cost, less

accumulated depreciation and impairment.

The estimation of useful lives impacts the level of annual depreciation expenses recorded and

the estimation is a matter of judgment based on the experience of our Company and general industry practice with similar assets.

The estimated

annual deprecation rates of our property and equipment are generally as follows:

Depreciation method

Depreciation rate

Furniture and fixtures

Straight-line

Auto & trucks

Straight-line

Trailers & truck chassis

Straight-line

15 – 17 years

Machinery & equipment

Straight-line

Leasehold improvements

Straight-line

Shorter of lease term or 15 years

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 $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 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

described in Note 2 — Summary of Significant Accounting Policies” in the notes to our unaudited consolidated financial

are no critical accounting estimates, the one that requires relatively significant estimates relates to useful lives of property and

equipment, allowance for credit losses for accounts receivable and other receivables, and loan receivables.

Our significant accounting policies are more

fully described in Note 2 — Summary of Significant Accounting Policies” in the notes to our unaudited consolidated

financial statements.

We believe that there were no critical accounting policies that affected the preparation of such financial statements.

Quantitative and Qualitative Disclosures

About Market Risk .

Quantitative and

Qualitative Disclosures About Market Risk .

As a smaller reporting company, we are not required

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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