Annual Report for Fiscal Year Ending June 30, 2025 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes included elsewhere in this filing.

Overview

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.

With the boom of e-commerce and Internet technology, along with the development of global supply chains, a growing number of merchants are seeking to sell their products through international e-commerce platforms, such as Amazon and eBay. These merchants, however, are confronted with major logistical challenges because of the 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 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 services to cross-border e-commerce merchants outside the U.S. who seek to sell in the U.S. market. We currently operate 10 warehouses across the country, with an aggregate gross floor area of approximately 3,905,020 square feet. Aside from a nationwide footprint and large storage space, our warehouses are equipped with automated sorting systems, heavy-duty forklifts, and pallets and trays that are suitable for processing bulky items. As a one-stop warehousing and logistics service provider, we offer a full spectrum of services, including (i) customs brokerage services; (ii) transportation of merchandise to U.S. warehouses; and (iii) warehouse management and order fulfillment services, which further include (a) product storage and retrieval, (b) product packing and labeling, (c) kitting and repackaging, (d) order assembly and load consolidation, (e) inventory management and sales forecasting, (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. In general, the warehousing and logistics services we provide to our domestic customers 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 June 30, 2025 and 2024, we had an active base of 505 and 105 customers, respectively, for our warehousing and logistics services.

We have experienced rapid growth since our inception. For the fiscal years ended June 30, 2025 and 2024, we had total revenue of $190.4 million, and $167.0 million, respectively, and net loss of $15.3 million, and net income of $7.4 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 fiscal years ended June 30, 2025 and 2024, we generated approximately 84% and 96% of our revenue from PRC-based customers, respectively. See "Item 1A. Risk Factors - Economic, Political, and Market Risks - China's economic, political, and social conditions, as well as governmental policies, could affect the business environment and economic conditions in China, which may result in an adverse impact on the demand for our services, potentially harming our financial condition and operating results."

Key Factors Affecting Our Results of Operations

We believe the following key factors may affect our financial condition and results of operations.

Supportive Cross-Border E-Commerce Business Environment and Platform Policies that Facilitate Sales by PRC E-Commerce Merchants into the U.S. Market

The majority of our customers consist of PRC e-commerce merchants who sell their merchandise into the U.S. market through e-commerce platforms. As such, our ability to acquire and maintain new or existing customers for our warehousing and logistics services is heavily reliant on their continued willingness to conduct cross-border e-commerce businesses, which may be significantly impacted by policies set by e-commerce platforms. For example, in early 2021, Amazon, the world's largest e-commerce platform, claimed that it had suspended the accounts of over 50,000 Chinese sellers for improper use of review functions. Specifically, instead of earning favorable reviews through high-quality products, those PRC sellers manipulated reviews by paying for positive product reviews or by giving away gift cards, which violated Amazon's terms of service. It is estimated that the 50,000 affected accounts caused approximately RMB100 billion in losses for the cross-border e-commerce industry in the PRC, which has discouraged a growing number of PRC e-commerce sellers from selling their merchandise in the U.S. via Amazon. There is no guarantee that our current or future international customers are fully compliant with the terms of service of all the international e-commerce platforms they use, including Amazon, or that those e-commerce platforms will not from time to time initiate such a widespread suspension of PRC sellers in the future. Such a crackdown on PRC sellers may significantly reduce the number of Chinese e-commerce sellers who intend to sell in the U.S., who are our primary customers. The loss of our PRC customer base due to the widespread suspension of PRC sellers in the cross-border e-commerce industry could be detrimental to our ongoing operations. See "Item 1A. Risk factors - Operational Risks - The suspension of PRC sellers on using international e-commerce platforms, such as the crackdown on PRC sellers by Amazon in early 2021, has discouraged and may continue to discourage a growing number of PRC e-commerce sellers from selling their merchandise to the United States, thus adversely affecting our business, financial condition, and results of operations."

Our Ability to Maintain Our Major Customers

During the fiscal years ended June 30, 2025 and 2024, our five largest customers accounted for approximately 55.1% and 53.0% of our total revenue, respectively. While we strive to maintain our competitive strengths, such as our quality warehousing and logistics services, competitive pricing, and quality customer services (see "Item 1. Business - Our Competitive Strengths") to maintain our customer base, there is no guarantee that we will continue to maintain our business relationships with these major customers at the same level, or at all. In the event that a significant customer terminates its relationship with us, there is no assurance that we will be able to secure an alternative arrangement with another comparable customer in a timely manner, or at all. Losing one or more of these major customers could adversely affect our revenue and profitability. See "Item 1A. Risk Factors - Operational Risks - Our largest customers generate a significant portion of our revenue and our business may rely on two suppliers that account for more than 10% of our total purchases, and interruption in operations of such significant customers or supplier may have an adverse effect on our business, financial condition, and results of operations."

Our Ability to Effectively Develop and Expand our Labor Force

Our ability to increase our customer base and achieve broader market acceptance will depend to a significant extent on our ability to expand our sales, marketing, and support operations, as well as our ability to recruit and retain talented personnel. We plan to continue expanding our labor force in these areas of the business and engaging additional partners. This expansion will require us to invest significant financial and other resources to attract and retain a skilled workforce. Our business will be harmed if we are unable to hire, develop, and retain skilled and qualified personnel, if our new personnel are unable to achieve desired productivity levels in a reasonable period of time, or if we are unable to retain our existing personnel.

Results of Operations

The following table outlines our consolidated statements of operations for the fiscal years ended June 30, 2025 and 2024:

		Year Ended June 30, 2025				Year Ended June 30, 2024
		US$				US$
Revenue			190,408,258				166,977,034
Costs of service			193,408,827				148,894,227
Gross (loss) profit			(3,000,569	)			18,082,807
Operating costs and expenses:
General and administrative			14,675,543				9,967,792
Total operating costs and expenses			14,675,543				9,967,792
(Loss) Income from operations			(17,676,112	)			8,115,015
Other (income) expenses:
Other income, net			(2,714,344	)			(2,320,257	)
Loss on debt extinguishment			1,192,431				-
Loss on disposal of assets			43,625				-
Finance costs			714,352				47,649
Total other (income) expenses			(763,936	)			(2,272,608	)
(Loss) Income before provision for income taxes			(16,912,176	)			10,387,623
Current income tax expense (recovery)			(26,954	)			2,145,072
Deferred income tax expense (recovery)			(1,536,455	)			801,333
Total income tax expenses (recovery)			(1,563,409	)			2,946,405
Net (loss) income			(15,348,767	)			7,441,218
Total comprehensive (loss) income			(15,348,767	)			7,441,218
Basic & diluted net earnings per share			(0.37	)			0.19
Weighted average number of shares of common stock-basic			41,808,909				40,205,836
Weighted average number of shares of common stock-diluted			41,808,909				40,216,109

The following table sets forth our revenue for the fiscal years ended June 30, 2025 and 2024:

		Year Ended June 30, 2025				Year Ended June 30, 2024
		US$				US$
Revenue			190,408,258				166,977,034
Cost of service			193,408,827				148,894,227
Gross profit (loss)			(3,000,569	)			18,082,807
Gross profit (loss) margin %			-1.6	%			10.8	%

The following table outlines the compositions of our revenue streams:

		Year Ended June 30, 2025				Year Ended June 30, 2024
		US$				US$
Transportation services			127,013,393				115,323,654
Warehousing services			63,285,107				51,502,358
Other services			109,758				151,022
Total			190,408,258				166,977,034

Our revenue increased by $23.4 million, or 14.0%, to $190.4 million during the fiscal year ended June 30, 2025, compared to $167.0 million for the fiscal year ended June 30, 2024. The increase was due to the following factors:

1)

Revenue from our transportation services increased by $11.7 million, or 10.1%, due to due to the addition of new warehouse locations, which resulted in an increase in shipment volume in the fiscal year ended June 30, 2025 compared to the fiscal year ended June 30, 2024.

2)

Revenue from our warehousing services increased by $11.8 million, or 22.9% in the fiscal year ended June 30 2025, compared to the fiscal year ended June 30, 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.

3)

Revenue from other services decreased by $0.04 million, or 27.3% in the fiscal year ended June 30 2025, compared to the fiscal year ended June 30, 2024. Other revenue mainly consisted of revenue from our customs brokerage services.

Our cost of service 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. Cost of service increased by $44.5 million, or 29.9%, during the fiscal year ended June 30, 2025, compared with the fiscal year ended June 30, 2024. The increase was primarily driven by the following two factors:

i.

In the fiscal year ended June 30, 2025, the Company expanded its operations with the opening of two new warehouses, in addition to a new warehouse in the State of Illinois which was launched at the end of the fiscal year 2024. Unlike prior expansions, which benefited from shifting personnel from nearby existing locations, these new facilities required incremental labor hiring. Furthermore, the type of orders fulfilled at the two new warehouses are not the traditional drop-shipping model and typically carry lower profit margins. These dynamics resulted in a notable increase in warehouse labor, rental, and other related operating expenses.

ii.

Freight costs rose significantly due to changes in carrier economics. The Company's gross profit margin on FedEx shipments declined from 23% in fiscal 2024 to 7% in fiscal 2025, largely driven by FedEx rate increases tied to tariffs and broader economic conditions. To mitigate this impact, management transitioned part of the freight volume to UPS. While UPS has provided a more stable cost structure, its current gross margin of 6% remains well below the 23% margin previously achieved with FedEx. This shift has partially cushioned the impact but continues to place downward pressure on freight profitability in the near term.

The following table sets forth a breakdown of our cost of service for the fiscal years ended June 30, 2025 and 2024:

		Year Ended June 30, 2025				Year Ended June 30, 2024
		US$				US$
Amortization			38,081				35,317
Depreciation			2,725,602				1,683,436
Rental expenses			38,290,217				30,421,614
Freight expenses			113,167,867				89,506,874
Port handling and customs fees			518,962				266,784
Salary and benefits			10,210,118				7,553,353
Temporary labor expenses			17,451,331				12,657,528
Warehouse expenses			9,491,473				5,705,059
Utilities			933,045				547,587
Other expenses			582,131				516,675
Total			193,408,827				148,894,227

Our rental expenses (primarily warehouse operating lease expenses), freight expenses, temporary labor expenses, and salary and benefits increased significantly by $7.9 million, $23.7 million, $4.8 million, and $2.7 million, respectively, in the fiscal year ended June 30, 2025 compared to the fiscal year ended June 30, 2024. The increases in lease expenses were due to the additional operating leases acquired during the year. 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 10.8% for the fiscal year ended June 30, 2024 to -1.6% for the fiscal year ended June 30, 2025, primarily due to the increase in lease expenses, temporary labor expenses for new warehouses, and UPS expenses. This decline is attributable to increases in the rental expenses, freight expenses, salary and benefits, temporary labor expenses, and warehouse expenses of approximately 25.9%, 26.4%, 35.2%, 37.9%, and 66.4%, respectively, despite a relatively modest increase in warehousing services revenue of approximately 22.9%.

Operating expenses

Our operating expenses consist primarily of general and administrative expenses. The following table sets forth a breakdown of our general and administrative expenses for the fiscal years ended June 30, 2025 and 2024:

		Year Ended June 30, 2025				Year Ended June 30, 2024
		US$				US$
Bank charges			162,657				99,850
Amortization			206,391				313,283
Office expenses			3,221,531				2,441,784
Professional fees			2,418,727				447,955
Rental expenses			2,646,508				427,014
Repairs and maintenance			1,251,729				1,130,378
Salary and benefits			3,646,361				4,312,408
Sundries			311,952				255,739
Tax and licenses			186,144				149,321
Vehicle expenses			187,194				180,378
Other expenses			160,739				114,988
Credit loss expenses			275,610				94,694
Total			14,675,543				9,967,792

Our general and administrative expenses increased by $4.7 million, from $10.0 million for the fiscal year ended June 30, 2024 to $14.7 million for the fiscal year ended June 30, 2025, representing an increase of 47.2%. The increase was due to the following factors:

1)

Office expenses increased by $0.8 million, or 31.9%, mainly due to an increase in truck insurance and general office expense associated with the rapid expansion of our business.

2)

Rental expenses increased by $2.2 million, or 519.8%, mainly due to additional warehouses rented in 2025 and a higher amount of lease expense was allocated to 2025.

3)

Professional fees increased by $2.0 million, or 439.9%, mainly due to the fees for the consulting services of two investment financial advisors and audit fees.

Income Tax

Our California subsidiaries are subject to the current California state corporate income tax at a rate of 8.84% and federal income tax at a flat rate of 21%.

The following table sets forth a breakdown of our income tax expense:

		Year Ended June 30, 2025				Year Ended June 30, 2024
		US$				US$
Current income tax (recovery) expense			(26,954	)			2,145,072
Deferred income tax (recovery) expense			(1,536,455	)			801,333
Total income tax (recovery) expenses			(1,563,409	)			2,946,405

Our income tax expense decreased by $4.5 million in the fiscal year ended June 30, 2025, mainly due to the decrease in profit before tax by $27.3 million in the fiscal year 2025, compared to the fiscal year 2024.

Net income

As a result of the foregoing, our net loss for the fiscal year ended June 30, 2025 was $15.3 million, compared with the net income of $7.4 million for the fiscal year ended June 30, 2024, representing a decrease by $22.8 million.

Liquidity and Capital Resources

In assessing our liquidity, management monitors and analyzes our cash on-hand, our ability to generate sufficient revenue sources in the future, and our operating and capital expenditure commitments. As of the date of this annual report, we have financed our operations primarily through cash generated by operating activities, equity financing, debt financing from third parties and capital contributions from stockholders. As of June 30, 2025 and 2024, we had cash and cash equivalents and restricted cash of $13.6 million and $10.0 million, respectively, which primarily consisted of cash deposited in banks.

Our working capital requirements mainly consist of cost of service 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 a Standby Equity Purchase Agreement (the "SEPA") with YA II PN, Ltd. (the "Investor"), pursuant to which we have the right to sell to the Investor up to $50.0 million (the "Commitment Amount") of our shares of common stock, subject to certain limitations and conditions set forth in the SEPA, from time to time during the term of the SEPA. In connection with the SEPA, and subject to the conditions set forth therein, the Investor agreed to advance to the Company pursuant to certain convertible promissory notes (the "Convertible Notes") an aggregate principal amount of up to $21.0 million (the "Pre-Paid Advance"), subject to a 10% original issue discount. We believe that our current cash and cash generated from our operating and 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 Fiscal Years Ended June 30, 2025 and 2024

		Year Ended June 30, 2025				Year Ended June 30, 2024
		US$				US$
Net cash provided by operating activities			1,460,845				2,992,889
Net cash used in investing activities			(1,805,223	)			(7,437,605	)
Net cash provided by financing activities			3,971,821				7,837,001
Net increase in cash and cash equivalents and restricted cash			3,627,443				3,392,285
Cash and cash equivalents and restricted cash at beginning of year			9,950,384				6,558,099
Cash and cash equivalents and restricted cash at end of year			13,577,827				9,950,384

We had a balance of cash and cash equivalents and restricted cash of $13.6 million as of June 30, 2025, compared with a balance of $10.0 million as of June 30, 2024. During the fiscal years ended June 30, 2025 and 2024, we mainly derived our cash inflow from operating and financing activities.

Operating Activities

Net cash provided by operating activities was $1.5 million for the fiscal year ended June 30, 2025, compared to net cash provided by operating activities of $3.0 million for the fiscal year ended June 30, 2024, representing a $1.5 million decrease in the net cash inflow provided by operating activities. The decrease was primarily due to the following:

(i)

We had net loss of $15.3 million for the fiscal year ended June 30, 2025. For the fiscal year ended June 30, 2024, we had net income of $7.4 million, which led to a $22.8 million decrease in net cash inflow from operating activities.

(ii)

Changes in accounts receivable and other receivables were $3.0 million cash inflow for the fiscal year ended June 30, 2025. For the fiscal year ended June 30, 2024, changes in accounts receivable and other receivables were $8.2 million cash outflow, which led to a $11.1 million decrease in net cash outflow from operating activities.

(iii)

Changes in accounts payable and accrued liabilities were $2.1 million net cash inflow for the fiscal year ended June 30, 2025. For the fiscal year ended June 30, 2024, changes in accounts payable and accrued liabilities were net cash outflow of $0.7 million, which led to a $2.8 million decrease in net cash outflow from operating activities.

(iv)

Changes in tax payable were $0.1 million net cash outflow for the fiscal year ended June 30, 2025. For the fiscal year ended June 30, 2024, changes in tax payable were net cash outflow of $2.6 million, which led to a $2.5 million decrease in net cash outflow from operating activities.

(v)

Changes in non-cash items provided $11.0 million net cash inflow for the fiscal year ended June 30, 2025. For the fiscal year ended June 30, 2024, changes in non-cash items provided net cash inflow of $8.0 million, which led to a $2.9 million increase in net cash inflow from operating activities.

Investing Activities

Net cash used in investing activities was $1.8 million for the fiscal year ended June 30, 2025, primarily attributable to $2.9 million cash used for the purchase of property and equipment, and net of $1.0 million cash used for loans extended to others, and $2.0 million proceeds received from loan repayments.

For the fiscal year ended June 30, 2024, net cash used in investing activities was $7.4 million, primarily attributable to $5.2 million cash used for purchase of property and equipment and $2.2 million used for loans extended to others.

Financing Activities

For the fiscal year ended June 30, 2025, we had net cash provided by financing activities of $4.0 million, which was primarily attributable to the net effects of: (i) $8.1 million of net proceeds convertible notes; (ii) $0.4 million of loans advanced to related parties; (iii) $3.4 million used for the repayment of convertible notes and commitment fees payable; and (iv) $0.4 million used to repay finance lease liabilities.

For the fiscal year ended June 30, 2024, we had net cash provided by financing activities of $7.8 million, which was primarily attributable to the net effects of: (i) $7.5 million collected from our initial public offering; (ii) $0.5 million collected from related parties for the repayment of loans we previously advanced to them; (iii) $1.0 million used for expenses relating to the initial public offering; (iv) $0.2 million used to repay finance lease liabilities; and (v) $1.0 million in capital contributions from stockholders.

Commitments and Contractual Obligations

As of June 30, 2025, we had operating and finance leases for office space, warehouse space, and forklifts. Lease terms expire at various dates through July 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 right-of-use assets or lease liabilities, as there is no reasonable certainty, as of the date of this annual report, that these options will be exercised.

As of June 30, 2025, aggregate annual lease obligations for each of the following fiscal years ending June 30 and thereafter were as follows:

		Operating				Finance
		US$				US$
2026			31,110,870				432,301
2027			36,578,138				312,731
2028			37,872,441				77,669
2029			25,804,167				67,226
2030 and beyond			39,734,608				-
Total minimum lease payment			171,100,224				889,927
Less: imputed interest			(42,879,765	)			(105,908	)
Total lease liabilities			128,220,459				784,019
Less: current potion			(29,280,907	)			(386,327	)
Non-current portion			98,939,552				397,692

As of June 30, 2025, our significant contractual obligations also include Convertible Notes arising from the SEPA entered into by the Company in November 2024 with a principal balance of $10.0 million. Pursuant to the SEPA, the Company has the right to sell to the Investor up to the Commitment Amount of the Company's shares of common stock, subject to certain limitations and conditions set forth in the SEPA, from time to time during the term of the SEPA.

Unless converted into our shares of common stock prior to their maturity, we are obligated to repay Convertible Notes in cash.

The following table summarizes our future contractual obligations related to the Convertible Notes as of June 30, 2025:

		US$
Less than 1 year			2,020,000
1-3 years			3,800,000
Total			5,820,000

Other than the above leases and the Convertible Notes, we did not have significant commitments, long-term obligations, or guarantees as of June 30, 2025.

Off-balance Sheet Commitments and Arrangements

Other than six standby letters of credit with Eastwest Bank in the aggregate amount of $4,387,550, 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 June 30, 2025, we still had unused credit of $4,387,550 with Eastwest Bank.

Critical Accounting Policies and Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, contingent assets and liabilities, each as of the date of this annual report, and revenue and expenses during the periods presented. On an ongoing basis, management evaluates their estimates and assumptions, and the effects of any such revisions are reflected in the financial statements in the period in which they are determined to be necessary. Management bases their estimates on historical experience and on various other factors that they believe are reasonable under the circumstances, the results of which form the basis for making 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.

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:

Category		Depreciation method		Depreciation rate
Furniture and fixtures		Straight-line		7 years
Auto & trucks		Straight-line		5 - 8 years
Trailers & truck chassis		Straight-line		5 - 17 years
Machinery & equipment		Straight-line		2 - 7 years
Leasehold improvements		Straight-line		Shorter of lease term or 15 years

As of June 30, 2025 and 2024, the historical cost of property and equipment was $17,532,767 and $14,773,842, respectively.

We recorded depreciation expenses of $2,555,625 and $1,827,231 during the fiscal years ended June 30, 2025 and 2024, respectively. Specifically, $2,349,234 and $1,513,947 of the depreciation expenses were recorded in cost of service for the fiscal years ended June 30, 2025 and 2024, respectively. $206,391 and $313,284 of the depreciation expenses were recorded in general and administrative expenses for the fiscal years ended June 30, 2025 and 2024, respectively.

While our significant accounting policies are more fully described in Note 2 - Summary of Significant Accounting Policies" in the notes to our consolidated financial statements, we believe that there were no critical accounting policies that affected the preparation of financial statements.