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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended February 29, 2024

 

or

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _________ to _________

 

Commission file number: 000-50612

 

UNIQUE LOGISTICS INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

 

Nevada   01-0721929

(State or other jurisdiction

of incorporation or organization)

 

(I.R.S. Employer

Identification No.)

     

154-09 146th Ave, Jamaica, NY

  11434
(Address of principal executive offices)   (Zip Code)

 

678-365-6004

(Registrant’s telephone number, including area code)

 

Securities registered under Section 12(b) of the Act:

 

Title of each class   Trading symbol(s)   Name of exchange on which registered
None   None   None

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer Accelerated filer
       
Non-accelerated filer Smaller reporting company
       
    Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act: ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

 

As of May 2, 2024, there were 799,141,770 shares of the registrant’s common stock outstanding.

 

 

 

 
 

 

UNIQUE LOGISTICS INTERNATIONAL, INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED FEBRUARY 29, 2024

 

TABLE OF CONTENTS

 

  Page
   
PART I. FINANCIAL INFORMATION F-1
     
ITEM 1. Financial Statements F-1
     
  Condensed Consolidated Balance Sheets as of February 29, 2024 (unaudited) and May 31, 2023 F-1
     
  Condensed Consolidated Statements of Operations for the Three and Nine Months ended February 29, 2024 and February 28, 2023 (unaudited) F-2
     
  Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Nine Months ended February 29, 2024 and February 28, 2023 (unaudited) F-4
     
  Condensed Consolidated Statements of Cash Flows for the Nine Months ended February 29, 2024 and February 28, 2023 (unaudited) F-5
     
  Notes to Condensed Consolidated Financial Statements (unaudited) F-6
     
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 3
     
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk 13
     
ITEM 4. Controls and Procedures 13
     
PART II. OTHER INFORMATION 14
     
ITEM 1. Legal Proceedings 14
     
ITEM 1A. Risk Factors 14
     
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 14
     
ITEM 3. Defaults Upon Senior Securities 14
     
ITEM 4. Mine Safety Disclosures 14
     
ITEM 5. Other Information 14
     
ITEM 6. Exhibits 15
     
SIGNATURES 16

 

2
 

 

PART I - FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

UNIQUE LOGISTICS INTERNATIONAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

   February 29, 2024   May 31, 2023 
   (Unaudited)   (Audited) 
         
ASSETS          
Current Assets:          
Cash and cash equivalents  $6,743,144   $6,744,238 
Accounts receivable, net   42,059,013    41,402,435 
Contract assets   3,047,570    2,886,779 
Other current assets and prepaids   5,374,732    9,293,533 
Total current assets   57,224,459    60,326,985 
           
Property and equipment, net   822,230    609,785 
           
Other noncurrent assets:          
Goodwill   20,516,018    20,516,018 
Intangible assets, net   11,571,589    12,865,093 
Equity-method investments   3,449,163    3,381,683 
Operating lease right-of-use assets, net   9,395,501    10,269,516 
Deferred tax asset, net   

1,978,178

    

-

 
Deferred offering cost   -    2,419,976 
Other noncurrent assets   670,707    1,133,674 
Total other noncurrent assets   47,581,156    50,585,960 
Total assets  $105,627,845   $111,522,730 
           
Liabilities and Stockholders’ Equity          
Current Liabilities:          
Accounts payable  $27,712,571   $25,132,388 
Accrued expenses and current liabilities   6,372,823    8,594,947 
Accrued freight   2,225,313    3,489,957 
Revolving credit facility   11,852,663    8,050,227 
Current portion of notes payable   971,081    - 
Current portion of notes payable to related parties   150,655    4,801,310 
Current portion of operating lease liability   2,676,904    2,379,774 
Total current liabilities   51,962,010    52,448,603 
           
Noncurrent liabilities          
Notes payable   11,028,919    4,000,000 
Notes payable to related parties, net of current portion   10,100,000    8,750,000 
Operating lease liability, net of current portion   7,194,929    8,212,445 
Derivative liabilities   7,439,695    11,558,261 
Deferred tax liability, net   -    4,405,442 
Other noncurrent liabilities   11,558,135    4,552,346 
Total noncurrent liabilities   47,321,678    41,478,494 
           
Total liabilities   99,283,688    93,927,097 
           
Commitments and contingencies (Note 6)   -    - 
           
Stockholders’ Equity:          
Preferred Stock, $.001 par value: 5,000,000 shares authorized          
           
Series A Convertible Preferred stock, $0.001 par value; 120,065 issued and outstanding as of February 29, 2024 and May 31, 2023, respectively. Liquidation preference $120 on February 29, 2024   120    120 
Series B Convertible Preferred stock, $0.001 par value; 820,800 issued and outstanding as of February 29, 2024 and May 31, 2023, respectively. Liquidation preference of $821 on February 29, 2024   821    821 
Series C Convertible Preferred stock, $0.001 par value; 195, issued and outstanding as of February 29, 2024 and May 31, 2023, respectively. Liquidation preference $7.6 million on February 29, 2024   -    - 
Series D Convertible Preferred stock, $0.001 par value; 180 issued and outstanding as of February 29, 2024 and May 31, 2023, respectively. Liquidation preference $7.1 million on February 29, 2024   -    - 
           
Common stock, $0.001 par value; 800,000,000 shares authorized; 799,141,770 shares issued and outstanding as of February 29, 2024 and May 31, 2023, respectively.   799,142    799,142 
Additional paid-in capital   180,220    180,220 
Accumulated other comprehensive income   (218,547)   3,258 
Retained earnings   1,976,325    13,066,109 
Total Stockholders’ Equity attributable to common shareholder   2,738,081    14,049,670 
Equity attributable to noncontrolling interests   3,606,076    3,545,963 
Total Stockholders’ Equity   6,344,157    17,595,633 
Total Liabilities and Stockholders’ Equity  $105,627,845   $111,522,730 

 

See notes accompanying condensed consolidated financial statements.

 

F-1
 

 

UNIQUE LOGISTICS INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATION

(Unaudited)

 

  

For the

Three Months Ended

February 29, 2024

  

For the

Three Months Ended

February 28, 2023

  

For the

Nine Months Ended

February 29, 2024

  

For the

Nine Months Ended

February 28, 2023

 
Revenues:                    
Airfreight services  $31,672,402   $13,206,112   $87,102,162   $64,721,816 
Ocean freight and ocean services   27,543,642    23,106,949    74,933,392    159,292,026 
Contract logistics   579,675    755,034    1,892,954    2,499,459 
Customs brokerage and other services   8,034,666    12,559,407    28,612,414    48,460,306 
Total revenues   67,830,385    49,627,502    192,540,922    274,973,607 
                     
Equity method earnings   224,854    -    675,606    - 
                     
Costs and operating expenses:                    
Airfreight services   29,076,358    11,964,314    81,374,442    59,465,104 
Ocean freight and ocean services   23,999,410    19,722,259    62,964,504    142,806,034 
Contract logistics   126,523    215,245    507,326    846,226 
Customs brokerage and other services   6,346,786    11,397,398    24,263,573    44,773,324 
Salaries and related costs   5,529,773    3,076,221    17,293,553    10,036,200 
Professional fees   666,850    39,082    2,299,312    1,213,807 
Rent and occupancy   1,176,612    883,681    3,382,602    2,026,363 
Selling and promotion   609,751    1,471,236    1,888,439    2,033,668 
Depreciation and amortization   752,750    203,390    2,203,093    606,030 
Foreign exchange transactions, net   26,858    -    (267,209)   - 
Other   282,871    323,747    948,402    993,508 
Total costs and operating expenses   68,594,542    49,296,573    196,858,037    264,800,264 
                     
(Loss) income from operations   (539,303)   330,929    (3,641,509)   10,173,343 
                     
Other (expenses) income                    
Interest expense   (1,407,449)   (546,791)   (3,823,822)   (2,876,776)
Change in fair value of derivative liabilities   4,300,429    64,955    4,118,566     809,611 
SPAC merger termination cost   (10,415,816)   -    (10,415,816)   - 
Uplist termination cost   (3,054,514)   -    (3,054,514)   - 
Total other (expenses) income   (10,577,350)   (481,836)   (13,175,586)   (2,067,165)
                     
Net (loss) income before income taxes   (11,116,653)   (150,907)   (16,817,095)   8,106,178 
                     
Income tax (benefit) expense   (5,268,793)   (814,080)   (5,787,424)   849,967 
                     
Net (loss) income   (5,847,860)   663,173    (11,029,671)   7,256,211 
                     
Noncontrolling interest   (114,538)   -    (60,113)   - 
                     
Net (loss) income attributable to for common shareholders  $(5,962,398)  $663,173   $(11,089,784)  $7,256,211 
                     
Net (loss) income available for common shareholders per common share                    
– basic  $(0.01)  $-   $(0.01)  $0.01 
– diluted  $(0.01)  $-   $(0.01)  $- 
                     
Weighted average common shares outstanding                    
– basic   799,141,770    799,141,770    799,141,770    780,768,778 
– diluted   

799,141,770

    9,677,967,424    799,141,770    9,659,594,432 

 

See notes to accompanying condensed consolidated financial statements.

 

F-2
 

 

UNIQUE LOGISTICS INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)

 

   For the Three   For the Three 
   Months Ended   Months Ended 
   February 29, 2024   February 28, 2023 
Net (loss) income  $(5,847,860)  $663,173 
Other comprehensive income (OCI), net of tax:          
Foreign currency translation adjustments   21,432    - 
OCI tax effect   -    - 
Total comprehensive (loss) income   (5,826,428)   663,173 
Net loss attributable to noncontrolling interest   114,538    - 
Comprehensive (loss) income attributable to common shareholder  $(5,940,966)  $663,173 

 

   For the Nine   For the Nine 
   Months Ended   Months Ended 
   February 28, 2023   February 28, 2023 
Net (loss) income  $(11,029,671)  $7,256,211 
Other comprehensive income, net of tax:          
Foreign currency translation adjustments   (236,674)   - 
OCI tax effect   14,869    - 
Total comprehensive (loss) income   (11,251,476)   7,256,211 
Net loss attributable to noncontrolling interest   60,113    - 
Comprehensive (loss) income attributable to common shareholder  $(11,311,589)  $7,256,211 

 

F-3
 

 

UNIQUE LOGISTICS INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

 

For the Three and Nine Months Ended February 29, 2024

 

                                                                                 
  

Series A

Preferred Stock

  

Series B

Preferred Stock

  

Series C

Preferred Stock

  

Series D

Preferred Stock

   Common Stock  

Additional

Paid in

  

Accumulated

Comprehensive

   Retained  

Total

Stockholders’

equity

attributable

to common

  

Non-

Controlling

  

Total

Stockholders

 
   Shares   Amount   Shares   Amount   Shares   Amount   Shares   Amount   Shares   Amount   capital   income   earning   stockholder   Interest   Equity 
                                                                 
Balance, June 1, 2023   120,065   $120    820,800   $821    195   $         -    180   $      -    799,141,770   $799,142   $180,220   $3,258   $13,066,109   $14,049,670   $3,545,963   $17,595,633 
                                                                                 
Other comprehensive income (loss), net of tax   -    -    -    -    -    -    -    -    -    -    -    (166,750)   -    (166,750)   -    (166,750)
                                                                                 
Net loss   -    -    -    -    -    -    -    -    -    -    -    -    (2,230,651)   (2,230,651)   (80,477)   (2,311,128)
                                                                                 
Balance, August 31, 2023   120,065    120    820,800    821    195    -    180    -    799,141,770    799,142    180,220    (163,493)   10,835,458    11,652,269    3,465,486    15,117,755 
Other comprehensive income (loss), net of tax   -    -    -    -    -    -    -    -    -    -    -    (76,487)   -    (76,487)   -    (76,487)
                                                                                 
Net loss   -    -    -    -    -    -    -    -    -    -    -    -    (2,896,735)   (2,896,735)   26,052    (2,870,683)
Balance, November 30, 2023   120,065   120    820,800   821    195   -    180   -    799,141,770   $799,142   180,220   (239,979)  7,938,723   8,679,047   3,491,538   12,170,585 
Other comprehensive income (loss), net of tax   -    -    -    -    -    -    -    -    -    -    -    21,432    -    21,432    -    21,432 
                                                                                 
Net loss   -    -    -    -    -    -    -    -    -    -    -    -    (5,962,398)   (5,962,398)   114,538    (5,847,860)
Balance, February 29, 2024   120,065   $120    820,800   $821    195   $-    180   $-    799,141,770   $799,142   $180,220   $(218,547)  $1,976,325  $2,738,081   3,606,076   $6,344,157 

 

For the Three and Nine Months Ended February 28, 2023

 

                                                   
  

Series A

Preferred Stock

  

Series B

Preferred Stock

  

Series C

Preferred Stock

  

Series D

Preferred Stock

   Common Stock  

Additional

Paid in

   Retained  

Total

Stockholders’

equity

attributable

  

Non-

Controlling

  

Total

Stockholders

 
   Shares   Amount   Shares   Amount   Shares   Amount   Shares   Amount   Shares   Amount   capital   earning   to registrant   Interest(1)   Equity 
Balance, May 31 2022   130,000   $130    820,800   $821    195   $         -    187   $        -    687,196,478   $687,197   $292,155   $4,851,541   $5,831,844   $-   $5,831,844 
                                                                            
Conversion of Preferred A to Common Stock   (9,935)   (10)   -    -    -    -    -    -    67,963,732    67,964    (67,954)   -    -    -    - 
                                                                            
Conversion of Preferred D to Common Stock   -    -    -    -    -    -    (7)   -    43,981,560    43,981    (43,981)   -    -    -    - 
                                                                            
Net income   -    -    -    -    -    -    -    -    -    -    -    3,321,341    3,321,341    -    3,321,341 
                                                                            
Balance, August 31, 2022   120,065    120    820,800    821    195    -    180    -    799,141,770    799,142    180,220    8,172,882    9,153,185    -    9,153,185 
                                                                            
Net income   -    -    -    -    -    -    -    -    -    -    -    3,271,697    3,271,697    -    3,271,697 
                                                                            
Balance, November 30, 2022   120,065    120    820,800    821    195    -    180    -    799,141,770    799,142    180,220    11,444,579    12,424,882    -    12,424,882 
                                                                            
Recognition of non-controlling interest upon acquisition   -    -    -    -    -    -    -    -    -    -    -    -    -    3,558,757    3,558,757 
                                                                            
Net income   -    -    -    -    -    -    -    -    -    -    -    663,173    663,173    -    663,173 
                                                                            
Balance, February 28, 2023   120,065   $120    820,800   $821    195   $-    180   $-    799,141,770   $799,142   $180,220   $12,107,752   $13,088,055   $3,558,757   $16,646,812 

 

See notes accompanying condensed consolidated financial statements.

 

F-4
 

 

UNIQUE LOGISTICS INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

 

  

For the

Nine Months Ended

February 29, 2024

  

For the

Nine Months Ended

February 28, 2023

 
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net (loss) income  $(11,029,671)  $7,256,211 
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:          
Depreciation and amortization   2,203,093    606,030 
Bad debt recovery   (1,203,978)   - 
Amortization of right of use assets   2,144,717    1,269,299 
Equity method earnings   (675,606)   - 
Change in net deferred tax provision   (6,838,466)   (261,118)
Change in fair value of derivative liabilities   (4,118,566)   (809,611)
Accretion of consulting agreement   -    (282,666)
Uplist termination cost previously deferred   2,419,976    - 
Changes in operating assets and liabilities:          
Accounts receivable   547,400    58,562,998 
Contract assets   (160,791)   27,111,019 
Prepaid expenses and current assets   3,918,801    (2,716,596)
Other noncurrent assets   462,967    (1,533,533)
Accounts payable   3,035,028    (44,314,785)
Accrued expenses and other liabilities   4,783,665    (9,511,815)
Accrued freight   (1,264,644)   (1,183,709)
Contract liabilities   -    (109,844)
Operating lease liability   (1,991,088)   (1,049,118)
Net Cash (Used in) Provided by Operating Activities   (7,767,163)   33,032,762 
CASH FLOWS FROM INVESTING ACTIVITIES:          
Purchase of property and equipment   (1,122,034)   (94,900)
Dividends received from equity method investments   608,127    8,828,309 
Net Cash (Used in) Provided by Investing Activities   (513,907)   8,733,409 
CASH FLOWS FROM FINANCING ACTIVITIES:          
Borrowings from notes payable   8,000,000    (303,833)
Repayments of debt due to related parties   (3,300,655)   (223,143)
Borrowing (repayments) line of credit, net   3,802,436    (28,258,922)
Net Cash Provided by (Used in) Financing Activities   8,501,781    (28,785,898)
           
Difference on the effect of exchange rate on cash and equivalents   (221,805)   - 
           
Net change in cash and cash equivalents   (1,094)   12,980,273 
           
Cash and cash equivalents - Beginning of period   6,744,238    1,422,393 
Cash and cash equivalents - End of period  $6,743,144   $14,402,666 
SUPPLEMENTARY CASH FLOW INFORMATION:          
Cash Paid During the period for:          
Income taxes  $1,013,900   $1,932,100 
Interest  $3,088,765   $2,571,748 
SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:          
Operating lease asset and liability additions  $1,270,702   $8,897,639 
 Non-cash consideration paid in business acquisition  $-   $25,250,000 

 

F-5
 

 

UNIQUE LOGISTICS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

February 29, 2024

 

1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Nature of Business

 

Unique Logistics International, Inc. and its subsidiaries (the “Company” or “Unique”) is a non-asset-based provider of global logistics and freight forwarding services operating through a worldwide network of offices and exclusive or non-exclusive agents. The Company’s customers include retailers and wholesalers, electronics, high technology, industrial and manufacturing companies around the world. The Company provides a range of international logistics services that enable its customers to outsource sections of their supply chain process. This range of services can be categorized as follows:

 

  Air Freight
  Ocean Freight
  Customs Brokerage and Compliance
  Warehousing and Distribution
  Order Management

 

Basis of Presentation

 

These condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include all accounts of the Company and its majority owned subsidiaries stated in U.S. dollars, the Company’s functional currency. For subsidiaries operating outside the U.S., the financial information will be accounted for on a one-month lag. Substantially all unremitted earnings of international subsidiaries are free of legal and contractual restrictions. All intercompany transactions and balances have been eliminated in the condensed consolidated financial statements.

 

The unaudited interim financial information furnished herein reflects all adjustments, consisting solely of normal recurring items, which in the opinion of management are necessary to fairly state the financial position of the Company and the results of its operations for the periods presented. The results reported in these interim condensed consolidated financial statements should not be regarded as necessary indicative of results that may be expected for an entire fiscal year. This report should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in the Company’s Form 10-K for the year ended May 31, 2023. The Company assumes that the users of the interim financial information herein have read or have access to the audited financial statements for the preceding fiscal year and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. The condensed consolidated balance sheet on May 31, 2023 was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America.

 

Liquidity

 

The accompanying condensed consolidated financial statements have been prepared on a going concern basis. Substantial doubt about an entity’s ability to continue as a going concern exists when conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued.

 

The Company’s working capital was $5.3 million and $7.9 million as of February 29, 2024 and May 31, 2023, respectively. The Company maintains its operating line of credit with TBK Bank, SSB, and on July 20, 2023 the Company entered into an agreement with TBK Bank to renew the TBK line of credit with a credit limit of up to $25.0 million. The Company has experienced negative operating cash flows during the nine months ended February 29, 2024 due to adverse market conditions. The Company relied heavily on its cash collections, cash reserves, dividends received from the ULHK Entities, new loans, and the use of its operating line of credit. The funds available under the current TBK line of credit are sufficient to provide the Company with the cash required to support its ongoing operations until market conditions improve.

 

While the Company continues to execute its strategic plan and grow its customer base, management is focused on managing cash and monitoring liquidity position. Many of the aspects of the liquidity plan involve management’s judgments and estimates that include factors that could be beyond our control and actual results could differ from our estimates. These and other factors could cause the strategic plan to be unsuccessful, which could have a material adverse effect on our operating results, financial condition, and liquidity. Based on our evaluation of the Company’s projected cash flows and business performance as of and subsequent to February 29, 2024, management has concluded that the Company’s current cash and cash availability under the TBK Facility would be sufficient to fund its planned operations for at least one year from the date the consolidated financial statements were issued.

 

Use of Estimates

 

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reported period. Actual results could differ from those estimates.

 

F-6
 

 

Significant estimates inherent in the preparation of the condensed consolidated financial statements include determinations of the useful lives and expected future cash flows of long-lived assets, including intangibles, valuation of assets and liabilities acquired in business combinations, and estimates and assumptions in valuation of debt and equity instruments, including derivative liabilities. In addition, the Company makes significant judgments to recognize revenue – see policy note “Revenue Recognition” below.

 

Revenue Recognition

 

The Company adopted ASC 606, Revenue from Contracts with Customers. Under ASC 606, revenue is recognized when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to receive in exchange for services. The Company recognizes revenue upon meeting each performance obligation based on the allocated amount of the total consideration of the contract to each specific performance obligation.

 

To determine revenue recognition, the Company applies the following five steps:

 

  1. Identify the contract(s) with a customer;
     
  2. Identify the performance obligations in the contract;
     
  3. Determine the transaction price;
     
  4. Allocate the transaction price to the performance obligations in the contract; and
     
  5. Recognize revenue as or when the performance obligation is satisfied.

 

Revenue is recognized as follows:

 

  i. Freight income - export sales
     
    Freight income from the provision of air, ocean, and land freight forwarding services are recognized over time based on a relative transit time basis through the sail or departure from origin port. The Company is the principal in these transactions and recognizes revenue on a gross basis.
     
  ii. Freight income - import sales
     
    Freight income from the provision of air, ocean, and land freight forwarding services are recognized over time based on a relative transit time basis through the delivery to the customer’s designated location. The Company is the principal in these transactions and recognizes revenue on a gross basis.
     
  iii. Customs brokerage and other service income