OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The following discussion of our financial condition and results of operations is based upon and should be read in conjunction with our consolidated financial statements and their related notes included in this annual report. This report contains forward-looking statements. In evaluating our business, you should carefully consider the information provided under the caption "Item 3. Key Information-D. Risk Factors" in this annual report. We caution you that our businesses and financial performance are subject to substantial risks and uncertainties.
Overview
We are an international freight forwarding and logistics service provider founded and based in Hong Kong. Our history can be traced back to 2002 when NCL (HK) was incorporated; it commenced its operations as a freight forwarder in 2004. We provide air and ocean export and import freight forwarding services ranging from the sale of cargo space, cargo pick up, off-airport air cargo security screening, palletization, preparation of shipping documentation, arrangement of customs clearance to cargo handling at ports. Since our inception, we have offered routes to over 140 countries to our customers. We have an experienced team of specialists who have extensive experience in the air and sea freight industries in Hong Kong. For all other countries, we have a strong network, cooperating closely with agents to handle both inbound and outbound traffic. These agents are carefully selected in order to ensure a consistently high level of service provided to our customers around the world.
Our scope of services includes:
| ● | Air Freight Import and Export; | |
| ● | Ocean Freight Import and Export; and | |
| ● | Other services such as warehousing and distribution, X-ray, gate charge and palletization. |
| A. | Operating Results |
For the years ended September 30, 2025, 2024 and 2023, we had total revenue of approximately US$44.08 million, US$52.18 million, US$36.07 million, respectively, and net loss after taxation of approximately US$10.7 million, net income after taxation of approximately US$0.22 million and US$0.45 million, respectively. Revenue derived from air freight, ocean freight and others accounted for approximately 95.13%, 1.28% and 3.59% of our total revenue for year ended September 30, 2025, respectively. Revenue derived from air freight, ocean freight and others accounted for approximately 92.02%, 1.72% and 6.26% of our total revenue for the year ended September 30, 2024, respectively. Revenue derived from air freight, ocean freight and others accounted for approximately 92.13%, 1.05% and 6.82% of our total revenue for year ended September 30, 2023, respectively.
General Factors that Affect Our Results of Operations
Our financial performance is significantly influenced by economic conditions in Hong Kong and Mainland China. These factors can affect our clients' demand for freight forwarding services and ultimately, our revenue and profitability. Key aspects of the economic conditions in these regions that may impact our business include:
GDP Growth
As we operate out of Hong Kong, accordingly fluctuations in the GDP growth rates of Hong Kong and Mainland China can directly affect the overall demand for our services. A slowdown in economic growth might lead to reduced trade volumes, which could negatively impact our business.
Trade Policies
Changes in trade policies, including trade agreements and tariffs, between Hong Kong, Mainland China, and their trading partners can have a significant impact on the overall volume of global trade. These changes can affect import and export activities, thereby influencing our freight forwarding services.
Economic Stability
Economic stability in Hong Kong and Mainland China plays a major role in maintaining a healthy business environment. Factors such as inflation, interest rates, and government regulation can influence overall economic stability, and in turn, affect the demand for our services.
Seasonality
Our peak season is generally from October to December, which is driven by festive events and discount promotions such as Thanksgiving, Christmas and New Year's Eve. Moreover, we typically record relatively lower volumes of shipment and thus relatively lower revenue during Lunar New Year (normally in January or February) owing to fewer business activities of manufacturers and shippers in Mainland China in the Lunar New Year, resulting in a decrease in the demand for freight forwarding services. Accordingly, comparisons of sales and operating results from different periods in any given financial year may not be relied upon as indicators of our performance. These seasonal trends are influenced by a number of factors, including weather patterns, national holidays, economic conditions, consumer demand, major product launches, as well as a number of other market forces. Since many of these forces are unforeseeable, there is no way for us to provide assurances that these seasonal trends will continue.
Labor and fuel supply
Since our services involve logistics or cargoes to various locations designated by our customers, an increase in labor and fuel prices may increase our direct costs. If we are unable to have a corresponding increase in our service rates, our profitability may be adversely affected. In addition, the cost of fuel can fluctuate significantly and is subject to many economic and political factors that are beyond our control, in the absence of a hedging system against the fluctuation in fuel prices, our financial performance may be different from what we expected.
Infrastructure Development
The ongoing development and investment in infrastructure projects in Hong Kong and Mainland China, such as ports, airports, and transportation networks, can have both positive and negative effects on our business. Improved infrastructure can help us better serve our clients, while increased competition might pose challenges to our market share and profitability.
Key Financial Performance Indicators
In assessing our financial performance, we consider a variety of financial performance measures, including the number of customers for our services, the service fees we charge, our ability to collect the service fees in a timely manner, and our ability to improve our operating efficiency over time. We timely review these indicators to respond promptly to competitive market conditions and different demands and preferences from our customers. The key measures that we use to evaluate the performance of our business are set forth below and are discussed in greater detail under "Results of Operations."
| For the years ended September 30, | ||||||||||||
| 2023 | 2024 | 2025 | ||||||||||
| % of total revenue | ||||||||||||
| Revenue from air freight forwarding services | 92.13 | % | 92.02 | % | 95.13 | % | ||||||
| Revenue from ocean freight forwarding services | 1.05 | % | 1.72 | % | 1.28 | % | ||||||
| Revenue from other services | 6.82 | % | 6.26 | % | 3.59 | % | ||||||
| Total operating revenue | 100.00 | % | 100.00 | % | 100.00 | % | ||||||
Revenue
Our revenue from freight forwarding services includes air and ocean freight forwarding services and includes both export and import shipment services. Our revenue from freight forwarding services is mainly derived from air freight export shipments to regions such as North America, Europe and Asia.
Air freight forwarding services
Revenue from air freight forwarding services includes both import and export of goods and principally involves the arrangement of shipment upon receipt of booking instructions from our customers, including the sale of cargo space, cargo pick up, off-airport air cargo security screening, palletization, preparation of shipping documentation, arrangement of customs clearance, and cargo handling at ports. During the years ended September 30, 2025, 2024 and 2023, our air freight forwarding services covered export shipments to over 140 countries.
Ocean freight forwarding services
Our ocean freight forwarding services involve major steps similar to those of our air freight forwarding services. During the years ended September 30, 2025, 2024 and 2023, our ocean freight forwarding services mainly covered export shipments to the U.S.
Other services
Our other services include warehousing and distribution, X-ray, gate charge and palletization.
Results of Operations
The following table sets forth a summary of our consolidated results of operations for the periods presented. This information should be read together with our consolidated financial statements and related notes included elsewhere in this annual report. The results of operations in any period are not necessarily indicative of our future trends.
SELECTED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| For the years ended September 30, | ||||||||||||
| 2023 | 2024 | 2025 | ||||||||||
| US$ | US$ | US$ | ||||||||||
| Revenues | 36,074,004 | 52,176,109 | 44,083,731 | |||||||||
| Cost of revenues | (32,590,022 | ) | (47,932,230 | ) | (43,921,081 | ) | ||||||
| Gross profit | 3,483,982 | 4,243,879 | 162,650 | |||||||||
| Operating expenses: | ||||||||||||
| General and administrative expenses | (2,961,483 | ) | (3,773,606 | ) | (11,001,406 | ) | ||||||
| Total operating expenses | (2,961,483 | ) | (3,773,606 | ) | (11,001,406 | ) | ||||||
| Income (loss) from operations | 522,499 | 470,273 | (10,838,756 | ) | ||||||||
| Other income | 66,617 | 22,592 | 145,706 | |||||||||
| Interest expense, net | (88,730 | ) | (98,026 | ) | (58,263 | ) | ||||||
| Total other (expenses)/income, net | (22,113 | ) | (75,434 | ) | 87,443 | |||||||
| Income (loss) before income tax | 500,386 | 394,839 | (10,751,313 | ) | ||||||||
| Income tax (expenses) credit | (45,971 | ) | (174,196 | ) | 20,591 | |||||||
| Net income (loss) | 454,415 | 220,643 | (10,730,722 | ) | ||||||||
Year ended September 30, 2025 compared to year ended September 30, 2024
Revenue
The logistics industry is expanding rapidly as online shopping fuels the need for faster and more secure deliveries. The rise of Omnichannel retail has introduced new complexities, with consumers expecting flexible options like store pickup, home delivery from physical stores, and the ability to choose or change delivery preference. Meeting these expectations requires tight integration between inventory control, warehousing and fulfilment operations. To overcome challenges like increasing transportation costs, labor gaps, and supply chain disruptions, logistics providers are relying more on an advanced technologies and smarter workforce strategies.
Revenue decreased by approximately $8.09 million, or approximately 15.51%, to $44.08 million for the year ended September 30, 2025 from approximately $52.18 million for the year ended September 30, 2024. The decrease in revenue was mainly attributable to the reduced order from several major customers resulting from their respective business downturns during the fiscal year. This reduction in demand had an adverse impact the Company's overall performance.
Our different revenue sources for the years ended September 30, 2025 and 2025 were as follows:
| For the years ended September 30, | ||||||||||||
| 2024 | 2025 | % of change | ||||||||||
| US$ | US$ | |||||||||||
| Revenue | ||||||||||||
| Revenue from air freight forwarding services | 48,010,322 | 41,934,661 | (12.65 | )% | ||||||||
| Revenue from ocean freight forwarding services | 898,709 | 564,941 | (37.14 | )% | ||||||||
| Revenue from other services | 3,267,078 | 1,584,129 | (51.51 | )% | ||||||||
| Total revenue | 52,176,109 | 44,083,731 | (15.51 | )% | ||||||||
Revenue from forwarding services is mainly derived from air freight. The following table sets forth the breakdown of monthly volume from air freight forwarding services for the years indicated.
| For the years ended September 30 , | |||||||||||
| 2024 | 2025 | % of change | |||||||||
| kg | kg | ||||||||||
| Monthly volume from air freight forwarding | |||||||||||
| - October | 568,340 | 706,035 | 24.22 | % | |||||||
| - November | 767,333 | 687,954 | (10.34) | % | |||||||
| - December | 760,477 | 652,747 | (14.17) | % | |||||||
| - January | 765,454 | 546,428 | (28.61) | % | |||||||
| - February (see note (1) below) | 735,598 | 324,031 | (55.95) | % | |||||||
| - March | 1,060,323 | 693,795 | (34.57) | % | |||||||
| - April | 817,214 | 650,877 | (20.35) | % | |||||||
| - May | 714,564 | 777,439 | 8.80 | % | |||||||
| - June | 859,354 | 764,218 | (11.07) | % | |||||||
| - July | 814,596 | 939,813 | 15.37 | % | |||||||
| - August | 800,880 | 844,034 | 5.39 | % | |||||||
| - September | 815,822 | 813,982 | (0.23) | % | |||||||
| Total volume from air freight forwarding | 9,479,955 | 8,401,353 | (11.38) | % | |||||||
Note: (1) Due to the Lunar New Year holiday, the Company recorded the lowest volume from air freight forwarding services in 2025.
Revenue from air freight forwarding services
During the year ended September 30, 2025, over 250 customers used our air freight forwarding services. Due to the reduced order from several major customers, our total volume from air freight forwarding decreased by 11.38% to 8,401,353 kg for the year ended September 30, 2025, from 9,479,955 kg for the year ended September 30, 2024. In addition, our monthly average unit prices ranging from US$3.13/kg to US$6.37/kg during the year ended September 30, 2024 decreased to ranging from US$1.94/kg to US$6.43/kg during the year ended September 30, 2025 due to the overall decrease in demand for the freight forwarding services of the Company during the years ended September 30, 2025. As a result of volume and rate trends above, revenue in air freight forwarding services decreased by approximately US$6.08 million, or approximately 12.65%, from approximately US$48.01 million in the year ended September 30, 2024, to approximately US$41.93 million in the year ended September 30, 2025.
Revenue from ocean freight forwarding services
During the years ended September 30, 2025, our revenue from ocean freight forwarding services decreased by approximately US$0.34 million, or approximately 37.14%, from approximately US$0.90 million in the year ended September 30, 2024, to approximately US$0.56 million in the year ended September 30, 2025. The decrease in our revenue from ocean freight forwarding services was attributed to the decreased freight rates due to a decrease in demand for the freight forwarding services of the Company during the year ended September 30, 2025.
Revenue from other services
During the year ended September 30, 2025, our other services including warehousing and distribution, palletization, X-ray and gate charge recorded revenue of approximately US$0.8 million, US$0.2 million, US$0.2 million and US$0.4 million, respectively.
During the year ended September 30, 2024, our other services including warehousing and distribution, palletization, X-ray and gate charge recorded revenue of approximately US$0.9 million, US$1.7 million, US$0.2 million and US$0.5 million , respectively.
During the year ended September 30, 2025, our revenue from other services decreased by approximately US$1.7 million, or approximately 51.51%, from approximately US$3.3 million in the year ended September 30, 2024, to approximately US$1.6 million in the year ended September 30, 2025. The decrease in our revenue from other services was attributed to the decrease in demand of palletization service of approximately US$1.5 million and warehousing and distribution service of US$0.1 million during the year ended September 30, 2025.
Costs of sales
The table below sets forth the breakdown of cost of sales by service type for the years indicated.
| For the years ended September 30, | ||||||||||||
| 2024 | 2025 | % of change | ||||||||||
| US$ | US$ | |||||||||||
| Air freight forwarding services | 45,209,433 | 41,027,483 | (9.25 | )% | ||||||||
| Ocean freight forwarding services | 849,426 | 514,129 | (39.47 | )% | ||||||||
| Other services | 1,873,371 | 2,379,469 | 27.02 | % | ||||||||
| Total cost of sales | 47,932,230 | 43,921,081 | (8.37 | )% | ||||||||
Our cost of sales amounted to approximately US$43.92 million and US$47.93 million in the years ended September 30, 2025 and 2024, respectively. The trend of cost of sales of each of the service types was in line with the trend of the revenue of respective service types.
The table below sets forth the breakdown of cost of sales by nature for the periods indicated.
| For the years ended September 30, | ||||||||||||
| 2024 | 2025 | % of change | ||||||||||
| US$ | US$ | |||||||||||
| Air freight charges | 44,018,551 | 41,017,511 | (6.82 | )% | ||||||||
| Ocean freight charges | 827,133 | 491,897 | (40.53 | )% | ||||||||
| Logistics and warehousing fees | 2,291,793 | 1,643,671 | (28.28 | )% | ||||||||
| Direct labor costs | 542,105 | 548,659 | 1.21 | % | ||||||||
| Handling fee | 119,423 | 108,056 | (9.52 | )% | ||||||||
| Others | 133,225 | 111,287 | (16.47 | )% | ||||||||
| Total cost of sales | 47,932,230 | 43,921,081 | (8.37 | )% | ||||||||
Our cost of sales mainly comprised air and ocean freight charges, logistics and warehousing fees, handling fees, labor costs and warehouse rental expenses. Air and ocean freight charges represented costs of cargo space charged by airlines, shipping liners or other freight forwarders. Logistics and warehousing fees primarily represented costs and service fees incurred in relation to warehousing services such as x-ray screening and consolidation performed in our warehouse and costs of local trucking and transportation services. Warehouse rental expenses represented rent paid for warehouse space.
Our total cost of sales decreased by approximately US$4.01 million or 8.37%, from approximately US$47.93 million for the year ended September 30, 2024, to approximately US$43.92 million for the year ended September 30, 2025, primarily due to declined air and ocean freight rates and volumes of air freight services.
Gross profit and gross profit margin
The following table sets out the gross profit and gross profit margin for our different services for the years ended September 30, 2025 and 2024:
| For the years ended September 30, | ||||||||||||||||
| 2024 | 2025 | |||||||||||||||
| US$ | US$ | |||||||||||||||
| Air freight forwarding services | 2,800,889 | 5.83 | % | 907,178 | 2.16 | % | ||||||||||
| Ocean freight forwarding services | 49,283 | 5.48 | % | 50,812 | 8.99 | % | ||||||||||
| Other services | 1,393,707 | 42.66 | % | (795,340 | ) | (50.21 | )% | |||||||||
| Overall | 4,243,879 | 8.13 | % | 162,650 | 0.37 | % | ||||||||||
Our gross profit decreased by 96.17% to US$0.16 million for the year ended September 30, 2025, from US$4.24 million for the years ended September 30, 2024. Our gross profit margin, resulting in a 0.37% for the year ended September 30, 2025. For the year ended September 30, 2025, the air freight gross profit margin decreased due to higher cost incurred for air freight. For the year ended September 30, 2025, notwithstanding an increase in cost from other services due to low-margin service, there was more cost incurred for palletization services such as transportation and third-party logistics services.
General and administrative expenses
The following table sets forth the breakdown of our general and administrative expenses for the years ended September 30, 2025 and 2024:
| For the years ended September 30, | ||||||||
| 2024 | 2025 | |||||||
| US$ | US$ | |||||||
| Professional expense | 758,223 | 973,707 | ||||||
| Depreciation expense | 179,103 | 36,381 | ||||||
| Payroll expense | 1,870,720 | 2,274,883 | ||||||
| Staff welfare | 23,294 | 57,793 | ||||||
| Share-based compensation expenses | - | 6,355,000 | ||||||
| Insurance expense | 26,618 | 85,405 | ||||||
| Lease expense | 213,199 | 222,059 | ||||||
| Utility expense | 18,655 | 18,022 | ||||||
| Motor expense | 71,365 | 129,694 | ||||||
| Office expense | 91,940 | 91,729 | ||||||
| Business development | 107,247 | 397,292 | ||||||
| (Reversal) provision of current expected credit loss of accounts receivables | 243,229 | 164,498 | ||||||
| Bank charges | 22,032 | 18,341 | ||||||
| Others | 147,981 | 176,602 | ||||||
| 3,773,606 | 11,001,406 | |||||||
Our general and administrative expense accounted for approximately 24.96% and 7.23% of our total revenue for the years ended September 30, 2025 and 2024, respectively. General and administrative expense for the year ended September 30, 2025 increased by 191.54%, or US$7.2 million, to US$11.0 million, compared with US$3.77 million in 2024. General and administrative expense increased primarily due to share-based compensation expenses approximately US$6.4 million in 2025 and nil in 2024, payroll expenses increasing by 21.60% or US$0.40 million, to US$2.27 million, compared with US$1.87 million in 2024 due to increased staffs. Expenditures for business developments increased by 270.45% or US$0.29 million, to US$0.40 million, compared with US$0.10 million in 2024.
We anticipate our overall general and administrative expense especially payroll and professional expenses for consulting service, to increase in the foreseeable future, as we plan to hire additional personnel and incur additional expenses in connection with the expansion of our business operations. We expect our professional fees for legal, audit, and advisory services to increase since we became a public company upon the effectiveness of our registration statement in November 2024.
Other income
| For the years ended September 30, | ||||||||
| 2024 | 2025 | |||||||
| US$ | US$ | |||||||
| Government grants | - | |||||||
| Interest income | 849 | 647 | ||||||
| Gain from early termination of financing lease | 12,832 | - | ||||||
| Consultancy income | - | 75,000 | ||||||
| Miscellaneous income | 8,911 | 70,059 | ||||||
| 22,592 | 145,706 | |||||||
Our other income is primarily represented by consultancy income and referral agency income. Other income increased by US$123,114, from US$22,592 for the year ended September 30, 2024 to US$145,706 for the year ended September 30, 2025, primarily due to increase consultancy income and referral agency income.
Income Tax Expense
We are not subject to any income tax in the BVI pursuant to the rules and regulations in the BVI, but our subsidiaries are subject to Hong Kong profits tax. Our income tax expense was nil for the years ended September 30, 2025, decreasing from US$174,196 for the year ended September 30, 2024, due to the net loss base in 2025. The effective tax rate for the years ended September 30, 2025 and 2024 was 0.19% and 44.12% respectively. The decrease in our effective income tax rate was driven by increase in non-deductible listing expenses and the decrease in assessable profit that the tax rate is 0% under the two-tiered profits tax regime in which income tax was charged at the rate of 8.25% on the first US$256,410 (equivalent to HKD2 million) profit and at the rate of 16.5% thereafter.
Net (Loss) Income
As a result of the foregoing, we reported net loss of approximately US$10.73 million for the year ended September 30, 2025, representing a decrease of approximately US$10.95 million from net income of approximately US$0.22 million for the year ended September 30, 2024.
Year ended September 30, 2024 compared to year ended September 30, 2023
Revenue
The global logistics industry demonstrated notable growth in the first half of 2024, driven by a resurgence in traditional shipping patterns and increased demand across various sectors. The industry has seen significant growth in 2024, supported by rising industrial production and consumer demand, particularly in the PRC, USA and India. Resilience remained a key focus, as geopolitical tensions, labor strikes, and environmental challenges persisted. Despite some economic uncertainties, the logistics sector has been stabilizing, with ocean and air transportation capacities resuming to pre-pandemic levels.
Revenue increased by approximately $16.10 million, or approximately 44.64%, to $52.18 million for the year ended September 30, 2024 from approximately $36.07 million for the year ended September 30, 2023. The increase in revenue was mainly attributable to the Company's ability to obtain bulk purchases of air cargo forwarding capacity at a competitive price from an airline company in respect of the routes to the United States and Europe, which allowed the Company to solicit more freight forwarding business in relation to these two areas.
Our different revenue sources for the years ended September 30, 2024 and 2023 were as follows:
| For the years ended September 30, | ||||||||||||
| 2023 | 2024 | % of change | ||||||||||
| US$ | US$ | |||||||||||
| Revenue | ||||||||||||
| Revenue from air freight forwarding services | 33,236,407 | 48,010,322 | 44.45 | % | ||||||||
| Revenue from ocean freight forwarding services | 378,039 | 898,709 | 137.73 | % | ||||||||
| Revenue from other services | 2,459,558 | 3,267,078 | 32.83 | % | ||||||||
| Total revenue | 36,074,004 | 52,176,109 | 44.64 | % | ||||||||
Revenue from forwarding services is mainly derived from air freight. The following table sets forth the breakdown of monthly volume from air freight forwarding services for the years indicated.
| For the years ended September 30 , | ||||||||||||
| 2023 | 2024 | % of change | ||||||||||
| kg | kg | |||||||||||
| Monthly volume from air freight forwarding | ||||||||||||
| - October (see note (2) below) | 752,498 | 568,340 | -24.47 | % | ||||||||
| - November | 860,467 | 767,333 | -10.82 | % | ||||||||
| - December | 1,001,618 | 760,477 | -24.08 | % | ||||||||
| - January | 586,802 | 765,454 | 30.45 | % | ||||||||
| - February (see note (1) below) | 505,039 | 735,598 | 45.65 | % | ||||||||
| - March | 756,513 | 1,060,323 | 40.16 | % | ||||||||
| - April | 591,371 | 817,214 | 38.19 | % | ||||||||
| - May | 679,085 | 714,564 | 5.22 | % | ||||||||
| - June | 545,170 | 859,354 | 57.63 | % | ||||||||
| - July | 573,011 | 814,596 | 42.16 | % | ||||||||
| - August | 607,967 | 800,880 | 31.73 | % | ||||||||
| - September | 769,100 | 815,822 | 6.07 | % | ||||||||
| Total volume from air freight forwarding | 8,228,641 | 9,479,955 | 15.21 | % | ||||||||
Note: (1) Due to the Lunar New Year holiday, the Company recorded the lowest volume from air freight forwarding services in 2023. However, due to significant growth in overall demand and a normalization of capacity of the air freight market in early of 2024, the Company recorded increase in volume from air freight forwarding service to offset the impact of the Lunar New Year holiday in 2024. (2)Our peak season started a bit later than usual in October 2023 due to overall demand remaining subdued, although global air freight volumes and spot rates experienced a slight increase in October 2023.
Revenue from air freight forwarding services
During the year ended September 30, 2024, over 200 customers used our air freight forwarding services. Due to the Company's ability to obtain bulk purchases of air cargo forwarding capacity at a competitive price from an airline company in respect of the routes to the United States and Europe, which allowed the Company to solicit more freight forwarding business in relation to these two areas, our total volume from air freight forwarding increased by 15.21% to 9,479,955 kg for the year ended September 30, 2024, from 8,228,641 kg for the year ended September 30, 2023. In addition, our monthly average unit prices ranging from US$2.88/kg to US$5.02/kg during the year ended September 30, 2023 increased to ranging from US$3.13/kg to US$6.37/kg during the year ended September 30, 2024 due to the overall increase in demand for the freight forwarding services of the Company during the years ended September 30, 2024. As a result of volume and rate trends above, revenue in air freight forwarding services increased by approximately US$14.77 million, or approximately 44.45%, from approximately US$33.24 million in the year ended September 30, 2023, to approximately US$48.01 million in the year ended September 30, 2024.
Revenue from ocean freight forwarding services
During the years ended September 30, 2024, our revenue from ocean freight forwarding services increased by approximately US$0.52 million, or approximately 137.73%, from approximately US$0.38 million in the year ended September 30, 2023, to approximately US$0.90 million in the year ended September 30, 2024. The increase in our revenue from ocean freight forwarding services was attributed to the increased freight rates due to an increase in demand for the freight forwarding services of the Company during the year ended September 30, 2024.
Revenue from other services
During the year ended September 30, 2024, our other services including warehousing and distribution, palletization, X-ray and gate charge recorded revenue of approximately US$0.9 million, US$1.7 million, US$0.2 million and US$0.5 million, respectively.
During the year ended September 30, 2023, our other services including warehousing and distribution, palletization, X-ray and gate charge recorded revenue of approximately US$1.4 million, US$0.6 million, US$0.1 million, and US$0.4 million, respectively.
During the year ended September 30, 2024, our revenue from other services increased by approximately US$0.8 million, or approximately 32.83%, from approximately US$2.5 million in the year ended September 30, 2023, to approximately US$3.3 million in the year ended September 30, 2024. The increase in our revenue from other services was attributed to the increase in revenue from palletization income of US$1.1 million during the year ended September 30, 2024.
Costs of sales
The table below sets forth the breakdown of cost of sales by service type for the years indicated.
| For the years ended September 30, | ||||||||||||
| 2023 | 2024 | % of change | ||||||||||
| US$ | US$ | |||||||||||
| Air freight forwarding services | 31,183,594 | 45,209,433 | 44.98 | % | ||||||||
| Ocean freight forwarding services | 307,350 | 849,426 | 176.37 | % | ||||||||
| Other services | 1,099,078 | 1,873,371 | 70.45 | % | ||||||||
| Total cost of sales | 32,590,022 | 47,932,230 | 47.08 | % | ||||||||
Our cost of sales amounted to approximately US$47.93 million and US$32.59 million in the years ended September 30, 2024 and 2023, respectively. The trend of cost of sales of each of the service types was in line with the trend of the revenue of respective service types.
The table below sets forth the breakdown of cost of sales by nature for the periods indicated.
| For the years ended September 30, | ||||||||||||
| 2023 | 2024 | % of change | ||||||||||
| US$ | US$ | |||||||||||
| Air freight charges | 29,663,812 | 44,018,551 | 48.39 | % | ||||||||
| Ocean freight charges | 292,965 | 827,133 | 182.33 | % | ||||||||
| Logistics and warehousing fees | 2,027,075 | 2,291,793 | 13.06 | % | ||||||||
| Direct labor costs | 460,657 | 542,105 | 17.68 | % | ||||||||
| Handling fee | 79,220 | 119,423 | 50.75 | % | ||||||||
| Others | 66,293 | 133,225 | 100.96 | % | ||||||||
| Total cost of sales | 32,590,022 | 47,932,230 | 47.08 | % | ||||||||
Our cost of sales mainly comprised air and ocean freight charges, logistics and warehousing fees, handling fees, labor costs and warehouse rental expenses. Air and ocean freight charges represented costs of cargo space charged by airlines, shipping liners or other freight forwarders. Logistics and warehousing fees primarily represented costs and service fees incurred in relation to warehousing services such as x-ray screening and consolidation performed in our warehouse and costs of local trucking and transportation services. Warehouse rental expenses represented rent paid for warehouse space.
Our total cost of sales increased by approximately US$15.34 million or 47.08%, from approximately US$32.59 million for the year ended September 30, 2023, to approximately US$47.93 million for the year ended September 30, 2024, primarily due to rising air and ocean freight rates and volumes of air freight services.
Gross profit and gross profit margin
The following table sets out the gross profit and gross profit margin for our different services for the years ended September 30, 2024 and 2023:
| For the years ended September 30, | ||||||||||||||||
| 2023 | 2024 | |||||||||||||||
| US$ | US$ | |||||||||||||||
| Air freight forwarding services | 2,052,813 | 6.18 | % | 2,800,889 | 5.83 | % | ||||||||||
| Ocean freight forwarding services | 70,689 | 18.70 | % | 49,283 | 5.48 | % | ||||||||||
| Other services | 1,360,480 | 55.31 | % | 1,393,707 | 42.66 | % | ||||||||||
| Overall | 3,483,982 | 9.66 | % | 4,243,879 | 8.13 | % | ||||||||||
Our gross profit increased by 21.81% to US$4.24 million for the year ended September 30, 2024, from US$3.48 million for the years ended September 30, 2023. Our gross profit margin remains fairly constant, resulting in a 1.6% decrease over 2024 only. For the year ended September 30, 2024, the ocean fright gross profit margin decreased due to higher costs. In comparison, for the year ended September 30, 2023, an increase in supply as the global logistics market continues to normalize and returns to pre-pandemic levels in early 2023, in addition to mark-up charged by the Company at fixed prices, led to cost reduction. For the year ended September 30, 2024, notwithstanding an increase in revenue from palletization income, there is a decrease in other services' gross profit margin due to palletization service is low-margin service. There was more cost incurred for palletization service such as transportation and third-party logistics services.
General and administrative expenses
The following table sets forth the breakdown of our general and administrative expenses for the years ended September 30, 2024 and 2023:
| For the years ended September 30, | ||||||||
| 2023 | 2024 | |||||||
| US$ | US$ | |||||||
| Professional expense | 291,366 | 758,223 | ||||||
| Depreciation expense | 187,259 | 179,103 | ||||||
| Payroll expense | 2,034,346 | 1,870,720 | ||||||
| Staff welfare | 11,703 | 23,294 | ||||||
| Share-based compensation expenses | - | - | ||||||
| Insurance expense | 10,079 | 26,618 | ||||||
| Lease expense | 212,871 | 213,199 | ||||||
| Utility expense | 18,403 | 18,655 | ||||||
| Motor expense | 82,096 | 71,365 | ||||||
| Office expense | 92,988 | 91,940 | ||||||
| Business development | 60,022 | 107,247 | ||||||
| (Reversal) provision of current expected credit loss of accounts receivables | (176,170 | ) | 243,229 | |||||
| Bank charges | 8,999 | 22,032 | ||||||
| 2,961,483 | 3,773,606 | |||||||
Our general and administrative expense accounted for approximately 7.23% and 8.21% of our total revenue for the years ended September 30, 2024 and 2023, respectively. General and administrative expense for the year ended September 30, 2024 increased by 27.42%, or US$0.81 million, to US$3.77 million, compared with US$2.96 million in 2023. General and administrative expense increased primarily due to professional expenses increasing by 160.23% or US$0.47 million, to US$0.76 million, compared with US$0.29 million in 2023 due to professional expenses paid for IPO and estimated credit loss on accounts receivable increasing by 238.07% or US$0.42 million, to US$0.24 million, compared with reversal of estimated credit loss on accounts receivable of US$0.18 million in 2023.
We expect our overall general and administrative expense, including salaries and professional and business consulting expenses, to increase in the foreseeable future, as we plan to hire additional personnel and incur additional expenses in connection with the expansion of our business operations. We expect our professional fees for legal, audit, and advisory services to increase since we became a public company upon the effectiveness of our registration statement in November 2024.
Other income
| For the years ended September 30, | ||||||||
| 2023 | 2024 | |||||||
| US$ | US$ | |||||||
| Government grants | 21,641 | - | ||||||
| Interest income | 645 | 849 | ||||||
| Exchange gains | 2,465 | - | ||||||
| Gain from early termination of financing lease | 12,832 | |||||||
| Miscellaneous income | 41,866 | 8,911 | ||||||
| 66,617 | 22,592 | |||||||
Our other income is primarily represented by Hong Kong government grants. Government grants represented the anti-epidemic funds received from the Hong Kong government under the Employment Support Scheme granted to companies in the freight forwarding industry in 2023. Other income decreased by US44,025, from US$66,617 for the year ended September 30, 2023 to US$22,592 for the year ended September 30, 2024, primarily due to no grants distributed by the absence of government grants as COVID-19 is over during the year ended September 30, 2024.
Income Tax Expense
We are not subject to any income tax in the BVI pursuant to the rules and regulations in the BVI, but our subsidiaries are subject to Hong Kong profits tax. Our income tax expense was US$174,196 for the years ended September 30, 2024, increasing from US$45,971 for the year ended September 30, 2023, due to the higher pre-tax profit base in 2024. The effective tax rate for the years ended September 30, 2024 and 2023 was 44.12% and 9.19% respectively. The increase in our effective income tax rate was driven by increase in non-deductible listing expenses and the increase in assessable profit that the tax rate is 16.5% under the two-tiered profits tax regime in which income tax was charged at the rate of 8.25% on the first US$256,410 (equivalent to HKD2 million) profit and at the rate of 16.5% thereafter.
Net Income
As a result of the foregoing, we reported net income of approximately US$0.22 million for the year ended September 30, 2024, representing a decrease of approximately US$0.23 million from net income of approximately US$0.45 million for the year ended September 30, 2023.
B. Liquidity and capital resources
Our use of cash was primarily related to operating activities and payment for offering cost in the years ended September 30, 2025, 2024 and 2023. We have historically financed our operations primarily through our cash flow generated from our operations and bank borrowings.
The table below sets forth our cash flows for the years ended September 30, 2023, 2024 and 2025.
| For the years ended September 30, | ||||||||||||
| 2023 | 2024 | 2025 | ||||||||||
| Net cash (used in) provided by operating activities | (2,487,096 | ) | 1,434,532 | (3,415,142 | ) | |||||||
| Net cash (used in) provided by investing activities | (218,109 | ) | 218,109 | (54,487 | ) | |||||||
| Net cash provided by (used in) financing activities | 502,382 | (1,284,637 | ) | 3,776,733 | ||||||||
| Net (decrease)/ increase in cash and cash equivalents | (2,202,823 | ) | 368,004 | 307,105 | ||||||||
| Cash and cash equivalents, beginning of year | 2,494,139 | 291,316 | 659,320 | |||||||||
| Cash and cash equivalents, end of year | 291,316 | 659,320 | 966,425 | |||||||||
Operating activities
Our cash inflow from operating activities was principally receipt of payments for our provision of freight forwarding services, whereas our outflow from operating activities is principally for freight charges, ancillary service fees payable to suppliers, payment of salaries and employee benefits, rental expenses and general and administrative expenses.
Net cash used in operating activities was approximately US$3.42 million for the year ended September 30, 2025, which primarily reflected our net loss of approximately US$10.73 million with adjustments of non-cash operating expenses and changes in operating assets and liabilities. Non-cash operating expenses primarily consisted of operating lease expense of approximately US$0.63 million, current expected credit loss of accounts receivables of approximately US$0.16 million, share-based compensation expense approximately US$6.36 million and change of deferring offering cost of approximately US$0.51 million. Adjustments for changes in operating assets and liabilities primarily consisted of (i) an increase of approximately US$1.31 million in accounts receivable; (ii) a decrease of approximately US$1.27 million in accounts payable, (iii) a decrease in lease liabilities - operating lease of approximately US$0.63 million and (iv) an increase of accruals and other current liabilities of approximately US$0.21 million.
Net cash provided by operating activities was approximately US$1.43 million for the year ended September 30, 2024, which primarily reflected our net income of approximately US$0.22 million with adjustments of non-cash operating expenses and changes in operating assets and liabilities. Non-cash operating expenses include operating lease expense of approximately US$1.17 million, current expected credit loss of accounts receivables of approximately US$0.24 million, depreciation of property, plant and equipment of approximately US$0.18 million and change of deferred offering cost of approximately US$0.27 million. Adjustments for changes in operating assets and liabilities primarily consisted of (i) a decrease of US$2.02 million in accounts receivable and approximately US$0.15 million in deposits and other receivables; (ii) an increase of approximately US$2.63 million in accounts payable; (iii) an increase of approximately US$0.09 million in income tax payable due to the taxable profit incurred for the year ended September 30, 2024 and (iv) a decrease of approximately US$1.17 million in a lease liabilities - operating lease.
Net cash used in operating activities was approximately US$2.49 million for the year ended September 30, 2023, which primarily reflected our net income of approximately US$0.45 million with adjustments of non-cash operating expenses and changes in operating assets and liabilities. Non-cash operating expenses include operating lease expense of approximately US$1.11 million, reversal of current expected credit loss of accounts receivables of approximately US$0.18 million and depreciation of property, plant and equipment of approximately US$0.19 million. Adjustments for changes in operating assets and liabilities primarily consisted of (i) an increase of approximately US$0.63 million in account receivables; (ii) a decrease of approximately US$0.57 million in accounts payable; (iii) a decrease of approximately US$1.92 million in income tax payable; and (iv) a decrease of approximately US$1.11 million in a lease liabilities - operating lease.
Investing activities
For the years ended September 30, 2025, 2024 and 2023, cash (used in) or provided by investing activities was approximately (US$0.05 million), US$0.22 million and (US$0.22 million) respectively. Cash used in investment activities was purchase of property, plant and equipment of approximately US$0.05 million during the year ended September 30, 2025. Cash provided by investment activities was collection of loan receivable from a related party of approximately US$0.22 million during the year ended September 30, 2024. Cash used in investment activities was advance to a related party as loan receivable of approximately US$0.22 million during the year ended September 30, 2023.
Financing activities
For the year ended September 30, 2025, our net cash provided by financing activities was approximately US$3.8 million, which was primarily attributable to (i) fund raising from IPO of approximately US$5.0 million; (ii) repayments of borrowings and overdraft to bank of approximately US$0.9 million bank overdraft of approximately US$0.13 million; and (iii) proceeds from bank loan approximately US$1.9 million; partially offset by (i) repayment of loan from related party of approximately US$2.4 million; and (ii) repayment of bank loan of approximately US$0.9 million.
For the year ended September 30, 2024, our net cash used in financing activities was approximately US$1.28 million, which was primarily attributable to (i) advances to shareholder and director of approximately US$0.81 million; (ii) repayments of borrowings and overdraft to bank of approximately US$28.70 million; and (iii) payment for deferred offering cost of approximately US$0.61 million; partially offset by (i) proceeds from bank borrowings and overdraft of approximately US$27.97 million; and (ii) proceeds from related party of approximately US$0.9 million.
For the year ended September 30, 2023, our net cash provided by financing activities was approximately US$0.5 million, which was primarily attributable to (i) proceeds from overdraft from banks of approximately US$14.18 million; (ii) proceeds from loans provided by director and related party of approximately US$2.28 million; and was mainly offset by (i) repayments of bank borrowings and overdraft of approximately US$13.46 million; (ii) advances to shareholder and director of approximately US$1.55 million and (iii) payment for deferred offering cost of approximately US$0.9 million.
SELECTED CONDENSED CONSOLIDATED BALANCE SHEETS
| As of September 30, | ||||||||
| 2024 | 2025 | |||||||
| US$ | US$ | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | 659,320 | 645,912 | ||||||
| Restricted cash | - | 320,513 | ||||||
| Accounts receivable, net | 13,237,577 | 11,765,180 | ||||||
| Due from related parties | 783,206 | - | ||||||
| Deferred listing cost | 1,928,701 | - | ||||||
| Deposits, prepayment and other receivable | 473,897 | 460,363 | ||||||
| Total current assets | 17,082,701 | 13,191,968 | ||||||
| Liabilities | ||||||||
| Current liabilities: | ||||||||
| Bank overdraft | 591,207 | 717,306 | ||||||
| Bank loans - current | 897,435 | 1,923,075 | ||||||
| Accounts payable | 6,546,974 | 5,278,790 | ||||||
| Accruals and other current liabilities | 165,577 | 375,001 | ||||||
| Operating lease liabilities - current | 594,589 | 215,575 | ||||||
| Finance lease liabilities - current | 34,731 | 36,592 | ||||||
| Loan payable - related party | 2,430,691 | - | ||||||
| Income tax payables | 462,563 | 433,915 | ||||||
| Total current liabilities | 11,723,767 | 8,980,254 | ||||||
| Net Current Assets | 5,358,934 | 4,211,714 | ||||||
Accounts receivable, net
Accounts receivable represented receivables from our customers arising from our freight forwarding services. We generally grant our customers a credit period typically ranging from 0 to 1 year, depending on their reputation and transaction history. Our accounts receivable, net decreased by 11.12% to US$11.77 million as of September 30, 2025, from US$13.24 million as of September 30, 2024 as a result of extending repayment periods for old customers to maintaining a positive and supportive relationship with the customers.
The following table summarizes our outstanding accounts receivable and subsequent collection as of September 30, 2025:
Balance as of September 30, | Subsequent | % of | ||||||||||
| 2025 | collection | subsequent | ||||||||||
| Accounts Receivable by aging bucket | US$ | US$ | collection | |||||||||
| 0-30 days | $ | 3,597,511 | $ | 2,747,971 | 76.39 | % | ||||||
| 31-60 days | 2,802,292 | 2,594,986 | 92.60 | % | ||||||||
| 61-90 days | 829,141 | 236,589 | 28.53 | % | ||||||||
| Over 90 days | 5,087,451 | 1,502,396 | 23.63 | % | ||||||||
| Total gross accounts receivable | 12,316,395 | $ | 7,081,942 | 57.50 | % | |||||||
| Allowance for expected credit loss | (551,215 | ) | ||||||||||
| Accounts Receivable, net | $ | 11,765,180 | ||||||||||
Loan payable - related party and amounts due from related parties
As of September 30, 2024 | As of September 30, 2025 | |||||||
| US$ | US$ | |||||||
Loan payable - related party | ||||||||
| Asia International Securities Exchange Co., Limited | 2,430,691 | - | ||||||
| Due from related parties | ||||||||
| Lam Shing Kwan Henry (director) | 440,164 | - | ||||||
| Ngan Ching Shun (executive officer) | 260,957 | - | ||||||
| Ng Yi To Peter (director) | 82,085 | - | ||||||
| 783,206 | - | |||||||
On December 1, 2022, the Company entered into facility letter with a shareholder, Sin Yuk Hung for a facility of up to HK$2 million ($256,410) available to the shareholder for overdraft. Drawdowns can be in different tranches approved by the Company and repaid at any time with one month's notice. This loan bears an annual interest at a rate of 2.8% on the outstanding amount from drawdown tranche until repayment. The loan of US$218,109 was repaid on April 8, 2024.
On December 22, 2022, the Company entered into a loan and sale and purchase agreement (the "Agreement") with Ngan Ching Shun and Asia International Securities Exchange Co., Ltd ("AISE"), pursuant to which AISE acquired 21% shareholding in the Company from Mr. Ngan and as part of the Agreement, AISE agreed to lend the Company up to the amount of US$2 million to finance the payment of the proposed IPO expenses. AISE advanced further amount of US$430,691 for a total loan amount of US$2,430,691 as of September 2024 due to the actual IPO expenses exceeding the budgeted amount of US$2 million. This loan is interest free and payable in full 180 days from the first trading date of the Company. AISE subsequently disposed of 4.5% to a third party shortly after the acquisition of the 21% shareholding and it remains a 16.5% shareholder of the Company before IPO.
As of September 30, 2025, nil balance of related parties. As of September 30, 2024, due from related parties are advances to related parties. The advances are unsecured, non-interest bearing and due on demand. The Company has not recorded any imputed interest income or expenses for the year ended September 30, 2023 and 2024. The amounts due from related parties were fully repaid in December 2024.
Deposits, prepayment and other receivable
Deposits, prepayment and other receivable consisted mainly of office rental deposits, utility deposits and cargo deposits. Deposits, prepayment and other receivable increased from US$473,897 as of September 30, 2024 to US$973,184 as of September 30, 2025 due to the refundable deposit paid for acquisition of a subsidiary of US$512,821.
Dividend paid
During year ended September 30, 2023, the Company approved and declared a dividend of HK$55,000,000 (equivalent to US$7,051,282). Certain shareholders agreed to waive the right to receive the declared dividends in an aggregate amount of US$1,057,692, and the remaining declared dividend has been paid by offsetting against the amount due from shareholders immediately.
There was no dividend declared or paid during the year ended September 30, 2024 and 2025.
Contractual Obligations
The following table summarizes our contractual obligations as of September 30, 2024:
| Payment due by period | ||||||||||||||||||||
| Less than | 1 to 2 | 2 to 5 | More than | |||||||||||||||||
| Contractual obligations: | 1 year | years | years | 5 years | Total | |||||||||||||||
| Bank loan | $ | 897,435 | $ | - | $ | - | $ | - | $ | 897,435 | ||||||||||
| Operating leases | 625,719 | 216,480 | 198,440 | - | 1,040,639 | |||||||||||||||
| Finance leases | 39,831 | 39,831 | 99,576 | - | 179,238 | |||||||||||||||
| Total contractual obligations | $ | 1,562,985 | $ | 256,311 | $ | 298,016 | $ | - | $ | 2,117,312 | ||||||||||
The following table summarizes our contractual obligations as of September 30, 2025:
| Payment due by period | ||||||||||||||||||||
| Less than | 1 to 2 | 2 to 5 | More than | |||||||||||||||||
| Contractual obligations: | 1 year | years | years | 5 years | Total | |||||||||||||||
| Bank loan | $ | 1,923,075 | $ | - | $ | - | $ | - | $ | 1,923,075 | ||||||||||
| Operating leases | 215,575 | 223,182 | - | - | 438,757 | |||||||||||||||
| Finance leases | 36,592 | 35,300 | 57,764 | - | 129,656 | |||||||||||||||
| Total contractual obligations | $ | 2,175,242 | $ | 258,482 | $ | 57,764 | $ | - | $ | 2,491,488 | ||||||||||
Off-balance Sheet Arrangement
We have no off-balance sheet arrangements, including arrangements that would affect its liquidity, capital resources, market risk support, credit risk support, or other benefits.
Quantitative and Qualitative Disclosure About Market Risk
Credit risk
Assets that potentially subject us to a significant concentration of credit risk primarily consist of bank balances, restricted cash, accounts receivables, due from related parties, deposits and other receivables. We believe that there is no significant credit risk associated with cash, which was held by reputable financial institutions in the jurisdictions where the Company and its subsidiaries are located. The Hong Kong Deposit Protection Board pays compensation up to a limit of HK$800,000 (approximately $102,564) if the bank with which an individual/company holds its eligible deposit fails. As of September 30, 2025, a cash balance of US$1 million was maintained at financial institutions in Hong Kong and approximately US$0.3 million was insured by the Hong Kong Deposit Protection Board.
We have designed our credit policies with an objective to minimize exposure to credit risk. We conduct credit evaluations on our customers and generally do not require collateral or other security from such customers. We periodically evaluate the creditworthiness of the existing customers in determining the allowance for credit losses, which represents our estimate of the probable credit losses inherent in our trade receivables as of the balance sheet date. The allowance for credit losses is estimated using a combination of models and management judgment, and is based on factors such as historical loss performance. The adequacy of our allowance for credit losses is assessed quarterly and the assumptions and models used in establishing the allowance are evaluated regularly.
Customer concentration risk
For the year ended September 30, 2025, two customers accounted for 12.86% and 11.63% of our total revenue, respectively. For the year ended September 30, 2024, a customer accounted for 26.46% of our total revenue. For the year ended September 30, 2023, a customer accounted for 10.79% of our total revenue. No other customer accounts for more than 10% of our total revenue for the years ended September 30, 2023, 2024 and 2025, respectively.
As of September 30, 2025, a customer accounted for 42.46% of the total balance of accounts receivable. As of September 30, 2024, a customer accounted for 52.39% of the total balance of accounts receivable. No other customer accounts for more than 10% of our accounts receivable as of September 30, 2024 and 2025, respectively.
Vendor concentration risk
For the year ended September 30, 2025, two vendors accounted for 20.63% and 17.91% of our total cost of services, respectively. For the year ended September 30, 2024, a vendor accounted for 18.3% of our total cost of services. For the year ended September 30, 2023, two vendors accounted for 26.46% and 11.70% of our total cost of services. No other vendor accounts for more than 10% of our cost of services for the year ended September 30, 2023, 2024 and 2025, respectively.
As of September 30, 2025, two vendors accounted for 17.48% and 11.10% of the total balance of accounts payable. As of September 30, 2024, two vendors accounted for 24.30% and 13.39% of the total balance of accounts payable. No other vendor accounts for more than 10% of our accounts payable as of September 30, 2024 and 2025, respectively.
Foreign currency risk
We are exposed to foreign currency risk primarily through service income or expenses that are denominated in a currency other than the functional currency of the operations to which they relate. The currencies giving rise to this risk are primarily $. As HK$ is currently pegged to $, our exposure to foreign exchange fluctuations is minimal.
Interest rate risk
We are exposed to interest rate risk primarily relates to the variable-rate bank loans and overdraft and is mainly concentrated on the fluctuation of Hong Kong Prime Rate arising from our bank loan and overdraft. We have not used any derivative instruments to mitigate its exposure associated with interest rate risk.
C. Research and Development, Patents and Licenses, etc.
Please see Item 4.A. "Information on the Company-Business Overview" above.
D. Trend Information
See ITEM 5.A "operating results" above for our trend information.
E. Critical Accounting Estimates
We prepare our consolidated financial statements in accordance with U.S. GAAP. These accounting principles require us to make judgments, estimates and assumptions on the reported amounts of assets and liabilities at the end of each fiscal period, and the reported amounts of revenues and expenses during each fiscal period.
We continually evaluate these judgments and estimates based on our own historical experience, knowledge and assessment of current business and other conditions, our expectations regarding the future based on available information, which together form our basis for making judgments about matters that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, our actual results could differ from those estimates.
Some of our accounting policies require a higher degree of judgment than others in their application.
Critical accounting policies
When reading our consolidated financial statements, you should consider our selection of critical accounting policies, including revenue recognition, accounts receivable, and income taxes, of which the details are set out in our consolidated financial statements.
Recently Accounting Pronouncements
See the discussion of the recent accounting pronouncements contained in Note 2 to the consolidated financial statements, "Summary of Significant Accounting Policies".
Critical accounting estimates
You should also consider the judgment and other uncertainties affecting the application of such policies and the sensitivity of reported results to changes in conditions and assumptions. We believe the following accounting policies involve the most significant judgments and estimates used in the preparation of our consolidated financial statements.
Allowance for credit loss - accounts receivable
In establishing an allowance for credit losses, we use reasonable and supportable information, which is based on historical collection experience, the financial condition of our customers and assumptions for the future movement of different economic drivers and how these drivers will affect each other. Loss-rate approach is based on the historical loss rates and expectations of future conditions.
Revenue recognition
Our transportation transactions provide for the arrangement of the movement of freight to a customer's destination. These performance obligations are satisfied and recognized in revenue upon the transfer of control of the services over the requisite transit period as the customer's goods move from origin to destination. We determine the period to recognize revenue in transit based upon the departure date and the delivery date, which may be estimated if delivery has not occurred as of the reporting date. Determination of the transit period and the percentage of completion of the shipment as of the reporting date requires us to make judgments that affect the timing of revenue recognition. We have determined that revenue recognition over the transit period provides a reasonable estimate of the transfer of services to our customers as it depicts the pattern of our performance under the contracts with its customers.