| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Reorganization
On
May 22, 2023, Globavend Holdings Limited (“Globavend Holdings” or the “Company”) was incorporated in the Cayman
Islands having an authorized share capital of US$50,000 divided into 50,000,000 ordinary shares of par value of US$0.001 each, and 13,125,000
ordinary shares were issued to Globavend Investments Limited (“Globavend Investments”), which is wholly owned by Mr. Wai
Yiu Yau.
Pursuant
to the Company’s reorganization (“Reorganization”) that took place on May 29, 2023, the former shareholder of Globavend
HK, namely Mr. Wai Yiu Yau transferred all the shares of, inter alia, Globavend HK to Globavend BVI in consideration of Globavend BVI
allotting and issuing 1 share to the Company credited as fully paid.
Following
such share swap, Globavend HK became the Company’s indirectly owned subsidiaries through Globavend BVI, whereas Globavend Investments
Limited became the controlling shareholders of the Company holding 100% of the issued share capital of the Company respectively.
The
combination has been treated as a corporate restructuring (“Reorganization”) of entities under common control and thus the
current capital structure has been retroactively presented in prior periods as if such structure existed at that time and in accordance
with ASC 805-50-45-5, the entities under common control are presented on a combined basis for all periods to which such entities were
under common control. Since all of the subsidiaries were under common control for the entirety of the six months ended March 31, 2023
and 2024, the results of these subsidiaries are included in the financial statements for both periods. After the Restructuring (“Reorganization”),
the Company has 13,125,000 ordinary shares issued and outstanding.
On
November 10, 2023, the Company completed its IPO and listed its Ordinary Shares on the Nasdaq Capital Market under the symbol “GVH”.
With the above IPO, the Company received total gross proceeds of US$5.3 million from the issuance of 1,500,000 new ordinary shares from
the initial public offering after deducting underwriting discounts, commissions and expenses.
As
of March 31, 2024, the authorized number of ordinary shares is 50,000,000 with a par value of $0.001 and the issued number of ordinary
shares is 14,625,000.
Basis
of Presentation and Principles of Consolidation
The
accompanying unaudited condensed consolidated financial statements of the Company and its wholly owned subsidiaries (Collectively, the
“Company”) have been prepared in accordance with U.S. generally accepted accounting principles (“US GAAP) for interim
financial reporting. These unaudited condensed consolidated financial statements do not include certain information and footnote disclosures
as required by the U.S. GAAP for complete annual financial statements. Accordingly, these statements should be read in conjunction with
the Company’s audited consolidated financial statements for the years ended September 30, 2022 and 2023.
In
the opinion of the management, the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments,
which are necessary for a fair presentation of financial results for the interim periods presented. The Company believes that the disclosures
are adequate to make the information presented not misleading. The accompanying unaudited condensed consolidated financial statements
have been prepared using the same accounting policies as used in the preparation of the Company’s consolidated financial statements
for the years ended September 30, 2022 and 2023. The results of operations for the six-month periods ended March 31, 2023 and 2024 are
not necessarily indicative of the results for the full years.
The
financial information as of September 30, 2023 presented in the unaudited condensed consolidated financial statements is derived
from the audited consolidated financial statements for the year ended September 30, 2023.
Use
of Estimates
The
preparation of consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that
affect the amounts reported and disclosed in the consolidated financial statements and accompanying notes. Actual amounts could differ
from those estimates and differences could be material. Changes in estimates are recorded in the period they are identified.
Judgments,
estimates and underlying assumptions are evaluated on an ongoing basis by management and are based on historical experience and other
factors including expectations of future events that are believed to be reasonable under the circumstances. However, existing circumstances
and assumptions about future developments may change due to market changes or circumstances and such changes are reflected in the assumptions
when they occur.
Significant
estimates required to be made by management include, but are not limited to, allowance of expected credit losses. Actual results could
differ from those estimates.
The
measurement of the expected credit loss allowance for financial assets measured at amortized cost is an area that requires the use of
significant assumptions about future economic conditions and credit behavior (e.g. the likelihood of customers defaulting and the resulting
losses). A number of significant judgements are also required in applying the accounting requirements for measuring expected credit loss,
such as:
| |
● |
Assessing
relevant historical and forward-looking quantitative and qualitative information; |
| |
|
|
| |
● |
Choosing
appropriate models and assumptions for the measurement of expected credit loss. |
The
Company reviews its accounts receivable and contract assets on a periodic basis and makes general and specific allowances when there
is doubt as to the collectability of individual balances. The loss-rate method is used to estimate the expected credit loss for accounts
receivable and contract assets. The loss-rates are estimated based on the age of the balances of accounts receivable, historical experience,
current general economic conditions, future expectations and customer specific quantitative and qualitative factors that may affect the
customers’ ability to pay. The assessment of the correlation among historical observed default rates, forecast economic conditions
and expected credit losses is a significant estimate. The amount of expected credit loss is sensitive to changes in circumstances and
forecast economic conditions. The historical credit loss experience and forecast of economic conditions may also not be representative
of a customer’s actual default in the future. As of September 30, 2023 and March 31, 2024, balance of allowance for expected credit
loss was $50,935 and $26,924, respectively.
Risks
and uncertainties
The
main operations of the Company are located in Hong Kong. Accordingly, the Company’s business, financial condition, and results
of operations may be influenced by political, economic, and legal environments in Hong Kong, as well as by the general state of the economy
in Hong Kong. The Company’s results may be adversely affected by changes in the political, regulatory and social conditions in
Hong Kong. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing
laws and regulations including its organization and structure disclosed in Note 1, such experience may not be indicative of future results.
The
Company’s business, financial condition and results of operations may also be negatively impacted by risks related to natural disasters,
extreme weather conditions, health epidemics and other catastrophic incidents, which could significantly disrupt the Company’s
operations.
Following
the Outbreak of COVID-19 (the “Outbreak”), a series of precautionary and control measures have been and will continue to
be implemented in Hong Kong. The directors of the Company will keep continuous attention on monitoring the development of the Outbreak.
Based on the currently available information, the directors of the Company consider that the Outbreak would not have a material financial
impact on the Company’s overall operation and sales performance.
As
an infectious disease, the Outbreak was first reported in late December 2019 and has since spread to various countries all over the world.
On 11 March 2020, the World Health Organization announced that COVID-19 be characterized as a pandemic based on its assessment and the
governments of different countries have taken drastic measures to curb the spread of the Epidemic. The Epidemic has not only endangered
the health of citizens but has also disrupted the business operations of various enterprises. While the Company’s business operations
are primarily based in Hong Kong, there was no significant impact on the Company’s business in 2023 and for the six months ended
March 31, 2024.
Concentration
risk
The
risk is mitigated by the Company’s assessment of the level of concentration on its major customers and its ongoing monitoring of
outstanding balances.
Concentration
of major customers and suppliers:
SCHEDULES
OF CONCENTRATION OF RISK BY RISK FACTOR
| | |
For the six months ended March
31, | |
| | |
2023 | | |
| | |
2024 | | |
| |
| Major customers representing more than 10% of the Company’s revenues | |
| | | |
| | | |
| | | |
| | |
| Customer A | |
$ | 2,099,354 | | |
| 22.3 | % | |
$ | 1,864,655 | | |
| 22.2 | % |
| Customer B | |
| 1,797,766 | | |
| 19.1 | % | |
| 1,434,490 | | |
| 17.1 | % |
| Customer C | |
| 1,252,095 | | |
| 13.3 | % | |
| 1,242,771 | | |
| 14.8 | % |
| Total Revenues | |
$ | 5,149,215 | | |
| 54.7 | % | |
$ | 4,541,916 | | |
| 54.2 | % |
| | |
As of | |
| | |
September
30, 2023 | | |
| | |
March
31, 2024 | | |
| |
| Major customers of the Company’s accounts receivable, net | |
| | | |
| | | |
| | | |
| | |
| Company A | |
$ | 437,898 | | |
| 29.8 | % | |
$ | 259,406 | | |
| 34.9 | % |
| Company B | |
| - | | |
| - | | |
| 143,392 | | |
| 19.3 | % |
| Company C | |
| 459,954 | | |
| 31.3 | % | |
| 617 | | |
| 0.1 | % |
| Total | |
$ | 897,852 | | |
| 61.1 | % | |
$ | 403,415 | | |
| 54.3 | % |
| | |
For the six months ended March
31, | |
| | |
2023 | | |
| | |
2024 | | |
| |
| Major suppliers representing more than 10% of the Company’s cost of revenue | |
| | | |
| | | |
| | | |
| | |
| Panaicia Pty Ltd (note) | |
$ | 3,004,054 | | |
| 34.6 | % | |
$ | 2,414,279 | | |
| 35.9 | % |
| Supplier A | |
| 1,725,911 | | |
| 19.9 | % | |
| 1,047,585 | | |
| 15.6 | % |
| Supplier B | |
| 1,194,857 | | |
| 13.8 | % | |
| 804,452 | | |
| 12.0 | % |
| Supplier C | |
| 1,127,423 | | |
| 13.0 | % | |
| - | | |
| - | |
| Total Cost of Revenue | |
$ | 7,052,245 | | |
| 81.3 | % | |
$ | 4,266,316 | | |
| 63.5 | % |
| | |
As of | |
| | |
September
30, 2023 | | |
| | |
March
31, 2024 | | |
| |
| Major suppliers of the Company’s accounts payables, net | |
| | | |
| | | |
| | | |
| | |
| Panaicia Pty Ltd (note) | |
$ | - | | |
| - | | |
$ | 261,770 | | |
| 33.5 | % |
| Supplier A | |
| 2,301,224 | | |
| 88.5 | % | |
| 240,468 | | |
| 30.7 | % |
| Supplier B | |
| 54,188 | | |
| 2.1 | % | |
| - | | |
| - | |
| Supplier C | |
| 108,743 | | |
| 4.1 | % | |
| 19,089 | | |
| 2.4 | % |
| Total | |
$ | 2,464,155 | | |
| 94.7 | % | |
$ | 521,327 | | |
| 66.6 | % |
Note:
Panaicia Pty Ltd is a related party of the Company, in which its sole director and sole shareholder is one of the shareholders of the
Company, Mr. Wai Yiu Yau.
Foreign
Currency Translation
The
Company uses United State Dollar (“US$”) as its reporting currency. The Company’s operations are principally conducted
in Hong Kong where Hong Kong dollar is the functional currency.
Transactions
denominated in other than the functional currencies are re-measured into the functional currency of the entity at the exchange rates
prevailing on the transaction dates. Monetary assets and liabilities denominated in currencies other than the applicable functional currencies
are translated into the functional currency at the prevailing rates of exchange at the balance date. The resulting exchange differences
are reported in the consolidated statements of operation and comprehensive income.
The
exchanges rates used for translation from Hong Kong dollar to USD was 7.8000, a pegged rate determined by the linked exchange rate system
in Hong Kong. This pegged rate was used to translate Company’s balance sheets, income statement items and cash flow items for six
months ended March 31, 2023 and 2024.
SCHEDULE OF FOREIGN CURRENCY TRANSLATION
| | |
For
the six months ended March
31, | |
| | |
2023 | | |
2024 | |
| Year end HKD: US$ exchange rate | |
| 7.8000 | | |
| 7.8000 | |
| Year average HKD: US$ exchange rate | |
| 7.8000 | | |
| 7.8000 | |
Credit
Risk
The
Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual
obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. Assets that potentially subject the
Company to a significant concentration of credit risk primarily consist of cash and cash equivalents, accounts receivable, deposits and contract
assets. The Company has designed their credit policies with an objective to minimize their exposure to credit risk.
The
exposure to credit risk, which will cause a financial loss to us due to failure to discharge an obligation by the counterparties, relates
primarily to our bank deposits (including our own cash at banks), accounts receivable, deposits and contract assets. The Company considers the
maximum exposure to credit risk equals to the carrying amount of these financial assets in the consolidated statement of financial position.
As of September 30, 2023 and March 31, 2024, the cash balances of $554,132 and $2,549,766, respectively, were substantially maintained
at financial institutions in Hong Kong, respectively.
The
Company believes 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
Company has adopted a credit policy of dealing with creditworthy counterparties to mitigate the credit risk from defaults. The credit
exposure is controlled by counterparty limits that are reviewed and approved by the senior management of the Company periodically. The
management team periodically evaluates the creditworthiness of the existing customers in determining an allowance for expected credit
loss primarily based on many factors, including the age of the balance, customer’s historical payment history, its current creditworthiness
and current or future economic trends.
Liquidity
Risk
Liquidity
risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that
are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as
possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions,
without incurring unacceptable losses or risking damage to the Company’s reputation.
Typically,
the Company ensures that it has sufficient cash on demand to meet expected operational expenses for a period of 60 days, including the
servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted,
such as natural disasters.
Foreign
Exchange Risk
The
reporting currency of the Company is U.S. Dollar. To date the majority of the revenues and costs are denominated in Hong Kong Dollar
and a significant portion of the assets and liabilities are denominated in Hong Kong Dollars. There was no significant exposure to foreign
exchange rate fluctuations and the Company has not maintained any hedging policy against foreign currency risk. The management will consider
hedging significant currency exposure should the need arise.
Fair
Value of Financial Instruments
The
Company applies the provisions of ASC 820, Fair Value Measurements and Disclosures, to the financial instruments that are required
to be carried at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability (an exit
price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants
at the measurement date. The Company uses a three-tier fair value hierarchy based upon observable and non-observable inputs that prioritizes
the information used to develop our assumptions regarding fair value. Fair value measurements are separately disclosed by level within
the fair value hierarchy.
| |
● |
Level
1—defined as observable inputs such as quoted prices in active markets for identical assets or liabilities; |
| |
|
|
| |
● |
Level
2—defined as inputs other than quoted prices in active markets, that are either directly or indirectly observable; and |
| |
|
|
| |
● |
Level
3—defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own
assumptions. |
The
Company’s financial instruments primarily consist of cash and cash equivalents, accounts receivable, deposit, accounts payable,
other payables, lease liabilities and accrued liabilities and tax payable.
The
carrying value of cash and cash equivalents, accounts receivable, deposit, accounts payable, other payables and accrued liabilities and
tax payable approximate fair value because of the short-term nature of these items. For lease liabilities, fair value approximates their
carrying value at the year-end, as the interest rates used to discount the host contracts approximate market rates.
Cash
and Cash Equivalents
Cash
and cash equivalents consist of cash held in banks, which are highly liquid and have original maturities of three months or less and
are unrestricted as to withdrawal or use. The Company maintains all bank accounts in Hong Kong. Cash balances in bank accounts in Hong
Kong are protected under Deposit Protection Scheme in accordance with the Deposit Protection Scheme Ordinance. The maximum protection
is up to HKD500,000 per depositor per Scheme member, including both principal and interest.
Accounts
Receivable, net
Accounts
receivables are carried at the original invoiced amount less an estimated allowance for expected credit losses based on the probability
of future collection. The Company reviews its accounts receivable on a periodic basis and makes general and specific allowances when
there is doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balances, the
Company considers many factors, including the age of the balance, customer’s historical payment history, its current creditworthiness
and current or future economic trends. Accounts are written off after exhaustive efforts at collection. The Company only grants credit
terms to established customers who are deemed to be financially responsible. Credit periods to customers are normally within 7 to 90
days after customers received services provided by the Company. If accounts receivables are to be provided for, or written off, they
would be recognized in the consolidated statements of operations and comprehensive income within operating expenses. The Company used
loss-rate methods to estimate allowance for credit loss. For those past due balances over 1 year and other higher risk receivables identified
by management are reviewed individually for collectability. In establishing an allowance for credit losses, the Company use reasonable
and supportable information, which is based on historical collection experience, the financial condition of its 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. The Company writes off potentially uncollectible accounts receivable against
the allowance for credit losses if it is determined that the amounts will not be collected or if a settlement with respect to a disputed
receivable is reached for an amount that is less than the carrying value. Balance of allowance for expected credit loss for accounts
receivables was $38,534 and $16,745 as of September 30, 2023 and March 31, 2024, respectively.
Related
Party
In
general, related parties exist when there is a relationship that offers the potential for transactions at less than arm’s-length,
favorable treatment, or the ability to influence the outcome of events different from that which might result in the absence of that
relationship. A related party may be any of the following: a) an affiliate, which is a party that directly or indirectly controls, is
controlled by, or is under common control with another party; b) a principle owner, owner of record or known beneficial owner of more
than 10% of the voting interest of an entity; c) management, which are persons having responsibility for achieving objectives of the
entity and requisite authority to make decision; d) immediate family of management or principal owners; e) a parent Company and its subsidiaries;
and f) other parties that have ability to significant influence the management or operating policies of the entity. The Company discloses
all significant related party transactions.
Contract
Assets and Contract Liabilities
Contract
assets include billed and unbilled amounts resulting from in-transit shipments, as the Company has an unconditional right to payment
only when services have been completed (i.e., shipments have been delivered). Amounts do not exceed their net realizable value. Contract
assets are generally classified as current and the full balance is converted within 90 days based on the short-term nature of the transactions.
Contract
assets were $543,838 and $ 452,031 as of September 30, 2023 and March 31, 2024, respectively. Balance of allowance for expected credit
loss for contract assets was $12,401 and $10,179 as of September 30, 2023 and March 31, 2024, respectively.
Contract
liabilities are recognized when the Company receives prepayments from customers resulting from in-transit logistics. Contract liabilities
will be recognized as revenue when promised services are provided. Contract liabilities were nil as of September 30, 2023 and March 31,
2024.
Deferred
costs
Deferred
offering costs consist principally of all direct offering costs incurred by the Company, such as underwriting, legal, accounting, consulting,
printing, and other registration related costs in connection with the offering of the Company’s ordinary shares. Such costs
are deferred until the closing of the offering, at which time the deferred costs are offset against the offering proceeds. In the event
the offering is unsuccessful or aborted, the costs will be expensed. As of September 30, 2023 and March 31, 2024, deferred costs were
$1,306,441 and
$300,000,
respectively.
Property,
Plant, and Equipment
Property,
plant, and equipment are stated at cost less accumulated depreciation, and include expenditure that substantially increases the useful
lives of existing assets. Expenditures for repairs and maintenance, which do not extend the useful life of the assets, are expensed as
incurred, whereas significant renewals and betterments are capitalized.
Depreciation
is provided over their estimated useful lives with an estimated residual value of the assets, using the straight-line method. Estimated
useful lives are as follows:
SCHEDULE
OF ESTIMATED USEFUL LIVES
| Motor
vehicles |
|
|
3.3
years |
|
| Fixtures,
furniture and equipment |
|
|
5
years |
|
When
assets are sold or retired, their costs and accumulated depreciation are eliminated from the consolidated financial statements and any
gain or loss resulting from their disposal is recognized in the period of disposition as an element of other income.
Impairment
of Long-Lived Assets
Long-lived
assets are evaluated for impairment periodically whenever events or changes in circumstances indicate that their related carrying amounts
may not be recoverable in accordance with FASB ASC 360, “Property, Plant and Equipment”.
In
evaluating long-lived assets for recoverability, the Company uses its best estimate of future cash flows expected to result from the
use of the asset and eventual disposition in accordance with FASB ASC 360-10-15. To the extent that estimated future, undiscounted cash
inflows attributable to the asset, less estimated future, undiscounted cash outflows, are less than the carrying amount, an impairment
loss is recognized in an amount equal to the difference between the carrying value of such asset and its fair value. Assets to be disposed
of and for which there is a committed plan of disposal, whether through sale or abandonment, are reported at the lower of carrying value
or fair value less costs to sell.
There
was no impairment loss recognized for the six months ended March 31, 2023 and 2024.
Lease
The
Company makes an accounting policy election not to separate non-lease components to measure the lease liability and lease asset. For
operating leases with a term of one year or less, we have elected not to recognize a lease liability or ROU asset on our consolidated
balance sheets. Instead, we recognize the lease payments as expenses on a straight-line basis over the lease term.
Operating
leases
Upon
adoption of ASC 842, the lease liabilities are recognized upon lease commencement for operating leases based on the present value of
lease payments over the lease term, operating leases are recognized as right-of-use assets (“ROU”) and lease liabilities
in the consolidated balance sheets if the initial lease term is greater than 12 months. For leases with an initial term of 12 months
or less the Company recognizes those lease payments on a straight-line basis over the lease term.
ROU
assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease
payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present
value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, management uses the
incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.
Management uses the implicit rate when readily determinable. Lease expense is recognized on a straight-line basis over the lease term
and are included in general and administrative (“G&A”) expenses.
Revenue
Recognition
The
Company considers revenue realized or realizable and earned when all the five following criteria are met: (1) Identify the Contract 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 When (or as) the Entity Satisfies a Performance Obligation.
The Company has assessed the impact of the guidance by reviewing its existing customer contracts and current accounting policies and
practices to identify differences that will result from applying the new requirements, including the evaluation of its performance obligations,
transaction price, customer payments, transfer of control and principal versus agent considerations. Based on the assessment, the Company
concluded that there was no change to the timing and pattern of revenue recognition for its current revenue streams in scope of Topic
606 and therefore there was no material changes to the Company’s consolidated financial statements upon adoption of ASC 606.
Revenue
may be recognized at a point in time or over time following the timing of satisfaction of the performance obligation. If a performance
obligation is satisfied over time, revenue is recognized based on the percentage of completion reflecting the progress towards complete
satisfaction of that performance obligation.
The
Company’s revenues are primarily from the provision of (i) integrated cross-border logistics services, which including supporting
transportation for freight forwarding purpose, storage of consignment, labelling of consignments, other related logistic services for
freight forwarding purpose, freight management services, and delivery at destination, and (ii) air freight forwarding services.
Integrated
cross-border logistics services
In
general, each logistics order constitutes a separate contract with the customer. A performance obligation is created once a customer
agreement with an agreed upon transaction price exists. The transaction price is typically fixed and not contingent upon the occurrence
or non-occurrence of any other event. The transaction price is generally due 7 to 90 days from the date of invoice. The Company’s
logistics services provide for the arrangement of the movement of shipments to a customer’s destination. The logistics services,
including certain ancillary services, such as loading/unloading and customs clearance, that are provided to the customer represent a
single performance obligation as these promises aren’t distinct in the context of the contract. This performance obligation is
satisfied over time 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. The Company determines 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 transportation as of the reporting date requires management to make judgments that affect the
timing of revenue recognition. The Company has determined that revenue recognition over the transit period provides a reasonable estimate
of the transfer of services to its customers as it depicts the pattern of the Company’s performance under the contracts with its
customers.
Air
freight forwarding services
The
Company also provides air freight forwarding services by purchasing transportation services from direct carriers or other freight forwarders
and reselling those services to its customers. The contracts with customers generally contain a single performance obligation. The Company
recognizes revenue from this performance obligation at a point in time, which is the completion of the services.
The
Company uses independent contractors and third-party carriers in the performance of its logistics and air freight forwarding services.
The Company evaluates who controls the logistics and air freight forwarding services to determine whether its performance obligation
is to transfer services to the customer or to arrange for services to be provided by another party. The Company determined it acts as
the principal for its logistics and air freight forwarding services performance obligation since it is in control of establishing the
prices for the specified services, managing all aspects of the logistics and air freight forwarding process, and assuming the risk of
loss for delivery and collection. Such logistics and air freight forwarding services revenue is presented on a gross basis in the consolidated
statements of operations and comprehensive income.
A
summary of the Company’s gross revenues disaggregated by major service lines and timing of revenue recognition for the six months
ended March 31, 2023 and 2024, respectively, are as follow:
SCHEDULE
OF DISAGGREGATED BY MAJOR SERVICE
| | |
| | | |
| | |
| | |
For
the six months ended March
31, | |
| | |
2023 | | |
2024 | |
| Integrated cross-border logistics services | |
$ | 8,923,224 | | |
$ | 7,659,537 | |
| Air freight forwarding services | |
| 477,346 | | |
| 725,253 | |
| Total | |
$ | 9,400,570 | | |
$ | 8,384,790 | |
Cost
of revenue
Cost
of revenue consists primarily of cargo space charged by airlines or other freight forwarders and ancillary logistics services fee including
costs of custom handling services, last mile carriage, labor costs and warehouse packaging.
General
and Administrative Expenses
General
and administrative expenses include salaries and employee benefits, depreciation for fixture, furniture and office equipment and ROU
assets, staff salaries, travel and entertainment, audit fees, bank charges, credit loss expense and other office expenses.
Income
Taxes
The
Company accounts for income taxes following the liability method pursuant to FASB ASC 740 “Income Taxes”. Under this method,
deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and
liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. The Company
records a valuation allowance to offset deferred tax assets if, based on the weight of available evidence, it is more-likely-than-not
that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rate is recognized
in income in the period that includes the enactment date.
The
Company also follows FASB ASC 740, which addresses the determination of whether tax benefits claimed or expected to be claimed on a tax
return should be recorded in the financial statements. The Company may recognize the tax benefit from an uncertain tax position only
if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical
merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the
largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. ASC 740 also provides guidance
on recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.
As of September 30, 2023 and March 31, 2024, the Company did not have a liability for unrecognized tax benefits. It is the Company’s
policy to include penalties and interest expense related to income taxes as a component of other expense and interest expense, respectively,
as necessary. The Company’s historical tax years will remain open for examination by the local authorities until the statute of
limitations has passed.
Earnings
per share
The
Company calculates earnings per share in accordance with ASC Topic 260 “Earnings per Share.” Basic earnings per share is
computed by dividing the net income by the weighted average number of common shares outstanding during the year. Diluted earnings per
share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common
shares that would have been outstanding if the potential ordinary shares equivalents had been issued and if the additional common shares
were dilutive. As of September 30, 2023 and March 31, 2024, there were no dilution impact.
Commitments
and Contingencies
In
the normal course of business, the Company is subject to contingencies, such as legal proceedings and claims arising out of its business,
which cover a wide range of matters. Liabilities for contingencies are recorded when it is probable that a liability has been incurred
and the amount of the assessment can be reasonably estimated.
If
the assessment of a contingency indicates that it is probable that a material loss is incurred and the amount of the liability can be
estimated, then the estimated liability is accrued in the Company’s financial statements. If the assessment indicates that a potentially
material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the
contingent liability, together with an estimate of the range of possible loss, if determinable and material, would be disclosed.
Loss
contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee
would be disclosed.
As
of September 30, 2023 and March 31, 2024, the Company had a banking facility arrangement for a bank guarantee line with maximum amount
of HK$3,690,000 and HK$1,040,000, respectively, which guaranteed by Mr. Wai Yiu Yau, the director of the Company, and secured by bank
deposit from time to time charged in the bank’s favor. There was no outstanding principal or pledged bank deposit as at September
30, 2023 and March 31, 2024.
Segment
Reporting
ASC
280, “Segment Reporting”, establishes standards for reporting information about operating segments on a basis consistent
with the Company’s internal organizational structure as well as information about geographical areas, business segments and major
customers in financial statements for detailing the Company’s business segments.
The
Company’s chief operating decision maker is the director, who reviews the financial information of each separate operating segment
when making decisions about allocating resources and assessing the performance of the segment. The Company has determined that it has
a single operating segment for purposes of allocating resources and evaluating financial performance.
Government
Grant
For
the six months ended March 31, 2023 and 2024, government grants in the amounts of $1,859 and nil were recognized as other income in the
consolidated statements of operation and comprehensive income, respectively.
Recently
Issued Accounting Pronouncements
The
Company is an “emerging growth company” (“EGC”) as defined in the Jumpstart Our Business Startups Act of 2012
(the “JOBS Act”). Under the JOBS Act, EGC can delay adopting new or revised accounting standards issued subsequent to the
enactment of the JOBS Act until such time as those standards apply to private companies.
Other
accounting standards that have been issued by FASB that do not require adoption until a future date are not expected to have a material
impact on the consolidated financial statements upon adoption. The Company does not discuss recent standards that are not anticipated
to have an impact on or are unrelated to its consolidated financial condition, results of operations, cash flows or disclosures.
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