Armlogi Holding Corp.

Previous wording

This Quarterly Report on Form 10-Q contains “forward-looking statements.” All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to: any projections of earnings, revenue, or other financial items; any statements regarding the adequacy, availability, and sources of capital, any statements of the plans, strategies, and objectives of management for future operations; any statements concerning proposed new products, services, or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. Forward-looking statements may include the words “may,” “will,” “estimate,” “intend,” “continue,” “believe,” “expect,” “plan,” “project,” or “anticipate,” and other similar words. In addition to any assumptions and other factors and matters referred to specifically in connection with such forward-looking statements, factors that could cause actual results or outcomes to differ materially from those contained in the forward-looking statements include those factors set forth in the “Risk Factors” section included in our registration statement on Form S-1 (File No. 333-274667), which was initially filed with the U.S. Securities and Exchange Commission (the “SEC”) on September 25, 2023, as amended, and declared effective by the SEC on May 13, 2024.

Current wording

This Quarterly Report on Form 10-Q contains “forward-looking statements.” All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to: any projections of earnings, revenue, or other financial items; any statements regarding the adequacy, availability, and sources of capital, any statements of the plans, strategies, and objectives of management for future operations; any statements concerning proposed new products, services, or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. Forward-looking statements may include the words “may,” “will,” “estimate,” “intend,” “continue,” “believe,” “expect,” “plan,” “project,” or “anticipate,” and other similar words. In addition to any assumptions and other factors and matters referred to specifically in connection with such forward-looking statements, factors that could cause actual results or outcomes to differ materially from those contained in the forward-looking statements include those factors set forth in the “Item 1A. Risk Factors” included in our annual report on Form 10-K (File No. 001-42099) (the “Annual Report”), which was filed with the SEC on September 26, 2024.

Previous wording

The information included in this Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our unaudited condensed consolidated financial statements and the notes included in this Quarterly Report, and the audited consolidated financial statements and notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our annual report on Form 10-K (File No. 001-42099), filed with the SEC on September 26, 2024.

Current wording

The information included in this Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our unaudited condensed consolidated financial statements and the notes included in this Quarterly Report, and the audited consolidated financial statements and notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in the Annual Report

Previous wording

We provide one-stop warehousing and logistics services to cross-border e-commerce merchants outside the U.S. who seek to sell in the U.S. market. We currently operate ten warehouses across the country, with an aggregate gross floor area of approximately 3,858,667 square feet. Aside from a nationwide footprint and large storage space, our warehouses are equipped with automated sorting systems, heavy-duty forklifts, and pallets and trays that are suitable for processing bulky items. As a one-stop warehousing and logistics service provider, we offer a full spectrum of services, including (i) customs brokerage services; (ii) transportation of merchandise to U.S. warehouses; and (iii) warehouse management and order fulfillment services, which further include (a) product storage and retrieval, (b) product packing and labeling, (c) kitting and repackaging, (d) order assembly and load consolidation, (e) inventory management and sales forecasting, (f) third-party distribution coordination, and (g) other value-added services. We also provide warehousing and logistics services to our U.S.-based commercial customers, who are typically domestic e-commerce merchants seeking efficient and reliable warehousing and logistics solutions to support their operations. In general, the warehousing and logistics services we provide to our domestic customers are similar to those we provide to our overseas customers. This allows us to provide integrated solutions for our customers, whether they need domestic or international warehousing and logistics support. As of December 31, 2024 and June 30, 2024 and 2023, we had an active customer base of 298, 105, and 83, respectively, for our warehousing and logistics services.

Current wording

We provide one-stop warehousing and logistics services to cross-border e-commerce merchants outside the U.S. who seek to sell in the U.S. market. We currently operate ten warehouses across the country, with an aggregate gross floor area of approximately 3,925,020 square feet. Aside from a nationwide footprint and large storage space, our warehouses are equipped with automated sorting systems, heavy-duty forklifts, and pallets and trays that are suitable for processing bulky items. As a one-stop warehousing and logistics service provider, we offer a full spectrum of services, including (i) customs brokerage services; (ii) transportation of merchandise to U.S. warehouses; and (iii) warehouse management and order fulfillment services, which further include (a) product storage and retrieval, (b) product packing and labeling, (c) kitting and repackaging, (d) order assembly and load consolidation, (e) inventory management and sales forecasting, (f) third-party distribution coordination, and (g) other value-added services. We also provide warehousing and logistics services to our U.S.-based commercial customers, who are typically domestic e-commerce merchants seeking efficient and reliable warehousing and logistics solutions to support their operations. In general, the warehousing and logistics services we provide to our domestic customers are similar to those we provide to our overseas customers. This allows us to provide integrated solutions for our customers, whether they need domestic or international warehousing and logistics support. As of March 31, 2025 and June 30, 2024 and 2023, we had an active customer base of 395, 105, and 83, respectively, for our warehousing and logistics services.

Previous wording

For the six months ended December 31, 2024 and 2023, we had total revenue of $93.6 million and $83.2 million, and net loss of $6.3 million and net income of $6.5 million, respectively. While we do not have any subsidiaries, assets, or employees in the PRC, we generate a significant portion of our revenue from customers based in China. During the six months ended December 31, 2024 and 2023, we generated approximately 86% and 96% of our revenue from PRC-based customers, respectively.

Current wording

For the nine months ended March 31, 2025 and 2024, we had total revenue of $139.5 million and $121.7 million, and net loss of $10.1 million and net income of $7.2 million, respectively. While we do not have any subsidiaries, assets, or employees in the PRC, we generate a significant portion of our revenue from customers based in China. During the nine months ended March 31, 2025 and 2024, we generated approximately 87.0% and 94.2% of our revenue from PRC-based customers, respectively.

Previous wording

The following table outlines our consolidated statements of operations for the three and six months ended December 31, 2024 and 2023:

Current wording

The following table outlines our consolidated statements of operations for the three and nine months ended March 31, 2025 and 2024:

Previous wording

The following table sets forth our revenue for the three and six months ended December 31, 2024 and 2023:

Current wording

The following table sets forth our revenue for the three and nine months ended March 31, 2025 and 2024:

Previous wording

Our revenue increased by $9.1 million, or 21.8%, to $51.1 million during the three months ended December 31, 2024, compared to $42.0 million for the same period in 2023. The increase was due to the following factors:

Current wording

Our revenue increased by $7.4 million, or 19.3%, to $45.8 million during the three months ended March 31, 2025, compared to $38.4 million for the same period in 2024. The increase was due to the following factors:

Previous wording

Our costs of sales mainly represented the costs incurred for the use of third-party direct freight service carriers, such as FedEx and UPS, warehouse rental expenses, costs of labor, and trucking expenses. Costs of sales increased by $16.3 million, or 47.6%, during the three months ended December 31, 2024, compared with the same period in 2023. The increase was driven by two main factors.First, there was a rise in freight expenses due to higher UPS shipping charges.Second, lease expenses, employee salary and benefits, and temporary labor costs increased as we expanded our warehouse and operations team to support growth.

Current wording

Our costs of sales mainly represented the costs incurred for the use of third-party direct freight service carriers, such as FedEx and UPS, warehouse rental expenses, costs of labor, and trucking expenses. Costs of sales increased by $10.5 million, or 30.0%, during the three months ended March 31, 2025, compared with the same period in 2024. The increase was driven by two main factors.First, there was a rise in freight expenses due to higher UPS shipping charges.Second, lease expenses, employee salary and benefits, and temporary labor costs increased as we expanded our warehouse and operations team to support growth.

Previous wording

Our revenue increased by $10.4 million, or 12.5%, to $93.6 million during the six months ended December 31, 2024, compared to $83.2 million for the same period in 2023. The increase was due to the following factors:

Current wording

Our revenue increased by $17.8 million, or 14.6%, to $139.5 million during the nine months ended March 31, 2025, compared to $121.7 million for the same period in 2024. The increase was due to the following factors:

Previous wording

Our costs of sales mainly represented the costs incurred for the use of third-party direct freight service carriers, such as FedEx and UPS, warehouse rental expenses, costs of labor, and trucking expenses. Costs of sales increased by $26.4 million, or 37.5%, during the six months ended December 31, 2024, compared with the same period in 2023. The increase was driven by two main factors.First, there was a rise in freight expenses due to higher UPS shipping charges.Second, lease expenses, employee salary and benefits, and temporary labor costs increased as we expanded our warehouse and operations team to support growth.

Current wording

Our costs of sales mainly represented the costs incurred for the use of third-party direct freight service carriers, such as FedEx and UPS, warehouse rental expenses, costs of labor, and trucking expenses. Costs of sales increased by $36.9 million, or 35.0%, during the nine months ended March 31, 2025, compared with the same period in 2024. The increase was driven by two main factors.First, there was a rise in freight expenses due to higher UPS shipping charges.Second, lease expenses, employee salary and benefits, and temporary labor costs increased as we expanded our warehouse and operations team to support growth.

Previous wording

The following table sets forth a breakdown of our costs of sales for the three months and six months ended December 31, 2024 and 2023:

Current wording

The following table sets forth a breakdown of our costs of sales for the three months and nine months ended March 31, 2025 and 2024:

Previous wording

Our freight expenses, lease expenses (primarily warehouse operating lease expenses), temporary labor expenses, warehouse expenses, and salary and benefits increased significantly by $8.3 million, $2.5 million, $2.9 million, $1.2 million and $0.7 million, respectively, during the three months ended December 31, 2024, compared to the same period in 2023. The increases in lease expenses were due to the additional operating leases acquired in the last and current fiscal quarter. The increases in freight expenses were due to the increase in UPS expenses. The increases in temporary labor expenses, warehouse expenses, and salary and benefits were due to the expansion of the warehouse operations.

Current wording

Our freight expenses, lease expenses (primarily warehouse operating lease expenses), temporary labor, salary benefits, and warehouse expenses increased significantly by $2.5 million, $2.8 million, $2.9 million, $0.8 million, and $0.7 million, respectively, during the three months ended March 31, 2025, compared to the same period in 2024. The increases in lease expenses were due to the additional operating leases acquired in the last and current fiscal quarter. The increases in freight expenses were due to the increase in UPS expenses. The increases in salary and benefits were due to the expansion of the warehouse operations.

Previous wording

Our overall gross profit margin decreased from 18.3% for the three months ended December 31, 2023 to 0.9% for the same period in 2024, primarily due to the increase of the surcharge by UPS and the decreases in customer order volume, as well as some of the recently leased warehouses that are not fully utilized.

Current wording

Our overall gross profit margin decreased from 8.6% for the three months ended March 31, 2024 to 0.6% for the same period in 2025, primarily due to the increase in lease expenses, temporary labor expense for new warehouses, and UPS expenses.

Previous wording

Our freight expenses, lease expenses (primarily warehouse operating lease expenses), temporary labor expenses, warehouse expenses, and salary and benefits increased significantly by $11.5 million, $4.8 million, $5.7 million, $1.8 million and $1.6 million, respectively, during the six months ended December 31, 2024 compared to the same period in 2023. The increases in lease expenses were due to the additional operating leases acquired in the last and current fiscal quarter. The increases in freight expenses were due to the increase in UPS expense. The increases in temporary labor expenses, warehouse expenses, and salary and benefits were due to the expansion of the warehouse operations.

Current wording

Our freight expenses, lease expenses (primarily warehouse operating lease expenses), temporary labor expenses, salary and benefits, and warehouse expenses increased significantly by $14.0 million, $7.6 million, $8.6 million, $2.4 million and $2.6 million, respectively, during the nine months ended March 31, 2025 compared to the same period in 2024. The increases in lease expenses were due to the additional operating leases acquired in the last and current fiscal quarter. The increases in freight expenses were due to the increase in UPS expense. The increases in temporary labor expenses, warehouse expenses, and salary and benefits were due to the expansion of the warehouse operations.

Previous wording

Our overall gross profit (loss) margin decreased from 15.5% for the for the six months ended December 31, 2023 to (3.3%) for the same period in 2024, primarily due to the increase of the surcharge by UPS and the decreases in customer order volume, as well as some of the recently leased warehouses that are not fully utilized.

Current wording

Our overall gross profit (loss) margin decreased from 13.3% for the for the nine months ended March 31, 2025 to (2.0%) for the same period in 2025, primarily due to the increase in lease expenses, temporary labor expense for new warehouses, and UPS expenses.

Previous wording

Our operating expenses consist primarily of general and administrative expenses. The following table sets forth a breakdown of our general and administrative expenses for the three and six months ended December 31, 2024 and 2023:

Current wording

Our operating expenses consist primarily of general and administrative expenses. The following table sets forth a breakdown of our general and administrative expenses for the three and nine months ended March 31, 2025 and 2024:

Previous wording

Our general and administrative expenses increased by $1.5 million, or 31%, from $4.8 million for the three months ended December 31, 2023 to $6.3 million for the same period in 2024. The increase was due to the following factors:

Current wording

Our general and administrative expenses increased by $1.2 million, or 36.8%, from $3.3 million for the three months ended March 31, 2025 to $4.5 million for the same period in 2025. The increase was mainly due to the following factor:

Previous wording

Our income tax expense decreased by $1.5 million for the three months ended December 31, 2024, compared to the same period in 2023, mainly due to the decrease in profit before tax by $6.9 million during the three months ended December 31, 2024.

Current wording

Our income tax expense decreased by $0.3 million for the three months ended March 31, 2025, compared to the same period in 2024, mainly due to the decrease in profit before tax by $4.4 million during the three months ended March 31, 2025.

Previous wording

Our income tax expense decreased by $4.0 million for the six months ended December 31, 2024, compared to the same period in 2023, mainly due to the decrease in profit before tax by $17.0 million during the six months ended December 31, 2024.

Current wording

Our income tax expense decreased by $4.3 million for the nine months ended March 31, 2025, compared to the same period in 2024, mainly due to the decrease in profit before tax by $21.3 million during the nine months ended March 31, 2025.

Previous wording

As a result of the foregoing, our net (loss) income for the three months ended December 31, 2024 was $(1.7) million, compared with the net income of $3.7 million for the same period in 2023, representing a decrease by $5.4 million.

Current wording

As a result of the foregoing, our net (loss) income for the three months ended March 31, 2025 was $(3.8) million, compared with the net income of $0.7 million for the same period in 2024, representing a decrease by $4.4 million.

Previous wording

Our net (loss) income for the six months ended December 31, 2024 was $(6.3) million, compared with the net income of $6.5 million for the same period in 2023, representing a decrease by $12.8 million.

Current wording

Our net (loss) income for the nine months ended March 31, 2025 was $(10.1) million, compared with the net income of $7.2 million for the same period in 2024, representing a decrease by $17.3 million.

Previous wording

In assessing our liquidity, management monitors and analyzes our cash on-hand, our ability to generate sufficient revenue sources in the future, and our operating and capital expenditure commitments. As of the date of this Quarterly Report, we have financed our operations primarily through cash generated by operating activities and proceeds from the Convertible Note. As of December 31, 2024 and June 30, 2024, we had cash and restricted cash of $7.4 million and $10.0 million, respectively, which primarily consisted of cash deposited in banks.

Current wording

In assessing our liquidity, management monitors and analyzes our cash on-hand, our ability to generate sufficient revenue sources in the future, and our operating and capital expenditure commitments. As of the date of this Quarterly Report, we have financed our operations primarily through cash generated by operating activities and proceeds from the Convertible Note. As of March 31, 2025 and June 30, 2024, we had cash and restricted cash of $9.4 million and $10.0 million, respectively, which primarily consisted of cash deposited in banks.

Previous wording

Cash Flows for the Six Months Ended December 31, 2024 and 2023

Current wording

Cash Flows for the Nine Months Ended March 31, 2025 and 2024

Previous wording

We had a balance of cash and restricted cash of $7.4 million as of December 31, 2024, compared with a balance of $10.0 million as of June 30, 2024. During the six months ended December 31, 2024, changes in our cashflow were mainly due to the following activities:

Current wording

We had a balance of cash and restricted cash of $9.4 million as of March 31, 2025, compared with a balance of $10.0 million as of June 30, 2024. During the nine months ended March 31, 2025, changes in our cashflow were mainly due to the following activities:

Previous wording

Net cash used in operating activities was $9.2 million for the six months ended December 31, 2024, compared to net cash provided by operating activities of $3.5 million for the same period in 2023, representing a $12.7 million decrease in the net cash inflow provided by operating activities. The decrease was primarily due to the following:

Current wording

Net cash used in operating activities was $5.6 million for the nine months ended March 31, 2025, compared to net cash provided by operating activities of $4.0 million for the same period in 2024, representing a $9.6 million decrease in the net cash inflow provided by operating activities. The decrease was primarily due to the following:

Previous wording

Net cash used in investing activities was $1.0 million for the six months ended December 31, 2024, primarily attributable to $2.1 million cash used for the purchase of property and equipment, $1.0 million cash used for loans extended to others, and $2.0 million proceeds received from loan repayments.

Current wording

Net cash used in investing activities was $1.5 million for the nine months ended March 31, 2025, primarily attributable to $2.6 million cash used for the purchase of property and equipment, $1.0 million cash used for loans extended to others, and $2.0 million proceeds received from loan repayments.

Previous wording

For the six months ended December 31, 2023, net cash used in investing activities was $3.9 million, primarily attributable to $2.9 million cash used for the purchase of property and equipment and $1.0 million used for loans extended to others.

Current wording

For the nine months ended March 31, 2024, net cash used in investing activities was $4.7 million, primarily attributable to $3.1 million cash used for the purchase of property and equipment and $1.6 million used for loans extended to others.

Previous wording

For the six months ended December 31, 2023, we had net cash provided by financing activities of $0.9 million, which was primarily attributable to the net effects of: (i) $1.0 million collected from related parties for the repayments of loans we previously advanced to them; (ii) $0.3 million used for expenses relating to the initial public offering; (iii) $0.1 million used to repay finance lease liabilities; and (iv) $0.3 million in capital contributions from stockholders.

Current wording

For the nine months ended March 31, 2024, we had net cash provided by financing activities of $0.2 million, which was primarily attributable to the net effects of: (i) $0.5 million collected from related parties for the repayment of loans we previously advanced to them; (ii) $0.6 million used for expenses relating to the initial public offering; (iii) $0.1 million used to repay finance lease liabilities; and (iv) $0.5 million in capital contributions from stockholders.

Previous wording

For the six months ended December 31, 2024, we had net cash provided from financing activities of $7.7 million, which was primarily attributable to the net effects of: (i) $0.4 million repayment related parties; (ii) $8.1 million of net proceeds from the Pre-Paid Advance under the SEPA.

Current wording

For the nine months ended March 31, 2025, we had net cash provided from financing activities of $6.6 million, which was primarily attributable to the net effects of: (i) $0.4 million repayment to related parties; (ii) $8.1 million of net proceeds from the Pre-Paid Advance under the SEPA, (iii) $0.9 million repayment of SEPA, (iv) $0.1 million repayment of finance lease liabilities, and (v) $0.2 million repayment of commitment fee payable.

Previous wording

Other than three standby letters of credit with Eastwest Bank in the aggregate amount of $2,259,932, we did not have during the period presented, and we do not currently have, any off-balance sheet financing arrangements as defined under the rules and regulations of the SEC, or any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities, that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As of December 31, 2024, we still have unused credit of $2,259,932 with Eastwest Bank.

Current wording

Other than the standby letters of credit with Eastwest Bank in the aggregate amount of $3,779,572, we did not have during the period presented, and we do not currently have, any off-balance sheet financing arrangements as defined under the rules and regulations of the SEC, or any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities, that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As of March 31, 2025, we still have unused credit of $3,779,572 with Eastwest Bank.

Previous wording

As of December 31, 2024 and June 30, 2024, the historical cost of property and equipment was $16,736,612 and $14,773,842, respectively.

Current wording

As of March 31, 2025 and June 30, 2024, the historical cost of property and equipment was $17,259,298 and $14,773,842, respectively.

Previous wording

We recorded depreciation expenses of $1,216,422 and $919,272 during the six months ended December 31, 2024 and 2023, respectively. Specifically, $1,108,175 and $786,466 of the depreciation expenses were recorded in costs of sales for the six months ended December 31, 2024 and 2023, respectively, $108,247 and $132,806 of the depreciation expenses were recorded in general and administrative expenses for the six months ended December 31, 2024 and 2023, respectively.

Current wording

We recorded depreciation expenses of $1,874,681 and $1,313,684 during nine months ended March 31, 2025 and 2024, respectively. Specifically, $1,717,363 and $1,091,795 of the depreciation expenses were recorded in costs of sales for the nine months ended March 31, 2025 and 2024, respectively, $157,318 and $221,889 of the depreciation expenses were recorded in general and administrative expenses for the nine months ended March 31, 2025 and 2024, respectively.