PS International Group Ltd 20-F for FY2025
PS International Group Ltd. (PSIG)
About this 20-F
PS International Group Ltd filed this 20-F on April 30, 2026, covering the fiscal year ended December 31, 2025 (FY2025).
Headline figures
Fiscal year ended December 31, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $53.15M
- down 39.0% from $87.17M a year earlier
- Net loss
- $15.21M
- compared with a net loss of $4.83M a year earlier
- Diluted EPS
- -$3.81
- compared with -$1.73 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
OR
For the fiscal year ended
OR
OR
For the transition period from to
Commission file number:
(Exact name of Registrant as specified in its charter)
(Jurisdiction of incorporation or organization)
Kowloon,
(Address of principal executive offices)
Chief Executive Officer
Telephone:
Email:
Kowloon,
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
$0.0008 per share |
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
Indicate the number of outstanding shares of each
of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
☐ Yes ☒
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
☐ Yes ☒
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
☒
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ | |||
| Emerging growth company |
If an emerging growth company that prepares its
financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition
period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange
Act.
Indicate by check mark whether the registrant
has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report. Yes ☐ No
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
| ☒ | International Financial Reporting Standards as issued | Other ☐ | ||
| by the International Accounting Standards Board ☐ |
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
☐ Item 17 ☐ Item 18
If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).
☐ Yes
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
☐ Yes ☐ No
Table of Contents
i
INTRODUCTION
Except where the context otherwise requires and for purposes of this annual report only the term:
| “AIB” refers to AIB Acquisition Corporation, a Cayman Islands exempted company | |
| “Amended and Restated Memorandum and Articles of Association” refers to the second amended and restated memorandum of association and the articles of association of PS International Group Ltd., adopted June 17, 2025; | |
| “BGG” refers to Business Great Global Supply Chain Limited, a Hong Kong company that is an operating subsidiary of the Company; | |
| “BGG (BVI)” refers to BGG (BVI) Ltd., an indirectly wholly owned subsidiary of the Company incorporated in British Virgin Islands; | |
| “Business Combination” means the mergers and transactions under the Business Combination Agreement, pursuant to which PSI and AIB became the wholly-owned subsidiaries of the Company; | |
| “Business Combination Agreement” means that certain business combination agreement, among PSI, AIB, the Company, Sponsor, PSI Merger Sub I and PSI Merger Sub II, dated December 27, 2023 (as the same may be amended, restated or supplemented). | |
| “China” or the “PRC” refer to the People’s Republic of China, including Hong Kong and Macau; | |
| “HK$” or “Hong Kong dollars” refers to the legal currency of Hong Kong; | |
| “Hong Kong” refers to Hong Kong Special Administrative Region of the People’s Republic of China; | |
| “Mainland China” refers to the mainland of the People’s Republic of China; excluding Taiwan and the special administrative regions of Hong Kong and Macau for the purposes of this annual report only; | |
| “Operating Subsidiaries” refers to PSIHK and BGG, the subsidiaries of the Company, unless otherwise specified; | |
| “Ordinary Shares” or “ordinary shares” refers to the Company’s ordinary shares, par value US$0.0008 per share; | |
| “PSI” refers to PSI Group Holdings Ltd, a Cayman Islands exempted company that is the intermediate holding company of PSI (BVI), BGG (BVI), and the Operating Subsidiaries, directly wholly-owned by PS International Group Ltd.; | |
| “PSI (BVI)” refers to PSI (BVI) Ltd., a wholly owned subsidiary of the Company incorporated in British Virgin Islands; | |
| “PSI Merger Sub I” refers to PSI Merger Sub I Limited, a Cayman Islands exempted company; | |
| “PSI Merger Sub II” refers to PSI Merger Sub II Limited, a Cayman Islands exempted company; | |
| “PSIG Inv” refers to PSIG Investment Ltd., a wholly owned subsidiary of the Company incorporated in British Virgin Islands; | |
| “PSIG Sing” refers to PSIG Singapore Pte. Ltd., a wholly owned subsidiary of the Company incorporated in Singapore. | |
| “PSIHK” refers to Profit Sail Int’l Express (H.K.) Limited, a Hong Kong company that is an operating subsidiary of the Company; | |
| “SEC” refers to the United States Securities and Exchange Commission; | |
| “Sponsor” refers to AIB LLC, a Delaware limited liability company affiliated with AIB’s chief executive officer; | |
| “US$” or “U.S. dollars” refers to the legal currency of the United States; and | |
| “We,” “us,” “our,” “the Company,” “our company,” “PS International” or “PS Group” refers to PS International Group Ltd., the holding company that is incorporated under the laws of Cayman Islands, and its subsidiaries and consolidated affiliated entities. |
ii
PS International Group Ltd. is a holding company with operations conducted in Hong Kong through its Operating Subsidiaries in Hong Kong, using Hong Kong dollars. The reporting currency is U.S. dollars. Assets and liabilities denominated in foreign currencies are translated at year-end exchange rates, income statement accounts are translated at average rates of exchange for the year and equity is translated at historical exchange rates. Any translation gains or losses are recorded in other comprehensive income (loss). Gains or losses resulting from foreign currency transactions are included in net income. The conversion of Hong Kong dollars into U.S. dollars are based on the exchange rates set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System. Unless otherwise noted, all translations from Hong Kong dollars to U.S. dollars and from U.S. dollars to Hong Kong dollars in this annual report were made at a year-end spot rate of HK$7.80 to US$1.00 or an average rate of HK$7.80 to US$1.00 for the fiscal years ended December 31, 2025 and 2024.
We obtained the industry and market data used in this annual report or any document incorporated by reference from industry publications, research, surveys and studies conducted by third parties and our own internal estimates based on our management’s knowledge and experience in the markets in which we operate. We did not, directly or indirectly, sponsor or participate in the publication of such materials, and these materials are not incorporated in this annual report other than to the extent specifically cited in this annual report. We have sought to provide current information in this annual report and believe that the statistics provided in this annual report remain up-to-date and reliable, and these materials are not incorporated in this annual report other than to the extent specifically cited in this annual report.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 20-F contains forward-looking statements. A forward-looking statement is a projection about a future event or result, and whether the statement comes true is subject to many risks and uncertainties. These statements often can be identified by the use of terms such as “may,” “will,” “expect,” “believe,” “anticipate,” “estimate,” “approximate” or “continue,” or the negative thereof. The actual results or activities of the Company will likely differ from projected results or activities of the Company as described in this Annual Report, and such differences could be material.
Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results and performance of the Company to be different from any future results, performance and achievements expressed or implied by these statements. In other words, our performance might be quite different from what the forward-looking statements imply. You should review carefully all information included in this Annual Report.
You should rely only on the forward-looking statements that reflect management’s view as of the date of this Annual Report. We undertake no obligation to publicly revise or update these forward-looking statements to reflect subsequent events or circumstances. You should also carefully review the risk factors described in other documents we file from time to time with the Securities and Exchange Commission (the “SEC”). The Private Securities Reform Act of 1995 contains a safe harbor for forward-looking statements on which the Company relies in making such disclosures. In connection with the “safe harbor,” we are hereby identifying important factors that could cause actual results to differ materially from those contained in any forward-looking statements made by us or on our behalf. Factors that might cause such a difference include, but are not limited to, those discussed in the section entitled “Risk Factors” under Item 3. - “Key Information.”
FINANCIAL STATEMENTS AND CURRENCY PRESENTATION
Basis of Presentation
We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America and publish our financial statements in United States Dollars. Certain amounts, percentages and other figures included in this Annual Report have been subject to rounding adjustments. Accordingly, amounts, percentages and other figures shown as totals in certain tables or charts may not be the arithmetic aggregation of those that precede them and amounts and figures expressed as percentages in the text may not total 100% or, when aggregated, may not be the arithmetic aggregation of the percentages that precede them.
iii
PART I
Item 1. Identity of Directors, Senior Management and Advisers
Not applicable for annual reports on Form 20-F.
Item 2. Offer Statistics and Expected Timetable
Not applicable for annual reports on Form 20-F.
Item 3. Key Information
3.A. [Reserved]
3.B. Capitalization and Indebtedness
Not applicable
3.C. Reasons for the Offer and Use of Proceeds
Not applicable
3.D. Risk Factors
An investment in the Company’s securities involves a high degree of risk. Investors purchasing our securities are purchasing securities of the Cayman Islands holding company rather than securities of our Operating Subsidiaries that operate in Hong Kong. You should carefully consider the risks described below, together with all of the other information included in this annual report, before making an investment decision. If any of the following risks actually occurs, our business, financial condition or results of operations could suffer. In that case, the value of the Company’s securities could significantly decline or be worthless and you may lose all or part of your investment.
Risks Related to Doing Business in the Jurisdictions in which Our Operating Subsidiaries Operate
All of our operations are located in Hong Kong. PRC laws and regulations in general are not applicable or enforceable in Hong Kong. However, due to the potential long arm application of these laws and regulations, the PRC government may exercise significant direct oversight and discretion over the conduct of our business and may intervene or influence our operations, which could result in a material change in our operations and/or the value of our ordinary shares. Our Operating Subsidiaries may be subject to laws and regulations of Mainland China, which may impair our ability to operate profitably and result in a material negative impact on our operations and/or the value of our ordinary shares. Furthermore, the changes in the policies, regulations, rules, and the enforcement of laws of the PRC may also occur quickly with little advance notice and our assertions and beliefs of the risk imposed by the PRC legal and regulatory system cannot be certain.
Our Operating Subsidiaries are located, and operate their business, in Hong Kong, a special administrative region of the PRC. Although some of our customers are individuals from Mainland China or companies that have shareholders and directors that are individuals from Mainland China, our Operating Subsidiaries do not have operations in Mainland China or collect, store or process any personal data of any customer in Mainland China, and are not regulated by any regulator in Mainland China. As a result, the laws and regulations of Mainland China do not currently have any material impact on our business, financial condition and results of operation. Furthermore, except for the Basic Law of the Hong Kong Special Administrative Region of the People’s Republic of China (“Basic Law”), national laws of Mainland China do not apply in Hong Kong unless they are listed in Annex III of the Basic Law and applied locally by promulgation or local legislation. National laws that may be listed in Annex III are currently limited under the Basic Law to those which fall within the scope of defense and foreign affairs as well as other matters outside the limits of the autonomy of Hong Kong. National laws and regulations relating to data protection, cybersecurity and the anti-monopoly have not been listed in Annex III and so do not apply directly to Hong Kong.
1
However, due to long arm provisions under the current Mainland China laws and regulations, there remain regulatory and legal uncertainty with respect to the implementation of laws and regulations of Mainland China to Hong Kong. As a result, there is no guarantee that the PRC government may not choose to implement the laws of Mainland China to Hong Kong and exercise significant direct influence and discretion over the operation of our Operating Subsidiaries in the future and, it will not have a material adverse impact on our business, financial condition and results of operations, due to changes in laws, political environment or other unforeseeable reasons.
In the event that we or our Operating Subsidiaries were to become subject to laws and regulations of Mainland China, the legal and operational risks associated in Mainland China may also apply to our operations in Hong Kong, and we face the risks and uncertainties associated with the legal system in Mainland China, complex and evolving Mainland China laws and regulation, and as to whether and how the recent PRC government statements and regulatory developments, such as those relating to the use of variable interest entities, data and cyberspace security and anti-monopoly concerns, would be applicable to a companies like our Operating Subsidiaries and us, given the substantial operations of our Operating Subsidiaries and the Chinese government may exercise significant oversight over the conduct of business in Hong Kong.
The laws and regulations in Mainland China are evolving, and their enactment timetable, interpretation, enforcement, and implementation involve significant uncertainties, and may change quickly with little advance notice, along with the risk that the PRC government may intervene or influence our Operating Subsidiaries’ operations at any time could result in a material change in our operations and/or the value of our securities or could significantly limit or completely hinder your ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless. Moreover, there are substantial uncertainties regarding the interpretation and application of Mainland China laws and regulations including, but not limited to, the laws and regulations related to our business and the enforcement and performance of our arrangements with customers in certain circumstances. The laws and regulations are sometimes vague and may be subject to future changes, and their official interpretation and enforcement may involve substantial uncertainty. The effectiveness and interpretation of newly enacted laws or regulations, including amendments to existing laws and regulations, may be delayed, and our business may be affected if we rely on laws and regulations which are subsequently adopted or interpreted in a manner different from our understanding of these laws and regulations. New laws and regulations that affect existing and proposed future businesses may also be applied retroactively. We cannot predict what effect the interpretation of existing or new PRC laws or regulations may have on our business.
The laws, regulations, and other government directives in Mainland China may also be costly to comply with, and such compliance or any associated inquiries or investigations or any other government actions may:
| ● | delay or impede our development; |
| ● | result in negative publicity or increase our operating costs; |
| ● | require significant management time and attention; |
2
| ● | cause devaluation of our securities or delisting; and, |
| ● | subject us to remedies, administrative penalties and even criminal liabilities that may harm our business, including fines assessed for our current or historical operations, or demands or orders that we modify or even cease our business operations. |
The PRC government may intervene or influence the Hong Kong operations of an offshore holding company, such as ours, at any time. The PRC government may exert more control over offerings conducted overseas and/or foreign investment in Hong Kong-based issuers. If the PRC government exerts more oversight and control over offerings that are conducted overseas and/or foreign investment in Hong Kong-based issuers and we were to be subject to such oversight and control, it may result in a material adverse change to our subsidiaries’ business operations, including our subsidiaries’ operations in Hong Kong.
As a company mainly conducting business in Hong Kong, a special administrative region of China and our subsidiaries’ clients include mainland China residents, our subsidiaries’ business and our prospects, financial condition, and results of operations may be influenced to a significant degree by political, economic, and social conditions in China generally. The PRC government may intervene or influence the operations in mainland China of an offshore holding company at any time, which, if extended to our subsidiaries’ operations in Hong Kong, could result in a material adverse change to our subsidiaries’ operations. The PRC government has recently indicated an intent to exert more oversight and control over listings conducted overseas and/or foreign investment in issuers based in mainland China. For instance, on July 6, 2021, the relevant PRC governmental authorities promulgated the Opinions on Strictly Cracking Down on Illegal Securities Activities, which emphasized the need to strengthen the supervision over overseas listings by companies in mainland China. We cannot assure you that the oversight will not be extended to companies operating in Hong Kong like us and any such action may significantly limit or completely hinder our ability to offer or continue to offer our securities to investors, result in a material adverse change to our subsidiaries’ business operations, including our subsidiaries’ Hong Kong operations, and damage our reputation.
Our subsidiaries’ business, our financial condition and results of operations, and/or the value of our Ordinary Shares or our ability to offer or continue to offer securities to investors may be materially and adversely affected by existing or future PRC laws and regulations which may become applicable to our subsidiaries.
We have no operations in Mainland China. However, our Operating Subsidiaries are located and operate in Hong Kong, a special administrative region of the PRC, there is no guarantee that if certain existing or future PRC laws become applicable to our subsidiaries, it will not have a material adverse impact on our subsidiaries’ business, financial condition and results of operations and/or our ability to continue to offer securities to investors.
Except for the Basic Law of the Hong Kong Special Region of the People’s Republic of China (“Basic Law”), national laws of mainland China (“National Laws”) do not apply in Hong Kong unless they are listed in Annex III of the Basic Law and applied locally by promulgation or local legislation. National Laws that may be listed in Annex III are currently limited under the Basic Law to those which fall within the scope of defense and foreign affairs as well as other matters outside the limits of the autonomy of Hong Kong. PRC laws and regulations relating to data protection, cyber security and the anti-monopoly have not been listed in Annex III and thus they may not apply directly to Hong Kong.
The PRC laws and regulations are evolving, and their enactment timetable, interpretation and implementation involve significant uncertainties. To the extent any PRC laws and regulations become applicable to our subsidiaries, we may be subject to the risks and uncertainties associated with the legal system in mainland China, including with respect to the enforcement of laws and the possibility of changes of rules and regulations with little or no advance notice.
3
We may also become subject to the PRC laws and regulations to the extent our subsidiaries commence business and customer facing operations in mainland China as a result of any future acquisition, expansion or organic growth. There is no guarantee that this will continue to be the case in the future in relation to the continued listing of our securities on a securities exchange outside of the PRC, or even when such permission is obtained, it will not be subsequently denied or rescinded. It remains uncertain as to the enactment, interpretation and implementation of regulatory requirements related to overseas securities offering and other capital markets activities and due to the possibility that laws, regulations, or policies in the PRC could change rapidly in the future, it remains uncertain whether the PRC government will adopt additional requirements or extend the existing requirements to apply to our operating subsidiary located in Hong Kong. It is also uncertain whether the Hong Kong government will be mandated by the PRC government, despite the constitutional constraints of the Basic Law, to control over offerings conducted overseas and/or foreign investment of entities in Hong Kong, including our operating subsidiary. Any actions by the PRC government to exert more oversight and control over offerings (including businesses whose primary operations are in Hong Kong) that are conducted overseas and/or foreign investments in Hong Kong-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of our securities to significantly decline or be worthless.
If we and/or our subsidiaries were to be required to comply with cybersecurity, data privacy, data protection, or any other PRC laws and regulations related to data and we and/or our subsidiaries cannot comply with such PRC laws and regulations, our subsidiaries’ business, financial condition, and results of operations may be materially and adversely affected.
We may be subject to a variety of cybersecurity, data privacy, data protection, and other PRC laws and regulations related to data, including those relating to the collection, use, sharing, retention, security, disclosure, and transfer of confidential and private information, such as personal information and other data. These laws and regulations apply not only to third-party transactions, but also to transfers of information within our organization. These laws and regulations may restrict our subsidiaries’ business activities and require us and/or our subsidiaries to incur increased costs and efforts to comply, and any breach or noncompliance may subject us and/or our subsidiaries to proceedings against such entity(ies), damage our reputation, or result in penalties and other significant legal liabilities, and thus may materially and adversely affect our subsidiaries’ business and our financial condition and results of operations.
As the laws and regulations related to cybersecurity, data privacy, and data protection in mainland China where our subsidiaries do not have operations are relatively new and evolving, and their interpretation and application may be uncertain, it is still unclear if we and/or our subsidiaries may become subject to such new laws and regulations.
The PRC Data Security Law, or the Data Security Law, which was promulgated by the Standing Committee of the National People’s Congress on June 10, 2021 and took effect on September 1, 2021, requires data collection to be conducted in a legitimate and proper manner, and stipulates that, for the purpose of data protection, data processing activities must be conducted based on data classification and hierarchical protection system for data security. According to Article 2 of the Data Security Law, it applies to data processing activities within the territory of mainland China as well as data processing activities conducted outside the territory of mainland China which jeopardize the national interest or the public interest of China or the rights and interest of any PRC organization and citizens. Any entity failing to perform the obligations provided in the Data Security Law may be subject to orders to correct, warnings and penalties including ban or suspension of business, revocation of business licenses or other penalties. As of the date of this Annual Report, we do not have any operation or maintain any office or personnel in mainland China, and we have not conducted any data processing activities which may endanger the national interest or the public interest of China or the rights and interest of any Chinese organization and citizens. Therefore, we do not believe that the Data Security Law is applicable to us.
On August 20, 2021, the Standing Committee of the National People’s Congress of China promulgated the Personal Information Protection Law, which integrates the scattered rules with respect to personal information rights and privacy protection and took effect on November 1, 2021. According to Article 3 of the Personal Information Protection Law, it is applied not only to personal information processing activities carried out in the territory of mainland China but also to personal information processing activities outside the mainland China for the purpose of offering products or services to domestic natural persons in the territory of mainland China. The offending entities could be ordered to correct, or to suspend or terminate the provision of services, and face confiscation of illegal income, fines or other penalties. As our subsidiaries’ services are provided in Hong Kong rather than in the mainland China to clients worldwide, including but not limited to clients of mainland China who visit our offices in these locations, we take the view that we and our subsidiaries are not subject to the Personal Information Protection Law.
4
On July 7, 2022, the Cyberspace Administration of China (the “CAC”) issued the Measures for Security Assessment of Outbound Data Transfer, or the Measures, which took effect on September 1, 2022. According to the Measures, in addition to the self-risk assessment requirement for provision of any data outside mainland China, a data processor shall apply to the competent cyberspace department for data security assessment and clearance of outbound data transfer in any of the following events: (i) outbound transfer of important data by a data processor; (ii) outbound transfer of personal information by an operator of critical information infrastructure or a data processor which has processed more than one million users’ personal data; (iii) outbound transfer of personal information by a data processor which has made outbound transfers of more than one hundred thousand users’ personal information or more than ten thousand users’ sensitive personal information cumulatively since January 1 of the previous year; (iv) such other circumstances where ex-ante security assessment and evaluation of cross-border data transfer is required by the CAC. As of the date of this Annual Report, we and our subsidiaries have not collected, stored, or managed any personal information in mainland China. Therefore, we believe that the Measures is not applicable to us.
However, given the recency of the issuance of the above PRC laws and regulations related to cybersecurity and data privacy, we and our subsidiaries still face uncertainties regarding the interpretation and implementation of these laws and regulations and we could not rule out the possibility that any PRC governmental authorities may subject us and/or our subsidiaries to such laws and regulations in the future. If they are deemed to be applicable to us and/or our subsidiaries, we cannot assure you that we and our subsidiaries will be compliant with such new regulations in all respects, and we and/or our subsidiaries may be ordered to rectify and terminate any actions that are deemed illegal by the PRC governmental authorities and become subject to fines and other government sanctions, which may materially and adversely affect our subsidiaries’ business and our financial condition and results of operations.
If we and/or our subsidiaries were to be required to obtain any permission or approval from or complete any filing procedure with the China Securities Regulatory Commission (the “CSRC”), the CAC, or other PRC governmental authorities in connection with the Business Combination or future offerings under PRC laws, we and/or our subsidiaries may be fined or subject to other sanctions, and our subsidiaries’ business and our reputation, financial condition, and results of operations may be materially and adversely affected.
The Cybersecurity Review Measures jointly promulgated by the CAC and other relevant PRC governmental authorities on December 28, 2021 required that, among others, “critical information infrastructure” or network platform operators holding over one million users’ personal information to apply for a cybersecurity review before any public offering on a foreign stock exchange. However, this regulation is recently issued and there remain substantial uncertainties about its interpretation and implementation.
As of the date of this Annual Report, we and our subsidiaries do not have any business operation or maintain any office or personnel in mainland China. We and our subsidiaries have not collected, stored, or managed any personal information in mainland China. Based on the assessment conducted by the management, we believe that we and our subsidiaries are not currently required to proactively apply to a cybersecurity review for the Business Combination or future offerings overseas, on the basis that (i) our subsidiaries are incorporated in Hong Kong, the British Virgin Islands, and other jurisdictions outside of mainland China and operate in Hong Kong without any subsidiary or variable interest entities (“VIE”) structure in mainland China, and we do not maintain any office or personnel in mainland China; (ii) except for the Basic Law, the National Laws do not apply in Hong Kong unless they are listed in Annex III of the Basic Law and applied locally by promulgation or local legislation, and National Laws that may be listed in Annex III are currently limited under the Basic Law to those which fall within the scope of defense and foreign affairs as well as other matters outside the limits of the autonomy of Hong Kong, and PRC laws and regulations relating to data protection and cyber security have not been listed in Annex III as the date of this Annual Report; (iii) our data processing activities are solely carried out by our overseas entities outside of mainland China for the purpose of offering services in Hong Kong and other jurisdictions outside of mainland China; (iv) we and our subsidiaries do not control more than one millions users’ personal information as of the date of this Annual Report; (v) as of the date of this Annual Report, we and our subsidiaries have not received any notice of identifying us as critical information infrastructure from any relevant PRC governmental authorities; and (vi) as of the date of this Annual Report, none of us or our subsidiaries have been informed by any PRC governmental authority of any requirement for a cybersecurity review.
5
Additionally, we believe that we and our subsidiaries are compliant with the regulations and policies that have been issued by the CAC to date and there was no material change to these regulations and policies since the Business Combination. However, regulatory requirements on cybersecurity and data security in the mainland China are constantly evolving and can be subject to varying interpretations or significant changes, which may result in uncertainties about the scope of our responsibilities in that regard, and there can be no assurance that the relevant PRC governmental authorities, including the CAC, would reach the same conclusion as us. We will closely monitor and assess the implementation and enforcement of the Cybersecurity Review Measures. If the Cybersecurity Review Measures mandates clearance of cybersecurity and/or data security regulators and other specific actions to be completed by companies like us, we may face uncertainties as to whether we can meet such requirements timely, or at all.
On February 17, 2023, the CSRC promulgated the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the “Trial Measures”) and five supporting guidelines, which took effect on March 31, 2023. The Trial Measures requires companies in mainland China that seek to offer and list securities overseas, both directly and indirectly, to fulfill the filing procedures with the CSRC. According to the Trial Measures, the determination of the “indirect overseas offering and listing by companies in mainland China” shall comply with the principle of “substance over form” and particularly, an issuer will be required to go through the filing procedures under the Trial Measures if the following criteria are met at the same time: (i) 50% or more of the issuer’s operating revenue, total profits, total assets or net assets as documented in its audited consolidated financial statements for the most recent accounting year are accounted for by companies in mainland China; and (ii) the main parts of the issuer’s business activities are conducted in mainland China, or its main places of business are located in mainland China, or the senior managers in charge of its business operation and management are mostly Chinese citizens or domiciled in mainland China. On the same day, the CSRC held a press conference for the release of the Trial Measures and issued the Notice on Administration for the Filing of Overseas Offering and Listing by Domestic Companies, which clarifies that (i) on or prior to the effective date of the Trial Measures, companies in mainland China that have already submitted valid applications for overseas offering and listing but have not obtained approval from overseas regulatory authorities or stock exchanges shall complete the filing before the completion of their overseas offering and listing; and (ii) companies in mainland China which, prior to the effective date of the Trial Measures, have already obtained the approval from overseas regulatory authorities or stock exchanges and are not required to re-perform the regulatory procedures with the relevant overseas regulatory authority or stock exchange, but have not completed the indirect overseas listing, shall complete the overseas offering and listing before September 30,2023, and failure to complete the overseas listing within such six-month period will subject such companies to the filing requirements with the CSRC.
Based on the assessment conducted by the management, we are not subject to the Trial Measures, because we are incorporated in the Cayman Islands and our subsidiaries are incorporated in Hong Kong, the British Virgin Islands and other regions outside of mainland China and operate in Hong Kong without any subsidiary or VIE structure in mainland China, and we do not have any business operations or maintain any office or personnel in mainland China. However, as the Trial Measures and the supporting guidelines are newly published, there exists uncertainty with respect to the implementation and interpretation of the principle of “substance over form”. As of the date of this Annual Report, there was no material change to these regulations and policies since the Business Combination. If our future securities offerings, and our listing on Nasdaq were later deemed as “indirect overseas offering and listing by companies in mainland China” under the Trial Measures, we may need to complete the filing procedures for our Business Combination and future secondary offerings, and listing. If we are subject to the filing requirements, we cannot assure you that we will be able to complete such filings in a timely manner or even at all.
Since these statements and regulatory actions are new, it is also highly uncertain in the interpretation and the enforcement of the above cybersecurity and overseas listing laws and regulation. There is no assurance that the relevant PRC governmental authorities would reach the same conclusion as us. If we and/or our subsidiaries are required to obtain approval or fillings from any governmental authorities, including the CAC and/or the CSRC, in connection with the listing or continued listing of our securities on a stock exchange outside of Hong Kong or mainland China, it is uncertain how long it will take for us and/or our subsidiaries to obtain such approval or complete such filing, and, even if we and our subsidiaries obtain such approval or complete such filing, the approval or filing could be rescinded. Any failure to obtain or a delay in obtaining the necessary permissions from or complete the necessary filing procedure with the PRC governmental authorities to conduct offerings or list outside of Hong Kong or mainland China may subject us and/or our subsidiaries to sanctions imposed by the PRC governmental authorities, which could include fines and penalties, suspension of business, proceedings against us and/or our subsidiaries, and even fines on the controlling shareholder and other responsible persons, and our subsidiaries’ ability to conduct our business, our ability to invest into mainland China as foreign investments or accept foreign investments, or our ability to list on a U.S. or other overseas exchange may be restricted, and our subsidiaries’ business, and our reputation, financial condition, and results of operations may be materially and adversely affected.
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If the Chinese government chooses to extend the oversight and control over offerings that are conducted overseas and/or foreign investment in mainland China-based issuers to Hong Kong-based issuers, such action may significantly limit or completely hinder our ability to offer or continue to offer Ordinary Shares to investors and cause the value of our Ordinary Shares to significantly decline or be worthless.
Recent statements, laws and regulations by the Chinese government, including the Measures for Cybersecurity Review (2021), the PRC Personal Information Protection Law and the Trial Measures, have indicated an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investments in China-based issuers. It is uncertain whether the Chinese government will adopt additional requirements or extend the existing requirements to apply to our Operating Subsidiaries located in Hong Kong. We could be subject to approval or review of Chinese regulatory authorities to pursue future offerings. Any future action by the PRC government expanding the categories of industries and companies whose foreign securities offerings are subject to review by the CSRC or CAC or filing with the CSRC could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and could cause the value of such securities to significantly decline or be worthless.
The enforcement of laws and rules and regulations in the PRC can change quickly with little advance notice. Additionally, the PRC laws and regulations and the enforcement of such that apply or are to be applied to Hong Kong can change quickly with little or no advance notice. As a result, the Hong Kong legal system embodies uncertainties which could limit the availability of legal protections, which could result in a material change in our Operating Subsidiaries’ operations and/or the value of the securities we are offering.
As one of the conditions for the handover of the sovereignty of Hong Kong to China, China accepted conditions such as Hong Kong’s Basic Law. The Basic Law ensured Hong Kong will retain its currency (the Hong Kong Dollar), legal system, parliamentary system, and people’s rights and freedom for fifty years from 1997. This agreement has given Hong Kong the freedom to function with a high degree of autonomy. The Special Administrative Region of Hong Kong is responsible for its domestic affairs, including, but not limited to, the judiciary and courts of last resort, immigration, and customs, public finance, currencies, and extradition. Hong Kong continues using the English common law system. However, if the PRC government attempts to alter its agreement to allow Hong Kong to function autonomously, this could potentially impact Hong Kong’s common law legal system and may in turn bring about uncertainty in, for example, the enforcement of our contractual rights. This could, in turn, materially and adversely affect our Operating Subsidiaries’ business and operations. Accordingly, we cannot predict the effect of future developments in the Hong Kong legal system, including the promulgation of new laws, changes to existing laws or the interpretation or enforcement thereof, or the pre-emption of local regulations by national laws.
There are political risks associated with conducting business in Hong Kong.
All of our operations are in Hong Kong. Accordingly, the business operations and financial conditions of our Operating Subsidiaries will be affected by the political and legal developments in Hong Kong. Any adverse economic, social and/or political conditions, material social unrest, strike, riot, civil disturbance or disobedience, as well as significant natural disasters, may affect the market and may adversely affect our operations. Given the relatively small geographical size of Hong Kong, any of such incidents may have a widespread effect on our business operations, which could in turn adversely and materially affect our business, results of operations and financial condition.
Hong Kong is a special administrative region of the PRC and the basic policies of the PRC regarding Hong Kong are reflected in the Basic Law, namely, Hong Kong’s constitutional document, which provides Hong Kong with a high degree of autonomy and executive, legislative and independent judicial powers, including that of final adjudication under the principle of “one country, two systems”. However, there is no assurance that there will not be any changes in the political arrangement between PRC and Hong Kong and the economic, political and legal environment in Hong Kong in the future. Since all of our operations are based in Hong Kong, any change of such political arrangements may pose an immediate threat to the stability of the economy in Hong Kong, thereby directly and adversely affecting our results of operations and financial positions.
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Based on certain recent development including the Law of the People’s Republic of China on Safeguarding National Security in the Hong Kong Special Administrative Region issued by the Standing Committee of the PRC National People’s Congress in June 2020, the U.S. State Department has indicated that the United States no longer considers Hong Kong to have significant autonomy from China and the United States signed an executive order and the Hong Kong Autonomy Act and an executive order to remove the preferential trade status of Hong Kong, pursuant to § 202 of the United States-Hong Kong Policy Act of 1992. The U.S. government has determined that Hong Kong is no longer sufficiently autonomous to justify preferential treatment in relation to the PRC, especially with the issuance of the Law of the People’s Republic of China on Safeguarding National Security in the Hong Kong Special Administrative Region (the “Hong Kong National Security Law”) on July 1, 2020. Hong Kong will now be treated as Mainland China, in terms of visa application, academic exchange, tariffs and trading, etc. According to § 3(c) of the executive order issued on July 14, 2020, the license exception for exports and reexports to Hong Kong and transfer within the PRC is revoked, while exports of defense items are banned. On the other hand, the existing tariffs the U.S. imposed on Mainland China will also be applied to Hong Kong exports. Losing its special status, Hong Kong’s competitiveness as the logistic hub may deteriorate in the future as its tax benefits as a result of preferential situation no longer exists and companies might prefer exporting through other cities. The level of activities of domestic exports and re-exports and other trading activities in Hong Kong may decline owing to the tariff being imposed on Hong Kong exports and the export restriction. In the event that Hong Kong loses its position as a logistics hub in Asia, the demand for freight forwarding services, ancillary logistics services, warehousing services, the overall business activities of the freight forwarding industries and thus our business, financial condition and results of operations, may be adversely affected. Furthermore, legislative or administrative actions in respect of China-U.S. relations could cause investor uncertainty for affected issuers, including us, and the market price of our Ordinary Shares could be adversely affected.
Trade war or restrictions, whether in form of embargo, tariff, or otherwise, effected between two or more countries, including the risks arising from current trade between the PRC and the United States, and on a larger scale internationally, could materially and adversely affect our business, financial condition and results of operation.
Our revenue from freight forwarding services for export shipments to the United States contributed to approximately US$122.3 million, US$61.7 million and US$37.8 million for the years ended December 31, 2023, 2024 and 2025 respectively, representing approximately 87.4%, 70.9% and 71.1% of our total export revenue of the corresponding period. Also, a significant portion of our business originates from customers in Mainland China and therefore depends on the level of imports and exports to and from Mainland China. Therefore, we are subject to risks related to the changes in trade policies, tariff regulations, embargoes, or other trade restrictions adverse to our customers’ business.
Tariffs restrictions imposed by the United States on Mainland China exports intensified since 2019 which resulted in a negative impact to the international trading activities globally and have attributed to the overall decrease in the cargo shipment volume of Hong Kong. Since February 2025, the U.S. government has imposed, and has proposed to impose additional, new or higher tariffs on specified products imported from China, and the Chinese government has responded by imposing, and proposing to impose additional, new or higher tariffs on specified products imported from the U.S. In April 2025, President Trump announced that the United States would impose additional tariffs on most countries, including, among others, a 34% additional reciprocal tariff on goods imported from China. Following this action, China responded by imposing an additional tariff on goods imported from the United States, and the two countries sequentially further increased the additional tariff charged on each other, bringing the cumulative tariffs imposed on each other to over 100%. Other economies that are affected by increased tariffs by the United States are also considering imposing or increasing tariffs on goods from the United States, although after President Trump announced a 90-day pause on the individualized higher tariff rates for other countries, the tariffs restrictions will continue to be imposed. As of the date of this annual report, there is still a high degree of uncertainty surrounding U.S. tariff policy, how it will be implemented and changed, and how other countries will react to it. It also remains uncertain whether increased tariffs and trade tensions will create further disruptions and uncertainties to the international trade and lead to a downturn to the global economy. Additionally, the U.S. government continues to signal that it may alter trade agreements and terms between China and the United States, including limiting trade with China, and may impose additional tariffs on imports from China and other countries from which we import goods. In addition, any further escalation in trade tensions between PRC and the United States or a trade war, or the perception that such escalation or trade war could occur, may have materially and negatively impact on the economies of not only the two countries concerned, but the global economy as a whole.
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A substantial portion of our business originates from the customers in Mainland China for their export/re-export needs to the United States. Also, as a freight forwarder, our business and financial performance and conditions substantially depends on the general conditions of global economy and level of international trade and commerce. Current trade tensions between United States and China, and other political events, international trade disputes, could harm or disrupt international commerce and the global economy, and they could have a material adverse effect on us and our customers, our service providers, and our other partners. In addition, political uncertainty surrounding international trade disputes and the potential of their escalation to trade war and global recession could have a negative effect on customer confidence, which could materially and adversely affect our business. We also may have access to fewer business opportunities, and our operations may be negatively impacted as a result. In addition, the current and future actions or escalations by either the United States or China that affect trade relations may cause global economic turmoil and potentially have a negative impact on trade markets, our business, or our results of operations, as well as the financial condition of our clients, and we cannot provide any assurances as to whether such actions will occur or the form that they may take.
Amid the ongoing tariff war between the United States and China as of the date of this annual report, the Trump administration might proceed toward a removal of Chinese companies from American stock exchanges. Our shares may be prohibited from being traded on a national securities exchange or in the over-the-counter trading market in the United States, which will materially and adversely affect the value of your investment.
Rising political tensions could reduce levels of trades, investments, technological exchanges, and other economic activities between the two major economies. Besides, China is also facing the challenges of technological blockade and the economic decoupling between the U.S. and China. Any of these factors could have a material adverse effect on our business, prospects, financial condition and results of operations. Such tensions between the United States and China, and any escalation thereof, may have a negative impact on the general, economic, political, and social conditions in China.
Current and future actions or escalations by either United States or China that affect trade relations may cause global economic turmoil and potentially have a negative impact on our business, financial condition and results of operations, and we cannot provide any assurance as to whether such actions will occur or the form that they may take. Amid the ongoing tariff war between the United States and China as of the date of this annual report, the Trump administration might proceed toward a removal of Chinese companies from American stock exchanges. Our shares may be prohibited from being traded on a national securities exchange or in the over-the-counter trading market in the United States, which will materially and adversely affect the value of your investment.
Changes and the downturn in the economic, political, or social conditions of Hong Kong, Mainland China and other countries or changes to the government policies of Hong Kong and Mainland China could have a material adverse effect on our business and operations.
Our operations are located in Hong Kong. Accordingly, our business, prospects, financial condition and results of operations may be influenced to a significant degree by political, economic and social conditions in Hong Kong and Mainland China generally. Economic conditions in Hong Kong are sensitive to Mainland China and the global economic conditions. Any major changes to Hong Kong’s social and political landscape will have a material impact on our business.
A majority of our revenue is generated from the export shipments from Hong Kong to various overseas destinations such as North America, Europe and Asia. Our results of operations are thus affected by global trade volume and export volume of Hong Kong. The global trade volume and export volume of Hong Kong are affected by changes in global economic, financial and political conditions such as impositions of trade restrictions, sanctions, boycotts and other measures, trade disputes, which may lead to a material decline in the demand for our services, and hence our results of operations may be adversely affected.
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Global and regional demands for freight services are primarily driven by trade and economic activity. Our industry experienced cyclical fluctuations due to economic recession, level of international trade activities, downturns in business cycles of our customers, interest and currency rate fluctuations, inflation, trade restrictions, economic sanctions, trade disputes, boycotts, outbreak of wars, changes in regulatory regimes and extreme weather conditions, all of which are beyond our control and the nature, timing and degree of which are largely unpredictable. Any decrease in demand for our services due to cyclical downturns could adversely affect our business, financial condition and results of operations. We are particularly sensitive to changes in regional and/or global political and economic conditions that impact our customers’ needs for our services.
Economic downturns in one or more countries or regions, particularly in Asia, the European Union, the United States and other countries and regions with consumer-oriented economies, have in the past, and could in the future, reduce international trade volumes, which directly affects the demand for shipping and freight forwarding services. Any reduction in such demand would adversely affect our business, financial condition and results of operations.
Other examples of other general economic, financial and political risks include:
| ● | a general or prolonged decline in, or shocks to, regional or broader macro-economics; |
| ● | regulatory changes that could impact the markets in which we operate, which could reduce demand for our goods and services or lead to pricing, currency, or other pressures; and |
| ● | deflationary economic pressures, which could hinder our ability to operate profitably in view of the challenges inherent in making corresponding deflationary adjustments to our cost and payment structure. |
The nature of these types of risks, which are often unpredictable, makes them difficult to plan for, or otherwise mitigate, and they are generally uninsurable, which compounds their potential impact on our business. Any such event could have a material adverse effect on our business, financial condition and results of operations.
Termination of the U.S.-Hong Kong International Shipping Agreement may have an adverse effect on our ocean freight forwarding services and results of operations.
Changes to trade policies and treaties, or the perception that these changes could occur, could adversely affect the financial and economic conditions in the jurisdictions in which we operate, as well as our financial condition and results of operations. In response to the Hong Kong National Security Law, the United States, amongst other sanctions aimed to eliminate certain preferential treatment of Hong Kong, announced the suspension or termination of three bilateral agreements signed between Hong Kong and the U.S. in August 2020, including the U.S.-Hong Kong International Shipping Agreement, which provided reciprocal tax exemption on income derived from the international operation of ships by the U.S. and Hong Kong residents. As a result of the termination of the U.S.-Hong Kong International Shipping Agreement, the U.S. and Hong Kong tax exemptions are no longer generally available to Hong Kong and U.S. shipping companies trading to each other’s territories. Thus, when a Hong Kong company whose vessel transports goods to or from the U.S. by sea, 50% of the income generated will generally be treated as arising from U.S. sources and will be subject to U.S. tax at an effective tax rate of 4% up to 44.7%, increasing the tax exposure of Hong Kong shipping companies.
The revenue attributable to our ocean freight forwarding services amounted to approximately US$1.3 million, US$1.5 million and US$0.8 million, representing approximately 1.0%, 1.7% and 1.6% of our total revenue for the years ended December 31, 2023, 2024 and 2025 respectively. The termination of the U.S.-HK International Shipping Agreement may increase the costs of ocean freight rates when the Hong Kong shipping companies pass the new U.S. tax costs to their customers such as our Operating Subsidiaries, resulting in an increase in cost of services of our Operating Subsidiaries. If we are unable to pass on the increased costs to our customers, our results of operations would be adversely affected. If we are able to pass on the costs to our customers, the customers’ demand on our ocean freight forwarding services may decrease as a result of higher ocean freight rates. Moreover, U.S. or other shipping companies trading to Mainland China or Asia may choose other port options other than Hong Kong as the new tax exposure may create financial pressure to avoid trading to Hong Kong in the future, resulting in the decrease in the customers’ demand on our ocean freight forwarding services, thus adversely affecting our ocean freight forwarding business and results of operations.
The US-Isreal conflict with Iran directly disrupts China-US seaborne and air freight forwarding businesses we are operating.
Our business mainly focused on the air freight forwarding services. The US-Isreal-Iran conflict has disproportionately hit air-freight even though China-US doesn’t overfly Iran directly. China-US air lanes are not directly blocked, but global rerouting cascades into global airspace squeeze, carriers shift widebody freighters from China-US to China-Europe for higher yields and some flights avoid the Middle East-linked airspace and take the north-polar reroute resulting in less payload per trip. The US-Isreal-Iran conflict also triggered rate and surcharge explosion. Base rates for China-US West Coast and China-US East Coast increased by 60-100% and 70-115% respectively. New surcharges become mandatory which include fuel surcharge, war risk surcharge, capacity premium and emergency handling fee. Forwarder like us also facing capacity and booking chaos. Spaces are sold out 2-3 weeks ahead, no firm space guarantees and no spot market space unless premium. With the US hub congestion, the transit time and reliability collapse.
The current Middle East situation might have an adverse impact on our business as it has now, could in the future, reduce our forwarding services for China-US due to capacity squeeze. We may also not be able to fully on pass the increased rates and surcharges to our customers.
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Risk Related to our Corporate Structure
We rely on dividends and other distributions on equity paid by the Operating Subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of the Operating Subsidiaries to make payments to us could have a material adverse effect on our ability to conduct our business.
We are a holding company incorporated in the Cayman Islands with the majority of our operations in Hong Kong. Accordingly, most of our cash is maintained in Hong Kong dollars. We rely in part on dividends from our Hong Kong subsidiaries for our cash and financing requirements, such as the funds necessary to service any debt we may incur. If any of our subsidiaries incurs debt on its own behalf in the future, the instruments governing the debt may restrict its ability to pay dividends or make other distributions to us.
There is currently no restriction or limitation under the laws of Hong Kong on the conversion of Hong Kong dollars into foreign currencies and the transfer of currencies out of Hong Kong and the foreign currency regulations of mainland China do not currently have any material impact on the transfer of cash between us and our Hong Kong subsidiaries. However, there is a possibility that certain PRC laws and regulations, including existing laws and regulations and those enacted or promulgated in the future were to become applicable to our Hong Kong subsidiaries in the future and the PRC government may prevent our cash maintained in Hong Kong from leaving or restrict the deployment of the cash into our business or for the payment of dividends in the future. Any such controls or restrictions, if imposed in the future and to the extent cash is generated in our Hong Kong subsidiaries and to the extent assets (other than cash) in our business are located in Hong Kong or held by a Hong Kong entity and may need to be used to fund operations outside of Hong Kong, may adversely affect our ability to finance our cash requirements, service debt or make dividend or other distributions to our shareholders. Furthermore, there can be no assurance that the PRC government will not intervene or impose restrictions on our ability to transfer or distribute cash within our organization, which could result in an inability or prohibition on making transfers or distributions to entities outside of Hong Kong and adversely affect our business.
You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated under the law of the Cayman Islands, we conduct substantially all of our operations and a majority of our directors and executive officers reside outside of the United States.
We are incorporated under the laws of the Cayman Islands. We conduct a majority of our operations and a majority of our directors and executive officers reside outside of the United States. Our corporate affairs are governed by our Amended and Restated Memorandum and Articles of Association, the Companies Act and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by noncontrolling shareholders and the fiduciary responsibilities of our directors to our company under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law, which has persuasive, but not binding, authority on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a less developed body of securities laws than the United States and provides significantly less protection to investors. In addition, some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands.
There is no statutory recognition in the Cayman Islands of judgments obtained in the United States, although a final and conclusive monetary judgment obtained in the United States will be recognized and enforced in the courts of the Cayman Islands at common law, without any re-examination of the merits of the underlying dispute, by an action commenced on the foreign judgment debt in the Grand Court of the Cayman Islands, provided such judgment (a) was given by a foreign court of competent jurisdiction and the company either submitted to such jurisdiction or was resident or carrying on business within such jurisdiction and was duly served with process; (b) was not in respect of penalties, fines, taxes or similar fiscal or revenue obligations; (c) was not obtained fraudulently by the person in whose favor judgment was given; and (d) was not obtained in a manner and is not of a kind the enforcement of which is contrary to natural justice or the public policy of the Cayman Islands. It may be difficult or impossible for you to bring an action against us or against our directors and officers in the Cayman Islands in the event that you believe that your rights have been infringed under the applicable securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands may render you unable to enforce a judgment against our assets or the assets of our directors and officers.
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Shareholders of Cayman Islands exempted companies such as us have no general rights under Cayman Islands laws to inspect corporate records and accounts or to obtain copies of lists of shareholders of these companies. Our directors have discretion under our Amended and Restated Memorandum and Articles of Association to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders, but are not obliged to make them available to our shareholders. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.
As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a U.S. company. Therefore, you may not be able to effectively enjoy the protection offered by the U.S. laws and regulations that intend to protect public investors.
Cayman Islands companies may not have standing to initiate a derivative action in a federal court of the United States. As a result, your ability to protect your interests if you are harmed in a manner that would otherwise enable you to sue in a United States federal court may be limited to direct shareholder lawsuits.
You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions against us or our management named in the Report based on foreign laws, and therefore you may not be afforded the same protection as provided to investors in U.S. domestic companies.
We are an exempted company incorporated under the laws of the Cayman Islands. We conduct a majority of our operations, and a majority of our directors and executive officers reside outside of the United States. As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the United States in the event that you believe that your rights have been infringed under the U.S. federal securities laws or otherwise. It may also be difficult for you to enforce judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against us and our officers and directors. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of Hong Kong may render you unable to enforce a judgment against us, our assets, directors and officers or their assets. Therefore, you may not be able to enjoy the same protection provided by various U.S. authorities as it is provided to investors in U.S. domestic companies.
In addition, to the extent that we retain any director that resides in a jurisdiction that does not have any treaties or other form of reciprocity with the United States that provide for the reciprocal recognition and enforcement of foreign judgments, additional local procedural rules will need to be followed.
Our Amended and Restated Memorandum and Articles of Association designate specific courts in Cayman Islands and the United States as the exclusive forum for certain litigation that may be initiated by the holders of our ordinary shares or other securities, which could limit their ability to obtain a favorable judicial forum for disputes with us.
Pursuant to our Amended and Restated Memorandum and Articles of Association, unless we consent in writing to the selection of an alternative forum, the courts of the Cayman Islands shall have exclusive jurisdiction to hear, settle and/or determine any dispute, controversy or claim (including any non-contractual dispute, controversy or claim) of (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Company to the Company or the Company’s shareholders, (iii) any action asserting a claim arising pursuant to any provision of the Companies Act or these Articles including but not limited to any purchase or acquisition of shares, security or guarantee provided in consideration thereof, or (iv) any action asserting a claim against the Company which if brought in the United States of America would be a claim arising under the internal affairs doctrine (as such concept is recognized under the laws of the United States from time to time). The Cayman Forum Provision will not apply to any causes of action arising under the Securities Act or Exchange Act. Our Amended and Restated Memorandum and Articles of Association further provides that unless we consent in writing to the selection of an alternative forum, to the fullest extent permitted by relevant law, United States District Court for the Southern District of New York (or, if the United States District Court for the Southern District of New York lacks subject matter jurisdiction over a particular dispute, the state courts in New York County, New York) shall be the exclusive forum within the United States for the resolution of any complaint asserting a cause of action arising out of or relating to the federal securities laws of the United States. In addition, our Amended and Restated Memorandum and Articles of Association provides that any person or entity purchasing or otherwise acquiring any shares or other securities in us is deemed to have notice of and consented to the Cayman Forum Provision and the Federal Forum Provision. Notwithstanding the above, holders of our ordinary shares or other securities cannot and will not be deemed to have waived our compliance with the U.S. federal securities laws and the rules and regulations thereunder.
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We recognize that the Cayman Forum Provision and the Federal Forum Provision in the our Amended and Restated Memorandum and Articles of Association may impose additional litigation costs on holders of our ordinary shares or other securities in pursuing their claims, particularly if the holders do not reside in or near the Cayman Islands or the United States. Additionally, the forum selection clauses in the our Amended and Restated Memorandum and Articles of Association may limit the holders’ ability to bring a claim in a judicial forum that they find favorable for disputes with us or our directors, officers or employees, which may discourage the filing of lawsuits against us and our directors, officers and employees, even though an action, if successful, might benefit holders of our securities.
Risks Related to our Business and Industry
We derive a significant portion of our revenue from few major customers with whom we do not enter into long-term contracts, the loss of one or more of which could have a material adverse effect on our business.
We generated a significant portion of our revenues from a single largest customer, Yanwen Logistics Co., Ltd (formerly known as “Beijing Yanwen Logistics Co., Ltd”) (“Yanwen Express”), for the years ended December 31, 2023, 2024 and 2025 respectively, which accounted for 75.3%, 39.3% and 56.6% of our total revenues respectively.
Loss of business from major customers could reduce our revenues and significantly harm our business, based on a number of factors other than our performance, such as: industry trends related to e-Commerce that may apply downward pricing pressures on the rates our customers can charge; the seasonality associated with the fourth quarter holiday season; business combinations and the overall growth of a customer’s underlying business; and any disruptions to our customers’ businesses. Furthermore, if we experience difficulties in the collection of our accounts receivables from our major customers, our results of operation may be materially and adversely affected. These customers could choose to divert all or a portion of their business with us to one of our competitors, demand pricing concessions for our services, require us to provide enhanced services that increase our costs, or develop their own shipping and distribution capabilities.
We expect that we will continue to depend on a relatively small number of customers for a significant portion of our revenue and may continue to experience fluctuations in the distribution of the revenue among our largest customers. The volume of sale to specific customers is likely to vary from year to year, especially since we do not have long-term commitments from any of our customers to purchase our services. A major customer in one year may not provide the same level of revenues for us in any subsequent year.
The demand for our services is easily affected by unpredictable factors, and our results of operations are affected by changes in the global and regional economic conditions and the international trading volumes.
A significant majority of our revenue is generated from air freight export from Hong Kong and Mainland China and organizing shipments primarily to Europe, Asia, Southeast Asia and North America. Our results of operations are thus affected by global trade volume and export volume of Hong Kong. We are sensitive to changes in regional and/or global political and economic conditions that impact customer shipping volumes, industry freight demand and demand for cargo space. The transportation industry historically has experienced cyclical fluctuations due to economic recession, level of international trade activities, downturns in business cycles of our customers, interest and currency rate fluctuations, inflation, trade restrictions, economic sanctions, trade disputes, boycotts, outbreak of wars, changes in regulatory regimes and extreme weather conditions, all of which are beyond our control and the nature, timing and degree of which are largely unpredictable. Any decrease in demand for our services due to cyclical downturns could adversely affect our business, financial condition and results of operations.
13
A decrease in the level of Mainland China’s export of goods could have a material adverse effect on our business.
A significant portion of our business originates from the customers in Mainland China and therefore depends on the level of imports and exports to and from Mainland China. Any adverse economic or social developments in Mainland China could lead to a general decline in consumption and a slowdown in international trade, which could have a significant impact on our businesses. In addition, an economic slowdown around the world and the shifting of outsourced manufacturing activities away from Mainland China, for example due to a “China plus One” strategy on behalf of outsourcers to reduce supply chain concentration, could have a significant impact on our international freight forwarding business.
Furthermore, the level of imports to and exports from Mainland China could be adversely affected by the changes in political, economic and social conditions or other relevant policies of the Chinese government. As Mainland China exports considerably more goods than it imports, any reduction in or hindrance to China-based exports, whether due to decreased demand from the rest of the world, an economic slowdown in Mainland China, seasonal decrease in manufacturing levels due to the Chinese New Year holiday or other factors, could have a material adverse effect on our business. In recent years, Mainland China has experienced an increasing level of economic autonomy. The “Dual Circulation” with the emphasis on “Internal Circulation” strategy became a key priority in the Chinese Government’s Fourteenth Five-Year Plan, signaling that Mainland China wants to reduce the role of international trade in its economy and its dependence on overseas markets. The Internal Circulation strategy may have the effect of reducing the imports to Mainland China and may, in turn, result in decreased demand for cargo shipping to Mainland China. Furthermore, the Chinese government’s economic policies which aimed at increasing domestic consumption of Chinese-made goods may have also the effect of reducing the supply of goods available for export and may, in turn, also result in decreased demand for export cargo shipping. Changes in U.S. and international trade policies, particularly with respect to China, may adversely impact our business and operating results. The U.S. government has recently made statements and taken certain actions that may lead to potential changes to U.S. and international trade policies, including imposing several rounds of tariffs and export control restrictions affecting certain products manufactured in China, imposing certain sanctions and restrictions in relation to China, and issuing statements indicating enhanced review of companies with significant China-based operations or the possibility of legislation that restricts or prohibits U.S. investment in certain companies operating in China. The Chinese government has, from time to time, responded by imposing its own tariffs, trade restrictions, and other regulations in response. A substantial portion of our business originates from the customers in Mainland China for their export/re-export needs to the United States. Also, as a freight forwarder, our business and financial performance and conditions substantially depends on the general conditions of global economy and level of international trade and commerce. Current trade tensions between United States and China, and other political events, international trade disputes, could harm or disrupt international commerce and the global economy, and they could have a material adverse effect on us and our customers, our service providers, and our other partners.
These factors could have a negative impact on the outbound activities of international freight forwarding from Mainland China. If Mainland China experiences slower growth or a decline in exports, our business, financial condition and results of operations could be materially and adversely affected.
There can be no assurance that Hong Kong will continue to maintain its position as a significant air cargo hub in Asia.
Our Operating Subsidiaries operate out of Hong Kong. As a significant air cargo hub in Asia, Hong Kong is well-positioned to foster a high demand for cargo space on outbound routes from Hong Kong to other destinations in Asia. There can be no assurance that Hong Kong will continue to maintain such position. For example, Shanghai, China, shares the same cargo catchment area in the Pearl River Delta region, while Singapore shares the same positioning as a regional hub for intra-Asia trade and as a logistics center. In the event that Hong Kong loses its position as a transportation hub in Asia, the demand for our freight forwarding services and ancillary logistics services and thus our business, financial condition and results of operations, may be adversely affected.
14
Fluctuations in the price of cargo space could have adverse impact on our results of operations.
Fluctuation in the price of cargo space will affect our total cost of revenue directly and thus the freight forwarding services fee charged to our customers as our pricing for freight forwarding services is determined on a cost-plus approach, which in turn affects our gross profit. Our results of operations are significantly affected by the air and ocean freight charges cost, which accounted for approximately 81.4%, 81.4% and 79.3% of our total cost of revenue for the years ended December 31, 2023, 2024 and 2025, respectively. The profitability of our freight forwarding services is correlated with the fluctuation of freight forwarding services fee charged to our customers. If we cannot pass on the cost of the cargo space in full to our customers, our results of operations may be materially and adversely affected.
In the course of business, we enter into certain block space arrangements and aircraft charter arrangements with the suppliers whereby we are committed to paying for the agreed cargo space irrespective of whether we can fully utilize the allotted space. There have been occasions when we have provided cargo space to customers at a rate lower than our cost of freight and there can be no assurance that this will not occur again in the future. Should the prevailing market rates of cargo space at the time when we charge to our customers fall below our cost of freight, we may not be able to increase the freight forwarding services fee in order to pass on in full the cost of freight to our customers and our results of operations may be materially and adversely affected.
Our profitability is susceptible to the volatility and uncertainties in demand and supply for cargo space.
The freight service fee we charge our customers is based on our assessment of, among other things, the demand and supply for cargo space, prevailing market rate and air cargo space price index. Our profitability could be also negatively impacted if our pricing strategy proves to be inaccurate. If we are incorrect in our assumptions and do not accurately calculate or assess the costs to us to provide our services, we could experience lower margins than anticipated, loss of business, or be unable to offer competitive products and services.
We procure the supply of cargo space through direct booking, block space arrangements and aircraft charter arrangements, based on our estimation regarding the existing and anticipated customer demand. Pursuant to the block space arrangements and aircraft charter agreements, we are committed to paying the agreed cargo space irrespective of whether we fully utilize the allotted space. If we cannot efficiently utilize the air cargo space allocated to us under the block space agreements and aircraft charter agreements with our airline partners, we may not be able to fully recover the costs of the relevant cargo space, and our results of operations may suffer. If we cannot fully utilize the cargo space we have sourced, i.e., when the actual customers’ demand for the cargo space is less than the amount of cargo space we sourced, we have to sell excess cargo space. We cannot assure that there will not be instances where, for example, due to (a) departure timetable of the aircraft or vessel; (b) popularity of the route; or (c) seasonality factors, we are unable to fully consolidate/co-load all the excess cargo space we purchased from our suppliers. In case we cannot fully utilize the cargo space we obtained from our suppliers, we may have to bear the costs of all the excess cargo space we purchased and our business and results of operations could be adversely affected.
In the event that the actual customers’ demand for the cargo space is higher than the amount of cargo space we have, we have to source the cargo space, by direct booking, from our suppliers, including airlines and other freight forwarders, at prevailing market rates. Should the freight forwarding services fee we charge to our customers fall below the prevailing market rates of cargo space, we may not be able to increase the services fee in order to pass on in full the cost of freight to our customers and our results of operations may be materially and adversely affected. Furthermore, since cargo space offered by our suppliers through direct booking is subject to the availability of their aircraft or vessels and normally on a first-come-first-served basis, without the guaranteed supply of cargo space by existing agreement, there is no assurance that we will be able to source sufficient cargo space to meet our customers’ demands within the expected time frame and at favorable price, in particular during peak seasons. If we cannot obtain sufficient cargo space from our suppliers to meet our customers’ demands, our reputation within the network of industry players and our results of operations could be adversely affected.
15
There may be disintermediation in the freight forwarding industry in the future.
In light of the trend of digitization, huge amount of product information is available on the internet and as a result of information transparency and other innovative technologies (such as online marketplaces, electronic payments, algorithmic order-matching), manufacturers and retailers are working on reducing the number of intermediaries in the supply chain by shipping directly to end customers in order to reduce costs in the process. As a freight forwarder, we are one such supply chain intermediary. The trend of eliminating intermediaries creates disintermediation in our industry. Any significant decrease in demand for our freight forwarding and related logistics services due to disintermediation in our industry could adversely affect our business, financial condition and results of operations.
Our revenue is subject to seasonal fluctuations, our results for different periods in any given financial year may not be relied upon as indicators of our performance.
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 record relatively lower volume of shipment and thus relatively lower revenue during Lunar New Year (normally in January or February) owing to lower business activities from manufacturers and shippers in Mainland China in Lunar New Year, resulting in a decrease in the demand for freight forwarding services. Accordingly, comparison of sales and operating results from different periods in any given financial year may not be relied upon as indicators of our performance. It is widely understood in the industry that 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 unforeseen there is no way for us to provide assurances that these seasonal trends will continue.
We generally do not enter into any long-term contracts with our customers and we may not be able to maintain a stable source of revenue generated from the freight forwarding business.
We generally do not enter into long-term contracts our customers, who make bookings with us for cargo space on an as-needed basis. As a result, we cannot guarantee that our current customers will continue to utilize our services or that they will continue at the same levels. Our revenue is therefore susceptible to fluctuations in the demand for cargo space from our customers and the cancellations of existing customer contracts. We rely on our customers to make continuous purchases of cargo space from us to maintain a stable source of revenue. Customers’ demand could be affected by unpredictable factors, such as regional and global political and economic conditions. Furthermore, as we are not the exclusive freight forwarder of our customers, we cannot be certain that sales to our existing customers, including our major customers, will continue to use our freight forwarding services. Our existing customers are not obliged to engage us for the provision of freight forwarding services for the shipments in the future. There is no assurance that our existing customers will not engage other freight forwarders whom they perceive to offer lower prices or better services than ours. There is no certainty that we will continue to generate a stable revenue from our customers, any significant reduction of bookings from our customers could materially affect our business, financial condition and results of operations.
We are dependent on our customers’ business performance, especially our freight forwarder customer, and their continuing demand for international freight forwarding services.
Our revenue generated from our provision of freight forwarding services to other freight forwarders accounted for approximately 99.6%, 99.6% and 99.5% of our total revenue as of the years ended December 31, 2023, 2024 and 2025 respectively. We are therefore dependent on other freight forwarders’ business performance and developments in their markets and industries. Any material adverse change to the social and economic condition in Hong Kong may affect their business and financial performance, which may in turn affect our business and financial condition. If the financial and business performance of other freight forwarders deteriorate, it will likely cause a corresponding decrease in demand for our freight forwarding services. Adverse changes in their demand, for example if we cannot absorb their direct shipper customers, could materially and adversely affect our business, financial condition and results of operations.
16
The freight forwarding industries in which we operate are susceptible to risk of changes in shipping policies which could have direct adverse impact on our business, results of operations and profits.
Frequent accidents concerning certain types of cargo on aircraft and vessels have called for tightened safety measures on aircraft and vessels. In the event that changes in shipping policies of certain airlines, for instance, prohibiting consignments containing lithium batteries from loading on to passenger aircraft, have been adopted, business activities of our customers could be directly affected. Our customers may either be forced to ship their consignments through airlines that offer cargo aircraft or divert their domestic and inter-continental deliveries to other alternatives such as sea, rail and road transportation. Tightened safety measures may also imply an overall burden on cargo space suppliers to raise shipping costs in order to maintain their profit margin. In the event that we are unable to source suitable alternative cargo space for our customers, or we fail to pass on our increased costs to our customers, our business, results of operations and profitability could be adversely affected.
We face risks associated with the items we deliver and the contents of shipments and inventories handled through our service network as we may fail to identify shipments which carry goods of dangerous or illicit nature.
We handle a large volume of shipments across our service network. In accordance with the air cargo security regime in Hong Kong and related statutory requirements of Hong Kong Civil Aviation Department (CAD), 100% of cargoes arranged by us are required to be screened by the screening equipment (such as x-ray) certified by aviation security authorities, such as the European Civil Aviation Conference (ECAC) of the European Commission, Transportation Security Administration (TSA) of the United States, Department for Transport (DofT) of the UK and Civil Aviation Administration of China (CAAC) (“Screening Equipment”). We are required shall ensure all dangerous goods are properly classified, packed, marked, labelled and documented before they are offered for air transportation. However, there is no assurance that our Screening Equipment or hand search/physical check by our screeners at piece level can successfully prevent the shipment of any illegal goods or dangerous goods.
Should we fail to identify shipments which carry goods of illicit or dangerous nature, these goods may be impounded by customs, and we may be subject to investigations and administrative or even criminal penalties or, if any personal injury or property damage is concurrently caused, we may be further liable for civil compensation. In such event, our reputation, business and results of operations may be materially and adversely affected. Furthermore, we face challenges with respect to the protection and control of these items when handling the shipments and inventories across our service network. Shipments and inventories in our service network may be stolen, damaged or lost for various reasons, and we, together with our service providers, may be perceived or found to be liable for such incidents.
Any lack of requisite licenses, certificate, permits applicable to the business operation may have a material and adverse impact on our business, financial condition and results of operations.
We have obtained various registrations, certificates, permits, and licenses in connection with our business and operations, including the certificate as an International Air Transport Association (IATA) member for easier access to space procurement for air cargo routes, license for the operation of our off-airport x-ray screening operation in our contract warehouses to satisfy the CAD 100% screening requirement (including Irradiating Apparatus License, Regulated Air Cargo Screening Facility License, and Regulated Agent License from Civil Aviation Department and Radiation Board of the Hong Kong Government), and the registration as a Food Import or Distributor and Textile Traders. For the details regarding the relevant licenses and permits, see “Item 4.B. Business Overview — Licenses and Regulatory Approvals.” Most licenses and registrations are subject to renewal. In the event that we fail to renew or obtain our relevant licenses and registrations, even if we may be able to subcontract relevant services, there is no assurance that we can locate suitable subcontractors in a timely manner or on reasonable commercial terms, and the subcontractor will at all times perform in a satisfactory level. Failure to obtain such licenses and permits may result in suspension of operation, fines or other penalties by government authorities. New laws and regulations may be enforced from time to time to require additional licenses and permits other than those we currently have. Therefore, our business, reputation, prospects, results of operations and financial condition may be materially and adversely affected.
17
We are dependent on our suppliers, and any disruption, non-performance and delayed performance of these suppliers may adversely affect our operations and substantially impact our financial results.
Our suppliers include airlines, freight forwarders and shipping liners for cargo space, and other suppliers for logistics-related services such as palletization services, warehousing services, local and overseas transportation services, and x-ray screening services. For the years ended December 31, 2023, 2024 and 2025, our top two suppliers accounted for approximately 26.8%, 26.0% and 29.9% of the total cost of revenue, respectively. A loss of any of these suppliers could have a negative effect on our operation. Disruptions in the business activities of our suppliers may have negative impacts on our business. There are operational risks inherent to the business activities of our suppliers, such as labor strikes, suspension or cancellation of flight lines due to technical failures, severe outbreaks of contagious diseases or epidemics (such as the COVID-19 pandemic), or financial difficulties which our suppliers may face. We may also encounter the risks associated with non-performance, unsatisfactory, or delayed performance by our suppliers. There is no assurance that the carriers, our business partners and other service providers will at all times perform at a satisfactory level.
Our suppliers may fail to deliver cargoes on time or cargoes may be damaged during transportation. We cannot assure that the service provided by our suppliers will always meet our customers’ delivery requirement. In case there is any error or delay due to various reasons, including but not limited to weather condition, air traffic control, trade embargo and human negligence, the cargoes may not be delivered to the assigned destination within the expected schedule and condition. Freight carriers may also mistakenly deliver the cargo to other destinations. If the carriers, our freight forwarder business partners and other service providers are unable to meet our customers’ standards and requirements and we are unable to find suitable alternatives promptly, our reputation within the industry and therefore our business, sales performance and results of operations could be adversely affected.
In the event of occurrence of the above, we may have to source cargo space from other suppliers for our customers within a tight time constraint. If our suppliers are unable to meet our customers’ delivery requirement, or if we are unable to find suitable alternatives promptly in the event of disruptions in the business activities of our suppliers, our reputation and therefore our business, sales performance and results of operations could be adversely affected. If we are not able to maintain or expand our relationships with our major suppliers, our ability to deliver our products and services in a timely manner may be impaired and we could be required to incur additional expenses to secure alternative suppliers. The disruption in our supply or the need to find alternative suppliers could impact the costs and/or timing associated with procuring necessary products and services.
Our profitability may be materially adversely impacted if our investments in equipment, logistic center/warehouses, and IT infrastructure do not match customer demand for these resources or if there is a decline in the availability of funding sources for these investments.
Although we are an asset-light company, our freight forwarding operations may require certain investments and commitment of capital in equipment, warehouse maintenance and expansion, warehousing systems such as shelving, racking, and IT system. The amount and timing of our capital investments depend on various factors, including anticipated freight volume levels and the price and availability of appropriate property for service centers.
These capital expenditures are associated with certain inherent risks. We may not have the resources to fund such investment. Even if we have sufficient funding, assets that best suit our needs may not be available at reasonable prices or at all. In addition, we are likely to incur capital expenditures earlier than all of the anticipated benefits, and the return on these investments may be lower, or may be realized more slowly, than we expected. In addition, the carrying value of the related assets may be subject to impairment, which may adversely affect our financial conditions and operating results. Furthermore, our continued investment in freight service centers, warehouses and other infrastructure may put us at a competitive disadvantage against competitors who spend less on these assets but focus more on improving other aspects of their business that are less capital heavy.
18
Our net cash outflow from operating activities may affect our liquidity.
We cannot assure you that we will not experience net cash outflow from operating activities in the future. Our liquidity in the future will, to an extent, depend on our ability to maintain adequate cash inflows from operating activities primarily generated from our trade receivables for the provision of air freight forwarding, distribution and logistics and ocean freight forwarding services. In the event of any significant deterioration in the quality of our trade receivable portfolio, our liquidity and cash flows from operating activities could be materially and adversely affected.
We may suffer losses from credit exposures and counterparty risks.
We are subject to the credit risks of our customers and our liquidity is dependent on the prompt payment of our customers. We generally grant our customers a credit period of 45-60 days from the invoice date. There are often time lags between receiving payments from our customers and making payments to our suppliers, and we are exposed to a potential risk of mismatch in our cash flow. There is no assurance that we will not experience any significant cash flow mismatch in the future. Further, there can be no assurance that our cash flow management measures will function properly or at all. If we fail to manage our cash flow properly and maintain sufficient working capital, we may suffer losses from credit exposures which may materially and adversely affect our financial position, results of operations and cash flow.
Our business is also subject to risks that customers or counterparties may delay or fail to perform their contractual obligations. There is no assurance that we will not experience any material difficulty in debt collections or potential default by customers in the future. While our finance department monitors material overdue payments closely, there is no assurance that we will be able to collect overdue payments. Any material non-payment or non-performance by customers or counterparties could adversely affect our financial position, results of operations and cash flows.
We may be subject to litigation and regulatory investigations and proceedings and may not always be successful in defending ourselves against such claims or proceedings.
The nature of our business exposes us to the potential for various types of claims and litigation. We may be subject to claims and litigation related to labor and employment, contractual claims, negligence claims, personal injury, vehicular accidents, cargo and other property damage, business practices, environmental liability and other matters, including with respect to claims asserted under various other theories of agency or employer liability. Claims against us may exceed the amount of insurance coverage that we have or may not be covered by insurance at all. Businesses that we may acquire also increase our exposure to litigation. Material increases in liability claims or workers’ compensation claims, or the unfavorable resolution of claims, or our failure to recover, in full or in part, under indemnity provisions could materially and adversely affect our operating results. In addition, significant increases in insurance costs or the inability to purchase insurance as a result of these claims could reduce our profitability. See “Item 4.B. Business Overview — Legal Proceedings.”
Any negative publicity with respect to the Company, the Operating Subsidiaries, our directors, officers, employees, shareholders, or other beneficial owners, our peers, business partners, or our industry in general, may materially and adversely affect our reputation, business, and results of operations.
Our reputation and brand recognition play an important role in earning and maintaining the trust and confidence of our existing and prospective customers. Our reputation and brand are vulnerable to many threats that can be difficult or impossible to control, and costly or impossible to remediate. Negative publicity about us, such as alleged misconduct, other improper activities, or negative rumors relating to our business, shareholders, or other beneficial owners, affiliates, directors, officers, or other employees, can harm our reputation, business, and results of operations, even if they are baseless or satisfactorily addressed. These allegations, even if unproven or meritless, may lead to inquiries, investigations, or other legal actions against us by any regulatory or government authorities. Any regulatory inquiries or investigations and lawsuits against us, and perceptions of conflicts of interest, inappropriate business conduct by us or perceived wrongdoing by any key member of our management team, among other things, could substantially damage our reputation regardless of their merits, and cause us to incur significant costs to defend ourselves. Moreover, any negative media publicity about the freight forwarding industry in general or service quality problems of other firms in the industry in which we operate, including our competitors, may also negatively impact our reputation and brand. If we are unable to maintain a good reputation or further enhance our brand recognition, our ability to attract and retain customers, third-party partners, and key employees could be harmed and, as a result, our business, financial position, and results of operations would be materially and adversely affected.
19
We may not be able to obtain finance from time to time to fund our operations and maintain growth.
In order to fund our operations and maintain our growth or expand our business, we may need to obtain future funding including equity financing or banking facilities from our banks from time to time. However, we may face the limitation of not having sufficient assets to pledge to secure additional debt financing. Further, there may be occasions where we are unable to obtain financing at commercial terms favorable or acceptable to us or at all. If these circumstances arise, our business, results of operations, and growth could be compromised.
Uncertainties relating to the growth and profitability of the e-Commerce industry could adversely affect our revenues and business prospect.
As part of our growth strategy, we plan to expand our services to customers focusing on cross-border e-Commerce or its related logistics services. The long-term viability and prospects of various e-Commerce business models remain relatively untested. The future results of operations of the e-Commerce platforms will depend on numerous factors affecting the development of the e-Commerce industry, which may be beyond our control, such as (i) the trust and confidence level of e-Commerce consumers, as well as changes in customer demographics and consumer tastes and preferences; (ii) the selection, price and popularity of products as well as promotions that the e-Commerce platforms offer online; (iii) whether alternative retail channels or business models that better address the needs of consumers; and (iv) the development of fulfillment, payment and other ancillary services associated with online purchases. A decline in the popularity of e-Commerce may adversely affect the business prospects of our customers, such as cross-border e-Commerce platforms, freight forwarders focusing on e-Commerce logistics services, and thus ultimately our revenue and business prospects may be adversely affected.
Our growth prospects may be limited if we do not successfully implement our future plans and growth strategy.
We devise our future plans as set out in the sections headed “Item 4.B. Business Overview — Growth Strategies” based on circumstances currently prevailing and bases and assumptions that certain circumstances will or will not occur, as well as the risks and uncertainties inherent in various stages of implementation.
Our growth is based on assumptions of future events which include (a) the continuous growing prevalence of e-Commerce; (b) our ability to develop our industry network with airlines and other freight forwarders for and co-loading activities; (c) the effectiveness of our management effort in overseeing our expansion; (d) continuous growth of the U.S. freight forwarding market; and (e) our ability to retain key staff in the management and the operational departments. Furthermore, our future business plans may be hindered by other factors that are beyond our control, such as competition within the freight forwarding industries and market conditions. Therefore, there is no assurance that any of our future business plans will materialize or result in the conclusion or execution of any agreement within the planned timeframe, or that our objectives will be fully or partially accomplished.
Our prospects must be considered in light of the risks and challenges which we may encounter in various stages of the development of our business. If the assumptions which underpin our future plans prove to be incorrect, our future plans may not be effective in enhancing our growth, in which case our business, financial condition and results of operations may be adversely affected.
20
We may grow, in part, through acquisitions, which involve various risks, and we may not be able to identify or acquire companies consistent with our growth strategy or successfully integrate acquired businesses into our operations.
We may intend to pursue opportunities to expand our business by acquiring other companies in the future. Acquisitions involve risks, including those relating to:
| ● | identification of appropriate acquisition candidates; |
| ● | negotiation of acquisitions on favorable terms and valuations; |
| ● | integration of acquired businesses and personnel; |
| ● | integration of information technology systems; |
| ● | implementation of proper business and accounting controls; |
| ● | ability to obtain financing, at favorable terms or at all; |
| ● | diversion of management attention; |
| ● | retention of employees and customers; |
| ● | non-employee driver attrition; |
| ● | unexpected liabilities; |
| ● | detrimental issues not discovered during due diligence. |
Acquisitions also may affect our short-term cash flow and net income as we expend funds, potentially increase indebtedness and incur additional expenses. If we are not able to identify or acquire companies consistent with our growth strategy, or if we fail to successfully integrate any acquired companies into our operations, we may not achieve anticipated increases in revenue, cost savings and economies of scale, our operating results may actually decline and acquired goodwill and intangibles may become impaired.
We are dependent on our senior management team and other key employees, and the loss of any such personnel could materially and adversely affect our business, operating results and financial condition.
We believe that our performance and success is, to a certain extent, attributable to the extensive industry knowledge and experience of our key executives and personnel. Our continued success is dependent, to a large extent, on the ability to attract and retain the services of the key management team. However, competition for key personnel in our industry is intense. We may not be able to retain the services of our directors or other key personnel, or attract and retain high-quality personnel in the future. If any of our key personnel departs from us, and we are not able to recruit a suitable replacement with comparable experience to join us on a timely basis, our business, operations and financial condition may be materially and adversely affected.
Increasing labor cost and labor shortage in our industry may affect our business, financial conditions and results of operations.
The economy in Hong Kong and globally has experienced general increases in inflation and labor costs in recent years. As a result, average wages in Hong Kong and certain other regions are expected to continue to increase. In addition, we are required by Hong Kong laws and regulations to pay various statutory employee benefits, including mandatory provident fund to designated government agencies for the benefit of our employees. The relevant government agencies may examine whether an employer has made adequate payments to the statutory employee benefits, and those employers who fail to make adequate payments may be subject to fines and other penalties.
21
Although we have not experienced any labor shortage to date, we have observed an overall tightening and increasingly competitive labor market. We have experienced, and expect to continue to experience, increases in labor costs due to increases in salary, social benefits and employee headcount. We and our network partners compete with other companies in our industry and other labor-intensive industries for labor, and we may not be able to offer competitive salaries and benefits compared to them.
Because the freight forwarding industry is a labor-intensive industry, we cannot assure that we will not experience any labor shortage for our services or that our labor costs will not continue to increase in the future. Market participants in the freight forwarding industry of Hong Kong have suffered from shortage of labor and are confronted with an increase in labor costs, which tends to constrain the sustainable development of the freight forwarding industry. If we fail to retain our existing labor and/or recruit sufficient staff at the expected rate in a timely manner, we may not be able to shift the extra costs to our customers. As such, the increasing labor costs and labor shortage may adversely affect our business, financial conditions and results of operations.
The freight forwarding industry in which we operate is highly fragmented and competitive and there can be no assurance that we can compete successfully in the future and adequately address the downward pricing pressure.
The freight forwarding industry in which we operate is highly competitive, fragmented and historically have few barriers to entry. We compete with a large number of other asset-light freight forwarders, asset-based carriers, and integrated logistics companies. Our competitors range from small operators that compete within a limited geographic area to companies with substantially greater financial and other resources, including greater freight capacity. In addition, our suppliers, such as major airlines and shipping liners have also set up subsidiaries to offer freight forwarding services and logistics services and our customers could bring in-house some of the services we provide to them.
Competition from other freight forwarders within the market may adversely affect our customer base and market share. Many of our competitors periodically reduce their rates to unusually low levels in order to gain business, especially during times of economic decline. Although such predatory pricing strategy is unsustainable in the long-term, it may adversely affect our business in the short-term. Furthermore, the freight forwarding industry continues to consolidate. As a result of consolidation, our competitors may increase their market share and improve their financial capacity and may strengthen their competitive positions. Business combinations could also result in competitors providing a wider variety of services at competitive prices, which could adversely affect our financial performance. We may lose key members of our management team and experienced employees (in particular those from our sales force who have established relationships with our key customers) to our competitors.
As a result, we may not be able to compete effectively with our existing or potential competitors. The competitive pressures may cause a decrease in our volume of freight and compel us to adopt a more competitive pricing strategy by lowering our profit margin in order to maintain our customer base and market share. There can be no assurance that we can compete successfully over other industry players for customers in the future. If we are unable to maintain our customer base, our business, financial condition and results of operations could be adversely affected.
If our merchant and non-freight forwarders customers are able to reduce their logistics and supply chain costs or increase utilization of their internal solutions, our business and operating results may be materially and adversely affected.
A major driver for merchants’ customers to use third-party logistics and supply chain service providers is the high cost and degree of difficulty associated with developing in-house logistics and supply chain expertise and operational efficiencies. If, however, our customers are able to develop their own logistics and supply chain solutions, increase utilization of their in-house supply chain, reduce their logistics spending, or otherwise choose to terminate our services, our logistics and supply chain management business and operating results may be materially and adversely affected.
22
Volatility in fuel prices, shortages of fuel or the ineffectiveness of our fuel surcharge program can have a material adverse effect on our results of operations and profitability.
We are subject to risks associated with the availability and price of fuel. Fuel prices have fluctuated dramatically over recent years. Future fluctuations in the availability and price of fuel could adversely affect our results of operations. Fuel availability and prices can be impacted by factors beyond our control, such as natural or man-made disasters, adverse weather conditions, political events, economic sanctions imposed against oil-producing countries or specific industry participants, disruption or failure of technology or information systems, price and supply decisions by oil producing countries and cartels, terrorist activities, armed conflict, tariffs, sanctions, other changes to trade agreements and world supply and demand imbalance. For example, the recent U.S.–Iran war and other conflicts in the Middle East have contributed to instability in global fuel supply and price levels, and similar events in the future could further disrupt supply chains and increase fuel price volatility. There can be no assurance that our fuel surcharge revenue programs will be effective in the future as the fuel surcharge may not capture the entire amount of the increase in fuel prices. Additionally, decreases in fuel prices reduce the cost of transportation services and accordingly, could reduce our revenues and may reduce margins for certain lines of business. In addition to changing fuel prices, fluctuations in volumes and related load factors may subject us to volatility in our fuel surcharge revenue. Fuel shortages, changes in fuel prices and the potential volatility in fuel surcharge revenue may adversely impact our results of operations and overall profitability.
Natural disasters, acts of God, wars, epidemics and other events may adversely affect our business operations, financial condition and results of operations.
Natural disasters, acts of God, wars, terrorist attacks, epidemics, material interruptions in service or stoppages in transportation and other events which are beyond our control may adversely affect local economies, infrastructures, airports, port facilities and international trade. They may also cause casualty to our employees, closure of ports or airports and disruptions to cargo flows, any of which could materially and adversely affect our results of operations and financial position. Harsh weather could also reduce our ability to transport freight, which could result in decreased revenues. Any of such occurrences of natural disasters or the outbreak of avian influenza, severe acute respiratory syndrome, the influenza A (H1N1), H7N9 or another epidemic could cause severe disruption to our daily operations, and may even require a temporary closure. Severe outbreaks of contagious diseases or epidemics such as coronavirus, avian influenza, swine influenza, severe acute respiratory syndrome (SARS) and Middle East respiratory syndrome (MERS) could lead to widespread health crises which may materially and adversely affect the regional and national economy. In particular, the COVID-19 pandemic have caused severe disruption to our daily operations, and may even require a temporary closure. Such closures may disrupt our business operations and adversely affect our results of operations. If any of our employees is suspected of having contracted a contagious disease, we may be required to apply quarantines or suspend our operations. Our operation could also be disrupted if our suppliers, customers or business partners were affected by such natural disasters or health epidemics.
In addition, our results of operations could be adversely affected to the extent that any health epidemic harms the Hong Kong economy in general. A prolonged outbreak of any illnesses or other adverse public health developments in Hong Kong or elsewhere in the world could have a material adverse effect on our business operations. Such outbreaks could severely disrupt our operations and adversely affect our business, financial condition and results of operations. Our headquarter is located in Hong Kong, where our management and employees currently reside. Consequently, if any natural disasters, health epidemics or other public safety concerns were to affect Hong Kong or cause travel restriction in or out of Hong Kong or its surrounding areas, our operation may experience material disruptions, which may materially and adversely affect our business, financial condition and results of operations. The war in Ukraine has had an immediate impact on the global economy resulting in higher energy prices and higher prices for certain raw materials and goods and services which in turn is contributing to higher inflation in the United States and other countries across the globe with significant disruption to financial markets. We do not have any operation or business in Russia or Ukraine, however, we may potentially be indirectly adversely impacted any significant disruption it has caused and may continue to escalate. Any one or more of these events may impede our operation and delivery efforts and adversely affect our sales results, or even for a prolonged period of time, which could materially and adversely affect our business, financial condition, and results of operations.
Any of these factors and other factors beyond our control could have an adverse effect on our business, financial condition and results of operations.
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If we fail to maintain our information technology systems, or if we fail to successfully implement new technology or enhancements, we may be at a competitive disadvantage and experience a decrease in revenues.
Our freight forwarding services are heavily dependent on our ability to communicate and manage the information related to the operation of freight forwarding business effectively. We rely on our current freight operations and accounting system to maintain our electronic system and database. Our system allows our staff to record and review the details of customers’ cargo space bookings, flight and shipping schedule and other related information of shipment. Moreover, we also rely on our warehousing management system for our provision of ancillary logistics services to manage our operation of our warehouse, including export shipments, invoicing and costing, reporting and transportation.
While we take measures to ensure the security of our IT systems, our systems are susceptible to outages from fire, floods, power loss, telecommunications failures, data leakage, human error, hacking and break-ins, cyber-attacks and similar events. The occurrence of any of these events could disrupt or damage our information technology systems and hamper our internal operations, disable our ability to handle the bookings of customers efficiently or at all, and adversely impact our customer service, volumes, and revenues and result in increased cost. In addition, we may be required to incur significant costs to protect against damage caused by the possible disruptions or security breaches in the future.
As we rely on our information technology systems to efficiently run our business, they are also the key components of our growth strategy and competitive advantage. As set out in the section headed “Item 4.B. Business Overview — Growth Strategy ”, we plan to enhance our information technology system in relation to freight forwarding services to improve our efficiency and facilitate the forecast in customers’ demand and planning of sourcing cargo space. We expect our customers to continue to demand more sophisticated, fully integrated information systems from their transportation providers. To keep pace with changing technologies and customer demands, we must correctly interpret and address market trends and enhance the features and functionality of our information technology systems in response to these trends, which may lead to significant ongoing software development costs. We may be unable to accurately determine the needs of our customers and the trends in the freight forwarding services industry or to design and implement the appropriate features and functionality of our information technology systems in a timely and cost-effective manner, which could put us at a competitive disadvantage and result in a decline in our efficiency, decreased demand for our services and a corresponding decrease in our revenues. In addition, we could incur software development costs for technology that is ultimately not deployed and thus, would require us to write-off these costs, which would negatively impact our financial results. Furthermore, as technology improves, our customers may be able to find alternatives to our services for matching shipments with available freight hauling capacity.
Our business is subject to cybersecurity risks. A cyberattack may disrupt our operations and compromise the personal data of our customers.
Our operations depend on effective and secure information technology systems. Threats to information technology systems, including as a result of cyber-attacks and cyber incidents, continue to grow. Cybersecurity risks could include, but are not limited to, malicious software, attempts to gain unauthorized access to our data and the unauthorized release, corruption or loss of our data and personal information, interruptions in communication, loss of our intellectual property or theft of our sensitive or proprietary technology, loss or damage to our data delivery systems, or other electronic security, including with our property and equipment.
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These cybersecurity risks could:
| ● | Disrupt our operations and damage our information technology systems, |
| ● | Subject us to various penalties and fees by third parties, |
| ● | Negatively impact our ability to compete, |
| ● | Enable the theft or misappropriation of funds, |
| ● | Cause the loss, corruption or misappropriation of proprietary or confidential information, expose us to litigation and |
| ● | Result in injury to our reputation, downtime, loss of revenue, and increased costs to prevent, respond to or mitigate cybersecurity events. |
If a cybersecurity event occurs, it could harm our business and reputation and could result in a loss of customers. Likewise, data privacy breaches by employees and others who access our systems may pose a risk that sensitive customer or vendor data may be exposed to unauthorized persons or to the public, adversely impacting our customer service, employee relationships and our reputation.
While we continue to make efforts to evaluate and improve our systems and particularly the effectiveness of our security program, procedures and systems, it is possible that our business, financial and other systems could be compromised, which could go unnoticed for a prolonged period of time, and there can be no assurance that the actions and controls that we implement, or which we cause third-party service providers to implement, will be sufficient to protect our systems, information or other property. Additionally, customers or third parties whom we rely on face similar threats, which could directly or indirectly impact our business and operations. The occurrence of a cyber-incident or attack could have a material adverse effect on our business, financial condition and results of operations.
We cannot assure that the insurance policies we have taken out are always able to cover all losses we sustain during the course of our business operations.
We maintain Freight Forwarder Liability insurance policies against cargo transportation losses and freight forwarder errors and omissions. We also maintain insurance coverage of employee’s compensation, and public liability insurance. Because of these significant self-insured exposures, insurance and claims expense may fluctuate significantly from period-to-period. Additionally, our ability to obtain and maintain adequate insurance and the cost of such insurance may be affected by significant claims and conditions in the insurance market over which we have no control.
We cannot assure that the insurance policies we have taken out are always able to cover all losses we sustain during the course of our business operations as it is not always possible to accurately predict and quantify how much loss we will suffer from potential claims. We may fail to establish sufficient insurance reserves and adequately estimate for future insurance claims. In the case of an uninsured loss or a loss in excess of insured limit, we may be required to pay for losses, damages and liabilities out of our own funds. The occurrence of an event that is not fully covered by insurance, the loss of insurance coverage or a material increase in the cost of insurance could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Fluctuations in exchange rates could result in foreign currency exchange losses, which may adversely affect our financial condition, results of operations and cash flows.
We are exposed to certain foreign exchange risks in respect of depreciation or appreciation amongst the currencies other than our functional currency. The value of Hong Kong dollar against Renminbi and other currencies may fluctuate and is affected by, among other things, the policies of the PRC government and changes in the PRC’s and international political and economic conditions. Since a significant portion of customers are from Mainland China, any future exchange rate volatility relating to Renminbi may lead to uncertainties in the value of our earnings.
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It is difficult to predict how market forces or Hong Kong, Mainland China, the U.S. or other government policies may impact the exchange rate among Hong Kong dollar, Renminbi, U.S. dollar and other currencies in the future. To the extent that we need to convert U.S. dollars we receive from the consummation of the Business Combination into Hong Kong dollars for our operations, appreciation of the Hong Kong dollar against the U.S. dollar would have an adverse effect on the Hong Kong dollar amount we would receive. Moreover, fluctuation in the exchange rate will affect the relative value of earnings from and the value of any foreign currency-denominated investments we make in the future. Shall we face significant volatility in these foreign exchange rates and we cannot procure any specific foreign exchange control measures to mitigate such risks, our results of operations and financial performance shall be adversely affected.
We may be affected by the currency peg system in Hong Kong.
Since 1983, Hong Kong dollars have been pegged to the U.S. dollars at the rate of approximately HK$7.8 to US$1.0. We cannot assure you that this policy will not be changed in the future. If the pegging system collapses and Hong Kong dollars suffer devaluation, the Hong Kong dollar cost of our expenditures denominated in foreign currency may increase. This would in turn adversely affect the operations and profitability of our business.
Our business is subject to various laws and regulations around the world; failure to comply with these provisions, as well as any adverse changes in applicable laws and regulations, may restrict or prevent us from doing business in certain countries or jurisdictions, require us to incur additional costs in operating our business or otherwise materially adversely affect our business.
The supply chain management services we provide are regulated by various governmental authorities around the world. A failure to comply with applicable laws and regulations and maintain appropriate authorizations could result in substantial fines, operational restrictions or possible revocations of authority to conduct operations, which could have a material adverse impact on our business, results of operations and financial condition. Future regulations or changes in existing regulations, or in the interpretation or enforcement of regulations, could require us or our customers to incur additional capital or operating expenses or modify business operations to achieve or maintain compliance. For example, the global responses to terrorist threats have resulted in a proliferation of cargo security regulations which have created a marked difference in the security arrangements required to move shipments around the globe, and we expect regulations to become more stringent in the future.
In addition, due to the cross-border nature of our activities and the large number of countries in which we operate, we must continually monitor our compliance with anti-corruption laws (such as the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act), trade control and sanctions laws and regulations (including those promulgated and enforced by the Office of Foreign Assets Controls and by other national and supranational institutions), and antitrust and competition laws. Recent years have seen a substantial increase in global enforcement of these laws, with more frequent voluntary self-disclosures by companies, industry-wide investigations and criminal and civil enforcement proceedings by U.S. and other government agencies resulting in substantial fines and penalties. We may be subject to criminal and civil penalties and other remedial measures as a result of any violation of such laws and regulations, which could have a material adverse effect on our business, results of operations and financial condition. While we have in place policies and procedures relating to compliance with these laws, there can be no assurance that our internal policies or procedures will work effectively to ensure that we comply with such laws and regulations all of the time or to protect us against liability under such laws and regulations for actions taken by our employees or by our third-party service providers (or their subcontractors) with respect to our business, which may be outside our direct control or knowledge.
We had a material weakness in our internal control over financial reporting. If we fail to implement and maintain an effective system of internal control to remediate our material weakness over financial reporting, we may be unable to accurately report our results of operations, meet our reporting obligations, or prevent fraud.
Prior to the Business Combination, we were a private company with limited accounting and financial reporting personnel and other resources with which we addressed our internal control over financial reporting. As defined in the standards established by the U.S. Public Company Accounting Oversight Board, a “material weakness” is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.
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In connection with the preparation of our consolidated financial statements in 2024 and 2025, we identified one material weakness in its internal control over financial reporting. Our independent registered public accounting firm has not conducted an audit of our internal control over financial reporting. The material weakness that has been identified related to insufficient accounting personnel with appropriate experience and knowledge to address complex accounting matters in accordance with U.S. GAAP and our lack of internal audit function to establish formal risk assessment process and internal control framework. Neither we nor our independent registered public accounting firm undertook a comprehensive assessment of our internal control under the Sarbanes-Oxley Act for purposes of identifying and reporting any weakness in our internal control over financial reporting.
We are subject to the Sarbanes-Oxley Act of 2002. Section 404 of the Sarbanes-Oxley Act, or Section 404, will require that us include a report from management on the effectiveness of our internal control over financial reporting in our annual report on Form 20-F beginning with our annual report in our second annual report on Form 20-F after becoming a public company. In addition, once we cease to be an “emerging growth company” as such term is defined in the Jumstart Our Business Startups Act (“JOBS Act”), our independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting. Moreover, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm, after conducting its own independent testing, may issue an adverse opinion on the effectiveness of internal control over financial reporting if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us. In addition, as a public company, our reporting obligations may place a significant strain on our management, operational and financial resources and systems for the foreseeable future. We may be unable to timely complete our evaluation testing and any required remediation.
During the course of documenting and testing our internal control procedures, in order to satisfy the requirements of Section 404, we may identify other weaknesses and deficiencies in our internal control over financial reporting. If we fail to maintain the adequacy of our internal control over financial reporting, as these standards are modified, supplemented or amended from time to time, we may not be able to conclude on an ongoing basis that it has effective internal control over financial reporting in accordance with Section 404. Generally speaking, if we fail to achieve and maintain an effective internal control environment, it could result in material misstatements in our financial statements and could also impair our ability to comply with applicable financial reporting requirements and related regulatory filings on a timely basis. As a result, our businesses, financial condition, results of operations and prospects, as well as the trading price of the Ordinary Shares, may be materially and adversely affected. Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject us to potential delisting from the stock exchange on which we list, regulatory investigations and civil or criminal sanctions. We may also be required to restate our financial statements from prior periods.
As a public company, we have incurred and expect to continue to incur significant legal, accounting and other expenses. For example, as a public company, we need to meet the applicable requirement of Nasdaq for independent directors and adopt policies regarding internal controls and disclosure controls and procedures. Operating as a public company may make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. In addition, we incur additional costs associated with our public company reporting requirements. It may also be more difficult for us to find qualified persons to serve on our board of directors or as executive officers.
After we are no longer an “emerging growth company,” we may incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 and the other rules and regulations of the SEC.
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Risks Related to our Ordinary Shares
Our securities may be prohibited from being traded in the United States under the Holding Foreign Companies Accountable Act in the future if the PCAOB is unable to inspect or investigate completely auditors located in China. The Holding Foreign Companies Accountable Act, as amended by the Consolidated Appropriations Act, 2023, decreased the number of “non-inspection years” from three years to two years, and thus, reduced the time before our securities may be prohibited from trading or delisted. The delisting of our securities, or the threat of them being delisted, may materially and adversely affect the value of your investment.
Pursuant to the Holding Foreign Companies Accountable Act, as amended by the Consolidated Appropriations Act, 2023, or the HFCAA, if the SEC determines that an issuer has filed audit reports issued by a registered public accounting firm located in a jurisdiction that has not been subject to inspections by the PCAOB for two consecutive years, the SEC will prohibit the securities of the issuer from being traded on a national securities exchange or in the over-the-counter trading market in the United States.
On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act and on December 29, 2022, the Consolidated Appropriations Act was signed into law by President Biden, which, among other things, reduced the number of consecutive non-inspection years required for triggering the prohibitions under the Holding Foreign Companies Accountable Act from three years to two years. The decrease in non-inspection years would reduce the time period before our securities may be prohibited from trading or delisted if the PCAOB determines that it is unable to inspect or investigate completely registered public accounting firms located in Hong Kong, China, under the HFCAA.
On December 16, 2021, the PCAOB issued a report to notify the SEC of its determination that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China or Hong Kong. On December 15, 2022, the PCAOB removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms.
Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions. If the PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China or Hong Kong and we use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the SEC, we would be identified as a Commission-Identified Issuer following the filing of the annual report on Form 20-F for the relevant fiscal year. In accordance with the HFCAA, our securities would be prohibited from being traded on a national securities exchange or in the over-the-counter trading market in the United States if we are identified as a Commission-Identified Issuer for two consecutive years in the future. If our securities are prohibited from trading in the United States, there is no certainty that we will be able to list on a non-U.S. exchange or that a market for our shares will develop outside of the United States. A prohibition of being able to trade in the United States would substantially impair your ability to sell or purchase our securities when you wish to do so, and the risk and uncertainty associated with delisting would have a negative impact on the price of our securities. Also, such a prohibition would significantly affect our ability to raise capital on terms acceptable to us, or at all, which would have a material adverse impact on our business, financial condition, and prospects.
WWC, P.C., the independent registered public accounting firm that issues the audit report included elsewhere in this annual report, as a firm headquartered in California and registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess our auditor’s compliance with the applicable professional standards with the last inspection in December 2023, and as of the date of this annual report, our auditor is not subject to the PCAOB determinations. However, in the event it is later determined that the PCAOB is unable to inspect or investigate completely the auditor because of a position taken by an authority in a foreign jurisdiction, then such lack of inspection could cause trading in the Company’s securities to be prohibited under the HFCAA, and ultimately result in a determination by a securities exchange to delist the Company’s securities. Our ability to retain an auditor subject to PCAOB inspection and investigation, including but not limited to inspection of the audit working papers related to us, may depend on the relevant positions of U.S. and Chinese regulators. With respect to audits of companies with operations in China or Hong Kong, such as the Company, there are uncertainties about the ability of our auditor to fully cooperate with a request by the PCAOB for audit working papers in Hong Kong or China without the approval of Chinese authorities. Whether the PCAOB will be able to conduct inspections of our auditor, including but not limited to inspection of the audit working papers related to us, in the future is subject to substantial uncertainty and depends on a number of factors out of our, and our auditor’s, control. If our shares and shares are prohibited from trading in the United States, there is no certainty that we will be able to list on a non-U.S. exchange or that a market for our shares will develop outside of the United States. Such a prohibition would substantially impair your ability to sell or purchase our shares when you wish to do so, and the risk and uncertainty associated with delisting would have a negative impact on the price of our shares. Also, such a prohibition would significantly affect our ability to raise capital on terms acceptable to us, or at all, which would have a material adverse impact on our business, financial condition, and prospects.
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The trading price of our Ordinary Shares may be volatile, which could result in substantial losses to you. Such volatility, including any stock run-ups, may be unrelated to our actual or expected operating performance and financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our Ordinary Shares.
The trading price of our Ordinary Shares is likely to be volatile and could fluctuate widely due to factors beyond our control. The market price of our Ordinary Shares may be volatile, both because of actual and perceived changes in our financial results and prospects, and because of general volatility in the stock market. In addition, any negative news or perceptions about inadequate corporate governance practices or fraudulent accounting, corporate structure or matters of other Hong Kong and Chinese companies may also negatively affect the attitudes of investors towards Hong Kong and Chinese companies in general, including us, regardless of whether we have conducted any inappropriate activities. Furthermore, securities markets may from time to time experience significant price and volume fluctuations that are not related to our operating performance, which may have a material and adverse effect on the trading price of our Ordinary Shares. Factors that could cause fluctuations in the trading price of our securities include the following:
| ● | actual or anticipated fluctuations in our financial condition or results of operations; |
| ● | variance in our financial performance from expectations of securities analysts; |
| ● | changes in our projected operating and financial results; |
| ● | changes in laws or regulations applicable to our business; |
| ● | announcements by us or our competitors of significant business developments, acquisitions or new offerings; |
| ● | sales of our securities by us, our shareholders, as well as the anticipation of lockup releases; |
| ● | significant breaches of, disruptions to or other incidents involving our information technology systems or those of our business partners; |
| ● | our involvement in litigation; |
| ● | conditions or developments affecting the solar power industry in our major markets; |
| ● | changes in senior management or key personnel; |
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| ● | the trading volume of our securities; |
| ● | changes in the anticipated future size and growth rate of our markets; |
| ● | publication of research reports or news stories about us, our competitors or our industry, or positive or negative recommendations or withdrawal of research coverage by securities analysts; |
| ● | general economic and market conditions; |
| ● | Changes in international trade policies, trade disputes, barriers to trade, or the emergence of the trade war and; |
| ● | other events or factors, including those resulting from war, incidents of terrorism, global pandemics (such as COVID-19), currency fluctuations, natural disasters or responses to these events, including with respect to potential operational disruptions, labor disruptions, increased costs, and impacts to demand related thereto. |
Any of these factors may result in large and sudden changes in the volume and price at which our Ordinary Shares will trade.
Recently, there have been instances of extreme stock price run-ups followed by rapid price declines and strong stock price volatility, especially among companies with relatively smaller public floats. As a relatively small-capitalization company with relatively small public float, we may experience greater stock price volatility, extreme price run-ups, lower trading volume and less liquidity than large-capitalization companies. In particular, our Ordinary Shares may be subject to rapid and substantial price volatility, low volumes of trades and large spreads in bid and ask prices. Such volatility, including any stock-run up, may be unrelated to our actual or expected operating performance, financial conditions or prospects, making it difficult for prospective investors to assess the rapidly changing value of our Ordinary Shares.
In addition, if the trading volumes of our Ordinary Shares are low, persons buying or selling in relatively small quantities may easily influence prices of our Ordinary Shares. This low volume of trades could also cause the price of our Ordinary Shares to fluctuate greatly, with large percentage changes in price occurring in any trading day session. Holders of our Ordinary Shares may also not be able to readily liquidate their investment or may be forced to sell at depressed prices due to low volume trading. Broad market fluctuations and general economic and political conditions may also adversely affect the market price of our Ordinary Shares. As a result of this volatility, investors may experience losses on their investment in our Ordinary Shares. A decline in the market price of our Ordinary Shares also could adversely affect our ability to issue additional shares of Ordinary Shares or other securities and our ability to obtain additional financing in the future. No assurance can be given that an active market in our Ordinary Shares will develop or be sustained. If an active market does not develop, holders of our Ordinary Shares may be unable to readily sell the shares they hold or may not be able to sell their shares at all.
Furthermore, employees and directors of the Company have granted equity awards under the 2024 Plan. You will experience additional dilution when those equity awards and purchase rights become vested and settled or exercised, as applicable, for the Company’s Ordinary Shares. Sales of Ordinary Shares by holders after the vesting of awards or holders of options who have exercised their options under any incentive plan that the Company may in the future implement could also cause the price of the Company’s Ordinary Shares to fall.
In 2025, the Company completed a private placement pursuant to a securities purchase agreement and issued units consisting of: (i) one Ordinary Share; and (ii) one Warrant to purchase up to two Ordinary Shares at an in-the-money exercise price per Ordinary Share. The private placement of units will immediately dilute existing shareholders’ ownership and voting interests and reduce earnings per share. The attached Warrants create substantial potential future dilution if exercised. These effects, combined with share supply overhang, investor uncertainty, and exercise-related selling pressure, may significantly increase the volatility of the Company’s Ordinary Share price, potentially resulting in substantial losses to investors.
Volatility in our share price could subject us to securities class action litigation.
The market price of our Ordinary Shares may be volatile and, in the past, companies that have experienced volatility in the market price of their shares have been subject to securities class action litigation. We may be the target of securities class action litigation and investigations. Securities litigation against us could result in substantial costs and divert management’s attention from other business concerns, which could adversely affect our business, financial condition and results of operations.
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If securities and industry analysts do not publish research or publish inaccurate or unfavorable research or cease publishing research
about us, the price and trading volume of our securities could decline significantly.
The trading market for the Ordinary Shares will depend in part on the research and reports that securities or industry analysts publish about us. Securities and industry analysts do not currently, and may never, publish research on us. If no securities or industry analysts commence coverage us, the trading price for the Ordinary Shares would likely be negatively impacted. In the event securities or industry analysts initiate coverage, if one or more of the analysts who cover us downgrade our securities or publish inaccurate or unfavorable research about our business, our share price would likely decline. If one or more of these analysts cease coverage or fail to publish reports on us, demand for the Ordinary Shares could decrease, which might cause our share price and trading volume to decline.
Our issuance of additional share capital in connection with financings, acquisitions, investments, our equity incentive plans or otherwise will dilute all other shareholders.
We expect to issue additional share capital in the future that will result in dilution to all other shareholders. We expect to grant equity awards to key employees under our equity incentive plans. We may also raise capital through equity financings in the future. As part of our business strategy, we may acquire or make investments in companies, solutions or technologies and issue equity securities to pay for any such acquisition or investment. Any such issuances of additional share capital may cause shareholders to experience significant dilution of their ownership interests and the per share value of the Company’s Ordinary Shares to decline.
Exercise of the Unit Purchase Option could increase the number of shares eligible for future resale in the public market and result in dilution to our shareholders.
Following the consummation of the Business Combination, we have assumed the Unit Purchase Option (as defined below) that AIB sold to Maxim Group LLC, for $100, which consists of an option to purchase up to a total of 431,250 Option Units (as defined below and disclose and before Reverse Stock Split) exercisable, in whole or in part, at $11.00 (before Reverse Stock Split) or $88 (after Reverse Stock Split) per unit, commencing on the consummation of the Business Combination (the “Unit Purchase Option”). The Unit Purchase Option may be exercised for cash or on a cashless basis, at the holder’s option, and expires five years from January 18, 2022. Upon exercise, each unit (the “Option Unit”) contains one Ordinary Share and one right. Each right, upon automatic conversion at issuance, entitles the holder thereof to receive one-tenth (1/10) of an Ordinary Share upon the consummation of the Business Combination. To the extent the Unit Purchase Option are exercised, additional Ordinary Shares will be issued, which will result in dilution to our then existing shareholders and increase the number of shares eligible for resale in the public market. Sales of substantial numbers of such shares in the public market could depress the market price of our ordinary shares.
It is not expected that we will pay dividends in the foreseeable future.
It is expected that we will retain most, if not all, of our available funds and any future earnings to fund the development and growth of our business. As a result, it is not expected that we will pay any cash dividends in the foreseeable future.
Our board of directors has complete discretion as to whether to distribute dividends. Even if the board of directors decides to declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on the future results of operations and cash flow, capital requirements and surplus, the amount of distributions, if any, received from our subsidiaries, our financial condition, contractual restrictions and other factors deemed relevant by the board of directors. There is no guarantee that our shares will appreciate in value or that the trading price of the shares will not decline.
The requirements of being a public company may strain our resources, divert our management’s attention and affect our ability to attract and retain qualified board members.
As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Act, listing requirements of Nasdaq and other applicable securities rules and regulations. As such, we have incurred and expect to continue to incur relevant legal, accounting and other expenses, and these expenses may increase even more if we no longer qualify as an “emerging growth company,” as defined in Section 2(a) of the Securities Act. The Exchange Act requires, among other things, that we file annual and current reports with respect to our business and results of operations. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. We may need to hire more employees or engage outside consultants to comply with these requirements, which will increase our costs and expenses.
Changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time-consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. These laws and regulations may increase our legal and financial compliance costs and render our certain business activities more time-consuming and costly.
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Some members of our management team have limited experience managing a publicly traded company, interacting with public company investors and complying with the increasingly complex laws pertaining to public companies. Our management team may not successfully or efficiently manage the transition to being a public company subject to significant regulatory oversight and reporting obligations under the federal securities laws and regulations and the continuous scrutiny of securities analysts and investors. The need to establish the corporate infrastructure demanded of a public company may divert the management’s attention from implementing our growth strategy, which could prevent the improvement of our business, financial condition and results of operations. Furthermore, these rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance, and consequently we may be required to incur substantial costs to maintain the same or similar coverage. These additional obligations could have a material adverse effect on our business, financial condition, results of operations and prospects. These factors could also make it more difficult to attract and retain qualified members of our board of directors, particularly to serve on our audit committee, compensation committee and nominating committee, and qualified executive officers.
As a result of disclosure of information in this Annual Report, the prospectus we filed in connection with the Business Combination and in other filings required of a public company, our business and financial condition has and will become more visible, which we believe may result in threatened or actual litigation, including by competitors and other third parties. If such claims are successful, our business and results of operations could be adversely affected, and, even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could cause an adverse effect on our business, financial condition, results of operations, prospects and reputation.
We are a foreign private issuer and are not subject to U.S. proxy rules and will be subject to Exchange Act reporting obligations that, to some extent, are more lenient and less frequent than those of a U.S. domestic public company.
As a foreign private issuer, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including: (1) the rules under the Exchange Act requiring the filing of quarterly reports on Form 10-Q or current reports on Form 8-K with the SEC; (2) the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act; (3) the sections of the Exchange Act imposing liability for insiders who profit from trades made in a short period of time; and (4) the selective disclosure rules by issuers of material nonpublic information under Regulation FD.
We are required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we expect to publish our results on a quarterly basis through press releases, distributed pursuant to the rules and regulations of Nasdaq. Press releases relating to financial results and material events will also be furnished to the SEC on Form 6-K. However, the information we are required to file with or furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. Accordingly, you may receive less or different information about us than you would receive about a U.S. domestic public company.
As we are a “foreign private issuer” and intend to follow certain home country corporate governance practices, our shareholders may not have the same protections afforded to shareholders of companies that are subject to all Nasdaq corporate governance requirements.
As a foreign private issuer, we have the option to follow certain home country corporate governance practices rather than those of Nasdaq, provided that we disclose the requirements we are not following and describe the home country practices we are following. We intend to rely on this “foreign private issuer exemption” with respect to Nasdaq rules for shareholder meeting quorums and shareholder approval requirements. We may in the future elect to follow home country practices with regard to other matters. As a result, our shareholders may not have the same protections afforded to shareholders of companies that are subject to all Nasdaq corporate governance requirements.
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We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses.
As discussed above, we are a foreign private issuer, and therefore, we are not required to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act. The determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter. In the future, we would lose our foreign private issuer status if (1) more than 50% of our outstanding voting securities are owned by U.S. residents and (2) a majority of our directors or executive officers are U.S. citizens or residents, a majority of our assets are located in the U.S., or our business is administered principally in the United States. If we lose our foreign private issuer status, we will be required to file with the SEC periodic reports and registration statements on U.S. domestic issuer forms, which are more detailed and extensive than the forms available to a foreign private issuer. We will also have to mandatorily comply with U.S. federal proxy requirements, and our officers, directors and principal shareholders will become subject to the short-swing profit disclosure and recovery provisions of Section 16 of the Exchange Act. In addition, we will lose our ability to rely upon exemptions from certain corporate governance requirements under the listing rules of Nasdaq. A U.S.-listed public company that is not a foreign private issuer will incur significant additional legal, accounting and other expenses that a foreign private issuer will not incur.
As an exempted company incorporated in the Cayman Islands, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from Nasdaq corporate governance listing standards; these practices may afford less protection to shareholders than they would enjoy if we complied fully with Nasdaq corporate governance listing standards.
We are an exempted company incorporated in the Cayman Islands. Nasdaq market rules permit a foreign private issuer like us to follow the corporate governance practices of our home country. Certain corporate governance practices in the Cayman Islands, which is our home country, may differ significantly from Nasdaq corporate governance listing standards applicable to domestic U.S. companies.
Among other things, we are not required to: (1) have a majority-independent board of directors; (2) have a compensation committee consisting of independent directors; (3) have a nominating committee consisting of independent directors; (4) have regularly scheduled executive sessions with only independent directors each year; or (5) obtain shareholder approval prior to the issuance of additional shares in certain circumstances in accordance with Rule 5635 of the Nasdaq Stock Market Rules.
We may also follow the home country practice for certain other corporate governance practices in the future, which may differ from the requirements of the Nasdaq Stock Market. If we choose to follow the home country practice, our shareholders may be afforded less protection than they would otherwise enjoy under the Nasdaq Stock Market Rules applicable to U.S. domestic issuers.
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We incur increased costs as a result of operating as a public company, and our management will be required to devote substantial time to compliance with our public company responsibilities and corporate governance practices.
As a public company, we incur significant legal, accounting and other expenses that we did not incur as a private company, which we expect to further increase after we are no longer an “emerging growth company.” The Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of Nasdaq, and other applicable securities rules and regulations impose various requirements on public companies. Our management and other personnel are not experienced in managing a public company and will be required to devote a substantial amount of time to comply with these requirements. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. We cannot predict or estimate the amount of additional costs we will incur as a public company or the specific timing of such costs.
We are an “emerging growth company” within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies, this could make it more difficult to compare our performance with other public companies.
We are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act. Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised, and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accountant standards used.
As an “emerging growth company” under applicable law, we will be subject to lessened disclosure requirements. Such reduced disclosure may make our Ordinary Shares less attractive to investors.
For as long as we remain an “emerging growth company,” as defined in the JOBS Act, we will elect to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies”, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. Because of these lessened regulatory requirements, our shareholders would be left without information or rights available to shareholders of more mature companies. If some investors find our Ordinary Shares less attractive as a result, there may be a less active trading market for our Ordinary Shares and our share price may be more volatile.
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We incur increased costs as a result of being a public company, particularly after we cease to qualify as an “emerging growth company.”
We incur significant legal, accounting and other expenses as a public company that we did not incur as a private company. The Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SEC, Nasdaq Capital Market, impose various requirements on the corporate governance practices of public companies. Compliance with these rules and regulations increases our legal and financial compliance costs and makes some corporate activities more time-consuming and costly. After we are no longer an “emerging growth company,” or until five years following the completion of the Business Combination, whichever is earlier, we expect to incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 and the other rules and regulations of the SEC. For example, as a public company, we have been required to increase the number of independent directors and adopt policies regarding internal controls and disclosure controls and procedures. We have incurred additional costs in obtaining director and officer liability insurance. In addition, we will incur additional costs associated with our public company reporting requirements. It may also be more difficult or costly for us to find qualified persons to serve on our board of directors or as executive officers as a public company. We are currently evaluating and monitoring developments with respect to these rules and regulations, and we cannot predict or estimate with any degree of certainty the amount of additional costs we may incur or the timing of such costs.
We may be or become a passive foreign investment company (“PFIC”), which could result in adverse U.S. federal income tax consequences to U.S. Holders of our ordinary shares or Warrants.
Depending on the value of our assets, which is determined based, in part, on the market value of our ordinary shares, and the nature of our assets and income over time, we could be classified as a passive foreign investment company (“PFIC”) for U.S. federal income tax purposes. A non-U.S. corporation, such as our company, will be classified as a PFIC for U.S. federal income tax purposes for any taxable year if either (i) at least 75% of its gross income for such year consists of certain types of “passive” income; or (ii) at least 50% of the value of its assets (generally determined on the basis of a quarterly average) during such year is attributable to assets that produce passive income or are held for the production of passive income (the “asset test”). Based on our income and assets and the market value of our ordinary shares, we believe that we were not a PFIC for the taxable year ended December 31, 2024.
There can be no assurance regarding our PFIC status for the current taxable year or foreseeable future taxable years, however, because our PFIC status is a factual determination made annually that will depend, in part, upon the composition of our income and assets. The value of our assets for purposes of the asset test, including the value of our goodwill and unbooked intangibles, may be determined in part by reference to the market price of our ordinary shares from time to time (which may be volatile). Because we will generally take into account our current market capitalization in estimating the value of our goodwill and other unbooked intangibles, our PFIC status for the current taxable year and foreseeable future taxable years may be affected by our market capitalization. Recent fluctuations in our market capitalization create a material risk that we may be classified as a PFIC for the current taxable year and foreseeable future taxable years. In addition, the composition of our income and our assets will be affected by how, and how quickly, we spend our liquid assets. Under circumstances where our revenue from activities that produce passive income significantly increases relative to our revenue from activities that produce non-passive income, or where we determine not to deploy significant amounts of cash for active purposes, our risk of becoming a PFIC may substantially increase. Because there are uncertainties in the application of the relevant rules, it is possible that the Internal Revenue Service may challenge our classification of certain income or assets as non-passive, or our valuation of our goodwill and other unbooked intangibles, each of which could cause us to become classified as a PFIC for the current or subsequent taxable years.
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If we are a PFIC for any taxable year during which a U.S. Holder (as defined in Item 10.E. Taxation — General) holds our ordinary shares or Warrants, the U.S. Holder may be subject to certain adverse U.S. federal income tax consequences. Additionally, if we are a PFIC for any taxable year during which U.S. Holders hold our ordinary shares or Warrants, we would generally continue to be treated as a PFIC with respect to such U.S. Holders even if we do not satisfy either of the above tests to be classified as a PFIC in a subsequent taxable year. Please see Item 10.E. Taxation — Passive Foreign Investment Company Rules.”
If we cannot satisfy, or continue to satisfy, the continued listing requirements and other rules of the Nasdaq Capital Market, our securities may be delisted, which could negatively impact the price of our securities and your ability to sell them.
Our securities are listed on the Nasdaq Capital Market. In order to maintain our listing on the Nasdaq Capital Market, we are required to comply with certain rules of the Nasdaq Capital Market, including those regarding minimum stockholders’ equity, minimum share price, minimum market value of publicly held shares, and various additional requirements. The Nasdaq Listing Rules require a company to maintain a minimum closing bid price of US$1.00 per share.
On October 20, 2024, we received a notice from Nasdaq that we failed to comply with the minimum closing bid price requirement set forth in Rule 5550(a)(2) of the Nasdaq Listing Rules as the closing bid price per Ordinary Share had been below US$1.00 for a period of 30 consecutive business days. The Nasdaq notification letter does not result in the immediate delisting of our securities. Pursuant to Rule 5810(c)(3)(A) of the Nasdaq Listing Rules, we have a compliance period of 180 calendar days, or until or until April 28, 2025 to regain compliance with Nasdaq’s minimum bid price requirement. If we do not regain compliance during such 180-day period, we may be eligible for an additional 180 calendar days, provided that we meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for Nasdaq except for Nasdaq Listing Rule 5550(a)(2), and provides Nasdaq with a written notice of its intention to cure this deficiency during the second compliance period, by effecting a reverse stock split, if necessary.
On April 29, 2025, we received the notice from Nasdaq that Nasdaq has determined that we are eligible for an additional 180 calendar day period, or until October 27, 2025, to regain compliance.
Even if we currently meet the other listing requirements and other applicable rules of the Nasdaq Capital Market, and even if we regain compliance with Nasdaq Listing Rule 5550(a)(2), we may not be able to continue to satisfy these requirements and applicable rules. If we are unable to satisfy the Nasdaq Capital Market criteria for maintaining our listing, our securities could be subject to delisting.
If our securities are subsequently delisted from trading, we could face significant consequences, including:
| ● | a limited availability for market quotations for our securities; |
| ● | reduced liquidity with respect to our securities; |
| ● | a determination that our Ordinary Shares is a “penny stock,” which will require brokers trading in our Ordinary Shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our Ordinary Shares; |
| ● | limited amount of news and analyst coverage; and |
| ● | a decreased ability to issue additional securities or obtain additional financing in the future. |
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Item 4. Information on the Company
4.A. History and Development of the Company
We are an exempted company with limited liability incorporated and registered under the laws of Cayman Islands on September 12, 2023. Our principal executive offices are located at Unit 1703, 17/F, First Group Centre, 23 Wang Chiu Road, Kowloon Bay, Kowloon, Hong Kong. Our telephone number at this address is +852 2754 3320. Our registered office in the Cayman Islands is located at the office of Ogier Global (Cayman) Limited, 89 Nexus Way, Camana Bay, Grand Cayman, KY1-9009, Cayman Islands. Our agent for service of process in the United States is Puglisi & Associates, located at 850 Library Avenue, Suite 204, Newark, Delaware 19711. Investors should contact us for any inquiries through the address and telephone number of our principal executive offices. Our website is https://www.psi-groups.com. The information contained on our websites is not a part of this annual report.
We commenced operation in 1993 with the establishment of PSIHK on May 27, 1993 and acquired BGG in March 2022. PSI owns 100% equity interest in PSI (BVI) Ltd, BGG (BVI) Ltd and PSIG Inv established on October 30, 2025, each a British Virgin Islands company; PSI (BVI) Ltd holds 99.2% of PSIHK with the remainder 0.8% held by two independent individuals at 0.4% each. BGG (BVI) Ltd owns 100% of BGG. PSIG Inv owns 100% PSIG Sing, a company registered in Singapore on December 10, 2025.
Our holding company, PS International Group Ltd., was incorporated under the laws of Cayman Islands for the purpose of effectuating the Business Combination. Prior to the completion of the Business Combination, we did not conduct any material activities other than those incidental to our formation and the matters contemplated by the Business Combination Agreement. Following, and as a result of the Business Combination, PSI will become the wholly-owned subsidiary of PS International Group Ltd., all of our business is conducted through PSI and its subsidiaries.
The Business Combination with AIB
On July 18, 2024 (the “Closing Date”), PS International Group Ltd., a Cayman Islands exempted company (the “Company”), consummated Business Combination pursuant to the Business Combination Agreement, by and among (i) the Company, (ii) AIB, (iii) PSI, (iv) AIB LLC (the “Sponsor”), (v) PSI Merger Sub I and (vi) PSI Merger Sub II. Pursuant to the Business Combination Agreement, (a) PSI Merger Sub I merged with and into PSI (the “First Merger”) on July 16, 2024, with PSI surviving the First Merger as a wholly-owned subsidiary of the Company and the outstanding shares of PSI being converted into the right to receive Ordinary Shares of the Company, and (b) PSI Merger Sub II merged with and into AIB (the “Second Merger”, and together with the First Merger, the “Mergers”) on July 18, 2024, with AIB surviving the Second Merger as a wholly-owned subsidiary of the Company and the outstanding securities of AIB being converted into the right to receive substantially equivalent securities of the Company.
As a result of the Mergers, (a) each of the ordinary shares of PSI that were issued and outstanding immediately prior to the effective time of the First Merger was cancelled and converted into (i) the right to receive 90% of such number of Ordinary Shares equal to the Exchange Ratio (as defined in the Business Combination Agreement), and (ii) the contingent right to receive 10% of such number of Ordinary Shares equal to the Exchange Ratio in accordance with the Business Combination Agreement and an Escrow Agreement, dated July 16, 2024 (the “Escrow Agreement”), by and between the Company, the Sponsor and Continental Stock Transfer & Trust Company, as escrow agent. Each ordinary share of AIB that was issued and outstanding immediately prior to the effective time of the Second Merger was cancelled and converted automatically into the right to receive one Ordinary Share of the Company. Each issued and outstanding right to receive one-tenth (1/10) of one Class A ordinary share of AIB (“AIB Class A Ordinary Share”) upon the completion of the Business Combination (“AIB Right”) was automatically converted into one-tenth of one Ordinary Share of the Company, provided that the Company did not issue fractional shares in exchange for the AIB Rights. As used herein, the “Exchange Ratio” equals to 100.
On July 19, 2024, Company’s Ordinary Shares commenced trading on The Nasdaq Capital Market (“Nasdaq”) under the symbol “PSIG.”
Additional Agreements in connection with the Business Combination
Lock-Up Agreements
Simultaneously with the execution of the Business Combination Agreement, the Company, the Sponsor, PSI and AIB have entered into lock-up agreements with certain shareholders of AIB and with certain holders of PSI’s securities. These lock-up agreements provide for a lock-up period commencing on the Closing Date and ending on the earlier of (i) the 6-month anniversary of the closing of the transactions contemplated by the Business Combination Agreement and (ii) the date on which the Company completes a liquidation, merger, capital stock exchange, reorganization, bankruptcy or other similar transaction that results in all of the outstanding Company’s Ordinary Shares being converted into cash, securities or other property, with respect to Company’s Ordinary Shares held by the such shareholder. The parties’ undertakings in the lock-up agreements were made as a condition to the willingness of PSI and AIB to consummate the Business Combination and as an inducement and in consideration therefor.
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Support Agreement
Simultaneously with the execution of the Business Combination Agreement, the Company, AIB, PSI, the Sponsor and certain shareholders of PSI have entered into a Support Agreement (the “Support Agreement”), pursuant to which, among other things, the Sponsor and the shareholders of PSI have agreed (a) to support the adoption of the Business Combination Agreement and the approval of the Business Combination, subject to certain customary conditions, and (b) not to transfer any of their subject shares (or enter into any arrangement with respect thereto), subject to certain customary conditions. In addition, the Sponsor agreed in the Support Agreement that, to the extent the Sponsor fails to pay or otherwise discharge any “Excess SPAC Expense Amount” (defined as the amount, if any, by which the aggregate amounts payable in cash for AIB’s accrued transaction expenses at the Closing, and any loans owed by AIB to the Sponsor for transaction and other administrative costs and expenses, exceeds $1.5 million), the Sponsor shall automatically surrender to the Company and forfeit for cancellation (for no additional consideration) a quantity of Company’s Ordinary Shares otherwise due to the Sponsor at Closing equal to (i) the portion of the Excess SPAC Expense Amount that is unpaid or otherwise undischarged by the Sponsor, divided by (ii) $10.00. The parties’ undertakings in the Support Agreement were made as a condition to the willingness of PSI and AIB to consummate the Business Combination and as an inducement and in consideration therefor.
Registration Rights Agreement
Simultaneously with the execution of the Business Combination Agreement, the Company, certain shareholders of AIB and PSI, have entered into a Registration Rights Agreement (the “Registration Rights Agreement”). Pursuant to the Registration Rights Agreement, the undersigned parties listed under “Investor” on the signature page thereto will be provided the right to demand registrations, piggy-back registrations and shelf registrations with respect to Registrable Securities (as defined in the Registration Rights Agreement). The Registration Rights Agreement contains customary covenants regarding registration procedures and mutual indemnification obligations, among other matters. The parties’ undertakings in the Registration Rights Agreement are made were made as a condition to the willingness of PSI and AIB to consummate the Business Combination and as an inducement and in consideration therefor.
Private Placement Financing
On November 12, 2025, we completed a private placement pursuant to a securities purchase agreement dated November 7, 2025 with certain institutional and accredited investors (the “Private Placement”). We issued an aggregate of 5,332,216 units at a purchase price of US$1.80 per unit, resulting in gross proceeds of approximately US$9.6 million, before deducting placement agent fees and other offering expenses. The Offering was conducted in reliance on exemptions from registration under the Securities Act.
Each unit consisted of: (i) one Ordinary Share, par value US$0.0008 per share; and (ii) one warrant (each, a “Warrant”) to purchase up to two Ordinary Shares. The Warrants entitle holders to purchase up to an aggregate of 10,664,432 additional Ordinary Shares at an exercise price of US$2.16 per Ordinary Share, subject to customary anti-dilution adjustments, and expire five years from issuance.
Joseph Stone Capital, LLC acted as placement agent on a reasonable best efforts basis. The Company paid: (i) a cash fee equal to 7.0% of gross proceeds, (ii) a 1.0% non-accountable expense allowance, and (iii) reimbursement of certain expenses.
In connection with the Offering, we agreed not to issue additional equity securities for 90 days following closing, subject to limited exceptions; and our directors, executive officers, and 10% shareholders entered into 90-day lock-up agreements.
We intends to use the net proceeds for working capital and general corporate purposes.
Resale Registration Statement
In connection with the Private Placement, the Company entered into a registration rights agreement pursuant to which it agreed to file a resale registration statement covering the Ordinary Shares issued in the private placement and the Ordinary Shares issuable upon exercise of the Warrants.
On December 17, 2025, the Company filed a registration statement on Form F-1 (File No. 333-292196) with the SEC to register the resale of up to 15,996,648 Ordinary Shares by the selling shareholders, consisting of: (i) 5,332,216 Ordinary Shares issued in the private placement; and (ii) up to 10,664,432 Ordinary Shares issuable upon exercise of the Warrants. On January 14, 2026, the SEC declared the registration statement effective.
The Company will not receive any proceeds from the resale of such shares by the selling shareholders. However, the Company may receive proceeds upon the cash exercise of the Warrants, if exercised.
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The effectiveness of the resale registration statement permits the selling shareholders to resell the registered shares from time to time in the public market. The availability of a significant number of shares for resale, including shares underlying outstanding Warrants, may increase volatility and could adversely affect the market price of the Company’s Ordinary Shares.
If all Warrants issued in the private placement were exercised for cash in full, an additional 10,664,432 Ordinary Shares would be issued, which would result in substantial dilution to existing shareholders.
Corporate Structure
The following diagram illustrates the corporate structure of the Company and its subsidiaries as of the date of this annual report:
The Subsidiaries and Business Functions
PSI
PSI Group Holdings Ltd is a Cayman Islands exempted company that is the intermediate holding company of PSI (BVI), BGG (BVI), PSIG Inv and the Operating Subsidiaries, and directly wholly-owned by the Company.
PSI (BVI)
PSI (BVI) Ltd is a British Virgin Islands company and a wholly owned subsidiary of PSI, holds 99.2% of PSIHK.
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PSIHK
Profit Sail Int’l Express (H.K.) Limited is an operating subsidiary of the Company, was incorporated under laws of Hong Kong and commenced its operations on May 27, 1993. PSIHK is engaged in the provision of logistics and freight handling services. PSI (BVI) holds 99.2% of PSIHK, and the remaining 0.8% ownership interests were held by two independent individuals with each holding equal ownerships of 0.4% each.
BGG (BVI)
BGG (BVI) Ltd is a British Virgin Islands company and the wholly owned subsidiary of PSI, holds 100% of BGG.
BGG
Business Great Global Supply Chain Limited is a Hong Kong company that is an operating subsidiary of the Company. BGG is engaged in the provision of logistics and freight handling services.
PSIG Inv
PSIG Investment Limited is a British Virgin Islands company and the wholly owned subsidiary of PSI, holds 100% of PSIG Sing.
PSIG Sing
PSIG Singapore Pte. Limited is a Singapore company that will be an operating subsidiary of the Company engaging in the provision of logistics and freight handling services in Aseean.
Emerging Growth Company Status
As a company with less than US$1.235 billion in revenue for our last fiscal year, we qualify as an “emerging growth company” pursuant to the Jumpstart Our Business Startups Act of 2012, as amended, or the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements compared to those that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 in the assessment of the emerging growth company’s internal control over financial reporting. The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards. Pursuant to the JOBS Act, we have elected to take advantage of the benefits of this extended transition period for complying with new or revised accounting standards. As a result, our operating results and financial statements may not be comparable to the operating results and financial statements of other companies who have adopted the new or revised accounting standards.
We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year during which we have total annual gross revenues of at least US$1.235 billion; (ii) the last day of our fiscal year following the fifth anniversary of the completion of our IPO; (iii) the date on which we have, during the preceding three-year period, issued more than US$1.0 billion in non-convertible debt; or (iv) the date on which we are deemed to be a “large accelerated filer” under the Securities Exchange Act of 1934, as amended, or the Exchange Act, which would occur if the market value of our Ordinary Shares that are held by non-affiliates exceeds US$700 million as of the last business day of our most recently completed second fiscal quarter. Once we cease to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed above.
Foreign Private Issuer Status
We are incorporated in the Cayman Islands, and more than 50 percent of our outstanding voting securities are not directly or indirectly held by residents of the United States. Therefore, we are a “foreign private issuer,” as defined in Rule 405 under the Securities Act and Rule 3b-4(c) under the Exchange Act. As a result, we are not subject to the same requirements as U.S. domestic issuers. Under the Exchange Act, we will be subject to reporting obligations that, to some extent, are more lenient and less frequent than those of U.S. domestic reporting companies. For example, we will not be required to issue quarterly reports or proxy statements. We will not be required to disclose detailed individual executive compensation information. Furthermore, our directors and executive officers will not be subject to the insider short-swing profit disclosure and recovery regime. In addition, as a company incorporated in the Cayman Islands, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from the Nasdaq Stock Market corporate governance requirements. These practices may afford less protection to shareholders than they would enjoy if we complied fully with the Nasdaq Stock Market corporate governance requirements.
Implication of the Holding Foreign Companies Accountable Act (the “HFCAA”)
The HFCAA was enacted on December 18, 2020. The HFCAA states if the SEC determines that a company has filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the PCAOB for three consecutive years beginning in 2021, the SEC shall prohibit the company’s shares from being traded on a national securities exchange or in the over the counter trading market in the United States.
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On March 24, 2021, the SEC announced that it had adopted interim final amendments to implement congressionally mandated submission and disclosure requirements of the HFCAA. The interim final amendments will apply to registrants that the SEC identifies as having filed an annual report on Forms 10-K, 20-F, 40-F or N-CSR with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that the PCAOB has determined it is unable to inspect or investigate completely because of a position taken by an authority in that jurisdiction. The SEC will implement a process for identifying such a registrant and any such identified registrant will be required to submit documentation to the SEC establishing that it is not owned or controlled by a governmental entity in that foreign jurisdiction, and will also require disclosure in the registrant’s annual report regarding the audit arrangements of, and governmental influence on, such a registrant.
On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act (“AHFCAA”), which was signed into law on December 29, 2022, amending the HFCAA and requiring the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchange if its auditor is not subject to PCAOB inspections for two consecutive years instead of three consecutive years.
On September 22, 2021, the PCAOB adopted a final rule implementing the HFCAA, which provides a framework for the PCAOB to use when determining, as contemplated under the HFCAA, whether the PCAOB is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction.
On December 2, 2021, the SEC issued amendments to finalize rules implementing the submission and disclosure requirements in the HFCA Act, which took effect on January 10, 2022. The rules apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that PCAOB is unable to inspect or investigate completely because of a position taken by an authority in foreign jurisdictions.
On December 16, 2021, PCAOB announced the PCAOB HFCAA determinations (the “PCAOB determinations”) relating to the PCAOB’s inability to inspect or investigate completely registered public accounting firms headquartered in mainland China of the PRC or Hong Kong, a Special Administrative Region and dependency of the PRC, because of a position taken by one or more authorities in the PRC or Hong Kong.
On August 26, 2022, the PCAOB announced that it had signed a Statement of Protocol (the “SOP”) with the China Securities Regulatory Commission and the Ministry of Finance of China. The SOP, together with two protocol agreements governing inspections and investigations (together, the “SOP Agreement”), establishes a specific, accountable framework to make possible complete inspections and investigations by the PCAOB of audit firms based in mainland China and Hong Kong, as required under U.S. law.
On December 15, 2022, the PCAOB announced that it was able to secure complete access to inspect and investigate PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong completely in 2022. The PCAOB Board vacated its previous 2021 determinations that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong. However, whether the PCAOB will continue to be able to satisfactorily conduct inspections of PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong is subject to uncertainties and depends on a number of factors out of our and our auditor’s control. The PCAOB continues to demand complete access in mainland China and Hong Kong moving forward and is making plans to resume regular inspections in early 2023 and beyond, as well as to continue pursuing ongoing investigations and initiate new investigations as needed. The PCAOB has also indicated that it will act immediately to consider the need to issue new determinations with the HFCAA if needed.
WWC, P.C., the independent registered public accounting firm that issues the audit report included elsewhere in this annual report, as a firm headquartered in California and registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess our auditor’s compliance with the applicable professional standards with the last inspection in December 2023, and as of the date of this annual report, our auditor is not subject to the PCAOB determinations. However, in the event it is later determined that the PCAOB is unable to inspect or investigate completely the auditor because of a position taken by an authority in a foreign jurisdiction, then such lack of inspection could cause trading in the Company’s securities (following consummation of the Business Combination) to be prohibited under the HFCAA, and ultimately result in a determination by a securities exchange to delist the Company’s securities. See “Item 3. Key Information — 3.D. Risk Factors — Risks Related to Our Ordinary Shares— Our securities may be prohibited from being traded in the United States under the Holding Foreign Companies Accountable Act in the future if the PCAOB is unable to inspect or investigate completely auditors located in China. The Holding Foreign Companies Accountable Act, as amended by the Consolidated Appropriations Act, 2023, decreased the number of “non-inspection years” from three years to two years, and thus, reduced the time before our securities may be prohibited from trading or delisted. The delisting of our securities, or the threat of them being delisted, may materially and adversely affect the value of your investment.”
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We cannot assure you whether Nasdaq or other regulatory authorities will apply additional or more stringent criteria to us. Such uncertainty could cause the market price of our Ordinary Shares to be materially and adversely affected. Our ability to retain an auditor subject to PCAOB inspection and investigation, including but not limited to inspection of the audit working papers related to us, may depend on the relevant positions of U.S. and Chinese regulators. With respect to audits of companies with operations in China or Hong Kong, such as the Company, there are uncertainties about the ability of our auditor to fully cooperate with a request by the PCAOB for audit working papers in Hong Kong or China without the approval of Chinese authorities. Whether the PCAOB will be able to conduct inspections of our auditor, including but not limited to inspection of the audit working papers related to us, in the future is subject to substantial uncertainty and depends on a number of factors out of our, and our auditor’s, control. If our shares and shares are prohibited from trading in the United States, there is no certainty that we will be able to list on a non-U.S. exchange or that a market for our shares will develop outside of the United States. Such a prohibition would substantially impair your ability to sell or purchase our shares when you wish to do so, and the risk and uncertainty associated with delisting would have a negative impact on the price of our shares. Also, such a prohibition would significantly affect our ability to raise capital on terms acceptable to us, or at all, which would have a material adverse impact on our business, financial condition, and prospects.
Satisfy a Listing Condition
On October 20, 2024, we received a notice from Nasdaq that we failed to comply with the minimum closing bid price requirement set forth in Rule 5550(a)(2) of the Nasdaq Listing Rules as the closing bid price per Ordinary Share had been below US$1.00 for a period of 30 consecutive business days. The Nasdaq notification letter does not result in the immediate delisting of our securities. Pursuant to Rule 5810(c)(3)(A) of the Nasdaq Listing Rules, we have a compliance period of 180 calendar days, or until or until April 28, 2025 to regain compliance with Nasdaq’s minimum bid price requirement. If we do not regain compliance during such 180-day period, we may be eligible for an additional 180 calendar days, provided that we meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for Nasdaq except for Nasdaq Listing Rule 5550(a)(2), and provides Nasdaq with a written notice of its intention to cure this deficiency during the second compliance period, by effecting a reverse stock split, if necessary. On April 29, 2025, we received the notice from Nasdaq that Nasdaq has determined that we are eligible for an additional 180 calendar day period, or until October 27, 2025, to regain compliance.
On June 17, 2025, certain shareholders of the Company who collectively held approximately 78.01% of the then total issued and outstanding voting power of the Company, approved a proposal authorizing the Company’s board of directors (the “Board”) to effect a consolidation of the issued shares of the Company at a ratio within a range of eight (8) shares into one (1) share to ten (10) shares into one (1) share, the exact ratio of which shall be determined by further action at the discretion of the Board, but in no event shall cause the Company to fail qualifying for the continuing listing standards on the Nasdaq Capital Market, to be effective on a date on or prior to October 15, 2025 as may be determined by the Board and announced by the Company, so that a shareholder holding every eight (8) to ten (10) ordinary shares of US$0.0001 par value each will hold one (1) new ordinary share of par value ranging from US$0.0008 to US$0.001 each, and any fractional shares created as a result of the share consolidation would be rounded up to the nearest whole share.
On September 5, 2025, the Board approved a reverse stock split (the “Reverse Stock Split”) at a ratio of one (1) new share for every eight (8) issued and outstanding ordinary shares, and determined that the Reverse Stock Split would become legally effective on October 6, 2025. Following the Reverse Stock Split, each shareholder’s percentage ownership interest in the Company and the proportional voting power remain unchanged except for adjustments resulting from fractional shares. The Reverse Stock Split increases the par value per share of the Company’s ordinary shares to US$0.0008 but does not change the total number of authorized capital. The minimum closing bid price requirement set forth in Rule 5550(a)(2) of the Nasdaq Listing Rules was then fulfilled after the Reverse Stock Split.
Departure of Directors or Certain Officers and Appointment of Certain Director and Officer
On July 17, 2025, the terms of office of Eric Chen, Yong Yao, Lai Ping Chan, Zijian Tong and Tsao-Lung Lai as directors of the Company expired.
On July 18, 2025, the Board appointed Kim Fung Keith Ching, Ho Pan Darren Kwok and Sheung Yuk Clara Chiu as independent directors to fill the vacancies on the Board.
On July 23, 2025, Chun Kit Tsui tendered his resignation as Chief Financial Officer of the Company. On September 9, 2025, the Board and Mr. Tsui mutually agreed that he would be released from his active duties effective on that date, and such date marked the commencement of his garden leave period.
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On September 15, 2025, the Board appointed Man Kiu Chan as Chief Financial Officer and Chunlin Tong as Chief Operating Officer, each effective as of September 15, 2025.
On November 3, 2025, Hang Tat Gabriel Chan resigned as Chief Executive Officer of the Company. Following his resignation as Chief Executive Officer, Mr. Chan continued to serve as General Manager of PSIHK.
On November 3, 2025, the Board approved the appointment of Chunlin Tong as Chief Executive Officer and a director of the Company, effective November 4, 2025, to fill the vacancy created by Mr. Chan’s resignation.
See “Item 6. Directors, Senior Management and Employees” of this Annual Report.
4.B. Business Overview
The following discussion reflects our business. Unless the context otherwise requires, all references in this section to “we,” “us,” and “our” refer collectively to PSI Group Holdings Ltd and its subsidiaries prior to the consummation of the Business Combination and PS International Group Ltd. and its subsidiaries following the consummation of the Business Combination.
Overview
We are a renowned air freight and end-to-end supply chain solution providers in Hong Kong, with a focus on providing cross border logistics services. Based in Hong Kong, a prominent logistics hub in Asia, we benefit from geographical advantages in providing integrated solutions that combine ocean, air, and overland logistics. This well-connected transportation network significantly enhances our operational efficiency and cost-effectiveness.
We are positioning ourselves as a global e-Commerce logistic service specialist, delivering solutions that are not only cost-effective but also sufficiently fast to compete with local alternatives. Our ability to accommodate adaptive service models is crucial for serving cross-border merchants, brands and e-Commerce platforms. This flexibility and adaptability are underpinned by our expertise in traditional services, which include air freight forwarding and ocean freight forwarding.
Through our Operating Subsidiaries, we employ an asset-light, structurally flexible, and scalable business model. Rather than owning or operating aircraft or vessels, we collaborate with carriers that specialize in asset-intensive transportation to handle freight shipment on our behalf. This arrangement allows us to customize our services to meet specific customer demands by selecting from various transportation methods and providers. Additionally, our asset-light business model minimizes our capital expenditure requirements, enabling us to scale our business to the market situation rapidly. We work closely with a robust network of well-established agents to manage both incoming and outgoing traffic for all other nations. These representatives are handpicked to maintain a uniformly high standard of service for our clients.
Our primary revenue streams come from premia charged above carrier fees for transporting customer shipments, as well as fees for customs brokerage and other value-added services. With our long-term, established relationships with our upstream suppliers, mainly airline carriers and shipping liners, we are able to secure cargo space at relatively lower prices compared to market guideline prices. Our existing customers are primarily peer freight forwarders and other logistics service providers, as well as some direct customers that book consignment shipping directly with us. Given the large volume of cargo we handle daily and our operational expertise in consolidating fragmented consignments, our unit rates per kilogram or per container charged to our customers can be lower compared to those seeking direct arrangements with carriers or other forwarders. With our expertise in providing these services and our knowledge of the global transportation network, we are well-positioned to help our customers improve transportation and cost efficiency.
Our Operating Subsidiaries source cargo space through various agreements, including direct booking, block space arrangements, and flight charters. Direct bookings involve purchase of cargo space without fixed-term agreements, while block space arrangements and aircraft charter arrangements ensure a reliable supply of cargo space to meet customer needs. In the years ended December 31, 2023, 2024 and 2025, our Operating Subsidiaries provided services to various customers, including freight forwarders and direct customers who are not freight forwarders but purchase cargo space directly from us. We have the ability to secure cargo space from suppliers for a wide range of destinations, serving over 90 routes around the globe.
During the same periods, we recorded revenue of approximately US$140.0 million, US$87.2 million and US$53.2 million, respectively. Revenue from air freight forwarding services accounted for 99.0%, 98.3% and 98.3% of the total revenue for the years ended December 31, 2023, 2024 and 2025, respectively; revenue from ocean freight forwarding services accounted for 1.0%, 1.7% and 1.6% of the total revenue for the same periods, respectively.
The revenue generated from freight forwarding services primarily comes from air freight exports to regions such as North America, Europe, and Asia. The United States is our largest forwarding destination.
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Our Services
Started as a provider of freight forwarding services, we are a renowned air-freight specialist in Hong Kong. In recent years, we have evolved our businesses to offer a comprehensive range of cross-border supply chain services, particularly strengthening our offerings in the e-Commerce market. We source cargo space from our suppliers (such as airlines, shipping liners, and other freight forwarders) through various arrangements such as direct booking, block space arrangements and flight charters. We utilize cargo and route resources to help our customers to ship their consignments globally at discounted rates compared to those who negotiate directly with carriers. We also offer customers more certain access to cargo capacity even during times of high demand.
We are positioning ourselves as global e-Commerce logistic service specialist, delivering solutions that are not only cost-effective but also sufficiently fast to compete with local alternatives. Our ability to accommodate adaptive service models is crucial for serving cross-border merchants, brands and e-Commerce platforms. This flexibility and adaptability are underpinned by our long-established expertise in traditional services, which include air freight forwarding and ocean freight forwarding:
Air Freight Services
Substantially all of our revenue is derived from the provision of air freight forwarding services, which includes both the import and export of goods. These services principally involve arranging shipment based on booking instructions from customers, conducting off-airport air cargo security screening, securing cargo space from cargo space suppliers (including airlines and other freight forwarders) and preparing necessary documentations such as customs clearance paperwork. We also offer ancillary logistics services such as cargo pickup, cargo handling at ports and local transportation, as well as warehousing related services such as repackaging, labelling, palletization, preparation of shipping documentation, customs clearance and warehousing. Our air freight forwarding services cover export shipments to over 90 countries.
Some of the specific air freight services we offer include:
| ● | Domestic, deferred, express and charter services, providing customers with options based on price and delivery speed; |
| ● | Port to Port and Door to Door shipments, allowing customers to separately manage post-arrival services such as delivery or clearance; |
| ● | Combination with our ocean freight services; |
| ● | Air and transload shipping services, transferring arriving cargo from an airline container or pallet to trucks for final delivery; and |
| ● | Transport of sensitive, perishable and refrigerated goods. |
To support these services, we engage independent service providers for logistics services at the origin of the consignment, such as cargo pickup, cargo handling at ports, x-ray screening, and local transportation. For warehousing-related services, including repackaging, labelling, palletization, preparation of shipping documentation, customs clearance and warehousing, we engage third-party service providers to manage these operations in their warehouses, under the supervision of our operations team. Prior to August 2022, when we surrendered the lease for our Tsing Yi Warehouse to improve our financial flexibility by reducing fixed rental costs, those operations were conducted in the Tsing Yi Warehouse.
The warehouse we contract is also Regulated Air Cargo Screening Facility (“RACSF”), a facility which is able to conduct air cargo screening facility at an off-airport location. Pursuant to the International Civil Aviation Organization (“ICAO”) policy, the Hong Kong Civil Aviation Department (“CAD”) requires the freight forwarders to screen all cargoes consigned by existing known consignors, which have not been validated by CAD. In light of this policy, CAD has formulated the RACSF Scheme to enable and regulate air cargo screening at off-airport locations, where interested industry operators, such as freight forwarders and shared warehouse operators, can conduct cargo screening operations in their off-airport premises by registering with the CAD to become a RACSF.
In response to the RACSF Scheme, we invested in and installed x-ray screening facilities and registered as “Regulated Agent” under the Scheme, as a freight forwarder that is able to carry out the security controls of air cargo off-airport in our own premise, as approved by the CAD. The x-ray screening facilities are located at our warehousing services provider’s warehouse, where the screening service is performed under our supervision.
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Our x-ray screening capabilities enable us to handle bulk or palletized cargo, streamlining the handling of large quantities of goods within tight schedules and minimizing errors. Providing off-airport air cargo security screening service enhances our efficiency and competitiveness in the freight forwarding industry. By providing these services, we have expanded the scope of our air freight forwarding services, particularly for other freight forwarders who lack in-house off-airport x-ray screening capabilities.
During the years ended December 31, 2023, 2024 and 2025, we did not enter into long-term written service agreements with these service providers, and we did not experience any material non-performance issues or quality disputes with our service providers that may cause material disruption to our operation.
Ocean Freight Services
Our ocean freight forwarding services involve similar steps to those employed in our air freight services. We procure ocean cargo space from shipping liners and ocean freight forwarders. We provide ocean freight consolidation, direct ocean forwarding, and order management services. We do not own or operate the vessels responsible for ocean transportation. We offer ancillary logistics and warehousing related services if requested by our customer. For the years ended December 31, 2023, 2024 and 2025, the revenue from ocean freight forwarding services amounted to approximately US$1.3 million, US$1.5 million, and US$0.8 million, respectively, representing 1.0%, 1.7%, and 1.6% of our total revenue, respectively.
Competitive Strengths
We believe in our ability to utilize our expansive global reach and expertise in air and ocean freight to form partnerships with our customers, thereby uncovering value within their supply chains and collectively building smart and efficient end-to-end logistics solutions. Our competitive advantages include:
Established reputation in the industry
We established our operations as a freight forwarder in 1993, giving us a successful track record of over 30 years. Throughout this time, we have established an extensive network of suppliers and customers involved in the transportation of cargo. Our reputation within this network is built upon on our dedication towards meeting the needs of our customers.
We have also been acknowledged for the quality of our service, as we are an accredited member of the International Air Transport Association (“IATA”). This association holds significant recognition within the industry, and airlines generally prefer partnering with freight forwarders who are IATA accredited agents. Becoming an IATA accredited agent involves fulfilling various criteria, including having at least two staff members who have undergone training on handling dangerous goods. Additionally, applicants must submit audited financial statements, insurance policies, and sales reports on IATA member airlines for inspection, in order to demonstrate that such applicants have sufficient financial resources to satisfy IATA requirements.
This accreditation also serves as a barrier to entry in the freight forwarding industry, as it requires time to establish a reputable presence in this industry. We believe that by being part of this renowned network of freight forwarders and industry participants, we can reach a vast range of suppliers and customers, potentially expanding and improving our base of suppliers and customers.
Comprehensive business network and stable business relationships with suppliers
We take pride in our ability to provide comprehensive routing services that are customized to meet the unique needs and requirements of our customers. Leveraging on our extensive experience in sourcing cargo space, gained over a period of over 30 years, we are capable of securing cargo space from airlines, shipping liners and other freight forwarders to reach a wide range of destinations covering over 90 international routes. In the years ended December 31, 2023, 2024 and 2025, we maintained stable relationships with our suppliers, who primarily consist of airlines and other freight forwarders. Our stable relationships with our suppliers and the extensive network with our business partner also enable us to continue to secure a stable supply of cargo space for our customers, which in turn further encourages customer loyalty, thereby strengthening our sales performance. Our diversified supplier network also minimizes the risks posed by reliance on a small number of suppliers and allows us to offer a wide portfolio of cargo routes at competitive prices for our customers and recommend the most viable route depending on their individual shipping needs. The diversified network distinguishes us from our competitors as maintaining such a network along the value chain requires years of effort in building strong relationships with suppliers, which could be a major obstacle to new entrants.
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Strong, long-term relationships with our customers
We believe that our reputation and track record play a crucial role in customers’ selection of freight forwarders. We offered freight forwarding services to direct shippers and other freight forwarders, with our primary and largest customers being other freight forwarders. It is important for us to continue to expand our customer base while maintaining strong, long-term business relationships with our customers. To achieve this, our sales team consistently communicates with major customers to ensure our services meet their delivery and logistics needs. We have maintained long-term relationships with our largest customers and believe that it demonstrates their loyalty and acknowledgement of our service quality. As such, even without fixed-term contracts, we believe we can rely on our good reputation and track record to retain current customers and attract new ones. Additionally, our ability to efficiently consolidate cargo from various customers to meet airline standards, along with our expertise in providing tailored value-added services and customized distribution solutions such as labeling, packing, reprocessing, and local transportation, allows us to attract more customers in the high-tech products and fast-moving consumer goods (“FMCG”) industries.
Dedicated team with extensive experience in freight forwarding industries
Our management team possesses extensive experience and in-depth knowledge in the freight forwarding and logistics industry. Throughout our company’s 30-year track record, our founder Mr. Yee Kit Chan has guided us through the ever-changing global economy and challenges by establishing a sustainable and proven business model, allowing for a sustainable business and operation. Our directors are also supported by a senior management team with extensive industry experience in freight forwarding and logistics. Their experience and expertise enable us to cultivate strong relationships with our business partners and customers, a key factor in our success. The industry expertise and knowledge of our staff give us a competitive edge over our competitors. This advantage allows us to efficiently meet our customers’ needs, earning their confidence in our services. We consider this confidence essential to our long-term growth and development in the freight forwarding industry.
Growth Strategies
We have clear growth strategies to capture opportunities in the cross-border e-Commerce market. We plan to grow our business through i) expanding our global service capacity, particularly our local network in the US market; ii) enhancing our current operations, including by accelerating development of our smart integrated logistics system; iii) strategic alliance through selected acquisitions or partnerships.
Expand our service presence in the cross-border e-Commerce market.
The fast growth and strong performance of cross-border e-Commerce industry in Hong Kong is expected, as a regional hub for trans-continental imports and exports from Mainland China and Southeast Asia, China and ASEAN, to further propel the demand for Hong Kong’s global air freight forwarding services. Consumer products, especially high-tech products have high requirements on the transportation environment and timeliness, and thus stimulated the integrated air freight forwarding industry. We expect to expand our presence to serve the prospering cross-border e-Commerce market. We plan to leverage our extensive delivery network and capabilities to strengthen our presence as a one-stop logistics service provider, by (i) acquiring/leasing different types of warehouses in Hong Kong and the United States, such as overseas bonded warehouses, distribution warehouses, logistics warehouses, and palletization warehouses, (ii) upgrading our existing IT system to respond to the demands of our customers, (iii) developing logistical solutions to manage each step of the shipping of small parcels common in cross-border e-Commerce B2C transactions, and (iv) expanding our network amongst local partners in our target markets to increase our route portfolio and market coverage, and enhance our door-to-door small parcel delivery capacity.
Although we actively evaluate and pursue potential acquisition and expansion opportunities in furtherance of this strategy, we do not currently have any definitive agreements, commitments or identified acquisition targets.
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Expand operations to the United States
We observed that the air freight forwarding industry in the United States recorded a growth at a CAGR of 4.7% from 2018 to 2024, and is expected to continue to grow at a CAGR of 4.6% from 2025 to 2035 driven by e-commerce, nearshoring, and digital adoption. This indicates an opportunity for us to expand our reach to customers who require export and import services from the United States. Our revenue from freight forwarding services for export shipments to the United States contributed to US$122.3 million, US$61.7 million and 37.8 million, respectively, for the years ended December 31, 2023, 2024 and 2025 representing 87.4%, 70.9% and 71.1% of our total export revenue during the same year. We intend to take advantage of our existing market presence in the United States by growing our United States import capabilities, linked to our inbound exports, as well as establishing United States domestic export capabilities. We plan to establish offices and warehouses in various major cities of the United States and enhance our cooperation and link-up with local ground logistics providers, such as USPS, FedEx, and DHL, to tap into new pool of customers who require air export freight forwarding services and to provide one-stop service.
The expansion plan to the U.S. market will follow a step-by-step approach and is a long-term strategy. The initial step will be looking for local partners that have logistic infrastructure and warehouse facilities, of which the cash requirements are relatively light.
Although we actively evaluate potential partnerships, facilities and expansion opportunities, we do not currently have any definitive agreements or binding commitments with respect to the establishment of additional U.S. offices or warehouse facilities.
Pursue strategic alliances and select acquisition opportunities
The market of freight forwarding and logistics services is fragmented in Hong Kong, which presents potential opportunities for further market consolidation and realization of economies of scale. We aim to selectively form additional strategic alliances with overseas logistics companies and other partners that bring synergies with our existing business. We also plan to selectively pursue acquisitions, investments, joint ventures and partnerships that are complementary to our business and operations. We will continue to work with domestic and international partners to grow our global coverage and broaden our service offerings in international markets. Through our Operating Subsidiaries, we target to further penetrate our existing markets by expanding our service offerings and enhancing our third-party logistics and fulfilment services, and expand into other countries and regions. We do not currently have any definitive agreements or identified acquisition targets with respect to such strategic initiatives.
Enhance our smart integrated logistics systems
We will continue to enhance our information technology system in relation to smart integrated supply chain services to improve our productivity and efficiency, better serve our cross-border e-Commerce customers, and facilitate the forecast in customers’ demand and adding more advanced supply chain management solutions.
The Platform Model system is expected to (i) provide integrated and real-time dynamic information; (ii) provide a user-friendly interface for our customers to log in to our system to check information of their bookings or cargo information; and (iii) be compatible to integrate with our warehousing system and the operation system of our customers (which shall be subject to the information technology service provider’s analysis on the system used by our customers and thus the feasibility of system integration). With the enhanced information technology system, we can collect, store, manage and interpret data from our business activities as it provides an integrated and continuously updated view of the core business processes. We believe that the enhanced information technology system can precisely analyze customer profiles and behavior (such as categorization of their shipments, seasonal demand and historical booking pattern) based on comprehensive data which we expect will strengthen our customer management and facilitate data analysis on our procurement of cargo space and forecast of customer demand. We also believe that the upgraded system could enhance our workflow efficiency and facilitate our customers to handle and check with their shipments’ status, which in turn improves customer experience and encourages long-term business relationship with our customers.
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Continue to improve operational efficiency and quality
We will continue to improve our operational capabilities and expand our capacity in the freight forwarding business by (i) enhancing technology infrastructure and synergies across our platform and network, (ii) expanding our sales and operation network, and (ii) hiring, training and retaining talent.
| ● | As our network has achieved critical scale, we will continue to enhance our technology infrastructure and synergies across our platform and the network with local partners to streamline our operations to lower transportation, labor and other operating costs. We will also continue to innovate and standardize operating procedures to enhance reliability, efficiency and service quality. |
| ● | We will further expand our sales and operation network. We believe that our continuous business growth is attributable to the effort of our experienced sales team and business partners. With the organic growth of service and the contemplated expansion to the United States market, we intend to further expand our sales network and collaborate with business partners in order to further our global marketing effort, especially in the United States and Asean markets. We will continue to recruit suitable candidates with at least five years freight forwarding industry experience and with strong clientele network. |
| ● | We will continue to hire, train and retain the best talent to reinforce our innovative culture. We will continue to invest in research and development and strengthen our technology infrastructure to enhance scalability, service quality and operational efficiency. We will introduce new services and solutions to service cross-border e-Commerce, B2C services and door to door service, as a one stop service provider to capture more business opportunities and increase customer loyalty. |
Business Model
Started as air freight specialist, we have evolved our business model to strengthen our offering in the e-Commerce market. The following illustrates the journey of our business:
We are positioning ourselves as global e-Commerce logistic service specialist, delivering solutions that are not only cost-effective but also sufficiently fast to compete with local alternatives. Our ability to accommodate adaptive service models is crucial for serving cross-border merchants, brands and e-Commerce platforms. This flexibility and adaptability are underpinned by our long-established expertise in traditional services, which include air freight forwarding and ocean freight forwarding.
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Our Traditional Services
The following illustrates how we source cargo space from our suppliers (such as airlines, shipping liners or freight forwarders) and sell them to our customers (such as direct customers and freight forwarders):
Our Business Operation and Workflow
The Workflow of Freight Forwarding Services
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The following workflow illustrates the general operation process of our air freight and ocean freight export shipments:
| ● | Providing quotation upon receiving the booking instructions. Our customers send us booking instructions containing details such as shipping method, destination, type, dimension, weight and quantity of consignment and expected date of arrival. Upon receipt, we will provide customers with quotations according to the rates lists (based on weight of goods) provided by our suppliers plus a margin for our services. |
| ● | Making a booking with our supplier. If our customers accept the quotations, we will make bookings with our suppliers by lodging a standardized booking form containing details of our customer’s booking. We will select our cargo space suppliers for each shipment by taking into account of various factors, such as rate, delivery schedule and availability of cargo space. We arrange cargo pickup from the customers if so requested. |
| ● | Off-airport air cargo security screening. Once the shipment arrives at our warehousing service provider’s warehouse, the cargo consignment will undergo cargo acceptance procedures (including documentation and appearance check). Upon completion of acceptance check, the cargo consignment will be screened through our x-ray screening facility. We obtain a security screening receipt (which serves as a document proof that the cargo has been screened) from AVSECO (being the RACSF Operator) if the consignment has been cleared by security screening. The screened cargo consignment will then be further processed and secured against unauthorized access before being loaded onto trucks. |
| ● | Consolidation/Co-Loading/Bulk. In general, we (i) consolidate cargoes from different customers at the designated warehouse in order to optimize utilization of cargo space, (ii) co-load cargo with other freight forwarders, or (iii) handle the cargo in bulk. Consolidation is the process by which a number of consignments of goods of different weights, volumes and sizes are grouped or packed together in a unit load device for carriage in order to optimize utilization of cargo space on transportation vehicles (aircraft or vessels). Co-loading refers to the sharing of space in a unit load device by one or more freight forwarders. |
Pursuant to the block space arrangements and aircraft charter agreements, we are committed to paying the agreed cargo space irrespective of whether we could fully utilize the allotted space. In case our cargo space could not be filled up by our own direct shippers before a scheduled flight or vessel departs, we shall offer cargo space in excess to other freight forwarders in order to optimize the utilization of cargo space. On the other hand, in case other freight forwarders have empty space in their container, we may co-load with other freight forwarders and purchase their cargo space at a more competitive price, which allows us to reduce our cost of services. The benefits of co-loading include the splitting of the freight charges of the trip among other freight forwarders and thus saving costs. It is therefore common for the freight forwarders to co-load the shipments with other market players.
Palletization forms part of consolidation, whereby cargoes are bundled in a unit load device before they are loaded onto an aircraft. We engage contractors for palletizing cargoes at our warehousing service provider’s warehouse. Our operation and warehousing team are responsible for monitoring the palletization at the warehouse. After being properly packaged with tamper-evident seals (or other means of protection against unlawful interference), the palletized air cargo consignments will be loaded onto trucks for transporting to the airport.
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| ● | Preparation of Shipping Documents: Issuance of master airway bill/master bill of lading and invoice. After a booking is acknowledged by our suppliers, our operation teams will prepare master airway bill (for shipment by air) or master bill of lading (for shipment by ocean) and cargo manifest before the shipment is loaded on board. Our operation teams will also issue an invoice and, when necessary, a house airway bill or a house bill of lading to our customer on the date when shipment is loaded on board the departing aircraft or vessel. |
| ● | Pre-Alert. Our operation teams will send a full set of documents (including a copy of commercial invoice between shipper and consignee, packing list, master airway bill or master bill of lading and/or house airway bill or house bill of lading and cargo manifest) to the overseas freight forwarder agents or our customers for preparation of import customs clearance and cargo release to the consignee at respective destination of the shipments. |
| ● | Delivery. It is generally the primary responsibility of our customers to prepare proper documentation for the relevant customs declaration before the cargo is imported to, or exported out of Hong Kong. However, upon request by our customers, we may assist our customers in the preparation of relevant customs declaration on their behalf. For the foreign customs clearance, it is usually for the consignee itself to perform, but we may also engage overseas freight forwarder agents to perform the customs clearance upon request of our customers. In any case, our customers bear the primary responsibility to provide the purchase orders, commercial invoices, airway bills or bills of lading as supporting documents for the contents of the cargoes. For port-to-port shipment, upon arrival at the port of destination, our customer will arrange cargo pick up on their own. For door-to-door shipment, we will arrange transportation services for our customers through our overseas freight forwarder agents. |
Procurement of Cargo Space
We obtain cargo space directly from airlines, shipping liners or other freight forwarders suppliers through various arrangements. These include direct booking, block space arrangements and aircraft charter arrangements.
For the years ended December 31, 2023, 2024 and 2025 and up to the date of this annual report, our block space and aircraft charter arrangement mainly involved outbound flights from Hong Kong to North America and Southeast Asia. We believe that these arrangements allow us to secure a reliable supply of cargo space to meet the needs of our customers. Throughout these periods, we have not breached any of our block space agreements and aircraft charter agreements with our suppliers, including terms related to the payment of agreed cargo space, in any material aspect.
Direct Booking
Under the direct booking arrangement, we purchase cargo space directly from airlines, shipping liners, and other freight forwarders without entering into fixed-term agreements. The charges we pay to these suppliers generally include freight charges, terminal handling charges, fuel surcharges, security charges, and miscellaneous items. For air cargo space, suppliers typically charge us based on the chargeable weight of the cargo at the prevailing market price. Ocean cargo space is typically sold to us at a fixed price per unit load device.
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Block Space Arrangement
Block space arrangements involve fixed-term agreements with airlines for continuous reservation of cargo space on regular routing flights, while aircraft charter arrangements involve procuring cargo space with airlines for specific unscheduled flights. These arrangements allow us to secure a stable supply of cargo space to meet our customers’ needs.
We generally adopt a prudent approach when entering block space agreements. We enter into these agreements based on our estimation of customer demand for cargo space to secure it at an earlier stage. These block space agreements enable us to procure a committed amount of cargo space from our suppliers for a specific period of time at a pre-agreed price.
Under our block space arrangements, we have a commitment to pay our suppliers for a specified amount of cargo space based on weight and number of airline contours, regardless of space utilization. If we fail to meet this commitment, we will be charged for the shortfall at an agreed-upon rate. However, in recent years, we either have successfully met our commitment or received grace periods from suppliers to fill any shortfall, resulting in minimal impact on our cost of revenue. If an operator cancels or delays a flight, they are not held responsible for any losses we may incur. Generally, we are responsible for applicable terminal service charges and other local/destination fees.
The terms of each block space agreement entered with the suppliers may vary, but they typically include terms as follows:
| Duration: | Normally ranging from months to not more than one year. | |
| Tonnage and rates: | An agreed level of cargo space (in terms of tonnage and/or space allocation) for each month to certain outbound routes or for certain flight schedules at pre-determined prices. | |
| Liability: | If the minimum allotted space under the block space agreement is not fully utilized, we are still responsible to pay for: (i) freight charges (including other surcharges such as fuel surcharge and security surcharge) based on the agreed level of cargo space; or (ii) cancellation fee (in addition to other surcharges such as fuel surcharge), based on the agreed level of cargo space. | |
| Deposit: | Some suppliers may require us to make a certain amount of deposit before the flight departure date. |
From time to time, we would evaluate whether the pre-determined prices under the block space arrangement are more competitive than direct booking from our suppliers. If the pre-determined prices under the previous block space arrangement are found to be higher than the then freight charges through direct booking, we would not renew the block space arrangement with the suppliers or we may re-negotiate for a more competitive price.
Aircraft Charter Arrangement
In contrast to regular routing flights which may require multiple connections and layovers, charter flights are characterized by their one-off nature and flexibility in terms of scheduling, routing and ports selection. A charterer(s) may rent a full charter by itself or partial charter through a consortium and decide on the departure/arrival time and destinations. Under aircraft charter arrangements, we purchase cargo space for a charter for a specified flight schedule and route at a charter price. The procurement of cargo space under aircraft charter arrangement generally contains the following terms:
| Charter specification: | Routing, flight schedule, type or configuration of the aircraft, loading capacity/committed tonnage, charter price per chartered flight. | |
| Payment terms and deposit: | The charter price shall be settled in full prior to the chartered flight departure date. | |
| Cancellation fee: | Normally, 50% or 100% of the charter price (depending on the number of days between the cancellation date and the chartered flight departure date) |
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For the years ended December 31, 2023, 2024 and 2025 and up to the date of this annual report, our block space and aircraft charter arrangement mainly involved outbound flights from Hong Kong to North America and Southeast Asia.
Our Suppliers
Our suppliers consist mainly of airlines, shipping liners, and other freight forwarders who provide us with cargo space, as well as ancillary service providers who offer logistics-related services, warehousing services, local and overseas transportation services, and RASCF screening services.
For the years ended December 31, 2023, 2024 and 2025, our cost of revenue attributable to our largest supplier amounted to approximately US$17.6 million, US$12.6 million and US$10.0 million, respectively, representing approximately 13.8%, 15.0% and 19.1% of our total cost of revenue of the corresponding period. The top five suppliers of the years ended December 31, 2023, 2024 and 2025 accounted for approximately 45.0%, 45.9% and 46.9% of the total cost of revenue, respectively.
When selecting our suppliers, we consider factors such as the booking instructions from our customers (including destination, weight and quantity of consignment and expected date of arrival), market supply of cargo space, quotations from suppliers, and our business relationships with the suppliers. We have access to multiple alternative suppliers in the market which specialize in various export destinations and can supply cargo space at comparable market prices, ensuring that we can purchase cargo space without difficulty.
Other ancillary service providers
If requested by our customers, we can arrange ancillary logistics services and warehousing-related services to support our freight forwarding services. These services may include cargo pickup, cargo handling, cargo handling at ports, local transportation, repackaging, labeling, palletization, preparation of shipping documentation, customs clearance, and warehousing. We did not enter into any long-term written service agreements with any service providers during the years ended December 31, 2023, 2024 and 2025 and we did not experience any material non-performance incident or quality dispute with our service providers causing material disruption to our operations.
Credit period
Typically, we have a short credit period for purchasing cargo space from airlines, while we generally provide our customers with a credit period of around 45 - 60 days. For charter flights, we often require full or partial payment in advance from customers. Payments for charter flights must be made in full and in advance, usually ranging from two to ten days before the flight’s departure. Our purchases are settled through checks and bank remittances.
Bank Guarantees
Depending on the amount of cargo and airline policies, freight forwarders may be required to provide bank guarantees in favor of airlines or shipping liners to secure purchases of cargo space. The requirement for bank guarantees varies among suppliers, and our principal banks provide these guarantees, typically requiring collateral such as mortgage over properties or bank deposits to be pledged in favor of our banks. When a bank guarantee is provided, our suppliers generally have the right from time to time by giving notice in writing to require us to increase the amount of guarantee if the cargo space purchased by us is greater than the existing guaranteed sum. Our bank guarantees are generally renewed on a yearly basis. See Note 7 to the consolidated financial statements for the banking facilities for details.
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Our Customers
Our customers are primarily peer freight forwarders as well as direct customers (i.e., customers that book their consignments directly with us, for example, e-Commerce shop owners and manufacturers which ship their products to end customers through integrated logistics services directly with us, also buyers of goods who arrange shipment by themselves). During the years ended December 31, 2023, 2024 and 2025, we worked with over various customers, of which freight forwarders accounted for approximately 99.6%, 99.6%, and 99.5% of our total revenue for the respective year. Our top five customers, based on revenue, accounted for approximately 81.4%, 65.0%, and 74.0% of our revenue for the years ended December 31, 2023, 2024 and 2025, with our single largest customer accounting for 75.3%, 39.3%, and 56.6% of our total revenues over the same year, respectively. For our top five customers, we are also their major provider of services, for which our relationships are mutually beneficial and stable.
Due to our usual process of co-loading, in which we purchase cargo space from as well as sharing spare capacities with our peer freight forwarders, some of our suppliers and customers may overlap.
In line with the industry practice, we generally do not enter into any long-term agreement with our customers for freight forwarding services. We generally do not have specific agreement with our customers regarding liability for damage of goods during transit. However, we maintain specialized freight forwarder’s liability insurance policies to cover cargo transportation losses and freight forwarder errors and omissions. See “–– Insurance” for details of our insurance coverage. For the years ended December 31, 2023, 2024 and 2025, we did not encounter any incident relating to liability for damage of goods of a material nature.
Credit policy
For freight forwarder customers, we generally grant an average credit period of around 45 – 60 days, except for charter flights where payment is often required in full or in part in advance. Direct customers are usually required to settle the full amount upon invoice issuance. Our invoices are generally settled by cheque or telegraphic transfer in HKD, RMB or USD. Credit terms granted to customers vary on a case-by-case basis, depending on factors such as reputation, credibility, payment history, and business relationships. We periodically review credit terms and payment records and make adjustments as necessary. We also closely monitor any outstanding overdue amounts and take measures to collect any outstanding amounts. For the years ended December 31, 2023, 2024 and 2025, we did not experience any material difficulty in collecting payment from our customers.
Sales and Marketing
We have maintained strong and stable business relationships with our existing customers. Our consistent efforts to develop our business, along with the quality of our services and our reputation, will help us attract new customers.
Our sales team has actively engaged with potential customers and managed existing customers, utilizing our established global networks, connections, and local partnerships that have been cultivated since 1993. Through word-of-mouth, our existing customers often refer new customers to us. Our Operating Subsidiaries are members and users of Global Logistics Associates (GLA), JCtrans Network and WCAworld, which are three of the largest independent freight forwarder networks in the world. As members and users, we will appear in their journals and catalogs, making us visible to potential customers. We believe that being part of such highly regarded networks of freight forwarders and other industry participants allows us to diversify and expand our supplier and customer bases. Additionally, we actively participate in various trade fairs and exhibitions such as the Asian Logistics, Maritime, and Aviation Conference to effectively promote our services to customers.
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Pricing Strategy
Our final freight rates are determined by considering several factors as follows:
| ● | market supply of and demand in the cargo space; |
| ● | shipment figure (weight and density of cargo); |
| ● | business relationship with the customer; |
| ● | freight charges (including purchase cost for cargo space and the surcharge such as terminal charges and fuel charges); |
| ● | rates offered by our competitors; |
| ● | the possibility of consolidation of cargo space or co-loading; |
| ● | seasonality; and |
| ● | any ancillary logistics services required. |
Customer Services
Our customer service team handles general enquiries, complaints and feedback from customers. For the years ended December 31, 2023, 2024 and 2025 and up to the date of this annual report, we did not receive any complaint or claim from our customers in relation to our services that would have a material impact on our business and operations.
Seasonality
Our peak season typically occurs from October to December, driven by festive events and discount promotions such as Thanksgiving, Christmas and New Year’s Eve. Conversely, during the Lunar Year holiday, usually in January or February, we experience lower shipment volumes and revenue due to reduced business activities in Mainland China. Accordingly, comparison of sales and operating results from different periods in any given financial year may not be relied upon as indicators of our performance. It is widely understood in the industry that 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 trends are subject to unforeseen circumstances, and we cannot provide assurances that these seasonal trends will continue.
Licenses and Regulatory Approvals
We have obtained all the necessary licenses, permits and approvals that are material to our business during the years ended December 31, 2023, 2024 and 2025 and up to the date of this annual report, with details set forth below:
| License/permit/approval | Holding entity | Issuing authority | Date of grant | Date of expiry | ||||
| Radio Dealer License (Unrestricted) | PSIHK | Communications Authority of Hong Kong | August 1, 2025 | July 31, 2026 | ||||
| Irradiating Apparatus License | PSIHK | Radiation Board | February 16, 2026 | — | ||||
| Regulated Agent | PSIHK | Civil Aviation Department | February 14, 2000 | — | ||||
| Regulated Air Cargo Screening Facility | PSIHK | Civil Aviation Department | April 29, 2020 | — | ||||
| Textiles Trader Registration | PSIHK | Trade and Industry Department | October 29, 2025 | October 28, 2026 | ||||
| Transhipment Cargo Exemption Scheme | PSIHK | Trade and Industry Department | January 1, 2026 | December 31, 2027 | ||||
| Regulated Agent | BGG | Civil Aviation Department | July 20, 2018 | — | ||||
| Food Import or Distributor Registration | BGG | Food and Environmental Hygiene Department | January 12, 2021 | January 11, 2027 |
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Insurance
Pursuant to paragraph 16.1 of the Hong Kong Association of Freight Forwarding and Logistics Ltd Standard Trading Conditions (HAFFA STCs), we are not required to arrange any insurance except on express written instructions given by the customer and accepted by us in writing. We maintain Freight Forwarder Liability Insurance (also known as the Forwarder Protect Liability Insurance) policies against cargo transportation losses and freight forwarder errors and omissions. We are not liable for any damage or loss to our customers’ goods unless such damage or loss is caused by our negligence. We also maintain cargo transportation liability insurance policies against loss damage liability or expense of the shipments, if so requested by our customers. While we are liable for the damage or loss to our customers’ goods, claims against us from our customers are covered by the Freight Forwarder Liability Insurance policies we maintain as described above. We also maintain insurance coverage of employee’s compensation, business interruption and public liability insurance. We believe that the insurance coverage taken out by us is in line with industry norms in Hong Kong and is adequate and sufficient for our operations.
Legal Proceedings
We may from time to time be subject to various legal or administrative claims and proceedings arising in the ordinary course of our business. We are currently not a party to any material pending legal or administrative proceedings and are not aware of any events that are likely to lead to any such proceedings. As of the date of this annual report, we are not a party to, and we are not aware of any threat of, any legal proceeding that, in the opinion of our management, is likely to have a material adverse effect on our business, financial condition or operations, nor have we experienced any incident of non-compliance which, in the opinion of our directors, is likely to materially and adversely affect our business, financial condition or operations. Litigation or any other legal or administrative proceeding, regardless of the outcome, is likely to result in substantial costs and diversion of our resources, including our management’s time and attention.
Internal Control and Risk Management
In order to ensure compliance with applicable laws and regulations and related policies in different operational aspects, we have established and adopted an internal control system, covering areas such as, among other things (i) financial reporting; (ii) freight cost and expenditure; (iii) cash and treasury management; (iv) human resources management; (v) risk management; and (vi) conflict of interest. In addition, we have a staff handbook, internal control and corporate governance manual which is required to be observed by all our directors and employees. We believe that our internal control system is sufficient and effective.
Health, Work Safety, Social and Environmental Matters
Due to the nature of tasks in the freight forwarding industry and the logistics industry which often involve carrying heavy objects and usage of machinery, workers are constantly subjected to risks of accidents or injuries. To mitigate such risks, we have set out a series of workplace safety rules in the staff manual for our staff to follow. During the years ended December 31, 2023, 2024 and 2025 and up to the date of this annual report, there were no material accidents in the course of our business operation which gave rise to any claims and compensation paid to our employees. There were also no interruptions in our business which may or have had a significant effect on our financial position during the years ended December 31, 2023, 2024, and 2025 and up to the date of this annual report.
Due to the nature of our business, our operational activities are not subject to environmental obligations, and we did not directly incur any cost of compliance with applicable environmental protection rules and regulations. We expect that we will not directly incur significant costs for compliance with applicable environmental protection rules and regulations in the future.
Regulations
As we conduct business in Hong Kong, our business operations are subject to various regulations and rules promulgated by the Hong Kong government. The following is a brief summary of the Hong Kong laws and regulations that currently and materially affect our business. This section does not purport to be a comprehensive summary of all present and proposed regulations and legislation relating to the industries in which we operate.
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Regulations Relating to Our Business
Business Registration Ordinance
Business Registration Ordinance (Chapter 310 of the Laws of Hong Kong) (the “BRO”) provides for the registration of businesses in Hong Kong. Business includes any form of trade, commerce, craftsmanship, profession, calling or other activity carried on for the purpose of gain and also means a club. Every company incorporated in Hong Kong or non-Hong Kong company registered under the Companies Ordinance (Chapter 622 of the Laws of Hong Kong) is deemed to be a person carrying on business and is required to be registered under the BRO. Pursuant to the BRO, every person (a company or an individual) carrying on a business in Hong Kong, other than those specifically exempted, shall make a business registration application to the Commissioner of Inland Revenue within one month of the commencement of the business and a valid business registration certificate shall be displayed at the place of business to which such certificate relates.
Dangerous Goods (Consignment by Air) (Safety) Ordinances and Dangerous Goods (Consignment by Air) (Safety) Regulations
The Dangerous Goods (Consignment by Air) (Safety) Ordinance (Chapter 384 of the Laws of Hong Kong) (the “DGCASO”) serves to control, in the interest of safety, the preparation, packing, marking, labelling and offering of dangerous goods for carriage by air, and for matters connected therewith. Dangerous Goods (Consignment by Air) (Safety) Regulations (Chapter 384A of the Laws of Hong Kong) (the “DGCASR”) was made under the DGCASO and must be complied with by consignors, which includes shippers and freight forwarders. Consignors must ensure that all dangerous goods are properly marked, packed, labelled, classified and documented before they offered for transportation by air.
Further, under the DGCASR, a consignor of dangerous goods by air is required to provide for each consignment a shipper’s declaration for dangerous goods, which must be signed by a person who completed appropriate dangerous good training within the past 24 months pursuant to Regulation 7 of the DGCASR.
The Convention of International Civil Aviation and the Aviation Security Ordinance
To safeguard aircraft against acts of unlawful interference, the International Civil Aviation Organisation has laid down standards and recommended practice in Annex 17 to the Convention on International Civil Aviation (the “CICA”) on the security measures required to be implemented by contracting states. For the security of air cargo to be in line with Annex 17 to the CICA, the Hong Kong Aviation Security Programme, which is enforceable under the Aviation Security Ordinance (Chapter 494 of the Laws of Hong Kong), has adopted the regulated agent regime (the “RAR”). As a result, the Aviation Security Ordinance made provisions for the prevention and suppression of acts of violence against civil air transport and for connected purposes, it constitutes the comprehensive legislation for implementation of the conventions and agreements on aviation security promulgated by the ICAO. A cargo handling agent, a freight forwarder or a consignor of air cargo may apply for registration as a who is required to comply with the requirements in respect of an RA in the Hong Kong Aviation Security Programme, in order to prevent the unauthorized carriage of explosives and incendiary devices in the consignments of cargo intended for carriage by air.
Under the RAR, an RA is obliged, among other obligations, to ensure that the appropriate security controls acceptable by the Civil Aviation Department (the “CAD”) are properly implemented upon the acceptance of cargo for carriage by air unless the consignment is from a known consignor recognized by an RA and to ensure that a consignment of cargo is safeguarded against unauthorized interference after its reception and to make best endeavors to protect it from unauthorized interference until the consignment is accepted by another RA or an airline.
An RA shall also ensure that a consignment of cargo accepted from a known consignor or another RA is: (i) accompanied by a full description of the contents in the shipping documents (e.g. airway bills, cargo manifests or shipper’s instructions), that the RA’s registration code or the known consignor’s code on the shipping documents of the consignment is checked; (ii) checked against the description in the shipping documents in respect of the quantity of cargo tendered and any sign of the package having been tampered with; (iii) declared as known cargo by checking the annotation of the tendering RA’s registration code or otherwise stated as unknown cargo on shipping documents in inter-RA’s handling; and (iv) safeguarded from unauthorized interference after it has been received until accepted by the next RA or an airline, or until loaded on to an aircraft. Given our Operating Subsidiaries are RA, we have duly carried out the aforementioned obligations during our ordinary course of business.
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On September 1, 2016, the ICAO has introduced a new policy direction to progressively increase the required screening percentage of known cargoes consigned by existing consignors which have not been approved by the CAD, from 1% to 100% before the deadline imposed by ICAO (30 June 2021). In order to fully implement such new policy direction, the CAD has developed a transitional arrangement for the registered agents, namely, (i) from January 2020 to April 2020, prior to the air cargo being loaded onboard, all registered agents will be required to screen 25% of their cargo tendered by consignors not approved by the CAD; (ii) from May 2020 to August 2020, the required screening percentage will be increased to 40%; (iii) from September 2020 to February 2021, the screening percentage will be increased to 70%; and (iv) from March 2021 to June 2021, the screening percentage will be further increased to 100%. In anticipation of an upsurge in screening demand, a regulated air cargo screening facilities scheme which enables and regulates air cargo screening at off-airport locations has been formulated. Any entity which intends to conduct air cargo security screening operations in their premises may apply for acceptance by the CAD to become a regulated air cargo screening facility (“RACSF”). Each RACSF must have at least two nominated persons for cargo security who have attended and completed the RACSF training program acceptable to the CAD. The relevant training certificates are valid for a period of three years, hence, the relevant RACSF should arrange for revalidation of the same by their expiry. As the Company conducts air cargo security screening operations in the Tsing Yi Warehouse from 2021 until August of 2022, the Company was required and duly registered the Tsing Yi Warehouse as the RACSF with the CAD. The Company engaged independent third party as a screening service provider to provide qualified manpower (the security screeners) to perform cargo screening using our off-airport x-ray screening machines and facilities on site in the Tsing Yi Warehouse. In August 2022, we surrendered the lease of the Tsing Yi Warehouse and the air cargo security screening is no longer performed in the Company’s premise since then.
Telecommunications Ordinance
Under the Telecommunications Ordinance (Chapter 106 of the Laws of Hong Kong), companies possessing and dealing in the course of trade or business in apparatus or material for radio communications or in any component parts in Hong Kong, are required to obtain a Radio Dealers License (Unrestricted) from Office of the Communications Authority (“OFCA”). Under the Radio Dealers License (Unrestricted), the licensee is permitted to (i) deal in radiocommunications apparatus and (ii) import into or export from Hong Kong radio transmitting apparatus pursuant to section 9 of the Telecommunications Ordinance. A Radio Dealers License (Unrestricted) is generally valid for a period of 12 months, and is renewable on payment of the prescribed fee, at the discretion of OFCA. Given the Company provides storage services to the customers in Hong Kong, we may fall within the ambit of the Telecommunications Ordinance and have duly obtained the Radio Dealers License (Unrestricted) from the OFCA.
International Conventions — Carriage of Goods by Air
In relation to carriage of goods by air, the relevant international conventions are the Warsaw Convention for the Unification of Certain Rules Relating to International Carriage by Air 1929 (the “Warsaw Convention”) and the Montreal Convention for the Unification of Certain Rules for International Carriage by Air 1999 (the “Montreal Convention”).
The Warsaw Convention
The Warsaw Convention was an international convention which regulates liability for international carriage of persons, luggage or goods performed by aircraft for reward. It was originally signed in 1929 in Warsaw and was amended in 1955 by the Hague Protocol. Hong Kong still applies the Amended Warsaw Convention to international air carriages with countries that have adopted the Amended Warsaw Convention but not the Montreal Convention.
The Montreal Convention and the Carriage by Air Ordinance
The Montreal Convention was designed to establish worldwide uniformity in liability rules governing air carriage of person, baggage and cargo for compensation between two countries which are parties to it. Hong Kong ratified the Montreal Convention on 15 December 2006. The Montreal Convention was put into force in Hong Kong under the Carriage by Air Ordinance (Chapter 500 of the Laws of Hong Kong) (the “CAO”).
The provisions of the Montreal Convention, as set out in Schedule 1A of the CAO, so far as they relate to the rights and liabilities of carriers, carriers’ servants and agents, passengers, consignors, consignees and other persons, and subject to the CAO, have the force of law in relation to any carriage by air to which the Montreal Convention applies, irrespective of the nationality of the aircraft performing that carriage.
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Article 18 of the Montreal Convention determines the extent of the carriers’ liability during carriage of cargoes. Article 18(1) states that the carrier is liable for damage sustained in the vent of the destruction or loss of, or damage to, cargo upon condition only that the event which caused the damage so sustained took place during the carriage by air. Article 18(2) provides the following four defences to the carrier:
| (a) | inherent defect, quality or vice of that cargo; |
| (b) | defective packing of that cargo performed by a person other than the carrier or its servants or agents; |
| (c) | an act of war or an armed conflict; and/or |
| (d) | an act of public authority carried out in connection with the entry, exit or transit of the cargo. |
Radiation Ordinance
The Radiation Ordinance (Chapter 303 of the Laws of Hong Kong) (the “RO”) controls the import, export, possession and use of radioactive substances and irradiating apparatus and the prospecting and mining for radioactive minerals and for purposes connected therewith. No person shall, except under and in accordance with a license duly issued under the RO, have in his possession or use, any radioactive substance or irradiating apparatus. As our Operating Subsidiaries own and operate certain apparatuses used for the provision of x-ray screening services to our customers, the use of which fall within the ambit of the RO, the our Operating Subsidiaries are required and has duly obtained an irradiating apparatus license in accordance with RO.
Regulations Relating to Import and Export
Import and Export Ordinance (Chapter 60 of the Laws of Hong Kong)
Importing and exporting cargo
Import and Export Ordinance (Chapter 60 of the Laws of Hong Kong) (the “IEO”) provides regulation and control of the import of articles into Hong Kong, the export of articles from Hong Kong, the handling and carriage of articles within Hong Kong which have been imported into Hong Kong or which may be exported from Hong Kong, and any matter incidental to or connected with the foregoing.
Shipping companies, airlines and freight forwarders registered under the Transhipment Cargo Exemption Scheme (the “TCES”) are, subject to certain conditions, exempted from import and export licensing requirements in respect of transhipment cargos handled by them. Transhipment cargos means any imported articles that (i) is consigned on a through bill of lading or a through air waybill from a place outside Hong Kong to another place outside Hong Kong; and (ii) is or is to be removed from the vessel, aircraft or vehicle in which it was imported and either returned to the same vessel, aircraft or vehicle or transferred to another vessel, aircraft or vehicle before being exported, whether it is or is to be transferred directly between such vessels, aircraft or vehicles or whether it is to be landed in Hong Kong and stored after its importation, pending exportation. Given the our Operating Subsidiaries have obtained a valid certificate of exemption issued by the Trade and Industry Department under the TCES, we are exempted from licensing requirements under the IEO in respect of certain types of transhipment cargo set out in relevant circulars or letters which may be issued by the Trade and Industry Department.
Import and Export (Registration) Regulations (Chapter 60E of the Laws of Hong Kong)
Import and Export (Registration) Regulations (Chapter 60E of the Laws of Hong Kong) (the “IAE Registration Regulations”) was made under the IEO, Regulations 4 and 5 of the IAE Registration Regulations set out that every person who imports or exports any article other than an exempted article shall lodge with the Commissioner of Customs and Excise an accurate and complete import or export declaration relating to such article using services provided by a specified body, in accordance with the requirements that the Commissioner of Customs and Excise may specify. Every declaration shall be lodged within 14 days after the importation or exportation of the article to which it relates.
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Regulations Relating to Labor, Health and Safety
Factories and Industrial Undertakings Ordinance, Factories and Industrial Undertakings (Lifting Appliances and Lifting Gear) Regulations, Factories and Industrial Undertakings (Cargo and Container Handling) Regulations, Factories and Industrial Undertakings (Loadshifting Machinery) Regulation and Factories and Industrial Undertakings (Fire Precautions in Notifiable Workplaces) Regulations
Factories and Industrial Undertaking Ordinance (Chapter 59 of the Laws of Hong Kong) (the “FIUO”) provides for the safety and health protection of workers in an industrial undertaking. Under the FIUO, (i) “industrial undertaking” includes but not limited to the loading, unloading, or handling of goods or cargo at any dock, quay, wharf, warehouse or airport; and (ii) a “proprietor” means the person for the time being having the management or control of the business carried on, in, inter alia, an industrial undertaking, or the occupier or the agent of the occupier of an industrial undertaking. Under the FIUO, there are 30 sets of subsidiary regulations covering various aspects of hazardous work activities in factories, building and engineering construction sites, catering establishments, cargo and container handling undertakings and other industrial workplaces. The subsidiary regulations prescribe detailed safety and health standards on work situations, plant and machinery, processes and substances.
Factories and Industrial Undertakings (Lifting Appliances and Lifting Gear) Regulations (Chapter 59J of the Laws of Hong Kong) (the “FIU(LALG)R”) was made under the FIUO and they lay down, among others, the legal requirements for the testing, examination and inspection of lifting appliances and lifting gear used for raising or lowering or as a means of suspension in any industrial undertaking (the “Lifting Equipment”). Every employer providing Lifting Equipment for use at work, and every person having control of such use, should observe and ensure compliance with these regulations. In particular, the Lifting Equipment must be made of strong and sound material, properly maintained, and thoroughly examined by a competent examiner at least once every 12 months and certified by the competence examiner in an approved form as being in a safe working order; the Lifting Equipment should not be loaded beyond the maximum safe working load; and that no load is left suspended from a Lifting Equipment unless a competent person is in charge of the lifting appliance during the period of suspension.
Factories and Industrial Undertakings (Cargo and Container Handling) Regulations (Chapter 59K of the Laws of Hong Kong) (the “FIU(CCH)R”) was made under the FIUO and they provide for the requirements on safety of workers employed in industrial undertakings of loading, unloading or handling of cargo and goods at docks, quays or wharves as well as those employed in industrial undertakings of loading, unloading, handling, stacking, unstacking, storing or maintaining (including repairing) of freight containers. In particular:
| ● | Regulation 7 requires that the owner of a fork-lift truck shall not use or cause or permit the use of the truck for cargo or container handling unless (i) it is properly maintained; and (ii) the person operating it is trained and competent to operate it. |
| ● | Regulation 9 requires that, where cargo or goods are placed on a dock, quay or wharf (a) a clear passage leading to the means of access to any vessel which is lying at a the dock, quay or wharf shall be maintained on the dock, quay or wharf; and (b) if any space is left along the edge of the dock, quay or wharf, it shall be at least 900 millimeters wide and clear of all obstructions, other than fixed structures, plant and appliances in use. |
| ● | Regulation 10B requires the proprietor to take all reasonable steps to ensure that no person works on top of a container unless adequate precautions have been taken to prevent persons falling therefrom. |
The proprietors of industrial undertakings (as defined in the FIUO) engaged in the aforementioned activities are responsible for ensuring that the regulations are observed.
Factories and Industrial Undertakings (Loadshifting Machinery) Regulation (Chapter 59AG of the Laws of Hong Kong) (the “FIU(LM)R”) stipulates the responsible person of a loadshifting machine shall ensure that the machine is only operated by a person who has attained the age of 18 years and holds a valid certificate applicable to the type of loadshifting machine to which that machine belongs. Under the FIU(LM)R, loadshifting machines used in industrial undertakings refer to fork-lift trucks.
Factories and Industrial Undertakings (Fire Precautions in Notifiable Workplaces) Regulations (Chapter 59V of the Laws of Hong Kong) (the “FIU(FPNW)R”) was made under the FIUO and they provide for the prevention of the outbreak of fire, the spread of fire and smoke in case of fire, the provision of firefighting equipment and the maintenance of fire escapes in notifiable workplaces.
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Occupiers Liability Ordinance
The Occupiers Liability Ordinance (Chapter 314 of the Laws of Hong Kong) (the “OLO”) regulates the obligations of a person occupying or having control of premises on injury resulting to persons or damage caused to goods or other property lawfully on the land. The OLO imposes a common duty of care on an occupier of premises to take such care as in all the circumstances of the case is reasonable to see that the visitors will be reasonably safe in using the premises for the purposes for which he is invited or permitted by the occupier to be there.
Motor Vehicles Insurance (Third Party Risks) Ordinance
Motor Vehicles Insurance (Third Party Risks) Ordinance (Chapter 272 of the Laws of Hong Kong) (the “MVI(TPR)O”) provides that it shall not be lawful for any person to use, or to cause or permit any other person to use, a motor vehicle on a road unless there is in force in relation to the user of the vehicle by that person or that other person, as the case may be, such a policy of insurance or such a security in respect of third party risks as complies with the requirements of the MVI(TPR)O.
Occupational Safety and Health Ordinance
Occupational Safety and Health Ordinance (Chapter 509 of the Laws of Hong Kong) (the “OSHO”) provides for the safety and health protection to employees in workplace, both industrial and non-industrial. Under section 6 of the OSHO, every employer must, so far as reasonably practicable, ensure the safety and health at work of all the employer’s employees by:
| (a) | providing and maintaining plant and systems of work that are safe and without risks to health; |
| (b) | making arrangements for ensuring safety and absence of risks to health in connection with the use, handling, storage or transport of plant and substances; |
| (c) | providing information, instruction, training and supervision as may be necessary to ensure the safety and health at work of the employees; |
| (d) | as regards any workplace under the employer’s control, maintaining the workplace in a condition that is safe and without risks to health or providing or maintaining means of access to and egress from the workplace that are safe and without any such risks; and |
| (e) | providing or maintaining a working environment for the employees that is safe and without risks to health. |
The Commissioner for Labor may serve an improvement notice on an employer against contravention of the OSHO or the FIUO, or a suspension notice against activity or condition or use of workplace or of any plant or substance located on the workplace which may create an imminent risk of death or serious bodily injury to the employees.
Regulations Relating to Environmental Protection
Air Pollution Control Ordinance, Air Pollution Control (Non-Road Mobile Machinery) (Emission) Regulation and Air Pollution Control (Air Pollutant Emission) (Controlled Vehicles) Regulation
Air Pollution Control (Non-Road Mobile Machinery) (Emission) Regulation (Chapter 311Z of the Laws of Hong Kong) (the “NRMM Regulation”) was made under Air Pollution Control Ordinance (Chapter 311 of the Laws of Hong Kong) (the “APCO”) and NRMM Regulation came into effect on June 1, 2015 to introduce regulatory control on the emissions of non-road mobile machinery (“NRMM”), including non-road vehicles and regulated machines that are subject to the NRMM Regulations (the “Regulated Machines”). Unless exempted, NRMMs which are regulated under the NRMM Regulation are required to comply with the emission standards prescribed under the NRMM Regulation. Under section 5 of the NRMM Regulation, starting from December 1, 2015, only approved or exempted NRMMs with a proper label are allowed to be used in specified activities and locations including construction sites. However, existing NRMMs which are already in Hong Kong on or before November 30, 2015 will be exempted from complying with the emission requirements pursuant to section 11 of the NRMM Regulation.
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Air Pollution Control (Air Pollutant Emission) (Controlled Vehicles) Regulation (Chapter 311X of the Laws of Hong Kong) (the “APE Regulation”) was made under the APCO. For the purposes of an application for a vehicle license made on or after the date specified in section 4(2) of the APE Regulation in respect of a controlled vehicle, the emission of the vehicle must conform to the emission standards applicable to the vehicle under section 5 of the APE Regulation. Under section 3 of the APE Regulation, a controlled vehicle is a designated vehicle first registered before April 1, 1995, on or after February 1, 2014, or within the period as specified in the schedule to the APE Regulation. A designated vehicle is a motor vehicle equipped with a compression ignition engine, that is a diesel commercial vehicle (“DCV”), including a goods vehicle, light bus and non-franchised bus. A vehicle license will not be issued to the relevant DCVs after certain dates (for example Euro IV DCV after 31 December 2027 if the first registration year is 2012) as specified by the Environmental Protection Department (the “EPD”) of the Hong Kong government, unless such DCVs comply with the applicable emission standards as if they were first registered on the date of the vehicle license applications. Eligible registered owners of Euro IV DCVs can apply for the ex-gratia payment before the deadline, which is subject to the first registration date of Euro IV DCV. To be eligible to apply for the ex-gratia payment, the vehicle under application and the applicant must satisfy the following requirements:
| (a) | the vehicle must be a DCV with a first registration date that falls within certain dates as specified by the EPD; |
| (b) | the vehicle is registered as a DCV or has applied for re-registration as of January 1, 2020; |
| (c) | the vehicle is scrapped on or after October 19, 2020 by a vehicle scrapping company registered under the ex-gratia payment scheme; |
| (d) | the registration of the vehicle is cancelled and on or before the deadline as specified by the EPD after it is scrapped; |
| (e) | the vehicle has had a valid vehicle license on or after January 1, 2020; |
| (f) | the applicant for the ex-gratia payment is the registered owner of the vehicle when its registration is cancelled; and |
| (g) | The vehicle is a DCV on the day of cancellation of its registration. |
Regulations Relating to Trade Description
Trade Descriptions Ordinance
Trade Descriptions Ordinance (Chapter 362 of the Laws of Hong Kong) (the “TDO”), which came into full effect in Hong Kong on April 1, 1981 aims to prohibit false or misleading trade description and statements to goods and services provided to the customers during or after a commercial transaction. Pursuant to the TDO, any person in the course of any trade or business applies a false trade description to any goods or supplies or offers to supply them commits an offence and a person also commits the same offence if he/she is in possession for sale or for any purpose of trade or manufacture of any goods with a false description. The TDO also provides that traders may commit an offence if they engage in a commercial practice that has a misleading omission of material information of the goods, an aggressive commercial practice, involves bait advertising, bait and switch or wrong acceptance of payment.
Regulations Relating to Trademark
Trade Marks Ordinance
Trade Marks Ordinance (Chapter 559 of the Laws of Hong Kong) (the “TMO”), which came into full effect in Hong Kong on April 4, 2003 provides the framework for the Hong Kong’s system of registration of trademarks and sets out the rights attached to a registered trade mark, including logo and a brand name. The TMO restricts unauthorized use of a sign which is identical or similar to the registered mark for identical and/or similar goods and/or services for which the mark was registered, where such use is likely to cause confusion on the part of the public. The TMO provides that a person may also commit a criminal offence if that person fraudulently uses a trade mark, including selling and importing goods bearing a forged trade mark, or possessing or using equipment for the purpose of forging a trade mark.
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Regulations Relating to Competition
Competition Ordinance
Competition Ordinance (Chapter 619 of the Laws of Hong Kong) (the “Competition Ordinance”), which came into full effect in Hong Kong on December 14, 2015 prohibits and deters undertakings in all sectors from adopting anti-competitive conduct which has the object or effect of preventing, restricting or distorting competition in Hong Kong. The key prohibitions include (i) prohibition of agreements between businesses which have the object or effect of preventing, restricting or distorting competition in Hong Kong; and (ii) prohibiting companies with a substantial degree of market power from abusing their power by engaging in conduct that has the object or effect of preventing, restricting or distorting competition in Hong Kong. The penalties for breaches of the Competition Ordinance include, but are not limited to, financial penalties of up to 10% of the total gross revenues obtained in Hong Kong for each year of infringement, up to a maximum of three years in which the contravention occurs.
Regulations Relating to Employment
Employment Ordinance
Pursuant to Employment Ordinance (Chapter 57 of the Laws of Hong Kong) (the “EO”), which came into full effect in Hong Kong on September 27, 1968, all employees covered by the EO are entitled to basic protection under the EO including but not limited to payment of wages, restrictions on wages deductions and the granting of statutory holidays.
Mandatory Provident Fund Schemes Ordinance
Pursuant to Mandatory Provident Fund Schemes Ordinance (Chapter 485 of the Laws of Hong Kong) (the “MPFSO”), which came into full effect in Hong Kong on December 1, 2000, every employer must take all practicable steps to ensure that the employee becomes a member of a Mandatory Provident Fund scheme. An employer who fails to comply with such a requirement may face a fine and imprisonment. The MPFSO provides that an employer who is employing a relevant employee must, for each contribution period, from the employer’s own funds, contribute to the relevant Mandatory Provident Fund scheme the amount determined in accordance with the MPFSO.
Employees’ Compensation Ordinance
Pursuant to Employees’ Compensation Ordinance (Chapter 282 of the Laws of Hong Kong) (the “ECO”), which came into full effect in Hong Kong on December 1, 1953, all employers are required to take out insurance policies to cover their liabilities under the ECO and at common law for injuries at work in respect of all of their employees. The ECO establishes a no-fault and noncontributory employee compensation system for work injuries, and lays down the rights and obligations of employers and employees in respect of injuries or death caused by accidents arising out of and in the course of employment, or by prescribed occupational diseases under the ECO. Under the ECO, if an employee sustains an injury or dies as a result of an accident arising out of and in the course of his employment, his employer is in general liable to pay compensation even if the employee might have committed acts of faults or negligence when the accident occurred. An employee who suffers incapacity arising from an occupational disease is entitled to receive the same compensation as that payable to an employee injured in an accident arising out of and in the course of employment, if the disease is one due to the nature of any occupation in which he was employed at any time within the prescribed period immediately preceding the incapacity caused.
Minimum Wage Ordinance
Minimum Wage Ordinance (Chapter 608 of the Laws of Hong Kong) (the “MWO”) provides for a prescribed minimum wage at an hourly wage rate during the wage period for certain employees. Every employee engaged under a contract of employment under the EO (except those specified under section 7 of the MWO). Any provision of employment contract which purports to extinguish or reduce the right, benefit or protection conferred on the employee under the MWO is void.
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Regulations Relating to Personal Data Collection
Personal Data (Privacy) Ordinance
Personal Data (Privacy) Ordinance (Chapter 486 of the Laws of Hong Kong) (the “PDPO”) imposes a statutory duty on data users to comply with the requirements of the six data protection principles (the “Data Protection Principles”) contained in Schedule 1 to the PDPO. The PDPO provides that a data user shall not do an act, or engage in a practice, that contravenes a Data Protection Principle unless the act or practice, as the case may be, is required or permitted under the PDPO. The six Data Protection Principles are:
| ● | Principle 1 — purpose and manner of collection of personal data; |
| ● | Principle 2 — accuracy and duration of retention of personal data; |
| ● | Principle 3 — use of personal data; |
| ● | Principle 4 — security of personal data; |
| ● | Principle 5 — information to be generally available; and |
| ● | Principle 6 — access to personal data. |
Non-compliance with a Data Protection Principle may lead to a complaint to the Privacy Commissioner for Personal Data (the “Privacy Commissioner”). The Privacy Commissioner may serve an enforcement notice to direct the data user to remedy the contravention and/or instigate prosecution actions. A data user who contravenes an enforcement notice commits an offense which may lead to a fine and imprisonment.
The PDPO also gives data subjects certain rights, inter alia:
| ● | the right to be informed by a data user whether the data user holds personal data of which the individual is the data subject; |
| ● | if the data user holds such data, to be supplied with a copy of such data; and |
| ● | the right to request correction of any data they consider to be inaccurate. |
The PDPO criminalizes, including but not limited to, the misuse or inappropriate use of personal data in direct marketing activities, non-compliance with a data access request and the unauthorized disclosure of personal data obtained without the relevant data user’s consent. An individual who suffers damage, including injured feelings, by reason of a contravention of the PDPO in relation to his or her personal data may seek compensation from the data user concerned.
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4.C. Organizational structure.
The following is a list of our subsidiaries as of the date of this annual report.
| Name of Subsidiary | Jurisdiction of Incorporation or Organization | |
| PSI Group Holdings Ltd | Cayman Islands | |
| PSI (BVI) Ltd | British Virgin Islands | |
| BGG (BVI) Ltd | British Virgin Islands | |
| PSIG Investment Ltd | British Virgin Islands | |
| Profit Sail Int’l Express (H.K.) Limited | Hong Kong | |
| Business Great Global Supply Chain Limited | Hong Kong | |
| PSIG Singapore Pte. Ltd | Singapore |
The following diagram illustrates the corporate structure of the Company and its subsidiaries as of the date of this annual report:
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4.D. Property, Plant and Equipment
Facilities and Property
Intellectual Property
On October 19, 2021, we applied to register “Profit Sail” in trademark classes 16, 35, and 39; the trademark was registered on March 8, 2022. On December 14, 2021, we applied to register “PSI Group” in trademark classes 9, 16, 35, 38, 39, 41, and 42; as of the date of this annual report, the registration is still in process. On March 2, 2022, we applied to register “PS” in trademark classes 16, 35 and 39; the trademark was registered on January 4, 2023. On March 18, 2022, we applied to register “PS” in trademark classes 35 from China National Intellectual Property Administration (“CNIPA”); the trademark was registered on December 21, 2022. Trademarks in Hong Kong and China are valid for ten years and are renewable.
| Country | Trademark | Application Date | Application Number | Classes | Status | |||||
| Hong Kong |  |
October 19, 2021 | 305775823 | 16, 35, 39 | Registered March 8, 2022 | |||||
 |
||||||||||
| Hong Kong |  |
March 2, 2022 | 305894407 | 16, 35, 39 | Registered January 4, 2023 | |||||
 |
||||||||||
| Hong Kong |  |
December 14, 2021 | 305830876 | 9, 16, 35, 38, 39, 41, 42 |
Registered October 12, 2023 | |||||
| China |  |
March 18, 2022 | 63369406 | 35 | Registered December 21, 2022 |
Real Property — Leases
We used to lease all of our facilities at Unit 1002, 10/F, Join-in Hang Sing Centre, No.2-16 Kwai Fung Crescent, Kwai Chung, New Territories, Hong Kong. The lease will expire on April 30, 2026. Before the lease expired we moved our current facilities in March 2026 to our own premises located at Unit 1703, 17/F, First Group Centre, 23 Wang Chiu Road, Kowloon Bay, Kowloon, Hong Kong.
We believe that the facilities that we leased in the past and the currently used premises are adequate to meet the needs of our operations, and that we will be able to obtain adequate facilities to accommodate our future expansion plans.
Property, Plant and Equipment
As of December 31, 2024 and 2025, the total current net worth of our property, plant and equipment was approximately US$0.1 million and US$4.3 million, respectively. Our property, plant and equipment consists of (i) warehouse operation machinery & tool, including two x-ray systems (Rapiscan Systems 628dv x-ray machine, Rapiscan systems 632dv x-ray machine), 4 Forklifts, and Air Cargo Pallets, (ii) office equipment and furniture, and (iii) buildings. The above three groups are used in warehouse operations, x-ray scanning, and office operation.
Item 4A. Unresolved Staff Comments
None.
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Item 5. Operating and Financial Review and Prospects
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our audited consolidated financial statements and the related notes included elsewhere in this annual report. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Item 3. Key Information — 3.D. Risk Factors” and elsewhere in this annual report.
Financial Summary for the year ended December 31, 2025 (all results compared to the year ended December 31, 2024, unless otherwise noted)
| ● | Revenues were $53.2 million, a decrease of 39.0%. |
| ● | Gross profit were $1.0 million, a decrease of 70.7%. |
| ● | Net loss was $15.2 million, an increase in net loss by 215.7%. |
A. Operating Results
The following table sets forth a summary of our consolidated results of operations for the years ended December 31, 2023, 2024 and 2025. This information should be read together with our consolidated financial statements and related notes included elsewhere in this document.
| For the years ended December 31, | ||||||||||||
| 2023 | 2024 | 2025 | ||||||||||
| US$ | US$ | US$ | ||||||||||
| Revenues | 139,673,764 | 86,906,423 | 52,187,740 | |||||||||
| Revenues - Related Party | 346,705 | 260,046 | 963,344 | |||||||||
| Revenues | 140,020,469 | 87,166,469 | 53,151,084 | |||||||||
| Cost of Revenue | 122,245,091 | 81,442,707 | 51,442,948 | |||||||||
| Cost of Revenue – Related Party | 5,022,497 | 2,191,830 | 694,798 | |||||||||
| Total Cost of Revenue | 127,267,588 | 83,634,537 | 52,117,746 | |||||||||
| Gross Profit | 12,752,881 | 3,531,932 | 1,033,338 | |||||||||
| (Provisions for) Reversal of compensation and penalty | (1,245,625 | ) | - | 1,458,856 | ||||||||
| General and administrative expenses | (5,526,360 | ) | (8,804,171 | ) | (4,021,539 | ) | ||||||
| Total operating expenses | (6,771,985 | ) | (8,804,171 | ) | (2,562,683 | ) | ||||||
| Income (Loss) from Operations | 5,980,896 | (5,272,239 | ) | (1,529,345 | ) | |||||||
| Other Income (Expense): | ||||||||||||
| Interest income | 79,207 | 66,101 | 50,582 | |||||||||
| Interest expense | (1,291 | ) | - | (35,052 | ) | |||||||
| Other income | 143,340 | 37,426 | 38,741 | |||||||||
| Loss on Private Placement | - | - | (6,060,367 | ) | ||||||||
| Issuance costs related to Private Placement | - | - | (1,023,625 | ) | ||||||||
| Change in fair value of warrant liabilities | - | - | (6,729,709 | ) | ||||||||
| Unrealized gains on marketable equity securities | - | - | 2,300 | |||||||||
| Other (loss) gain | (208,232 | ) | (9,104 | ) | 75,023 | |||||||
| Total other income (expense), net | 13,024 | 94,423 | (13,682,107 | ) | ||||||||
| Income (Loss) Before Income Tax | 5,993,920 | (5,177,816 | ) | (15,211,452 | ) | |||||||
| Income Tax (Expense) Benefit | (1,381,729 | ) | 358,684 | (1,728 | ) | |||||||
| Net Income (Loss) | 4,612,191 | (4,819,132 | ) | (15,213,180 | ) | |||||||
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Revenues
We generate revenue primarily from the provision of air and ocean export and import freight forwarding services during the year ended December 31, 2023, 2024 and 2025. The table below sets forth the breakdown of our revenue by service type for the years or periods indicated.
| For the years ended December 31, | ||||||||||||
| 2023 | 2024 | 2025 | ||||||||||
| US$ | US$ | US$ | ||||||||||
| Freight forwarding services | ||||||||||||
| - Air freight | 138,683,827 | 85,621,326 | 52,236,937 | |||||||||
| - Ocean freight | 1,336,418 | 1,509,863 | 841,734 | |||||||||
| Subtotal | 140,020,245 | 87,131,189 | 53,078,671 | |||||||||
| Ancillary logistic services | 224 | 35,280 | 72,413 | |||||||||
| Total | 140,020,469 | 87,166,469 | 53,151,084 | |||||||||
Freight forwarding services
Our freight forwarding services include arranging for consignment upon receipt of booking instructions from customers, cargo pick up, obtaining cargo space, preparation of freight documentation, arranging for customs clearance and cargo handling at origin and destination as well as other related logistics services such as supporting transportation for freight forwarding purposes. For the year ended December 31, 2023, 2024 and 2025, our revenue was principally derived from the provision of air freight forwarding services, which amounted to approximately US$139 million, US$86 million and US$52 million, respectively, representing 99.0%, 98.2% and 98.3% of our total revenue for the same period. US tariffs in 2025 caused volume collapse, importers cancel/pause orders to avoid tariffs. Some shippers move sourcing to Vietnam, Mexico, Malaysia to avoid tariffs which adversely affected sourcing from China. Because of fewer shipments, there was fierce competition among forwarders.
Ancillary logistics services
Our ancillary logistics services involve the provision of a wide range of logistics services, such as cargo pickup, cargo handling at ports and local transportation, and warehousing related services, such as repackaging, labelling, palletization, preparation of shipping documentation, arrangement of customs clearance and warehousing.
Revenue from freight forwarding services is mainly derived from export shipments. The following table sets forth the breakdown of revenue from freight forwarding services for the years ended December 31, 2023, 2024 and 2025.
| For the years ended December 31, | ||||||||||||
| 2023 | 2024 | 2025 | ||||||||||
| US$ | US$ | US$ | ||||||||||
| Export shipments | ||||||||||||
| - Air | 138,665,566 | 85,613,133 | 52,234,196 | |||||||||
| - Ocean | 1,314,374 | 1,503,045 | 839,416 | |||||||||
| - Subtotal | 139,979,940 | 87,116,178 | 53,073,612 | |||||||||
| Import shipments | ||||||||||||
| - Air | 18,261 | 8,193 | 2,741 | |||||||||
| - Ocean | 22,044 | 6,818 | 2,318 | |||||||||
| - Subtotal | 40,305 | 15,011 | 5,059 | |||||||||
| Total | 140,020,245 | 87,131,189 | 53,078,671 | |||||||||
For the years ended December 31, 2023, 2024 and 2025, we focused on export freight forwarding services, which contributed to approximately US$140 million, US$87 million and US$53 million, respectively, representing 99.9%, 99.9% and 99.9% of our revenue from freight forwarding services during the same period.
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For the years ended December 31, 2023, 2024 and 2025, our revenue was principally derived from the provision of air and ocean export freight forwarding services. The table below sets forth the breakdown of export revenue by destination for the years or periods indicated.
| For the years ended December 31, | ||||||||||||||||||||||||
| 2023 | 2024 | 2025 | ||||||||||||||||||||||
| United States | $ | 122,275,056 | 87.4 | % | $ | 61,745,629 | 70.9 | % | $ | 37,762,127 | 71.1 | % | ||||||||||||
| United Kingdom | 3,725,207 | 2.7 | % | 6,012,265 | 6.9 | % | 3,704,292 | 7.0 | % | |||||||||||||||
| The Netherlands | 7,703,309 | 5.5 | % | 6,401,024 | 7.4 | % | 2,848,598 | 5.4 | % | |||||||||||||||
| Others (Note) | 6,276,368 | 4.4 | % | 12,957,261 | 14.8 | % | 8,758,595 | 16.5 | % | |||||||||||||||
| Total export revenue | $ | 139,979,940 | 100 | % | $ | 87,116,179 | 100 | % | $ | 53,073,612 | 100 | % | ||||||||||||
Note: Others represent a number of countries including, among others Canada, Qatar and France, etc.
For the years ended December 31, 2023, 2024 and 2025, our revenue from freight forwarding services for export shipments to the United States contributed to approximately US$122 million, US$62 million and US$38 million, respectively, representing 87.4%, 70.9% and 71.1% of our total export revenue during the same period.
The following table sets forth the breakdown of our revenue by type of customers for the years ended December 31, 2023, 2024 and 2025:
| For the years ended December 31, | ||||||||||||
| 2023 | 2024 | 2025 | ||||||||||
| US$ | US$ | US$ | ||||||||||
| Freight forwarders | 139,475,411 | 86,762,856 | 52,864,407 | |||||||||
| Direct customers | 545,058 | 403,613 | 286,677 | |||||||||
| Total | 140,020,469 | 87,166,469 | 53,151,084 | |||||||||
We focus on provision of freight forwarding services to freight forwarders, which generated revenue of approximately US$139 million, US$87 million and US$53 million for the years ended December 31, 2023, 2024 and 2025, respectively representing 99.6%, 99.6% and 99.5% of our total revenue for the same period. US tariffs resulted in lower volume as importers cancel/pause orders to avoid tariffs. US sourcing shifted to countries enjoyed lower tariffs. Some shippers demand forwarders to absorb tariff-related costs and the forwarders could choose to walk away.
Cost of Revenue
The table below sets forth the breakdown of cost of revenue by service type for the years ended December 31, 2023, 2024 and 2025.
| For the years ended December 31, | ||||||||||||
| 2023 | 2024 | 2025 | ||||||||||
| US$ | US$ | US$ | ||||||||||
| Freight forwarding services | ||||||||||||
| - Air freight | 126,081,162 | 82,206,986 | 51,257,411 | |||||||||
| - Ocean freight | 1,162,092 | 1,348,321 | 759,544 | |||||||||
| Subtotal | 127,243,254 | 83,555,307 | 52,016,955 | |||||||||
| Ancillary logistic services | 24,334 | 79,230 | 100,791 | |||||||||
| Total | 127,267,588 | 83,634,537 | 52,117,746 | |||||||||
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Our cost of revenue amounted to approximately US$127 million, US$84 million and US$52 million for the years ended December 31, 2023, 2024 and 2025, respectively. The trend of cost of revenue of each of the service types was in line with the trend of the revenue of respective service types during the period.
The table below sets forth the breakdown of cost of revenue by nature for the years ended December 31, 2023, 2024 and 2025.
| For the years ended December 31, | ||||||||||||
| 2023 | 2024 | 2025 | ||||||||||
| US$ | US$ | US$ | ||||||||||
| Air freight charges | 102,487,454 | 66,728,914 | 40,598,968 | |||||||||
| Ocean freight charges | 1,083,103 | 1,319,174 | 740,470 | |||||||||
| Logistics and warehousing fees | 23,624,745 | 15,575,231 | 10,778,308 | |||||||||
| Depreciation of property, plant and equipment | 72,286 | 11,218 | - | |||||||||
| Total | 127,267,588 | 83,634,537 | 52,117,746 | |||||||||
Our cost of revenue mainly comprised of air and ocean freight charges, and warehouse and transportation cost. Air and ocean freight charges represented costs of cargo space charged by airlines, shipping liners or other freight forwarders. Air freight charges were the major component of our cost of revenue, which accounted for 80.5%, 79.8% and 77.9%, respectively, for the years ended December 31, 2023, 2024 and 2025.
Logistics and warehousing fees primarily represent costs and service fees incurred in relation to warehousing services such as x-ray screening, storage, palletizing and consolidation performed in our warehouse and costs of local trucking and transportation services. Logistics and warehousing fees represented a significant portion of our cost of revenue, which accounted for 18.6%, 18.6% and 20.7%, respectively, for the years ended December 31, 2023, 2024 and 2025.
Depreciation of property, plant and equipment represents the depreciation of property, plant and equipment related to our buildings and equipment such as x-ray screening equipment and forklifts in warehouse for the years ended December 31, 2023 and 2024 and no such depreciation expense for the year ended December 31, 2025.
US tariffs in 2025 caused costs surged. More documents such as origin certificates, detailed manifests, manufacturer IDs. Port congested and significantly increased the clearance times. More demurrage/detention fees that forwarders had to absorb.
Gross profit
The table below set forth the breakdown of gross profit by service type for the years ended December 31, 2023, 2024 and 2025.
| For the years ended December 31, | ||||||||||||
| 2023 | 2024 | 2025 | ||||||||||
| US$ | US$ | US$ | ||||||||||
| Freight forwarding services | ||||||||||||
| Air freight | 12,602,665 | 3,414,340 | 979,526 | |||||||||
| Ocean freight | 174,326 | 161,542 | 82,190 | |||||||||
| Subtotal | 12,776,991 | 3,575,882 | 1,061,716 | |||||||||
| Ancillary logistic services | (24,110 | ) | (43,950 | ) | (28,378 | ) | ||||||
| Total | 12,752,881 | 3,531,932 | 1,033,338 | |||||||||
Our total gross profit amounted to approximately US$12.8 million, US$3.5 million and US$1.0 million for the years ended December 31, 2023, 2024 and 2025, respectively. We recorded overall gross profit margin of 9.1%, 4.1% and 1.9% for the same period. Our gross profit and gross profit margin are mainly affected by the spread we earn between the freight charge per kilogram payable by our customers and the freight charges payable to suppliers we are able to secure. The US tariffs reduced China-US freight forwarders’ gross profit margin in 2025. Gross profit margin fell in 2025 because of demand crashed and carriers cut prices to fill ships/planes. Carriers preferred sold direct to shippers at lower rates than forwarders’ contracted prices. Forwarders must accept thin spreads or lose business. On the other hand, costs like compliance, labor, fees and risk surged.
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General and administrative expenses
| For the years ended December 31, | ||||||||||||
| 2023 | 2024 | 2025 | ||||||||||
| US$ | US$ | US$ | ||||||||||
| Staff costs and benefits | 2,765,190 | 2,189,405 | 2,005,530 | |||||||||
| Office expenses | 93,286 | 78,907 | 39,359 | |||||||||
| Allowance (reversals) for expected credit loss | 56,556 | (28,547 | ) | (5,187 | ) | |||||||
| Depreciation of right of use assets | 105,341 | 97,789 | 110,858 | |||||||||
| Depreciation | 92,131 | 46,298 | 52,079 | |||||||||
| Bad debt, net | — | (56,605 | ) | — | ||||||||
| Motor vehicles expenses | 11,998 | 11,382 | 8,550 | |||||||||
| Equity-settled share-based payment expenses | — | 5,585,610 | 771,856 | |||||||||
| Others | 2,401,858 | 879,932 | 1,038,494 | |||||||||
| Total | 5,526,360 | 8,804,171 | 4,021,539 | |||||||||
Our general and administrative expenses were approximately US$5.5 million, US$8.8 million and US$4.0 million for the year ended December 31, 2023, 2024 and 2025. Our general and administrative expenses increased from approximately US$5.5 million for the year ended December 31, 2023 to approximately US$8.8 million for the year ended December 31, 2024, primarily driven by the recognition of equity-settled share-based payment expenses of US$5.6 million. The share-based payment expenses represented the vesting of options granted to directors and employees of the Group. 2,420,000 options were granted, 70% of which were vested on the closing date of the business combination, 20% of which will be vested on the first anniversary of the closing date of the business combination; and 10% of which will be vested on the 2nd anniversary of the closing date of the business combination. Our general and administrative expenses decreased from US$8.8 million for the year ended December 31, 2024 to US$4.0 million for the year ended December 31, 2025 mainly due to the significant reduction in the equity-settled share-based payment expenses as a result of option forfeiture and less options were vested.
Interest expenses
Our interest expenses decreased from US$1,291 for the year ended December 31, 2023 to Nil for the year ended December 31, 2024, which was primarily attributable to decrease in short-term bank loans. Due to the involvement of margin finance, interest expenses increased from Nil for the year ended December, 2024 to US$35,052 for the year ended December 31, 2025, which was mainly due to the increase in broker’s margin interest and bank borrowing interest.
Other income
| For the years ended December 31, | ||||||||||||
| 2023 | 2024 | 2025 | ||||||||||
| Government grants | $ | 28,703 | $ | — | $ | — | ||||||
| Management fee income | 29,423 | 4,276 | 3,567 | |||||||||
| Management fee income from related parties | 25,961 | 17,103 | 14,272 | |||||||||
| Insurance compensation | 55,903 | — | — | |||||||||
| Miscellaneous income | 3,350 | 16,047 | 20,902 | |||||||||
| Total | $ | 143,340 | $ | 37,426 | $ | 38,741 | ||||||
Our other income decreased from US$143,340 for the year ended December 31, 2023 to US$37,426 for the year ended December 31, 2024, which was primarily driven by decreased government grants and insurance compensation. Our other incomes slightly increased from US$37,426 for the year ended December 31, 2024 to US$38,741 for the year ended December 31, 2025 which mainly contributed by sundry income.
Other expenses
Our other expenses represented exchange (loss) gain. Exchange (loss) gain was primarily driven by fluctuation of RMB and US$ against HKD.
Income tax
For the year ended 31 December 2025, our income tax expense mainly represented the corporate income tax of its Hong Kong operating subsidiaries.
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Net income
As a result of the above factors, our net income decreased by approximately US$9.4 million from US$4.6 million for the year ended December 31, 2023 to net loss of US$4.8 million for the year ended December 31, 2024 and to a reduction of net loss of US$1.0 million for the year ended December 31, 2025.
B. Liquidity and capital resources
Cash flows
The table below sets forth a summary of our cash flows for the years ended December 31, 2023, 2024 and 2025:
| For the years ended December 31, | ||||||||||||
| 2023 | 2024 | 2025 | ||||||||||
| US$ | US$ | US$ | ||||||||||
| Net cash provided by (used in) operating activities | 7,336,570 | (1,844,009 | ) | (1,308,650 | ) | |||||||
| Net cash (used in) provided by investing activities | 2,229,058 | 718,828 | (11,223,176 | ) | ||||||||
| Net cash (used in) provide by financing activities | (4,097,806 | ) | (1,500,915 | ) | 13,315,388 | |||||||
| Net increase (decrease) in cash and cash equivalents and restricted cash | 5,467,822 | (2,626,096 | ) | 783,562 | ||||||||
Cash used in operating activities
Our operating cash inflow is primarily from our operating activities principally from the 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 and general and administrative expenses.
For the years ended December 31, 2025, our net cash used in operating activities was approximately US$1.5 million, mainly attributable to (i) net loss of approximately US$15.2 million; (ii) reversal of compensation and penalty of approximately US$1.5 million; (iii) decrease in accounts payable to third parties of approximately US$1.0 million; and (iv) increase in amounts due from related companies of approximately US$0.9 million; which was partially offset by (i) fair value loss in warrant liabilities of approximately US$6.7 million; (ii) loss on Private Placement of approximately US$6.1 million; (iii) issuance costs on Private Placement of approximately US$1.0 million; and (iv) the decrease in accounts receivables of approximately US$2.6 million.
Cash used in investing activities
For the year ended December 31, 2025, our net cash flow used in investing activities was approximately US$11.2 million, mainly attributable to (i) purchase of property, plant and equipment of approximately US$4.2 million; (ii) invest in marketable equity securities of approximately US$5.0 million; and (iii) grant a loan to third party of US$2.0 million.
Cash provided by financing activities
For the year ended December 31, 2025, our net cash provided by financing activities was approximately US$13.3 million, mainly attributable to (i) approximately US$8.6 million net proceeds from a private placement; and (ii) proceeds from borrowings of approximately US$4.8 million.
The Company completed an approximately US$9.6 million private placement which involved the sale of 5,332,216 units at USD1.80 per unit, with each unit comprising one ordinary share and one warrant to purchase two additional ordinary shares at US$2.16 each.
Exercise of Warrants after year ended December 31, 2025
On November 12, 2025, the Company completed a private placement for the issuance of 5,332,216 units at a purchase price of US$1.80 per unit to support its working capital and general corporate needs. Subsequent to issuance and prior to April 30, 2026, the reporting date of this Form F-20, all of these Warrants were fully cashless exercised. The Warrant exercises increased the Company’s outstanding share count and enhanced overall capital liquidity, with no continuing warrant-related liabilities as of the reporting date.
Off-Balance Sheet Arrangements
We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. In addition, we have not entered into any derivative contracts that are indexed to our securities and classified as shareholders’ equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. Moreover, we do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engage in leasing, hedging or research and development services with us.
Other than the banking facilities as disclosed to the consolidated financial statements, we do not currently have any outstanding off-balance sheet arrangements or commitments. We have no plans to enter into transactions involving, or otherwise form relationships with, unconsolidated entities or financial partnerships established for the purpose of facilitating off-balance sheet arrangements or commitments.
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Recent Accounting Pronouncements
For a discussion of new accounting standards relevant to our business, refer to Note 2 to our consolidated financial statements included in this Report.
C. Research and Development, Patents and Licenses, etc .
Please see Item 4. “Information on the Company—Intellectual Property” above.
D. Trend Information
See ITEM 5.A “operating results” above for our trend information.
E. Critical Accounting Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
You should read the descriptions of critical accounting policies, judgments and estimates in our consolidated financial statements and other disclosures included in this Report.
The following accounting estimates relate to the significant areas involving management’s judgments and estimates in the preparation of our financial statements, and are those that it believes are the most critical to aid the understanding and evaluation of this management discussion and analysis:
Share-based compensation
The Company recognizes share-based compensation expense for the estimated fair value of equity awards issued as compensation to individuals over the requisite service period, which generally ranges immediate up to two years. The Company accounts for forfeitures as they occur. Accordingly, in the absence of a modification, if an individual’s continuous service is terminated, all previously unvested awards granted to such individual are forfeited, which results in a benefit to share-based compensation expense in the period of termination equal to the cumulative expense recorded through the termination date for the unvested awards. For employee stock awards with graded vesting schedules and only services conditions, the Company recognizes share-based compensation expense on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was, in-substance, multiple awards, ensuring that cumulative recorded share-based compensation expense equals the grant date fair value of vested awards at each period-end.
Fair Value Measurements – Warrant Liability
The Company classifies its outstanding Warrants issued in connection with private placement as warrant liabilities under ASC 815-40 (Derivatives and Hedging – Contracts in Entity’s Own Equity). The Warrants fail equity classification due to redemption, cash settlement, and certain net share settlement provisions requiring liability accounting under U.S. GAAP.
The warrant liability is initially measured at fair value on issuance date and re-measured at fair value at each subsequent balance sheet date, with all changes in fair value recognized within consolidated statements of operations in the current reporting period.
Fair value of the warrant liability is determined using the Black-Scholes Option Pricing Model, classified as Level 3 recurring fair value measurement within the ASC 820 fair value hierarchy, due to reliance on significant unobservable inputs.
Key valuation assumptions applied as of the reporting date include:
| ● | Underlying Ordinary Share’s stock price |
| ● | Contractual remaining term of the warrants |
| ● | Risk-free interest rate (U.S. Treasury yield matching remaining warrant term) |
| ● | Expected common stock price volatility (derived from peer comparable listed entities) |
| ● | Expected dividend yield (assumed zero where no dividend policy exists) |
No reclassification between Level 1, Level 2 and Level 3 fair value hierarchy levels occurred during the reporting period. All movements in the warrant liability balance result from period-end fair value remeasurement and no early exercise or warrant modifications were executed.
Fluctuations in the fair value of warrant liability directly impact reported net income/loss for each period. There is no cash settlement impact at initial recognition or periodic remeasurement; any future cash impact will only arise upon warrant exercise or fundamental transaction redemption.
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Subsequent events
In March, 2026, the Company moved its Hong Kong office to the new office premises PSIHK acquired in 2025. The previous lease in Kwai Fong has expired on 30 April 2026.
On April 2, 2025, the U.S. Government announced a 34% tariff on goods imported from China, on top of the existing 20% tariff on Chinese imports. On April 10, 2025, the U.S. Government further increased the tariffs to a total of 145% on goods imported from China. On Feburary 20, 2026, U.S. Government invoked Section 122 of the Trade Act of 1974 (first-ever use) after the Supreme Court struck down IEEPA-based global tariffs. 10% ad valorem on all imports for 150 days starting from February 24, 2026. The Section 301 China Tariff Exclusions which was originally expiring November 29, 2025 was extended to November 10, 2026. The management are currently assessing the impact such tariffs would have on the Company’s operations in 2026.
The US-Israel-Iran Conflict which escalated into a full-scale war in February 2026. Iran’s Supreme Leader Ali Khamenei and top commanders killed in Tehran triggered Iran retaliates. The war creates critical impacts to a Hong Kong based forwarder handling China US exports. Space tight, rates up, longer transits and rerouted, all will add difficulties on PSIG providing forwarder services. Booking instability, client anger and port congestion further affect our business. The management are currently assessing the impact such conflict would have on the Company’s long-term and short-term operations.
Safe Harbor Statement
Certain statements in this announcement are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on the Company’s current expectations and projections about future events that the Company believes may affect its financial condition, results of operations, business strategy and financial needs. Investors can identify these forward-looking statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “is/are likely to,” “potential,” “continue” or other similar expressions. The Company undertakes no obligation to update or revise publicly any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company’s registration statement and other filings with the SEC, which are available for review at www.sec.gov.
Item 6. Directors, Senior Management and Employees
6.A. Directors and Senior Management
The following table provides information regarding our executive officers and directors as of the date hereof:
| Name | Age | Position(s) | ||
| Yee Kit Chan | 67 | Director and Chairman of the Board | ||
| Chunlin Tong | 41 | Chief Executive Officer, Chief Operating Officer, and Director | ||
| Man Kiu Chan | 64 | Chief Financial Officer | ||
| Kim Fung Keith Ching | 41 | Director | ||
| Ho Pan Darren Kwok | 37 | Director | ||
| Sheung Yuk Clara Chiu | 53 | Director |
Yee Kit Chan is our founder and serves as Director and the Chairman of our board of directors. Mr. Chan also serves as a director of PSIHK and BGG, the Operating Subsidiaries of our Company. Mr. Chan has over 40 years of experience in logistic and supply chain operations. He commenced his career at JET Freight International (H.K.) Limited in 1980. From 1981 to 1982, Mr. Chan worked as a manager at DAS Express (HK) Limited. Prior to the founding of PSIHK in 1993, Mr. Chan worked at “K” Line Air Service (Hong Kong) Limited (formerly also known as “K” Line Air Service Fast Forwarders Limited and Fast Forwarder Limited) from 1985 to 1993 with various positions including assistant sales manager, sales manager, the sales manager of Asia Pacific region and the general manager of China region. Mr. Chan obtained a high school diploma in 1978.
Chunlin Tong is our Director, Chief Executive Officer, and Chief Operating Officer. Mr. Tong has more than 17 years of management and marketing experience across multinational and financial services companies. He most recently served as Marketing Director of Sparkle In Technology Investment Ltd. in Hong Kong, where he led business development with major enterprises and state-owned entities. From 2022 to 2023, he was Managing Director of CIC Guolian (Beijing) Investment Fund Co., Ltd. Previously, Mr. Tong held senior positions at Aerospace Science and Industry Financial Leasing Co., Ltd., CITIC Financial Leasing, Minsheng Financial Leasing, and Huawei Technologies, where he was responsible for business development in shipping, aviation, energy, finance, and intelligent manufacturing sectors. He holds an MBA in Accounting, Finance, and Management from the Graduate School of the Chinese Academy of Social Sciences.
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Man Kiu Chan has been our Chief Financial Officer since September 2025 and is primarily responsible for our accounting, financial reporting, internal control and compliance functions. Mr. Chan has over 30 years of accounting, financial management, and corporate governance experience. He served as Chief Financial Officer and Company Secretary of Jiangnan Group Limited, a Hong Kong-listed cable manufacturer, from 2011 until its privatization in 2023. Prior to that, he held senior management roles at Xinhua Sports & Entertainment Limited as Deputy COO, Xinhua Financial Network Limited as Managing Director of Business Development, and Jardine Fleming Holdings Limited as Director of Securities Services. He began his career at PriceWaterhouse in Hong Kong. Mr. Chan is an associate member of the Hong Kong Institute of Certified Public Accountants and holds a Professional Diploma in Accountancy from Hong Kong Polytechnic and an MBA from City University of Hong Kong.
Kim Fung Keith Ching serves as our Director. Mr. Ching has over 15 years of experience in corporate governance, auditing, and financial management. He currently serves as the Company Secretary of Eggriculture Foods Limited since 2018, where he supports board governance and regulatory compliance with Hong Kong Listing Rules and Companies Ordinance requirements. He is also the sole proprietor of Ching Kim Fung Certified Public Accountant (Practising) since 2016, providing audit services to private companies in Hong Kong. Previously, Mr. Ching was the Financial Controller of Jiangnan Group Limited (stock code: 1366.HK) from 2015 to 2025, and an Assistant Manager (Audit) at SHINEWING (HK) CPA Limited, leading audit and IPO assignments for listed clients across industries. Mr. Ching holds a BBA (Hons) in Accounting & Finance from The Hong Kong Polytechnic University. He is a member of the Hong Kong Institute of Certified Public Accountants and an associate of The Hong Kong Chartered Governance Institute.
Ho Pan Darren Kwok serves as our Director. Mr. Kwok has over 5 years of professional experience in accounting, auditing, and financial management. He is currently the Financial Controller and Compliance Manager of XTB Limited (Uzen Securities Limited) since March 2025, where he manages accounting functions, regulatory compliance, and financial reporting in a licensed securities firm. He previously served as Accounting Manager at House of Talent Limited (Master Beef Group), and held senior auditing roles at Moore Stephens CPA Limited, Baker Tilly Hong Kong, and Linkers CPA Limited, where he handled audits for private and Hong Kong listed companies. Mr. Kwok obtained his Bachelor of Science (Hons) in Accounting from the University of Hull. He is proficient in accounting standards and regulatory reporting relevant to Hong Kong’s securities and financial sector.
Sheung Yuk Clara Chiu serves as our Director. Ms. Chiu brings over 20 years of experience in asset management, financial services, and regulatory compliance. She currently serves as Executive Director and Responsible Officer (Type 9 license) at Sino Linear Investment Management Ltd since November 2023, overseeing strategic operations, hedge fund and PE fund management, and regulatory compliance. Prior roles include senior leadership and Responsible Officer positions at various licensed firms such as HTF Securities Limited, Matrix Securities Ltd, and HK Keystone Capital Limited, with responsibilities spanning fund setup, discretionary account management, middle-back office controls, and risk management. Ms. Chiu holds a Master of Science in Training & Performance Management from the University of Leicester and a BBA (Hons) in Human Resources Management from Hong Kong Baptist University. She is fluent in Cantonese, English, and Mandarin.
Family Relationships
None of the directors or executive officers has a family relationship as defined in Item 401 of Regulation S-K.
6.B. Compensation
Employment Agreements and Indemnification Agreements
We have entered into employment agreements with our executive officers. Pursuant to such agreements, such individuals agreed to serve as our executive officers. Under these agreements, each of our executive officers is employed for a specified time period. We may terminate employment for cause, at any time, for certain acts of the executive officer, such as continued failure by the executive officer to satisfactorily perform his/her duties, or the executive officer’s conviction or entry of a guilty or nolo contendere plea of any felony or any misdemeanor involving moral turpitude. We may also terminate an executive officer’s employment without cause upon 60-day advance written notice. In such case of termination by the Company, the Company will (i) continue to provide to the executive officer all compensation, base salary and previously earned but unpaid incentive compensation, if any, and to allow the executive officer to participate in any benefit plans in accordance with the terms of such plans during the notice period, and (ii) pay to the executive officer, in lieu of benefits under any severance plan or policy of the Company, any such amount as may be agreed between the Company and the executive officer.
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Each executive officer has agreed to hold, both during and after the termination or expiry of his or her employment agreement, in strict confidence and not to use, except as required in the performance of his or her duties in connection with the employment or pursuant to applicable law, any of Company’s confidential information or trade secrets, any confidential information or trade secrets of the Company’s clients or prospective clients, or the confidential or proprietary information of any third party received by the Company and for which the Company o has confidential obligations. The executive officers have also agreed to disclose in confidence to the Company all inventions, designs and trade secrets which they conceive, develop or reduce to practice during the executive officer’s employment with the Company and to assign all rights, title and interest in them to the Company, and assist the Company in obtaining and enforcing patents, copyrights and other legal rights for these inventions, designs and trade secrets.
In addition, each executive officer has agreed to be bound by non-competition and non-solicitation restrictions during the term of his or her employment and typically for one year following the last date of employment. Specifically, each executive officer has agreed not to (i) engage in, or otherwise directly or indirectly being employed by or acting as a consultant or lender to, or being a director, officer, employee, principal, agent, stockholder, member, owner or partner of, or permitting the executive officer’s name to be used in connection with the activities of, any other business or organization which competes, directly or indirectly, with the Company, (ii) solicit from any customer doing business with the Company during the term, or (iii) otherwise interfere with the business or accounts of the Company.
The Company has entered into indemnification agreements with each of the Company’s directors and executive officers. Under these agreements, the Company agrees to indemnify the Company’s directors and executive officers against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being a director or officer of the Company.
Compensation of Directors and Executive Officers
For the year ended December 31, 2025 we incurred an aggregate of US$666,689 as compensation to our directors and executive officers as well as an aggregate of US$4,494 contributions to the Mandatory Provident Fund (“MPF”), a statutory retirement scheme introduced after the enactment of the Mandatory Provident Fund Schemes Ordinance in Hong Kong.
Except contribution to the MPF, we did not set aside or accrued any amount to provide pension, retirement, or other similar benefits to our directors and executive officers.
2024 Share Incentive Plan
We have adopted a 2024 share incentive plan (the “2024 Plan”). Under the 2024 Plan, we have granted share incentive awards to eligible directors, employees and consultants of ours in order to promote the success and enhance the value of the Company. The material terms of the 2024 Plan are summarized below:
Eligibility and Administration. Directors, employees and consultants, including any prospective director, employee, or consultant who has accepted an offer of employment or service and will be a director, employee, or consultant after the commencement of their service are eligible to participate in the 2024 Plan.
Limitation on Awards and Shares Available. The number of ordinary shares initially be approved for issuance under the 2024 Plan shall be 2,527,027 shares (the “Share Limit”). Subject to the authorized share capital as provided in the memorandum of association and articles of association of the Company, the Share Limit will be increased automatically on January 1st of each calendar year during the term of the 2024 Plan commencing on January 1st, 2025 (each, an “Evergreen Date”), by an amount equal to one percent (1%) of the total number of outstanding shares of the Company on the end of the calendar year immediately preceding the applicable Evergreen Date. The shares that the Company issues under the 2024 Plan may be, in whole or in part, authorized and unissued shares, treasury shares (subject to appliable laws) or shares purchased on the open market. If an award is terminated, expired or lapsed for any reason, any shares subject to such award may be used again for new grants under the 2024 Plan, subject to the Share Limit.
Awards. The 2024 Plan provides for the grant of options, restricted shares or restricted share units. Each award under the 2024 Plan shall be evidenced by a notice of grant, which will detail the terms, conditions and limitations for each award, including, among others, the term of the award, and the provisions that are applicable in the event that the grantee’s employment or service terminates, and Company’s authority to unilaterally or bilaterally amend, modify, suspend, cancel, or rescind an award.
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Transfer Restrictions. Unless otherwise expressly provided in the 2024 Plan, by applicable laws and by the notice of grant, an award is non-transferable and will not be subject in any manner to sale, transfer, anticipation, alienation, assignment, pledge, encumbrance, or charge.
Plan Amendment and Termination. With the approval of the board of directors, the administrator of the 2024 Plan may terminate, amend, modify, alter, suspend or discontinue the 2024 Plan or any portion thereof at any time. Except with respect to the amendments made in the abovementioned situations and except to the extent any such amendment, alteration, suspension, discontinuance or termination is made to cause the 2024 Plan to comply with applicable laws or accounting or tax rules and regulations, no termination, amendment or modification may adversely affect in any material way any award previously granted pursuant to the 2024 Plan without prior written consent of the participant.
As of the date of the Annual Report, 2,420,000 pre Reverse Stock Split options have been granted and partially vested on certain directors and employees of the Company and its Operating Subsidiaries, including 670,000 pre Reverse Stock Split options to Mr. Hok Wai Alex Ko, the Company’s former Chief Executive Officer and Director, 380,000 pre Reverse Stock Split options to Mr. Chun Kit Tsui, the Company’s former Chief Financial Officer, 380,000 pre Reverse Stock Split options to Mr. Hang Tat Gabriel Chan, the Company’s former Chief Executive Officer and Director, and an aggregate of 990,000 pre Reverse Stock Split options to other grantees who are the employees of the Company’s Operating Subsidiaries, not the directors and officers of the Company. Upon vesting, each option will be exercisable at $0.01 per share (before Reverse Stock Split).
The 2024 Plan will expire on, and no award may be granted pursuant to the 2024 Plan after, the tenth anniversary of the closing date of the Business Combination, i.e. July 18, 2024, unless otherwise determined by the Administrator.
As of the date of the Annual Report, 2,044,000 pre Reverse Stock Split options granted under the 2024 Plan have been exercised, and as the result, 2,044,000 pre Reverse Stock Split ordinary shares of US$0.0001 par value per share or 255,500 post Reverse Stock Split ordinary shares of US$0.0008 par value per share, have been issued as exercised in accordance with the 2024 Plan.
6.C. Board Practices
Board of Directors
The board of directors of the Company consists of five (5) directors. Three of these five directors are independent. A director is not required to hold any shares in the Company by way of qualification. A director may vote with respect to any contract, proposed contract or arrangement in which he is interested provided (i) such director has declared the nature of his interest at the earliest meeting of the board at which it is practicable for him to do so, either specifically or by way of a general notice, (ii) such director has not been disqualified by the chairman of the relevant board meeting, and (iii) if such contract or arrangement is a transaction with a related party, such transaction has been approved by the audit committee in accordance with the Nasdaq rules. The directors may exercise all the powers of the Company to borrow money, mortgage its undertaking, property and uncalled capital, and issue debentures or other securities whenever money is borrowed or as security for any obligation of the Company or of any third party.
Committees of the Board of Directors
Our board of directors has an audit committee, a compensation committee and a nominating and corporate governance committee. Each committee’s members and functions are described below.
Audit Committee
The Company’s audit committee consists of Mr. Kim Fung Keith Ching, Mr. Ho Pan Darren Kwok, and Ms. Sheung Yuk Clara Chiu. Mr. Kim Fung Keith Chiu is the chairperson of the Company’s audit committee. Each of Mr. Ching, Mr. Kwok, and Mr. Chiu satisfies the independence requirements under Rule 5605(c)(2) of the Nasdaq Stock Market Rules and meets the criteria for independence set forth in Rule 10A-3 of the Exchange Act, as well as the criteria of an audit committee financial expert as set forth under the applicable rules of the SEC.
The Company’s audit committee oversees the Company’s accounting and financial reporting processes and the audits of the Company’s financial statements. The audit committee is responsible for, among other things:
| ● | selecting the independent auditor; |
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| ● | pre-approving auditing and non-auditing services permitted to be performed by the independent auditor; |
| ● | annually reviewing the independent auditor’s report describing the auditing firm’s internal quality control procedures, any material issues raised by the most recent internal quality control review, or peer review, of the independent auditors and all relationships between the independent auditor and the Company; |
| ● | reviewing responsibilities, budget, compensation and staffing of the Company’s internal audit function; |
| ● | reviewing with the independent auditor any audit problems or difficulties and management’s response; |
| ● | reviewing and, if material, approving all related party transactions on an ongoing basis; |
| ● | reviewing and discussing the annual audited financial statements with management and the independent auditor; |
| ● | reviewing and discussing with management and the independent auditors major issues regarding accounting principles and financial statement presentations; |
| ● | reviewing reports prepared by management or the independent auditors relating to significant financial reporting issues and judgments; |
| ● | discussing earnings press releases with management, as well as financial information and earnings guidance provided to analysts and rating agencies; |
| ● | reviewing with management and the independent auditors the effect of regulatory and accounting initiatives, as well as off-balance sheet structures, on the Company’s financial statements; |
| ● | discussing policies with respect to risk assessment and risk management with management and internal auditors; |
| ● | timely reviewing reports from the independent auditor regarding all critical accounting policies and practices to be used by the Company, all alternative treatments of financial information within IFRS that have been discussed with management and all other material written communications between the independent auditor and management; |
| ● | establishing procedures for the receipt, retention and treatment of complaints received from the Company’s employees regarding accounting, internal accounting controls or auditing matters and the confidential, anonymous submission by the Company’s employees of concerns regarding questionable accounting or auditing matters; |
| ● | such other matters that are specifically delegated to the Company’s audit committee by the Company’s board of directors from time to time; and |
| ● | meeting separately, periodically, with management, internal auditors and the independent auditor. |
Compensation Committee
The Company’s compensation committee consists of Mr. Chunlin Tong, Mr. Yee Kit Chan, and Mr. Ho Pan Darren Kwok. Mr. Tong is the chairperson of the compensation committee. Mr. Kwok satisfies the independence requirements under Rule 5605(a)(2) of the Nasdaq Stock Market Rules.
The Company’s compensation committee is responsible for, among other things:
| ● | reviewing, evaluating and, if necessary, revising the Company’s overall compensation policies; |
| ● | reviewing and evaluating the performance of the Company’s directors and relevant executive officers and determining the compensation of relevant executive officers; |
| ● | reviewing and approving the Company’s executive officers’ employment agreements with the Company; |
| ● | setting performance targets for relevant executive officers with respect to the Company’s incentive compensation plan and equity-based compensation plans; |
| ● | administering the Company’s equity-based compensation plans in accordance with the terms thereof; and |
| ● | such other matters that are specifically delegated to the compensation committee by the Company’s board of directors from time to time. |
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Nominating and Corporate Governance Committee
The Company nominating and corporate governance committee consists of Mr. Chunlin Tong, Mr. Yee Kit Chan, and Mr. Kim Fung Keith Ching. Mr. Chunlin Tong is the chairperson of the nominating and corporate governance committee. Mr. Ching satisfies the independence requirements under Rule 5605(a)(2) of the Nasdaq Stock Market Rules.
The Company nominating and corporate governance committee is responsible for, among other things:
| ● | selecting and recommending to the Company’s board of directors nominees for election by the shareholders or appointment by the board; |
| ● | reviewing annually with the Company’s board of directors the current composition of the Company’s board of directors with regards to characteristics such as independence, knowledge, skills, experience and diversity; |
| ● | making recommendations on the frequency and structure of the Company’s board of directors meetings and monitoring the functioning of the committees of the Company’s board of directors; and |
| ● | advising the Company’s board of directors periodically with regards to significant developments in the law and practice of corporate governance as well as the Company’s compliance with applicable laws and regulations, and making recommendations to the board on all matters of corporate governance and on any remedial action to be taken |
Duties of Directors
Under the laws of the Cayman Islands, directors have fiduciary duties to our company, including a duty of loyalty, and a duty to act honestly in good faith with a view to the company’s best interests. The Company’s directors must also exercise their powers only for a proper purpose. Our directors also have a duty to exercise the skills they actually possess and such care and diligence that a reasonably prudent person would exercise in comparable circumstances. In fulfilling their duty of care to us, our directors must ensure compliance with Amended and Restated Memorandum and Articles of Association as amended and restated from time to time. Our company has the right to seek damages if a duty owed by the directors is breached.
The functions and powers of our board of directors include, among others:
| ● | convening shareholders’ annual general meetings and reporting its work to shareholders at such meetings; |
| ● | declaring dividends and distributions; |
| ● | appointing officers and determining the term of office of officers; and |
| ● | exercising the borrowing powers of our company and mortgaging the property of our company. |
Code of Business Conduct and Ethics
We have adopted a Code of Business Conduct and Ethics, which will cover a broad range of matters including the handling of conflicts of interest, compliance issues and other corporate policies such as equal opportunity and nondiscrimination standards. This Code of Business Conduct and Ethics will apply to all of our executive officers, board members and employees.
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Terms of Directors and Officers
The Company’s directors may be appointed by an ordinary resolution of the Company’s shareholders. In addition, the Company’s board of directors may, by the affirmative vote of a simple majority of the directors present and voting at a board meeting appoint any person as a director either to fill a casual vacancy on the Company’s board or as an addition to the existing board. Unless otherwise determined by the Company in general meeting, the Company shall have no more than five (5) directors. The office of a director shall be vacated if the director (i) becomes bankrupt or makes any arrangement or composition with his creditors, (ii) dies or is found to be or becomes of unsound mind, (iii) resigns his office by notice in writing to the Company, (iv) is removed from office pursuant to any other provisions of the Amended Company Charter, (v) without consent of the other directors, is absent from meetings of the Company directors for a continuous period of six months, or (vi) is prohibited by the laws of the Cayman Islands from acting as a director.
The Company’s officers are elected by and serve at the discretion of the board of directors of the Company.
6.D. Employees
As of December 31, 2023, 2024 and 2025, we had 33, 29 and 28 full-time employees respectively, all of our employee are based in Hong Kong. The following table sets forth the number of our employees categorized by function as of the date of this annual report:
| Functions | As of December 31, 2025 | |||
| Accounting | 6 | |||
| Air Freight Operations | 8 | |||
| Customer Services | 2 | |||
| HR & Admin | 5 | |||
| Management | 4 | |||
| Sales & Marketing | 1 | |||
| Sea Freight Operation | 2 | |||
| Total | 28 | |||
We believe that we offer our employees competitive compensation packages and a merit-based work environment that encourages initiative, and as a result, we have generally been able to attract and retain qualified personnel and maintain a stable core management team. Our management considers our employees as key assets which play a pivotal role in our continuous growth. We believe that we maintain a good working relationship with our employees and we have not experienced any significant labor disputes. None of our employees is represented by labor unions.
6.E. Share Ownership
Except as specifically noted, the following table sets forth information with respect to the beneficial ownership of our Ordinary Shares as of the date of this annual report by:
| ● | each of our directors and executive officers; and |
| ● | each person known to us to beneficially own more than 5% of our Ordinary Shares. |
The calculations in the table below are based on 15,376,572 Ordinary Shares issued and outstanding as of the date of this annual report. All of our shareholders who own our Ordinary Shares have the same voting rights.
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Beneficial ownership is determined in accordance with the rules and regulations of the SEC. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days, including through the exercise of any option, warrant or other right or the conversion of any other security. These shares, however, are not included in the computation of the percentage ownership of any other person.
| Ordinary Shares Beneficially Owned | ||||||||
| Number of Ordinary Shares | % | |||||||
| Directors and Executive Officers†: | ||||||||
| Yee Kit Chan | — | — | % | |||||
| Chunlin Tong | — | — | % | |||||
| Man Kiu Chan | — | — | % | |||||
| Kim Fung Keith Ching | — | — | % | |||||
| Ho Pan Darren Kwok | — | — | % | |||||
| Sheung Yuk Clara Chiu | — | — | % | |||||
| Hang Tat Gabriel Chan (resigned) | 42,750 | 0.28 | % | |||||
| Chun Kit Tsui (resigned) | — | — | % | |||||
| Yong Yao (retired) | — | — | % | |||||
| Lai Ping Chan (retired) | — | — | % | |||||
| Eric Chen(1) (retired) | — | — | % | |||||
| Tsao-Lung Lai (retired) | — | — | % | |||||
| Zijian Tong (retired) | — | — | % | |||||
| All Directors and Executive Officers as a Group | — | — | % | |||||
| Principal Shareholders holding 5% or more†: | ||||||||
| Great Rank Limited(1) | 2,089,000 | 13.59 | % | |||||
| Quanyong Hou | 881,431 | 5.73 | % | |||||
| Lijun Lu | 919,207 | 5.98 | % | |||||
| Xiaoqing Zhu | 1,227,708 | 7.98 | % | |||||
| Yudian Liu | 1,221,412 | 7.94 | % | |||||
| Jing Liu | 1,208,821 | 7.86 | % | |||||
| Chuanbiao Liao | 1,234,005 | 8.03 | % | |||||
| † | Except otherwise disclosed, the business address of each Directors, Executive Officers and principal shareholders is Unit 1703, 17/F, First Group Centre, 23 Wang Chiu Road, Kowloon Bay, Kowloon, Hong Kong. |
| (1) | Represents 2,089,000 Ordinary Shares held by Great Rank Limited. Mr. Huaixi Yang has voting and investment control over the securities held by Great Rank Limited. |
Item 7. Major Shareholders and Related Party Transactions
7.A. Major Shareholders
Please refer to “Item 6. Directors, Senior Management and Employees — 6.E. Share Ownership.”
7.B. Related Party Transactions
Agreements Related to the Business Combination
In connection with, and pursuant to the Business Combination Agreement, certain agreements were entered into between (i) the Company, (ii) AIB, (iii) PSI, (iv) AIB LLC, (v) PSI Merger Sub I, (vi) PSI Merger Sub II, and (vii) certain related parties. See “Item 4. Information On the Company—4. A. History and Development of the Company.”
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Employment Agreements and Indemnification Agreements
See “Item 6. Directors, Senior Management and Employees—6.B. Compensation—Employment Agreements and Indemnification Agreements.”
Share Incentive Plans
See “Item 6. Directors, Senior Management and Employees—6.B. Compensation—2024 Share Incentive Plan.”
Other Related Party Transactions
Names and relationship of related parties
| Existing relationship with the Company | ||
| Rich Fame International Limited | At 31 December 2025, it was owned as to 50%, 25% and 25% by Mr. Yee Kit Chan, one of the directors of the Company, Ms. Jingyu Hao (the spouse of Mr. Chan), and Ms. Hoi Huen Heidi Chan (the daughter of Mr. Chan), respectively.
At 31 December 2024, it was wholly owned by Ms. Jingyu Hao. | |
| Profit Sail International Express (SZX) Company Limited | One of the shareholders and sole director is Ms. Jingyu Hao, the spouse of one of the directors, Mr. Chan. | |
| Top Star E-Commerce Logistics Limited | Director and shareholder is Ms. Sau Fong Leung, the spouse of one of the directors of PSIHK, Mr. Kin Yin Alfred Kwong. |
Summary of balances with related parties
| As of December 31, | ||||||||||||||||
| Amounts due to related parties: | Notes | 2023 | 2024 | 2025 | ||||||||||||
| Profit Sail International Express (SZX) Company Limited | (1) | $ | 153,317 | $ | 3,056 | $ | 21,554 | |||||||||
| Rich Fame International Limited | (1) | 111,090 | 104,231 | 45,000 | ||||||||||||
| Top Star E-Commerce Logistics Limited | (1) | 205,127 | — | — | ||||||||||||
| Total | $ | 469,534 | $ | 107,287 | $ | 66,554 | ||||||||||
| As of December 31, | ||||||||||||||||
| Amounts due from a related party: | Notes | 2023 | 2024 | 2025 | ||||||||||||
| Profit Sail International Express (SZX) Company Limited | (2) | $ | 117,327 | $ | — | $ | 939.370 | |||||||||
| Total | $ | 117,327 | $ | — | $ | 939.370 | ||||||||||
Notes:
| (1) | Advances from related parties to the Company and general and administrative expenses paid by the related parties on behalf of the Company. Amounts due to related parties are non-trade, unsecured, non-interest bearing and repayable on demand. |
| (2) | General and administrative expenses paid by the Company on behalf of the related parties. Amounts due from related parties are non-trade, unsecured, non-interest bearing, repayable on demand and are for business development purposes. |
| Amount due from Profit Sail International Express (SZX) Company Limited has been subsequently settled and the outstanding balance as at the reporting date is nil. Amounts due to related parties have been paid and no balance as of the reporting date. |
Summary of related party transaction
A summary of trade transactions with related parties for years ended December 31, 2023, 2024 and 2025 are listed below:
| For the years ended December 31, | ||||||||||||
| Services fee income from related parties: | 2023 | 2024 | 2025 | |||||||||
| Profit Sail International Express (SZX) Company Limited | $ | 346,705 | $ | 260,046 | $ | 963,344 | ||||||
| Total | $ | 346,705 | $ | 260,046 | $ | 963,344 | ||||||
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The amounts for the years ended December 31, 2023, 2024 and 2025 represented services fee income from provision of logistics and freight handling services based on a mutually agreed price for each transaction.
| For the years ended December 31, | ||||||||||||
| Freight charges and other handling charges charged by related parties: | 2023 | 2024 | 2025 | |||||||||
| Profit Sail International Express (SZX) Company Limited | $ | 706,432 | $ | 1,699,760 | $ | 694,798 | ||||||
| Top Star E-Commerce Logistics Limited | 4,316,065 | 492,052 | — | |||||||||
| Total | $ | 5,022,497 | $ | 2,191,812 | $ | 694,798 | ||||||
The amounts for the years ended December 31, 2023, 2024 and 2025 represented charges paid for freight and other handling services based on a mutually agreed price for each transaction.
| For the years ended December 31, | ||||||||||||||||
| Other income – management fee income from related parties: | Notes | 2023 | 2024 | 2025 | ||||||||||||
| Profit Sail International Express (SZX) Company Limited | (1) | $ | 25,961 | $ | 17,103 | $ | 14,272 | |||||||||
| Total | $ | 25,961 | $ | 17,103 | $ | 14,272 | ||||||||||
| (1) | The amounts for the years ended December 31, 2023, 2024 and 2025 represented services fee income from provision of management services based on the contractual terms of the related agreements. On April 15, 2019, the Company entered into several management fee agreements with Profit Sail International Express (SZX) Company Limited for the provision of management services including administrative, handling and office services, effective from May 1, 2019. The agreements shall remain valid until further notice by both parties. The annual management fee was based on the Company’s workload devoted to the related party. |
| For the years ended December 31, | ||||||||||||
| IT maintenance fee charged by a related party: | 2023 | 2024 | 2025 | |||||||||
| Rich Fame International Limited | $ | 359,090 | $ | 109,231 | $ | — | ||||||
| Total | $ | 359,090 | $ | 109,231 | $ | — | ||||||
The amounts for the years ended December 31, 2023, 2024 and 2025 represented charges paid for information technology services based on the contractual terms of the related agreement.
On January 1, 2020, the Company entered into an agreement with Rich Fame International Limited for the provision of information technology services including maintenance, consultancy and cloud hosting services. The agreement was effective for a 12-month term from January 1, 2020 to December 31, 2020 and continuing thereafter on an annual or a half-year basis. The annual information technology services fee was equivalent to approximately $359,090, $109,231 and Nil for the years ended December 31, 2023, 2024 and 2025, respectively.
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C. Interests of Experts and Counsel
None / Not applicable.
Item 8. Financial Information
8.A. Consolidated Statements and Other Financial Information
Please refer to “Item 18. Financial Statements.”
Legal and Administrative Proceedings
We may from time to time be subject to various legal or administrative claims and proceedings arising in the ordinary course of our business. We are currently not a party to any pending any material legal or administrative proceedings and are not aware of any events that are likely to lead to any such proceedings. As of the date of this annual report, we are not a party to, and we are not aware of any threat of, any legal proceeding that, in the opinion of our management, is likely to have a material adverse effect on our business, financial condition or operations, nor have we experienced any incident of non-compliance which, in the opinion of our directors, is likely to materially and adversely affect our business, financial condition or operations. Litigation or any other legal or administrative proceeding, regardless of the outcome, is likely to result in substantial costs and diversion of our resources, including our management’s time and attention.
Dividend Policy
We have not declared or paid any dividends. We do not have any present plan to pay any cash dividends on our Ordinary Shares in the foreseeable future. We currently intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business.
Our holding company rely on dividends paid by our Operating Subsidiaries for its cash requirements, including funds to pay any dividends and other cash distributions to its shareholders, service any debt it may incur and pay its operating expenses. Our holding company’s ability to pay dividends to its shareholders will depend on, among other things, the availability of dividends from our Operating Subsidiaries. Cash dividends, if any, on our Ordinary Shares will be paid in U.S. dollars. Under the current practice of the Inland Revenue Department of Hong Kong, no tax is payable in Hong Kong in respect of dividends paid by us.
The holders of Ordinary Shares are entitled to such dividends as may be declared by our board of directors or declared by our shareholders by ordinary resolution (provided that no dividend may be declared by our shareholders which exceeds the amount recommended by our board of directors). Our Amended and Restated Memorandum and Articles of Association provide that dividends may be declared and paid out of our lawfully available funds. Under the laws of the Cayman Islands, we may pay a dividend out of either profits or share premium account, provided that in no circumstances may a dividend be paid if this would result in our being unable to pay our debts as they fall due in the ordinary course of business.
Subject to the foregoing, the payment of cash dividends in the future, if any, will be at the discretion of the Company’s board of directors and will depend upon such factors as earnings levels, capital requirements, contractual restrictions, the Company’s overall financial condition, available distributable reserves and any other factors deemed relevant by the Company’s board of directors. Under Cayman Islands law, a Cayman Islands company may pay a dividend out of either profits (including retained earnings) or share premium, provided that in no circumstances may a dividend be paid if this would result in the Company being unable to pay its debts as they fall due in the ordinary course of its business.
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Even if the Company’s board of directors decides to pay dividends, the form, frequency and amount will depend upon the Company’s future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the Company’s board of directors may deem relevant. In addition, the Company is a holding company and depend on the receipt of dividends and other distributions from its subsidiaries to pay dividends on the Company’s Ordinary Shares. When making recommendations on the timing, amount and form of future dividends, if any, the Company’s board of directors will consider, among other things:
| ● | the Company’s results of operations and cash flow; |
| ● | the Company’s expected financial performance and working capital needs; |
| ● | the Company’s future prospects; |
| ● | the Company’s capital expenditures and other investment plans; |
| ● | other investment and growth plans; |
| ● | dividend yields of comparable companies globally; |
| ● | restrictions on payment of dividend that may be imposed on us by financing arrangements; and |
| ● | the general economic and business conditions and other factors deemed relevant by our board of directors and statutory restrictions on the payment of dividends. |
8.B. Significant Changes
A discussion of significant changes since December 31, 2023 is provided under Item 4 of this Report. Except as disclosed elsewhere in this Report, we have not experienced any significant changes since December 31, 2023.
Item 9. The Offer and Listing
9.A. Offer and listing details
Nasdaq Listing of the Ordinary Shares
The Ordinary Shares listed on Nasdaq are traded under the symbols “PSIG”. Holders of the Ordinary Shares should obtain current
market quotations for their securities. There can be no assurance that the Ordinary Shares will remain listed on Nasdaq. If we fail to
comply with the Nasdaq listing requirements, the Ordinary Shares could be delisted from Nasdaq. A delisting of the Ordinary Shares will
likely affect their liquidity and could inhibit or restrict our ability to raise additional financing.
9.B. Plan of distribution
Not applicable for annual reports on Form 20-F.
9.C. Markets
Our Ordinary Shares are listed on the Nasdaq Capital Market under the symbol “PSIG.”
9.D. Selling shareholders
Not applicable for annual reports on Form 20-F.
9.E. Dilution
Not applicable for annual reports on Form 20-F.
9.F. Expenses of the issue
Not applicable for annual reports on Form 20-F.
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Item 10. Additional Information
10.A. Share capital
Not applicable for annual reports on Form 20-F.
10.B. Memorandum and articles of association
The following are summaries of the material provisions of our amended and restated memorandum and articles of association and the Companies Act, insofar as they relate to the material terms of our Ordinary Shares. They do not purport to be complete. Reference is made to our amended and restated memorandum and articles of association, a copy of which is filed as an exhibit to the annual report (and which is referred to in this section as, respectively, the “memorandum” and the “articles”).
Authorized Share Capital
The authorized share capital of the Company is US$50,000 divided into 62,500,000 Shares, 50,000,000 of which shall be Ordinary Shares, US$0.0008 par value per share, and 12,500,000 shares of which shall be Undesignated Shares, US$0.0008 par value per share.
Number and Qualification of Directors
Unless otherwise determined by the Company in general meeting, the number of directors shall be up to five (5) and the majority of whom shall be independent directors under the Designated Stock Exchange Rules (as defined in the Amended Company Charter), the exact number of directors to be determined from time to time by the board of directors.
A director shall not be required to hold any shares in the Company. A director who is not a shareholder of the Company shall nevertheless be entitled to attend and speak at general meetings.
Appointment/Removal of Directors
The board may, by the affirmative vote of a simple majority of the directors present and voting at a board meeting, or the Company may by ordinary resolution, appoint any person to be a director.
A director may be removed from office by the affirmative vote of two-thirds (2/3) of the directors then in office (except with regard to the removal of the chairman, who may be removed from office by the affirmative vote of all directors), or by ordinary resolution (except with regard to the removal of the chairman, who may be removed from office by special resolution), notwithstanding anything in the Amended and Restated Memorandum and Articles of Association or in any agreement between the Company and such director (but without prejudice to any claim for damages under such agreement).
Vacancies on the Board of Directors
A vacancy on the board created by the aforesaid removal of a director may be filled by ordinary resolution or by the affirmative vote of a simple majority of the remaining directors present and voting at a board meeting. The notice of any meeting at which a resolution to remove a director shall be proposed or voted upon must contain a statement of the intention to remove that director and such notice must be served on that director not less than ten (10) calendar days before the meeting. Such director is entitled to attend the meeting and be heard on the motion for his removal.
The board may, by the affirmative vote of a simple majority of the remaining directors present and voting at a board meeting, appoint any person as a director, to fill a casual vacancy on the board or as an addition to the existing board.
Amendment to Governing Documents
Subject to the Cayman Companies Act, the Company may at any time and from time to time by special resolution alter or amend the Amended and Restated Memorandum and Articles of Association in whole or in part.
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Quorum of General Meeting
One or more shareholders holding shares which carry in aggregate (or representing by proxy) not less than one-half (1/2) of all votes attaching to all shares in issue and entitled to vote at such general meeting present, shall be a quorum for all purposes.
Shareholder Meetings
All general meetings other than annual general meetings shall be called extraordinary general meetings.
The Company may (but shall not be obliged to) in each calendar year hold a general meeting as its annual general meeting and shall specify the meeting as such in the notices calling it. The annual general meeting shall be held at such time and place as may be determined by the directors. At these meetings the report of the directors (if any) shall be presented.
The chairman or the directors (acting by a resolution of the board) may call general meetings, and they shall on a shareholders’ requisition forthwith proceed to convene an extraordinary general meeting of the Company.
A shareholders’ requisition is a requisition of shareholders of the Company holding at the date of deposit of the requisition shares which carry in aggregate not less than one-third (1/3) of all votes attaching to all the issued and outstanding shares that as at the date of the deposit carry the right to vote at general meetings of the Company.
The requisition must state the objects of the meeting and must be signed by the requisitionists and deposited at the Registered Office, and may consist of several documents in like form each signed by one or more requisitionists.
If there are no directors as at the date of the deposit of the shareholders’ requisition, or if the directors do not within twenty-one (21) calendar days from the date of the deposit of the requisition duly proceed to convene a general meeting to be held within a further forty-five (45) calendar days, the requisitionists, or any of them representing more than one-half (1/2) of the total voting rights of all of them, may themselves convene a general meeting, but any meeting so convened shall not be held after the expiration of three (3) calendar months after the expiration of the said forty-five (45) calendar days.
A general meeting convened as aforesaid by requisitionists shall be convened in the same manner as nearly as possible as that in which general meetings are to be convened by directors.
Notice of Shareholder Meetings
At least seven (7) calendar days’ notice shall be given for any general meeting. Every notice shall be exclusive of the day on which it is given or deemed to be given and of the day for which it is given and shall specify the place, the day and the hour of the meeting and the general nature of the business and shall be given in the manner hereinafter mentioned or in such other manner if any as may be prescribed by the Company, provided that a general meeting of the Company shall, whether or not the notice specified in the Amended and Restated Memorandum and Articles of Association has been given and whether or not the provisions of the Amended and Restated Memorandum and Articles of Association regarding general meetings have been complied with, be deemed to have been duly convened if it is so agreed:
| (a) | in the case of an annual general meeting, by all the shareholders (or their proxies) entitled to attend and vote thereat; and |
| (b) | in the case of an extraordinary general meeting, by holders of two-thirds (2/3) of the shareholders having a right to attend and vote at the meeting, present at the meeting or, in the case of a corporation or other non-natural person, represented by its duly authorized representative or proxy. |
The accidental omission to give notice of a meeting to or the non-receipt of a notice of a meeting by any Shareholder shall not invalidate the proceedings at any meeting.
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Indemnification, liability insurance of Directors and Officers
To the maximum extent permitted by applicable law, the Company shall indemnify each existing or former secretary, director (including alternate director), and other officer of the Company (including an investment adviser or an administrator or liquidator) and their personal representatives against:
| (a) | all actions, proceedings, costs, charges, expenses, losses, damages or liabilities incurred or sustained by the existing or former secretary or officer in or about the conduct of the Company’s business or affairs or in the execution or discharge of the existing or former secretary’s or officer’s duties, powers, authorities or discretions; and |
| (b) | without limitation to paragraph (a), all costs, expenses, losses or liabilities incurred by the existing or former secretary or officer in defending (whether successfully or otherwise) any civil, criminal, administrative or investigative proceedings (whether threatened, pending or completed) concerning the Company or its affairs in any court or tribunal, whether in the Cayman Islands or elsewhere. |
No such existing or former secretary or officer, however, shall be indemnified in respect of any matter arising out of his own actual fraud, willful default or willful neglect.
Dividends
Subject to any rights and restrictions for the time being attached to any shares, the directors may from time to time declare dividends (including interim dividends) and other distributions on shares in issue and authorize payment of the same out of the funds of the Company lawfully available therefor.
Subject to any rights and restrictions for the time being attached to any shares, the Company by ordinary resolution may declare dividends, but no dividend shall exceed the amount recommended by the directors.
Any dividend payable in cash to the holder of shares may be paid in any manner determined by the directors. The directors may determine that a dividend shall be paid wholly or partly by the distribution of specific assets (which may consist of the shares or securities of any other company) and may settle all questions concerning such distribution.
Subject to any rights and restrictions for the time being attached to any shares, all dividends shall be declared and paid according to the amounts paid up on the shares, but if and for so long as nothing is paid up on any of the shares dividends may be declared and paid according to the par value of the shares. No amount paid on a share in advance of calls shall, while carrying interest, be treated for the purposes of the Amended and Restated Memorandum and Articles of Association as paid on the share.
No dividend shall bear interest against the Company. Any dividend unclaimed after a period of six calendar years from the date of declaration of such dividend may be forfeited by the board of directors and, if so forfeited, shall revert to the Company.
Winding up
If the Company shall be wound up the liquidator may, with the sanction of a special resolution of the Company and any other sanction required by the Cayman Companies Act, divide amongst the shareholders of the Company in species or in kind the whole or any part of the assets of the Company (whether they shall consist of property of the same kind or not) and may for that purpose value any assets and, subject to the provisions of Amended and Restated Memorandum and Articles of Association, determine how the division shall be carried out as between the shareholders of the Company or different classes of shareholders of the Company. The liquidator may, with the like sanction, vest the whole or any part of such assets in trustees upon such trusts for the benefit of the shareholders of the Company as the liquidator, with the like sanction, shall think fit, but so that no shareholder of the Company shall be compelled to accept any asset upon which there is a liability.
If the Company shall be wound up, and the assets available for distribution amongst the shareholders of the Company shall be insufficient to repay the whole of the share capital, such assets shall be distributed so that, as nearly as may be, the losses shall be borne by the shareholders of the Company in proportion to the par value of the shares held by them. If in a winding up the assets available for distribution amongst the shareholders of the Company shall be more than sufficient to repay the whole of the share capital at the commencement of the winding up, the surplus shall be distributed amongst the shareholders of the Company in proportion to the par value of the shares held by them at the commencement of the winding up subject to a deduction from those Shares in respect of which there are monies due, of all monies payable to the Company for unpaid calls or otherwise. This article is without prejudice to the rights of the holders of shares issued upon special terms and conditions.
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Exclusive Jurisdiction and Forum
Without limiting the jurisdiction of the courts of the Cayman Islands to hear, settle and/or determine disputes related to the Company, the courts of the Cayman Islands shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Company to the Company or the Company’s shareholders, (iii) any action asserting a claim arising pursuant to any provision of the Companies Act or these Articles including but not limited to any purchase or acquisition of shares, security or guarantee provided in consideration thereof, or (iv) any action asserting a claim against the Company which if brought in the United States of America would be a claim arising under the internal affairs doctrine (as such concept is recognized under the laws of the United States from time to time).
Unless the Company consents in writing to the selection of an alternative forum, the United States District Court for the Southern District of New York (or, if the United States District Court for the Southern District of New York lacks subject matter jurisdiction over a particular dispute, the state courts in New York County, New York) shall be the exclusive forum within the United States for the resolution of any complaint asserting a cause of action arising out of or relating in any way to the federal securities laws of the United States, regardless of whether such legal suit, action, or proceeding also involves parties other than the Company.
10.C. Material contracts
Other than contracts entered into in the ordinary course of business, We have not entered into any material contracts other than in the ordinary course of business, and other than those described in “Item 4. Information on the Company—A. History and Development of the Company,” “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions” or elsewhere in this Annual Report, the following contract summarized below are the material contracts that the Company has been a party to for the two years preceding the publication of this Annual Report.
Agreements for the Sale and Purchase of Office Premises and Motor Vehicle Parking Spaces
On March 26, 2025, Profit Sail Int’l Express (H.K.) Limited, our operating subsidiary, entered into several preliminary agreements for the sale and purchase with First Commercial Centre Company Limited (“the Seller”) regarding several office premises and motor vehicle parking spaces located in First Group Centre, 23 Wang Chiu Road, Kowloon Bay, Hong Kong. The formal agreements were entered into on April 7, 2025. Key terms as follows:
| Properties | Seller | Payment Schedule | Completion Date | Total Consideration |
Date of Formal Agreement | ||||||
|
Office Space No.1 on 17th Floor
of First Group Centre, Kowloon Bay, |
First Commercial Centre Company Limited | 1. | Deposit on March 26, 2025 of HK$969,500 | On or before November 18, 2025 | HK$ 19,390,000 (Approximately US$2,485,897) | April 7, 2025 | |||||
| 2. | A further deposit on April 7, 2025 of HK$969,500 | ||||||||||
| 3. | A part payment on or before May 12, 2025 of HK$969,500 | ||||||||||
| 4. | A further part payment on or before July 11, 2025 of HK$969,500 | ||||||||||
| 5. | The balance of purchase price on or before November 18, 2025 of HK$15,512,000 | ||||||||||
|
Office Space No.3 on 17th Floor of First Group Centre, 23 Wang Chiu Road, Kowloon Bay, Hong Kong |
First Commercial Centre Company Limited | 1. | Deposit on March 26, 2025 of HK$980,000 | On or before November 18, 2025 | HK$ 19,600,000 (Approximately US$2,512,820) | April 7, 2025 | |||||
| 2. | A further deposit on April 7, 2025 of HK$980,000 | ||||||||||
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| 3. | A part payment on or before May 12, 2025 of HK$980,000 | ||||||||||
| 4. | A further part payment on or before July 11, 2025 of HK$980,000 | ||||||||||
| 5. | The balance of purchase price on or before November 18, 2025 of HK$15,680,000 | ||||||||||
|
Motor Vehicle Parking Space No.F89, B2/F in First Group Centre, 23 Wang Chiu Road, Kowloon Bay, Hong Kong |
First Commercial Centre Company Limited | 1. | Deposit on March 26, 2025 of HK$100,000 | On or before November 18, 2025 | HK$ 2,000,000 (Approximately US$256,410) |
April 7, 2025 | |||||
| 2. | A further deposit on April 7, 2025 of HK$100,000 | ||||||||||
| 3. | A part payment on or before May 12, 2025 of HK$100,000 | ||||||||||
| 4. | A further part payment on or before July 11, 2025 of HK$100,000 | ||||||||||
| 5. | The balance of purchase price on or before November 18, 2025 of HK$1,600,000 | ||||||||||
|
Motor Vehicle Parking Space No.F90, B2/F in First Group Centre, 23 Wang Chiu Road, Kowloon Bay, Hong Kong |
First Commercial Centre Company Limited | 1. | Deposit on March 26, 2025 of HK$100,000 | On or before November 18, 2025 |
HK$ 2,000,000 (Approximately US$256,410) |
April 7, 2025 | |||||
| 2. | A further deposit on April 7, 2025 of HK$100,000 | ||||||||||
| 3. | A part payment on or before May 12, 2025 of HK$100,000 | ||||||||||
| 4. | A further part payment on or before July 11, 2025 of HK$100,000 | ||||||||||
| 5. | The balance of purchase price on or before November 18, 2025 of HK$1,600,000 |
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10.D. Exchange controls
There is currently no restriction or limitation under the laws of Hong Kong on the conversion of Hong Kong dollars into foreign currencies and the transfer of currencies out of Hong Kong. The foreign currency regulations of Mainland China do not currently have any material impact on the transfer of cash between our Company and our Hong Kong Operating Subsidiaries. However, the PRC government may impose controls on the conversion of RMB into foreign currencies and the remittance of currencies out of the PRC. Therefore, there is a possibility that certain PRC laws and regulations, including existing laws and regulations and those enacted or promulgated in the future were to become applicable to our Hong Kong Operating Subsidiaries in the future, and the PRC government may prevent our cash maintained in Hong Kong from leaving or restrict the deployment of the cash into our business or for the payment of dividends in the future. See “Item 3. Key Information-Risks related to our Corporate Structure-We rely on dividends and other distributions on equity paid by the Operating Subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of the Operating Subsidiaries to make payments to us could have a material adverse effect on our ability to conduct our business.” for more information. Although the exchange rate between the Hong Kong dollar to the U.S. dollar has been pegged since 1983, we cannot assure you that this policy will not be changed in the future. See “-D. Risk Factors-Risks related to our business and industry-We may be affected by the currency peg system in Hong Kong.”
There are no limitations on the abilities of the Company to transfer cash to or from our Operating Subsidiaries or to investors. The Company is permitted under the laws of Cayman Islands to provide funding to our Operating Subsidiaries in Hong Kong through loans or capital contributions without restrictions on the amount of the funds. Our Operating Subsidiaries are also permitted under the laws of Hong Kong to provide funding to the Company, through dividend distributions or payments, without restrictions on the amount of the funds. According to the Companies Ordinance (Chapter 622 of the Laws of Hong Kong), a company may only make a distribution out of profits available for distribution. Therefore, if our Operating Subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other distributions to us. See “Item 3. Key Information-Risks related to our Corporate Structure-We rely on dividends and other distributions on equity paid by the Operating Subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of the Operating Subsidiaries to make payments to us could have a material adverse effect on our ability to conduct our business.” for more information.
10.E. Taxation
The following discussion is a summary of U.S. federal income tax considerations generally applicable to the ownership and disposition of our Ordinary Shares by a U.S. Holder (as defined below) that acquires our Ordinary Shares in this offering and holds our Ordinary Shares as “capital assets” (generally, property held for investment) under the U.S. Internal Revenue Code of 1986, as amended, or the Code. This discussion is based upon existing U.S. federal tax law, which is subject to differing interpretations or change, possibly with retroactive effect. No ruling has been sought from the Internal Revenue Service, or the IRS, with respect to any U.S. federal income tax considerations described below, and there can be no assurance that the IRS or a court will not take a contrary position. This discussion, moreover, does not address the U.S. federal estate, gift, and alternative minimum tax considerations, the Medicare tax on certain net investment income, information reporting or backup withholding or any state, local, and non-U.S. tax considerations, relating to the ownership or disposition of our Ordinary Shares. The following summary does not address all aspects of U.S. federal income taxation that may be important to particular investors in light of their individual circumstances or to persons in special tax situations such as:
| ● | banks and other financial institutions; |
| ● | insurance companies; |
| ● | pension plans; |
| ● | cooperatives; |
| ● | regulated investment companies; |
| ● | real estate investment trusts; |
| ● | broker-dealers; |
| ● | traders that elect to use a mark-to-market method of accounting; |
| ● | certain former U.S. citizens or long-term residents; |
| ● | tax-exempt entities (including private foundations); |
| ● | individual retirement accounts or other tax-deferred accounts; |
| ● | persons liable for alternative minimum tax; |
| ● | persons who acquire their Ordinary Shares pursuant to any employee share option or otherwise as compensation; |
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| ● | investors that will hold their Ordinary Shares as part of a straddle, hedge, conversion, constructive sale or other integrated transaction for U.S. federal income tax purposes; |
| ● | investors that have a functional currency other than the U.S. dollar; |
| ● | persons that actually or constructively own 10% or more of our Ordinary Shares (by vote or value); or |
| ● | partnerships or other entities taxable as partnerships for U.S. federal income tax purposes, or persons holding the Ordinary Shares through such entities, |
all of whom may be subject to tax rules that differ significantly from those discussed below.
Each U.S. Holder is urged to consult its tax advisor regarding the application of U.S. federal taxation to its particular circumstances, and the state, local, non-U.S., and other tax considerations of the ownership and disposition of our Ordinary Shares.
General
For purposes of this discussion, a “U.S. Holder” is a beneficial owner of our Ordinary Shares that is, for U.S. federal income tax purposes:
| ● | an individual who is a citizen or resident of the United States; |
| ● | a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created in, or organized under the laws of the United States or any state thereof or the District of Columbia; |
| ● | an estate the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or |
| ● | a trust (i) the administration of which is subject to the primary supervision of a U.S. court and which has one or more U.S. persons who have the authority to control all substantial decisions of the trust, or (ii) that has otherwise validly elected to be treated as a U.S. person under the Code. |
| ● | If a partnership (or other entity treated as a partnership for U.S. federal income tax purposes) is a beneficial owner of our Ordinary Shares, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. Partnerships holding our Ordinary Shares and their partners are urged to consult their tax advisors regarding an investment in our Ordinary Shares. |
An individual is considered a resident of the United States for federal income tax purposes if he or she meets either the “Green Card Test” or the “Substantial Presence Test” described as follows:
Green Card Test: You are a lawful permanent resident of the United States, at any time, if you have been given the privilege, according to the immigration laws of the United States, of residing permanently in the United States as an immigrant. You generally have this status if the U.S. Citizenship and Immigration Services issued you an alien registration card, Form I-551, also known as a “green card.”
Substantial Presence Test: If an alien is present in the United States on at least 31 days of the current calendar year, he or she will (absent an applicable exception) be classified as a resident alien if the sum of the following equals 183 days or more (See §7701(b)(3)(A) of the Internal Revenue Code and related Treasury Regulations):
| 1. | The actual days in the United States in the current year; plus |
| 2. | One-third of his or her days in the United States in the immediately preceding year; plus |
| 3. | One-sixth of his or her days in the United States in the second preceding year. |
Passive Foreign Investment Company Considerations
A non-U.S. corporation, such as our company, will be classified as a PFIC for U.S. federal income tax purposes for any taxable year if either (i) 75% or more of its gross income for such year consists of certain types of “passive” income or (ii) 50% or more of the value of its assets (determined on the basis of a quarterly average) during such year is attributable to assets that produce or are held for the production of passive income, or the asset test. Passive income generally includes, among other things, dividends, interest, rents, royalties, and gains from the disposition of passive assets. Passive assets are those which give rise to passive income, and include assets held for investment, as well as cash, assets readily convertible into cash, and working capital. The company’s goodwill and other unbooked intangibles are taken into account and may be classified as active or passive depending upon the relative amounts of income generated by the company in each category. We will be treated as owning a proportionate share of the assets and earning a proportionate share of the income of any other corporation in which we own, directly or indirectly, 25% or more (by value) of the stock.
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Based upon our current and projected income and assets, the expected proceeds from this offering, and projections as to the market price of our Ordinary Shares immediately following this offering, we do not expect to be a PFIC for the current taxable year or the foreseeable future. However, no assurance can be given in this regard because the determination of whether we are or will become a PFIC is a factual determination made annually that will depend, in part, upon the composition and classification of our income and assets, including the relative amounts of income generated by our strategic investment business as compared to our other businesses, and the value of the assets held by our strategic investment business as compared to our other businesses. Because there are uncertainties in the application of the relevant rules, it is possible that the IRS may challenge our classification of certain income and assets as non-passive, which may result in our being or becoming classified as a PFIC in the current or subsequent years. Furthermore, fluctuations in the market price of our Ordinary Shares may cause us to be a PFIC for the current or future taxable years because the value of our assets for purposes of the asset test, including the value of our goodwill and unbooked intangibles, may be determined by reference to the market price of our Ordinary Shares from time to time (which may be volatile). In estimating the value of our goodwill and other unbooked intangibles, we have taken into account our anticipated market capitalization immediately following the close of this offering. Among other matters, if our market capitalization is less than anticipated or subsequently declines, we may be or become a PFIC for the current or future taxable years. The composition of our income and assets may also be affected by how, and how quickly, we use our liquid assets and the cash raised in this Offering. Under circumstances where our revenues from activities that produce passive income significantly increases relative to our revenues from activities that produce non-passive income, or where we determine not to deploy significant amounts of cash for active purposes, our risk of becoming a PFIC may substantially increase.
If we are a PFIC for any year during which a U.S. Holder holds our Ordinary Shares, we generally will continue to be treated as a PFIC for all succeeding years during which such U.S. Holder holds our Ordinary Shares unless, in such case, we cease to be treated as a PFIC and such U.S. Holder makes a “purging election”.
The discussion below under “— Dividends” and “— Sale or Other Disposition” is written on the basis that we will not be or become classified as a PFIC for U.S. federal income tax purposes. The U.S. federal income tax rules that apply generally if we are treated as a PFIC are discussed below under “— Passive Foreign Investment Company Rules.”
Dividends
Any cash distributions paid on our Ordinary Shares out of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles, will generally be includible in the gross income of a U.S. Holder as dividend income on the day actually or constructively received by the U.S. Holder. To the extent that the amount of the distribution exceeds our current or accumulated earnings and profits (as determined under U.S. federal income tax principles), it will be treated first as a tax-free return of your tax basis in your Ordinary Shares, and to the extent that the amount of the distribution exceeds your tax basis, the excess will be taxed as capital gain. Because we do not intend to determine our earnings and profits on the basis of U.S. federal income tax principles, any distribution we pay will generally be treated as a “dividend” for U.S. federal income tax purposes. Therefore, a U.S. Holder should expect that a distribution will be treated as a dividend even if that distribution would otherwise be treated as a non-taxable return of capital or as capital gain under the rules described above. Dividends received on our Ordinary Shares will not be eligible for the dividends received deduction allowed to corporations in respect of dividends-received from U.S. corporations.
Individuals and other non-corporate U.S. Holders may be subject to tax on any such dividends at the lower capital gain tax rate applicable to “qualified dividend income,” provided that certain conditions are satisfied, including that (i) our Ordinary Shares on which the dividends are paid are readily tradable on an established securities market in the United States, or we are eligible for the benefits of an approved qualifying income tax treaty with the United States that includes an exchange of information program, (ii) we are neither a PFIC nor treated as such with respect to a U.S. Holder for the taxable year in which the dividend is paid and the preceding taxable year, and (iii) certain holding period requirements are met. Because there is no income tax treaty between the United States and the Cayman Islands, clause (i) above can be satisfied only if the Ordinary Shares are readily tradable on an established securities market in the United States. We intend to list the Ordinary Shares on Nasdaq. Provided that this listing is approved, we believe that the Ordinary Shares should generally be considered to be readily tradable on an established securities market in the United States. There can be no assurance that the Ordinary Shares will continue to be considered readily tradable on an established securities market in later years. U.S. Holders are urged to consult their tax advisors regarding the availability of the lower rate for dividends paid with respect to the Ordinary Shares, including the effects of any change in law after the date of this prospectus.
For U.S. foreign tax credit purposes, dividends paid on our Ordinary Shares will generally be treated as income from foreign sources and will generally constitute passive category income. The rules governing the foreign tax credit are complex and U.S. Holders are urged to consult their tax advisors regarding the availability of the foreign tax credit under their particular circumstances.
Sale or Other Disposition
A U.S. Holder will generally recognize gain or loss upon the sale or other disposition of Ordinary Shares in an amount equal to the difference between the amount realized upon the disposition and the holder’s adjusted tax basis in such Ordinary Shares. Such gain or loss will generally be capital gain or loss. Any such capital gain or loss will be long term if the Ordinary Shares have been held for more than one year. Non-corporate U.S. Holders (including individuals) generally will be subject to United States federal income tax on long-term capital gain at preferential rates. The deductibility of a capital loss may be subject to limitations. Any such gain or loss that the U.S. Holder recognizes will generally be treated as U.S. source income or loss for foreign tax credit limitation purposes, which could limit the availability of foreign tax credits. Each U.S. Holder is advised to consult its tax advisor regarding the tax consequences if a foreign tax is imposed on a disposition of our Ordinary Shares, including the applicability of any tax treaty and the availability of the foreign tax credit under its particular circumstances.
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Passive Foreign Investment Company Rules
If we are classified as a PFIC for any taxable year during which a U.S. Holder holds our Ordinary Shares, and unless the U.S. Holder makes a mark-to-market election (as described below), the U.S. Holder will generally be subject to special tax rules on (i) any excess distribution that we make to the U.S. Holder (which generally means any distribution paid during a taxable year to a U.S. Holder that is greater than 125 percent of the average annual distributions paid in the three preceding taxable years or, if shorter, the U.S. Holder’s holding period for the Ordinary Shares), and (ii) any gain realized on the sale or other disposition, including, under certain circumstances, a pledge, Ordinary Shares. Under the PFIC rules:
| ● | the excess distribution or gain will be allocated ratably over the U.S. Holder’s holding period for the Ordinary Shares; |
| ● | the amount allocated to the current taxable year and any taxable years in the U.S. Holder’s holding period prior to the first taxable year in which we are classified as a PFIC (each, a “pre-PFIC year”), will be taxable as ordinary income; and |
| ● | the amount allocated to each prior taxable year, other than a pre-PFIC year, will be subject to tax at the highest tax rate in effect for individuals or corporations, as appropriate, for that year, increased by an additional tax equal to the interest on the resulting tax deemed deferred with respect to each such taxable year. |
As an alternative to the foregoing rules, a U.S. Holder of “marketable stock” (as defined below) in a PFIC may make a mark-to-market election under Section 1296 of the U.S. Internal Revenue Code with respect to such stock to elect out of the tax treatment discussed above. If a U.S. Holder makes this election with respect to our Ordinary Shares for first taxable year which they hold (or are deemed to hold) Ordinary Shares and for which we are determined to be a PFIC, the holder will generally (i) include as ordinary income for each taxable year that we are a PFIC the excess, if any, of the fair market value of Ordinary Shares held at the end of the taxable year over the adjusted tax basis of such Ordinary Shares and (ii) deduct as an ordinary loss the excess, if any, of the adjusted tax basis of the Ordinary Shares over the fair market value of such Ordinary Shares held at the end of the taxable year, but such deduction will only be allowed to the extent of the net amount of gains previously included in income as a result of the mark-to-market election. The U.S. Holder’s adjusted tax basis in the Ordinary Shares would be adjusted to reflect any income or loss resulting from the mark-to-market election. If a U.S. Holder makes a mark-to-market election in respect of our Ordinary Shares and we cease to be classified as a PFIC, the holder will not be required to take into account the gain or loss described above during any period that we are not classified as a PFIC. If a U.S. Holder makes a mark-to-market election, any gain such U.S. Holder recognizes upon the sale or other disposition of our Ordinary Shares in a year when we are a PFIC will be treated as ordinary income and any loss will be treated as ordinary loss, but such loss will only be treated as ordinary loss to the extent of the net amount previously included in income as a result of the mark-to-market election.
The mark-to-market election is available only for “marketable stock,” which is stock that is traded in other than de minimis quantities on at least 15 days during each calendar quarter (“regularly traded”), on a qualified exchange or other market, as defined in applicable United States Treasury regulations. Our Ordinary Shares will be treated as marketable stock upon their listing on Nasdaq. We anticipate that our Ordinary Shares should qualify as being regularly traded, but no assurances may be given in this regard.
Because a mark-to-market election cannot technically be made for any lower-tier PFICs that we may own, a U.S. Holder may continue to be subject to the PFIC rules with respect to such U.S. Holder’s indirect interest in any investments held by us that are treated as an equity interest in a PFIC for U.S. federal income tax purposes.
Alternatively, a U.S. Holder of stock in a PFIC may make a “qualified electing fund” election under Section 1295(b) of the U.S. Internal Revenue Code with respect to such PFIC to elect out of the tax treatment discussed above. A U.S. Holder who makes a valid qualified electing fund election with respect to a PFIC will generally include in gross income for a taxable year such holder’s pro rata share of the corporation’s earnings and profits for the taxable year. The qualified electing fund election, however, is available only if such PFIC provides such U.S. Holder with certain information regarding its earnings and profits as required under applicable U.S. Treasury regulations. We do not intend to provide information necessary for U.S. Holders to make qualified electing fund elections which, if available, would result in tax treatment different from (and generally less adverse than) the general tax treatment for PFICs described above. Therefore, prospective investors should assume that a qualified electing fund election will not be available.
If you do not make a timely “mark-to-market” election (as described above), and if we were a PFIC at any time during the period you hold our Ordinary Shares, then such Ordinary Shares will continue to be treated as stock of a PFIC with respect to you even if we cease to be a PFIC in a future year, unless you make a “purging election” for the year we cease to be a PFIC. A “purging election” creates a deemed sale of such Ordinary Shares at their fair market value on the last day of the last year in which we are treated as a PFIC. The gain recognized by the purging election will be subject to the special tax and interest charge rules treating the gain as an excess distribution, as described above. As a result of the purging election, you will have a new basis (equal to the fair market value of the Ordinary Shares on the last day of the last year in which we are treated as a PFIC) and holding period (which new holding period will begin the day after such last day) in your Ordinary Shares for tax purposes.
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Internal Revenue Code Section 1014(a) provides for a step-up in basis to the fair market value for our Ordinary Shares when inherited from a decedent that was previously a holder of our Ordinary Shares. However, if we are determined to be a PFIC and a decedent that was a U.S. Holder did not make either a timely qualified electing fund election for our first taxable year as a PFIC in which the U.S. Holder held (or was deemed to hold) our Ordinary Shares, or a mark-to-market election and ownership of those Ordinary Shares are inherited, a special provision in Internal Revenue Code Section 1291(e) provides that the new U.S. Holder’s basis should be reduced by an amount equal to the Section 1014 basis minus the decedent’s adjusted basis just before death. As such if we are determined to be a PFIC at any time prior to a decedent’s passing, the PFIC rules will cause any new U.S. Holder that inherits our Ordinary Shares from a U.S. Holder to not get a step-up in basis under Section 1014 and instead will receive a carryover basis in those Ordinary Shares.
If a U.S. Holder owns our Ordinary Shares during any taxable year that we are a PFIC (regardless of whether they make a mark-to-market election as described above), the holder must generally file an annual IRS Form 8621. The failure to file IRS Form 8621 could result in the imposition of penalties and the extension of the statute of limitations with respect to U.S. federal income tax. You should consult your tax advisor regarding the application of the PFIC rules to your investment in our Ordinary Shares and the elections discussed above.
Information Reporting and Backup Withholding
Dividend payments with respect to our Ordinary Shares and proceeds from the sale, exchange or redemption of our Ordinary Shares may be subject to information reporting to the Internal Revenue Service and possible United States backup withholding at a current flat rate of 24%. Backup withholding will not apply, however, to a U.S. Holder who furnishes a correct taxpayer identification number and makes any other required certification on Internal Revenue Service Form W-9 or who is otherwise exempt from backup withholding. U.S. Holders who are required to establish their exempt status generally must provide such certification on Internal Revenue Service Form W-9. U.S. Holders are urged to consult their tax advisors regarding the application of the U.S. information reporting and backup withholding rules.
Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited against your U.S. federal income tax liability, and you may obtain a refund of any excess amounts withheld under the backup withholding rules by filing the appropriate claim for refund with the Internal Revenue Service and furnishing any required information. We do not intend to withhold taxes for individual shareholders. Transactions effected through certain brokers or other intermediaries, however, may be subject to withholding taxes (including backup withholding), and such brokers or intermediaries may be required by law to withhold such taxes.
Certain U.S. Holders are required to report information relating to our Ordinary Shares, subject to certain exceptions (including an exception for Ordinary Shares held in accounts maintained by certain financial institutions), by attaching a complete Internal Revenue Service Form 8938, Statement of Specified Foreign Financial Assets, with their tax return for each year in which they hold Ordinary Shares. In addition, certain U.S. Holders must file a U.S. Internal Revenue Service Form 926 to report the contribution of property (including cash) to a foreign corporation. Failure to report such information could result in substantial penalties.
The foregoing description of reporting requirements is not exhaustive, and you should consult your own tax advisor regarding your obligation to file a Form 8938, Form 926 or other applicable forms as a result of an investment in our Ordinary Shares.
Hong Kong Taxation
The taxation of income and capital gains of holders of Ordinary Shares is subject to the laws and practices of Hong Kong and of jurisdictions in which holders of Ordinary Shares are resident or otherwise subject to tax. The following summary of certain relevant taxation provisions under Hong Kong law is based on current law and practice, is subject to changes therein and does not constitute legal or tax advice. The discussion does not deal with all possible tax consequences relating to an investment in the Ordinary Shares. Accordingly, each prospective investor (particularly those subject to special tax rules, such as banks, dealers, insurance companies, tax-exempt entities and holders of 10% or more of our voting capital stock) should consult its own tax advisor regarding the tax consequences of an investment in the Ordinary Shares. The discussion is based upon laws and relevant interpretations thereof in effect as of the date of this prospectus, all of which are subject to change. There is no reciprocal tax treaty in effect between Hong Kong and the United States.
95
Tax on Dividends
Under the current practices of the Hong Kong Inland Revenue Department, no tax is payable in Hong Kong in respect of dividends paid by us as a company incorporated in British Virgin Islands.
Profits Tax
No tax is imposed in Hong Kong in respect of capital gains from the sale of property (such as the Ordinary Shares). Trading gains from the sale of property by persons carrying on a trade, profession or business in Hong Kong where such gains are derived from or arise in Hong Kong from such trade, profession or business will be chargeable to Hong Kong profits tax. According to the Inland Revenue (Amendment) (No. 3) Ordinance 2018, the two-tiered profits tax rates regime is introduced with effect from the year of assessment 2018/19. The profits tax rate for the first HKD2 million of assessable profits will be lowered to 8.25% for corporations and 7.5% for unincorporated businesses. Assessable profits above HKD2 million will continue to be subject to the rate of 16.5% for corporations and standard rate of 15% for unincorporated businesses. Liability for Hong Kong profits tax may thus arise in respect of trading gains from sales of Ordinary Shares realized by persons carrying on a business or trading or dealing in securities in Hong Kong.
Stamp Duty
Hong Kong stamp duty, currently charged at the rate of 0.13% of the amount of the consideration or of its value on every sold note and every bought note for sale or purchase of any Hong Kong stock (i.e., a total of HKD 2.6 (US$0.3) per HKD 1,000.0 (US$128.2)). In addition, a fixed duty of HKD 5.0 (US$0.6) is currently payable on any instrument of transfer of any Hong Kong stock. If one of the parties to the sale is a non-Hong Kong resident and does not pay the required stamp duty, the duty not paid will be assessed on the instrument of transfer (if any) and the transferee will be liable for payment of such duty. No Hong Kong stamp duty is payable upon the transfer of Ordinary Shares outside Hong Kong.
Estate Duty
The Revenue (Abolition of Estate Duty) Ordinance 2005 came into effect on February 11, 2006 in Hong Kong. No Hong Kong estate duty is payable and no estate duty clearance papers are needed for an application for a grant of representation in respect of holders of Ordinary Shares whose death occurs on or after February 11, 2006.
Cayman Islands Tax Considerations
The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation, and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to our Company levied by the Government of the Cayman Islands save for certain stamp duties which may be applicable, from time to time, on certain instruments.
No stamp duty is payable in the Cayman Islands on transfer of shares of Cayman Islands companies except for those which hold interests in land in the Cayman Islands.
The Cayman Islands enacted the International Tax Co-operation (Economic Substance) Act (as amended from time to time), or the Substance Act, together with the Guidance Notes published by the Cayman Islands Tax Information Authority from time to time. Under the Substance Act, if a company is considered to be a “relevant entity” and is conducting one or more of the nine “relevant activities” then that company will be required to comply with the economic substance requirements in relation to the relevant activity from 1 July 2019. All companies whether a relevant entity or not is required to file an annual report in the Cayman Islands with the Companies Registry confirming whether or not it is carrying on any relevant activities and if it is, it must satisfy an economic substance test.
10.F. Dividends and paying agents
Not applicable for annual reports on Form 20-F.
10.G. Statement by experts
Not applicable for annual reports on Form 20-F.
96
10.H. Documents on display
We are subject to certain of the informational filing requirements of the Exchange Act. Since we are a “foreign private issuer,” we are exempt from the rules and regulations under the Exchange Act prescribing the furnishing and content of proxy statements, and our officers, directors and principal shareholders are exempt from the reporting and “short-swing” profit recovery provisions contained in Section 16 of the Exchange Act, with respect to their purchase and sale of our shares. In addition, we are not required to file reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act. However, we are required to file with the SEC an Annual Report on Form 20-F containing financial statements audited by an independent accounting firm. We may, but are not required, to furnish to the SEC, on Form 6-K, unaudited financial information after each of our first three fiscal quarters. The SEC also maintains a website at http://www.sec.gov that contains reports and other information that we file with or furnish electronically with the SEC.
10.I. Subsidiary Information
Not applicable.
Item 11. Quantitative and Qualitative Disclosures About Market Risk
Foreign currency risk
The functional currency of the Group is HK$ and the transactions are mostly denominated in HK$ and United States dollar (“US$”). For transactions or balances denominated in US$ which are reasonably stable with the Hong Kong dollars under the Linked Exchange Rate System, the directors are of the opinion that the Company does not have significant foreign exchange risk, the exposure to fluctuation in exchange rates will only arise from the translations to the presentation currency of the Group.
Concentration of credit risk
Credit risk refers to the risk of financial loss to us arising from default by customers or counterparties of financial instruments on the contract obligations. Financial instruments that potentially expose us to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivables. We place the cash and cash equivalents with financial institutions with high credit ratings and quality. We conduct credit evaluations of customers, and generally do not require collateral or other security from our customers. We establish an allowance for expected credit loss primarily based upon various factors surrounding the credit risk of specific customers and general economic conditions. As at 31 December 2024, the Group has concentration of credit risk as 45.4% (2023: 54.2%) of its accounts receivables were due from one (2023: one) largest customer.
Item 12. Description of Securities Other than Equity Securities
12.A. Debt Securities
Not applicable.
12.B. Warrants and Rights
Following the consummation of the Business Combination, we have assumed the Unit Purchase Option that AIB sold to Maxim Group LLC, for $100, which consists of an option to purchase up to a total of 431,250 Option Units (before Reverse Stock Split) exercisable, in whole or in part, at $11.00 (before Reverse Stock Split) or $88.00 (after Reverse Stock Split) per unit, commencing on the consummation of the Business Combination. The Unit Purchase Option may be exercised for cash or on a cashless basis, at the holder’s option, and expires five years from January 18, 2022. Upon exercise, each Option Unit contains one Ordinary Share and one right. Each right, upon automatic conversion at issuance, entitles the holder thereof to receive one-tenth (1/10) of an Ordinary Share upon the consummation of the Business Combination.
On November 12, 2025, the Company completed a private placement pursuant to a securities purchase agreement and issued an aggregate of 5,332,216 units at a purchase price of US$1.80 per unit. Each unit consisted of: (i) one Ordinary Share, par value US$0.0008 per share; and (ii) one Warrant to purchase up to two Ordinary Shares. The Warrants entitle holders to purchase up to an aggregate of 10,664,432 additional Ordinary Shares at an exercise price of US$2.16 per Ordinary Share, subject to customary anti-dilution adjustments, and expire five years from issuance. All Warrants issued during the private placement have been fully exercised in their entirely prior to April 30, 2026, the reporting date of this Form 20-F on a cashless basis. Accordingly, no Warrants from this issuance were outstanding, unexercised or otherwise unsettled as of the reporting date. Full exercise of these Warrants on a cashless basis resulted in the issuance of additional 6,753,470 ordinary shares of the Company with corresponding adjustments from warrant-related liabilities to share capital and additional paid-in capital recorded in the consolidated balance sheet and consolidated statement of changes in shareholders’ equity as at the reporting date.
12.C. Other Securities
Not applicable.
12.D. American Depositary Shares
Not applicable.
97
PART II
Item 13. Defaults, Dividend Arrearages and Delinquencies
We do not have any material defaults in the payment of principal, interest, or any installments under a sinking or purchase fund.
Item 14. Material Modifications to the Rights of Securities Holders and Use of Proceeds
None.
Item 15. Controls and Procedures
Disclosure Controls and Procedures
Our management, with the participation of our chief executive officer and chief financial officer, has performed an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report, as required by Rule 13a-15(b) under the Exchange Act.
Based upon that evaluation, our management, with the participation of our chief executive officer and chief financial officer, has concluded that, as of December 31, 2024 and 2025, our disclosure controls and procedures were ineffective. Such conclusion is due to the presence of material weakness in internal control over financial reporting as described below.
Management’s Annual Report on Internal Control over Financial Reporting and Attestation Report of the Registered Public Accounting Firm
This annual report does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of the company’s registered public accounting firm due to a transition period established by rules of the Securities and Exchange Commission for newly public companies.
Internal Control over Financial Reporting (ICFR)
Prior to the Business Combination, we were a private company with limited accounting personnel and other resources with which to address out internal control over financial reporting. Our independent registered public accounting firm has not conducted an audit of our internal control over financial reporting.
In the preparation of our consolidated financial statements as included in this annual report, we identified one material weakness in our internal control over financial reporting as of December 31, 2025. As defined in the standards established by the PCAOB, a “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis.
The material weakness identified relates to insufficient accounting personnel with appropriate experience and knowledge to address complex accounting matters in accordance with U.S. GAAP and our lack of internal audit function to establish formal risk assessment process and internal control framework. The material weakness, if not remediated timely, may lead to material misstatements in its consolidated financial statements in the future. Prior to preparing for the Business Combination, neither we nor our independent registered public accounting firm had undertaken a comprehensive assessment of our internal control for purposes of identifying and reporting the material weakness and other control deficiencies in our internal control over financial reporting. Had we performed a formal assessment of internal control over financial reporting or had our independent registered public accounting firm performed an audit of our internal control over financial reporting, additional deficiencies may have been identified.
To mitigate our identified material weaknesses, we have engaged and recruited qualified financial and accounting advisory team and relevant staff with working experience in U.S. GAAP and SEC reporting requirements to strengthen our financial reporting function taken measures to improve our internal control over financial reporting. We plan to take measures including (i) establishing a comprehensive policy and procedure manual; (ii) implementing more regular and continuous U.S. GAAP accounting and financial reporting training programs for its accounting and financial reporting personnel, and (iii) enhancing oversight over and clarifying reporting requirements for, non-recurring and complex transactions to ensure consolidated financial statements and related disclosures are accurate, complete and in compliance with U.S. GAAP and SEC reporting requirements.
The process of designing and implementing an effective financial reporting system is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a financial reporting system that is adequate to satisfy our reporting obligations. See “Item 3. Key Information — 3.D. Risk Factors — Risks Related to our Business and Industry— We have identified a material weakness in our internal control over financial reporting. If we fail to implement and maintain an effective system of internal control to remediate our material weakness over financial reporting, we may be unable to accurately report our results of operations, meet our reporting obligations, or prevent fraud.”
ICFR has inherent limitations, including the possibility of human error, the circumvention or override of controlsm and the impact of changes in circumstances. Therefore, ICFR can provide only reasonable, not absolute, assurance regarding financial reporting reliability.
98
Attestation Report of the Registered Public Accounting Firm
This Annual Report does not include an attestation report on management’s ICFR assessment by our independent registered public accounting firm. As the Company is a Non-Accelerated Filer and a Foreign Private Issuer with market cap less than US$75 million, our independent registered public accounting firm is not required to attest to the effectiveness of our internal controls over financial reporting pursuant to Section 404 of the JOBS Act.
Changes in Internal Control over Financial Reporting
Other than as described above, there were no changes in our internal controls over financial reporting that occurred during the period covered by this Report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 16. Reserved
Not applicable.
Item 16A. Audit Committee Financial Expert
The Company’s audit committee consists of Kim Fung Keith Ching, Ho Pan Darren Kwok and Sheung Yuk Clara Chiu,. Kim Fung Keith Ching is the chairperson of the Company’s audit committee. Each of Kim Fung Keith Ching, Ho Pan Darren Kwok and Sheung Yuk Clara Chiu satisfies the independence requirements under Rule 5605(c)(2) of the Nasdaq Stock Market Rules and meets the criteria for independence set forth in Rule 10A-3 of the Exchange Act, as well as the criteria of an audit committee financial expert as set forth under the applicable rules of the SEC.
Item 16B. Code of Ethics
Our board of directors adopted a Code of Business Conduct and Ethics applicable to our directors, officers and employees. The code applies to all directors, officers, employees and extended workforce, including the Chairperson and Chief Executive Officer and Chief Financial Officer. A copy of our Code of Business Conduct and Ethics is available on our website at https://ir.psi-groups.com/corporate-governance.
Item 16C. Principal Accountant Fees and Services
WWC, P.C. acted as the independent auditor of the Company for the years ended December 31, 2023, 2024, 2025. Audit services provided by WWC, P.C. for fiscal years ended December 31, 2023, 2024, and 2025 included the examination of the consolidated financial statements of the Company; and services related to periodic filings made with the SEC.
Fees Paid to Independent Registered Public Accounting Firm
Auditor Fees
The following table sets forth the aggregate fees by categories specified below in connection with certain professional services rendered by WWC, P.C., our independent registered public accounting firm, for the periods indicated.
| Year Ended December 31, | ||||||||||||
| Services | 2023 | 2024 | 2025 | |||||||||
| US$ | US$ | US$ | ||||||||||
| Audit Fees | 248,000 | 320,000 | 340,000 | |||||||||
| Total | 248,000 | 320,000 | 340,000 | |||||||||
Audit Fees — Include the aggregate fees for professional services rendered in connection with the annual audit of the Company’s financial statements and the review of the Company’s interim financial statements, as well as fees for services that generally only the independent registered public accounting firm can be reasonably expected to provide, including comfort letters, consents, and review of registration statements filed with the SEC.
The policy of our audit committee is to pre-approve all audit and non-audit services provided by our independent registered public accounting firm, including audit services and audit-related services as described above, other than those for de minimus services which are approved by the audit committee prior to the completion of the audit.
99
Item 16D. Exemptions from the Listing Standards for Audit Committees
Not applicable.
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
Not applicable.
Item 16F. Change in Registrant’s Certifying Accountant
Not applicable.
Item 16G. Corporate Governance
We are a “foreign private issuer,” as defined in the Exchange Act. Nasdaq market rules permit a foreign private issuer like us to follow the corporate governance practices of our home country, the Cayman Islands, in lieu of the corporate governance standards of Nasdaq applicable to U.S. domestic companies. Certain corporate governance practices in the Cayman Islands may differ significantly from Nasdaq corporate governance listing standards applicable to domestic U.S. companies.
For example, among other things, we are not required to: (1) have a majority-independent board of directors; (2) have a compensation committee consisting of independent directors; (3) have a nominating committee consisting of independent directors; (4) have regularly scheduled executive sessions with only independent directors each year; or (5) obtain shareholder approval prior to the issuance of additional circumstances in accordance with Rule 5635 of the Nasdaq Stock Market Rules.
Currently, we plan to rely on certain exemptions offered to foreign private issuers under Nasdaq Stock Market Rules, including not having the compensation committee and nominating committee consists of only independent directors, and the requirement to receive shareholder approval prior to the issuance of additional shares in certain circumstances. We may also follow the home country practice for certain other corporate governance practices in the future, which may differ from the requirements of the Nasdaq corporate governance listing standards.
As a foreign private issuer, we are also subject to reduced disclosure requirements and are exempt from certain provisions of the U.S. securities rules and regulations applicable to U.S. domestic issuers such as the rules regulating solicitation of proxies and certain insider reporting and short-swing profit rules. We may utilize these exemptions for as long as we continue to qualify as a foreign private issuer.
Item 16H. Mine Safety Disclosure
Not applicable.
Item 16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
100
PART III
Item 17. Financial Statements
See “Item 18. Financial Statements.”
Item 18. Financial Statements
Our consolidated financial statements are included at the end of this annual report, beginning with page F-1.
Item 19. Exhibits
101
| * | Filed herewith. |
| # | Schedules and annexes have been omitted |
102
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
| PS International Group Ltd. | |||
| By: | /s/ Yee Kit Chan | ||
| Name: | Yee Kit Chan | ||
| Title: | Chairman of the Board and Director | ||
Date: April 30, 2026
103
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
| To: | The Board of Directors and Shareholders of |
| PS International Group Ltd. |
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of PS International Group Ltd. and its subsidiaries (collectively the “Company”) as of December 31, 2024 and 2025, and the related consolidated statements of operations and comprehensive income (loss), changes in shareholders’ equity (deficit), and cash flows for each of the years in the three-year period ended December 31, 2025, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2025, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31 , 2025, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Certified Public Accountants
PCAOB
ID No.
April 30, 2026
We have served as the Company’s auditor since November 17, 2021.
F-1
PS
INTERNATIONAL GROUP LTD.
AUDITED CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2024 AND 2025
(IN U.S. DOLLARS)
| December 31, 2024 | December 31, 2025 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Accounts receivable, net | ||||||||
| Accounts receivable – related parties | ||||||||
| Contract assets, net | ||||||||
| Loan receivable, net | ||||||||
| Marketable equity securities | ||||||||
| Amount due from a related party, net | ||||||||
| Prepayments and other current assets, net | ||||||||
| Total current assets | ||||||||
| Non-current assets | ||||||||
| Property, plant and equipment, net | ||||||||
| Right-of-use assets | ||||||||
| Total non-current assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
F-2
PS
INTERNATIONAL GROUP LTD.
AUDITED CONSOLIDATED BALANCE SHEETS (cont.)
AS OF DECEMBER 31, 2024 AND 2025
(IN U.S. DOLLARS)
| December 31, 2024 | December 31, 2025 | |||||||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accounts payable – related parties | ||||||||
| Contract liabilities | ||||||||
| Other payables and accrued liabilities | ||||||||
| Provisions for compensation and penalty | ||||||||
| Tax payables | ||||||||
| Lease liabilities – current | ||||||||
| Borrowings | ||||||||
| Amounts due to related parties | ||||||||
| Warrant liabilities | ||||||||
| Dividend payables | ||||||||
| Total current liabilities | ||||||||
| Non-current liability | ||||||||
| Lease liabilities – non-current | ||||||||
| Total non-current liability | ||||||||
| TOTAL LIABILITIES | ||||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| EQUITY (DEFICIT) | ||||||||
| Ordinary shares, par value $ | ||||||||
| Additional paid-in capital* | ||||||||
| Retained earnings (Accumulated deficit) | ( | ) | ||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Total shareholders’ equity (deficit) | ( | ) | ||||||
| Non-controlling interest | ||||||||
| TOTAL EQUITY (DEFICIT) | ( | ) | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | $ | ||||||
| * |
The accompanying notes are an integral part of these audited consolidated financial statements.
F-3
PS
INTERNATIONAL GROUP LTD.
AUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
FOR THE YEARS ENDED DECEMBER 31, 2023, 2024 AND 2025
(IN U.S. DOLLARS)
| For the years ended December 31, | ||||||||||||
| 2023 | 2024 | 2025 | ||||||||||
| REVENUES | $ | $ | $ | |||||||||
| REVENUES – RELATED PARTIES | ||||||||||||
| TOTAL REVENUE | ||||||||||||
| COST OF REVENUE | ||||||||||||
| COST OF REVENUE – RELATED PARTIES | ||||||||||||
| TOTAL COST OF REVENUE | ||||||||||||
| GROSS PROFIT | ||||||||||||
| (Provision for) Reversal of compensation and penalty | ( | ) | ||||||||||
| General and administrative expenses | ( | ) | ( | ) | ( | ) | ||||||
| Total operating expenses | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| INCOME (LOSS) FROM OPERATIONS | $ | $ | ( | ) | $ | ( | ) | |||||
| OTHER INCOME (EXPENSE) | ||||||||||||
| Interest income | ||||||||||||
| Interest expense | ( | ) | ( | ) | ||||||||
| Other income | ||||||||||||
| Loss on Private Placement | ( | ) | ||||||||||
| Issuance costs related to Private Placement | ( | ) | ||||||||||
| Change in fair value of warrant liabilities | ( | ) | ||||||||||
| Unrealized gains on marketable equity securities | ||||||||||||
| Other (loss) gain | ( | ) | ( | ) | ||||||||
| Total other income (expense), net | ( | ) | ||||||||||
| INCOME (LOSS) BEFORE INCOME TAX | $ | $ | ( | ) | $ | ( | ) | |||||
| INCOME TAX (EXPENSE) BENEFIT | ( | ) | ( | ) | ||||||||
| NET INCOME (LOSS) | $ | $ | ( | ) | $ | ( | ) | |||||
| LESS: NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTEREST | ||||||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO ORDINARY SHAREHOLERS OF THE COMPANY | $ | $ | ( | ) | $ | ( | ) | |||||
F-4
PS
INTERNATIONAL GROUP LTD.
AUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (cont.)
FOR THE YEARS ENDED DECEMBER 31, 2023, 2024 AND 2025
(IN U.S. DOLLARS)
| For the years ended December 31, | ||||||||||||
| 2023 | 2024 | 2025 | ||||||||||
| TOTAL COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO ORDINARY SHAREHOLERS OF THE COMPANY | $ | $ | ( | ) | $ | ( | ) | |||||
| WEIGHTED AVERAGE ORDINARY SHARES OUTSTANDING*: | ||||||||||||
| Basic and diluted | ||||||||||||
| NET INCOME (LOSS) PER ORDINARY SHARE ATTRIBUTABLE TO ORDINARY SHAREHOLERS OF THE COMPANY: | ||||||||||||
| Basic and diluted | $ | $ | ( | ) | $ | ( | ) | |||||
| * |
The accompanying notes are an integral part of these audited consolidated financial statements.
F-5
PS
INTERNATIONAL GROUP LTD.
AUDITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 2023, 2024 AND 2025
(IN U.S. DOLLARS)
| Number of Shares* | Ordinary Shares* | Additional Paid-in Capital* | Retained Earnings (Accumulated Deficit) | Accumulated Other Comprehensive Loss | Total Shareholders’ Equity (Deficit) | Non- Controlling Interest | Total Equity (Deficit) | |||||||||||||||||||||||||
| Balance as of December 31, 2022 | ( | ) | ||||||||||||||||||||||||||||||
| Net income | — | |||||||||||||||||||||||||||||||
| Dividends | — | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance as of December 31, 2023 | ( | ) | ||||||||||||||||||||||||||||||
| Balance as of December 31, 2023 | ( | ) | ||||||||||||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Issuance of shares upon recapitalization | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Issuance of shares for services provided | ||||||||||||||||||||||||||||||||
| Share issuance cost | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Share-based compensation | — | |||||||||||||||||||||||||||||||
| Exercise of stock options | ||||||||||||||||||||||||||||||||
| Forfeiture of stock options | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance as of December 31, 2024 | ( | ) | ||||||||||||||||||||||||||||||
| Balance as of December 31, 2024 | ( | ) | ||||||||||||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Issuance of shares upon Private Placement | ||||||||||||||||||||||||||||||||
| Share-based compensation | — | |||||||||||||||||||||||||||||||
| Issuance of fraction shares upon Reverse Stock Split | ||||||||||||||||||||||||||||||||
| Exercise of stock options | ||||||||||||||||||||||||||||||||
| Balance as of December 31, 2025 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||
| * |
The accompanying notes are an integral part of these audited consolidated financial statements.
F-6
PS
INTERNATIONAL GROUP LTD.
AUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2023, 2024 AND 2025
(IN U.S. DOLLARS)
| For the years ended December 31, | ||||||||||||
| 2023 | 2024 | 2025 | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||
| Net income (loss) | $ | $ | ( |
) | $ | ( |
) | |||||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||||||
| Depreciation of property, plant and equipment | ||||||||||||
| Depreciation of right-of-use assets | ||||||||||||
| Unrealized gains on marketable equity securities | ( |
) | ||||||||||
| Loss on Private Placement | ||||||||||||
| Issuance costs related to Private Placement | ||||||||||||
| Change in fair value of warrant liabilities | ||||||||||||
| Provisions for (Reversal of) compensation and penalty | ( |
) | ||||||||||
| Share-based compensation expenses | ||||||||||||
| Provision for (Reversal of) expected credit losses, net | ( |
) | ( |
) | ||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Decrease (Increase) in: | ||||||||||||
| Accounts receivable | ( |
) | ||||||||||
| Accounts receivable – related parties | ( |
) | ( |
) | ||||||||
| Contract assets | ( |
) | ( |
) | ||||||||
| Amounts due from related parties | ( |
) | ||||||||||
| Other current assets | ( |
) | ||||||||||
| Tax recoverable | ||||||||||||
| (Decrease) Increase in: | ||||||||||||
| Accounts payable | ( |
) | ( |
) | ||||||||
| Accounts payable – related parties | ( |
) | ( |
) | ( |
) | ||||||
| Amounts due to related parties | ( |
) | ( |
) | ( |
) | ||||||
| Tax payables | ( |
) | ( |
) | ||||||||
| Provision for compensation | ( |
) | ||||||||||
| Other payables and accrued liabilities | ( |
) | ||||||||||
| Contract liabilities | ( |
) | ( |
) | ( |
) | ||||||
| Lease liabilities | ( |
) | ( |
) | ( |
) | ||||||
| NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | $ | $ | ( |
) | $ | ( |
) | |||||
F-7
PS
INTERNATIONAL GROUP LTD.
AUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (cont.)
FOR THE YEARS ENDED DECEMBER 31, 2023, 2024 AND 2025
(IN U.S. DOLLARS)
| For the years ended December 31, | ||||||||||||
| 2023 | 2024 | 2025 | ||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||
| Purchases of property, plant and equipment | $ | ( |
) | $ | $ | ( |
) | |||||
| Decrease in restricted cash with maturity of more than three months when acquired | ||||||||||||
| Purchase of marketable equity securities | ( |
) | ||||||||||
| Loan granted | ( |
) | ||||||||||
| NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITES | $ | $ | $ | ( |
) | |||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||
| Dividends paid | $ | ( |
) | $ | $ | |||||||
| Proceeds from Private Placement | ||||||||||||
| Payments of issuance costs | ( |
) | ( |
) | ||||||||
| Proceeds from exercise of stock options | ||||||||||||
| Expiry of unpresented check for dividend paid to shareholders in prior years | ||||||||||||
| Proceeds from bank borrowings | ||||||||||||
| Proceeds from other borrowings | ||||||||||||
| Payments of bank loan interest | ( |
) | ( |
) | ||||||||
| NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITES | $ | ( |
) | $ | ( |
) | $ | |||||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH | $ | $ | ( |
) | $ | |||||||
| CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF YEAR | ||||||||||||
| CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF YEAR | $ | $ | $ | |||||||||
| Cash and cash equivalents at end of year | ||||||||||||
| Restricted cash at end of year | ||||||||||||
| Restricted cash with maturity of three months or more when acquired at end of year | ( |
) | ||||||||||
| Total cash and cash equivalents and restricted cash shown in the audited consolidated statements of cash flows | $ | $ | $ | |||||||||
F-8
PS
INTERNATIONAL GROUP LTD.
AUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (cont.)
FOR THE YEARS ENDED DECEMBER 31, 2023, 2024 AND 2025
(IN U.S. DOLLARS)
| For the years ended December 31, | ||||||||||||
| 2023 | 2024 | 2025 | ||||||||||
| Supplemental disclosure of cash flow information | ||||||||||||
| Interest received | ||||||||||||
| Interest paid | ( | ) | ( | ) | ||||||||
| Income tax refunded | ||||||||||||
| Income tax paid | ( | ) | ( | ) | ||||||||
| Non-cash investing and financing activities | ||||||||||||
| Operating lease right-of-use assets obtained in exchange for operating lease liabilities | ||||||||||||
| Deemed distribution to AIB’s shareholders in reverse recapitalization | ||||||||||||
| Issuance of ordinary shares of the Company for services provided | ||||||||||||
The accompanying notes are an integral part of these audited consolidated financial statements.
F-9
PS INTERNATIONAL GROUP LTD.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 — ORGANIZATION AND PRINCIPAL ACTIVITIES
(a) Organization
PS
International Group Ltd. (the “Company”) was incorporated under the laws of the Cayman Islands on
Profit
Sail Int’l Express (H.K.) Limited (“PSIHK”) and Business Great Global Supply Chain Limited (“BGG”), incorporated
under laws of Hong Kong and commenced its operations on May 27, 1993 and November 11, 2016, respectively, are the major business
component of the Company. PSIHK and BGG are engaged in the provision of logistics and freight handling services. The Company holds a
Business Combination
On July 18, 2024 (the “Closing Date”), the Company consummated the previously announced business combination pursuant to the Business Combination Agreement, dated December 27, 2023 (the “Business Combination Agreement”), by and among (i) the Company, (ii) AIB Acquisition Corporation, a Cayman Islands exempted company (“AIB”), (iii) PSI Group Holdings Ltd, a Cayman Islands exempted company (“PSI”), (iv) AIB LLC, a Delaware limited liability company (the “Sponsor”), (v) PSI Merger Sub I Limited, a Cayman Islands exempted company (“PSI Merger Sub I”), and (vi) PSI Merger Sub II Limited, a Cayman Islands exempted company (“PSI Merger Sub II”).
Pursuant to the Business Combination Agreement, (a) PSI Merger Sub I merged with and into PSI (the “First Merger”) on July 16, 2024, with PSI surviving the First Merger as a wholly-owned subsidiary of the Company and the outstanding shares of PSI being converted into the right to receive ordinary shares of the Company, and (b) PSI Merger Sub II merged with and into AIB (the “Second Merger”, and together with the First Merger, the “Mergers” or “Business Combination”) on July 18, 2024, with AIB surviving the Second Merger as a wholly-owned subsidiary of the Company and the outstanding securities of AIB being converted into the right to receive substantially equivalent securities of the Company.
As
a result of the Mergers, (a) each of the ordinary shares of PSI that were issued and outstanding immediately prior to the effective
time of the First Merger was cancelled and converted into (i) the right to receive
On July 19, 2024, ordinary shares of the Company commenced trading on The Nasdaq Capital Market under the symbol “PSIG.”
PSI was deemed the accounting acquirer in the Business Combination based on an analysis of the criteria outlined in Accounting Standards Codification (“ASC”) 805. This determination was primarily based on PSI’s stockholders prior to the Business Combination having a majority of the voting interests in the combined company, PSI’s operations comprising the ongoing operations of the combined company, and PSI’s senior management comprising the senior management of the combined company. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of PSI’s issuing stock for the net liabilities of AIB, accompanied by a recapitalization. The net liabilities of AIB are stated at historical cost, with no goodwill or other intangible assets recorded.
While the Company was the legal acquirer in the Business Combination, because PSI was deemed the accounting acquirer, the historical financial statements of PSI became the historical financial statements of the combined company upon the consummation of the Business Combination. As a result, the financial statements included in this report reflect (i) the historical operating results of PSI prior to the Business Combination; (ii) the combined results of the Company and PSI following the closing of the Business Combination; (iii) the assets and liabilities of PSI at their historical cost; and (iv) the Company’s equity structure before and after the Business Combination.
In accordance with applicable guidance, the equity structure has been restated in all comparative periods to reflect the number of shares of the Company’s common shares, issued to PSI’s shareholders in connection with the First Merger. As such, the shares and corresponding capital amounts and earning related to PSI’s ordinary shares prior to the Business Combination have been restated as shares reflecting the Exchange Ratio established in the Business Combination Agreement.
F-10
PS INTERNATIONAL GROUP LTD.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 — ORGANIZATION AND PRINCIPAL ACTIVITIES (cont.)
(a) Organization (cont.)
AIB was deregistered on August 6, 2025. Such change in the group structure did not have material impact to the audited consolidated financial statements of the Company.
Reverse Stock Split
On
October 6, 2025, the Company effected a reverse stock split of the Company’s issued and outstanding ordinary shares, by a ratio
of 8-to-1 (the “Reverse Stock Split”). Accordingly, all ordinary shares, warrants and stock options, as well as per share
information, for all periods presented in the audited consolidated financial statements and notes thereto have been adjusted retrospectively
to reflect this Reverse Stock Split. The Reverse Stock Split increased the par value share of the Company’s ordinary shares to
$
Private Placement
On
November 7, 2025, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with certain
purchasers (the “Purchasers”) identified therein for a private placement (the “Private Placement”) of up to
Pursuant
to the Securities Purchase Agreement, the Warrant became exercisable on their initial exercise date and will expire
(b) Principal activities
The Company is a freight forwarding service provider with networks across the globe. The Company conducts its operations through PSIHK and BGG (collectively the “Operating Subsidiaries”) in Hong Kong.
The Operating Subsidiaries provide air and ocean export and import freight forwarding services with optional ancillary logistics related services (such as cargo pick up, cargo handling at ports and local transportation) and warehousing related services (such as repackaging, labelling, palletization, preparation of shipping documentation, arrangement of customs clearance and warehousing) to meet the requirements of the customers.
Generally, the Company’s services are divided into air freight forwarding services and ocean freight forwarding services.
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation and principles of consolidation
The accompanying audited consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The audited consolidated financial statements include the financial statements of the Company and its majority-owned subsidiaries. All significant inter-company transactions and balances between the Company and its subsidiaries are eliminated upon consolidation.
F-11
PS INTERNATIONAL GROUP LTD.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Use of estimates
The preparation of the audited consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the audited consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made. Actual results could differ from those estimates. Significant estimates include, but are not limited to, the fair value measurement of warrant liabilities, including the selection of appropriate valuation models and assumptions for the year ended December 31, 2025 (2024: valuation and recognition of share-based compensation).
Foreign currency
The Company’s reporting currency is United Sates dollars (“US$” or “$”). The functional currency of the Company and all the other subsidiaries is $ or Hong Kong Dollar (“HKD”).
The
audited consolidated financial statements of the Company are translated from the functional currency into $. Assets and liabilities denominated
in HKD are translated into $ using the applicable exchange rates at the balance sheet date. Equity accounts other than earnings generated
in current period are translated into $ at the appropriate historical rates. Revenues, expenses, gains and losses are translated into
$ at the average rates of exchange for the year
| For the years ended December 31, | ||||||||||||
| 2023 | 2024 | 2025 | ||||||||||
| Year end $: HKD exchange rate | ||||||||||||
| Year average $: HKD exchange rate | ||||||||||||
Foreign currency transaction gains and losses are a result of the effect of exchange rate changes on transactions denominated in currencies other than the functional currency of the respective subsidiary. Foreign currency denominated financial assets and liabilities are re-measured at the balance sheet date exchange rate. Exchange gains and losses resulting from those foreign currency transactions denominated in a currency other than the functional currency are recorded in the audited consolidated statements of operations and comprehensive income (loss).
Cash and cash equivalents
For financial reporting purposes, the Company considers all highly liquid investments purchased with original maturity of three months or less to be cash equivalents. The Company maintains no bank account in the United States of America. The Company maintains its bank accounts in Hong Kong Special Administrative Region (“Hong Kong”).
Restricted cash
Restricted
cash represents amounts held by bank as security for banking facilities and therefore is not available for the Company’s use until
such time as the banking facilities have been fulfilled or expired. The facilities include bank borrowings and a letter of guarantee.
As of December 31, 2025, the bank borrowings of $
F-12
PS INTERNATIONAL GROUP LTD.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
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 its 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, restricted cash, accounts receivable, loan receivable, marketable equity securities, other current assets, accounts payable, other payables and accrued liabilities, borrowings, dividend payables, warrant liabilities and amounts due from/to related parties.
The carrying value of cash and cash equivalents, restricted cash, accounts receivable, loan receivable, marketable equity securities, other current assets, accounts payable, other payables and accrued liabilities, borrowings, dividend payables and amounts due from/to related parties approximate their fair value.
The warrant liabilities are adjusted to fair value on a recurring basis using the Black-Scholes valuation method. The Company determines fair value for warrant liabilities with Level 3 inputs because it requires unobservable inputs including liquidity discount and volatility in which little or no market data exists, therefore requiring an entity to develop its own assumptions.
Business combinations
The Company allocates the fair value of purchase consideration to the tangible assets acquired and liabilities assumed acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions.
Warrants
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrants’ specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity, and ASC 815, Derivatives and Hedging. The assessment considers whether the warrants are freestanding financial instruments, whether they meet the definition of a liability under ASC 480, and whether they meet all of the criteria for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares and whether the Company has sufficient authorized and unissued shares to settle the instruments, among other conditions. This assessment requires the use of judgment and is performed at the time of issuance and reassessed at each reporting date while the warrants are outstanding.
Warrants that meet all of the criteria for equity classification are recorded as a component of additional paid-in capital at the time of issuance and are not subsequently remeasured. Warrants that do not meet all of the criteria for equity classification are recorded as liabilities at their fair value on the date of issuance and are subsequently remeasured to fair value at each reporting date, with changes in fair value recognized in the consolidated statements of operations and comprehensive income (loss).
The Company has determined that its Warrants do not meet the criteria for equity classification under ASC 815 and are therefore classified as liabilities. The Warrants may require net cash settlement upon the occurrence of events that are not solely within the control of the Company.
F-13
PS INTERNATIONAL GROUP LTD.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Marketable equity securities
The Company’s investments in marketable equity securities are carried at fair value with the changes in unrealized gains and losses recognized in the audited statements of operations and comprehensive income (loss).
Accounts receivable
Accounts
receivable are measured at amortized cost less an allowance for expected credit loss as needed.. The allowance for expected credit loss
is the Company’s best estimate of the amount of probable credit losses in the Company’s existing receivables from customers.
The Company assess the allowance by pooling receivables that have similar risk characteristics and evaluates receivables individually
when specific receivables no longer share those risk characteristics. In evaluating the expected credit loss, 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 45 days after customers
received services provided by the Company. If allowance for expected credit losses are to be provided for, or written off, they would
be recognized in the audited consolidated statements of operations and comprehensive income (loss) within operating expenses. Balance
of allowance for expected credit losses was $
Expected credit loss
ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments requires entities to use a current lifetime expected credit loss methodology to measure impairments of certain financial assets. Using this methodology will result in earlier recognition of losses. There are other provisions within the standard that affect how impairments of other financial assets may be recorded and presented, and that expand disclosures.
Property, plant and equipment, net
Property, plant, and equipment, net 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, using the straight-line method. Estimated useful lives are as follows:
| Buildings | ||
| Leasehold improvements | ||
| Machinery and equipment | ||
| Motor vehicles | ||
| Furniture and fixture |
When assets are sold or retired, their costs and accumulated depreciation are eliminated from the audited 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.
F-14
PS INTERNATIONAL GROUP LTD.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
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 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 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 years ended December 31, 2023, 2024 and 2025.
Leases
ASC 842 generally requires lessees to recognize operating and finance lease liabilities and corresponding right-of-use (“ROU”) assets on the audited consolidated balance sheets and to provide disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements. Leases that transfer substantially all of the benefits and risks incidental to the ownership of assets are accounted for as finance leases as if there was an acquisition of an asset and incurrence of an obligation at the inception of the lease. All other leases are accounted for as operating leases.
The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease ROU assets, current liabilities and long-term operating lease liabilities in the audited consolidated balance sheets.
ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. For leases that do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company uses the implicit rate when readily determinable. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
Significant judgment may be required when determining whether a contract contains a lease, the length of the lease term, the allocation of the consideration in a contract between lease and non-lease components, and the determination of the discount rate included in the Company’s office lease. The Company reviews the underlying objective of each contract, the terms of the contract, and consider its current and future business conditions when making these judgments.
Adoption of new accounting standard
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740)-Improvements to Income Tax Disclosures. ASU No. 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. The guidance is effective for annual periods beginning after December 15, 2024 on a prospective basis. Early adoption is permitted. The Company adopted this update beginning January 1, 2025 and the required information was disclosed in Note 23.
F-15
PS INTERNATIONAL GROUP LTD.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Revenue recognition
The Company recognizes revenues in accordance with ASC 606, Revenue from Contracts with Customers.
The Company derives revenues primarily from the provision of air and ocean freight forwarding services by purchasing transportation services from direct (asset-based) carriers or other freight forwarders and reselling those services to its customers in Hong Kong. The contracts with customers generally contain a single performance obligation as the distinct services provided remain substantially the same over time and possess the same pattern of transfer. The performance obligation is satisfied over the transit period when the customers simultaneously receive and consume the benefits of the delivery services. Accordingly, revenue is recognized over the transit period based on the progress towards the completion of the performance obligation.
The transit period can vary based upon the method of transport. Determining the transit period and how much of it has been completed as of the reporting date may require management to make judgments that affect the timing of revenue recognized.
(a) Air freight forwarding services
Revenue was recognized based on the cost-to-cost measure of progress because it best depicts the transfer of control to the customer which occurs as the Company incurs costs on its contracts. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenue is recorded proportionally as costs are incurred. The typical amount of time spent rendering air freight forwarding services is three to five days.
(b) Ocean freight forwarding services
Revenue was recognized based on time-in-transit to measure the progress. The typical amount of time spent rendering ocean freight forwarding services is approximately three to four weeks. The Company believes that the transpiring of time provides the best measurement of the rendering of services to the customer.
(c) Ancillary services
The Company also provides certain value-added logistics services, such as packaging, warehousing services, small parcel, and local transportation services. The performance obligation is generally satisfied over the service period as the Company performs the obligations. Pricing for its services is established in the customer contract and is dependent upon the specific needs of the customer but may be agreed upon at a fixed fee per transaction, labor hour, or service period.
Pricing
for the Company’s services is generally a fixed amount. The Company does not have significant variable consideration in its contracts.
Payments are received within
The Company recognizes revenue on a gross basis as the Company controls the services. The Company is primarily responsible for fulfilling the promise, assumes risk of loss, has discretion in setting the prices for the services to its customers, and has the ability to direct the use of the services provided by third parties.
F-16
PS INTERNATIONAL GROUP LTD.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Revenue recognition (cont.)
Contract
assets include billed and unbilled amounts resulting from in-transit shipments, as the Company has an unconditional right to payment
only once all performance obligations have been completed (e.g., shipments have been delivered). Contract assets are generally classified
as current, and the full balance is converted each reporting period based on the short-term nature of the transactions. Gross contract
assets related to in-transit shipments totaled $
Contract
liabilities are recognized when the Company receives prepayments from customers. Contract liabilities will be recognized as revenue when
promised services are provided. Contract liabilities were $
All the Company’s air and ocean freight forwarding and ancillary services are for periods of one year or less. As permitted under ASC 606-10-50-14, the transaction price allocated to the remaining performance obligations under those contracts is not disclosed.
Cost of revenue
Cost of revenue consists primarily of cargo space charged by airlines, shipping liners or other freight forwarders and ancillary logistics services fee including costs of security, local handling and x-ray screening and warehouse services.
General and administrative expenses
General and administrative expenses include management and office salaries and employee benefits, depreciation for office facility and office equipment, travel and entertainment, legal and accounting, consulting fees and other office expenses.
Shipping and handling costs
All shipping and handling costs are expensed as incurred.
Advertising
All
advertising costs are expensed as incurred. During the years ended December 31, 2023, 2024 and 2025, the total amount charged to the
audited consolidated statements of operations and comprehensive income (loss) in respect of the Company’s advertising costs incurred
was $
Employee benefit plan
Employees
of the Company located in Hong Kong participate in a defined contribution Mandatory Provident Fund retirement benefit scheme by the local
laws in Hong Kong. During the years ended December 31, 2023, 2024 and 2025, the total amount charged to the audited consolidated statements
of operations and comprehensive income (loss) in respect of the Company’s costs incurred in the scheme was $
Share-based compensation
The
Company recognizes share-based compensation expense for the estimated fair value of equity awards issued as compensation to individuals
over the requisite service period, which generally ranges immediate up to
F-17
PS INTERNATIONAL GROUP LTD.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Offering costs associated with the Private Placement
The
Company complies with the requirements of ASC 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A - Expenses of Offering. Offering
costs consist principally of professional and registration fees incurred through the balance sheet date that are related to the Private
Placement. Offering costs directly attributable to the issuance of an equity contract to be classified in equity are recorded as a reduction
in equity. Offering costs for equity contracts that are classified as assets and liabilities are expensed immediately. The Company incurred
offering costs in an aggregated amount of $
Income tax
The Company accounts for income taxes following the liability method pursuant to 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 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 December 31, 2024 and 2025, the Company did not have an asset 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.
Comprehensive loss
Comprehensive loss is defined as the change in equity during the year from transactions and other events, excluding the changes resulting from investments by owners and distributions to owners, and is not included in the computation of income tax expense or benefit. Accumulated comprehensive loss consists of foreign currency translation. The Company presents comprehensive loss in accordance with ASC 220, Comprehensive Income.
Earnings (Loss) per share
The Company calculates earnings (loss) per share in accordance with ASC 260, Earnings per Share. Basic earnings (loss) per share is computed by dividing the net income (loss) by the weighted average number of common shares outstanding during the year. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potentially dilutive securities had been issued and if the potentially dilutive securities were dilutive. As of December 31, 2023, there were no potentially dilutive securities. As of December 31, 2024 and 2025, the Company’s potentially dilutive securities, which include share options and warrants, have been excluded from the computation of diluted loss per share as the effect would be to reduce the loss per share. Therefore, the weighted average number of common shares outstanding used to calculate both basic and diluted loss per share attributable to shareholders is the same.
F-18
PS INTERNATIONAL GROUP LTD.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Commitments and contingencies
In the normal course of business, the Company is subject to contingencies, including legal proceedings and environmental claims arising out of the normal course of businesses that relate to a wide range of matters, including among others, contracts breach liability. The Company records accruals for such contingencies based upon the assessment of the probability of occurrence and, where determinable, an estimate of the liability. Management may consider many factors in making these assessments including past history, scientific evidence and the specifics of each matter. The Company’s management has evaluated all such proceedings and claims that existed as of December 31, 2024 and 2025.
Provision for compensation
The Company recognizes a provision for staff injury compensation in accordance with the requirements of ASC 450. This provision is established to account for potential liabilities arising from work-related injuries or illnesses incurred by the Company’s employee. The provision is calculated based on estimated maximum future cash outflows to settle the staff injury claim in accordance with Hong Kong Employees’ Compensation Ordinance and ASC 450. The claim considers the assessment of loss of earning capacity including the necessary period of absence from duty and the percentage of loss of earning capacity permanently caused to the employee as a result of the work injury.
Management believes that the provision for compensation adequately reflects the Company’s potential liabilities. However, actual outcomes may differ from the estimates due to uncertainties inherent in the assessment of future claims and changes in applicable laws or regulations. The provision is reviewed and adjusted on a regular basis to reflect any changes in the estimates of future cash outflows (i.e. court decisions may require adjustments to provision.) Any adjustments will increase/decrease in the provision in the period in which the change occurs.
The
provision for staff injury compensation of $
During
the year ended December 31, 2025, the staff injury case was settled, and the related costs were fully covered by the Company’s
insurance provider. Consequently, the previously recognized provision for staff injury compensation of $
Provision for penalty
The
Company recognizes a provision for penalty claim in accordance with the requirements of ASC 450. The Company is currently involved in
a dispute with one of its suppliers regarding a penalty claim. The supplier issued the penalty invoice due to the Company’s insufficient
occupancy of the cargo aircraft capacity, which resulted in an inadequate load weight for the aircraft. As a result, the supplier charged
the Company for freight rate, fuel surcharge, and security charges for a total amount of $
Management believes that the provision for penalty adequately reflects the Company’s potential liabilities. However, actual outcomes may differ from the estimates due to uncertainties inherent in the assessment of future claims and changes in applicable laws or regulations. The provision is reviewed and adjusted on a regular basis to reflect any changes in the estimates of future cash outflows. Any adjustments will increase/decrease in the provision in the period in which the change occurs.
The
provision for penalty of $
F-19
PS INTERNATIONAL GROUP LTD.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Non-controlling interest
Non-controlling
interest are recognized to reflect the portion of their equity that is not attributable, directly or indirectly, to the Company as the
controlling shareholder. For the Company’s consolidated subsidiaries, non-controlling interests represent a minority shareholder’s
Non-controlling interest are presented as a separate line item in the equity section of the Company’s audited consolidated balance sheets and have been separately disclosed in the Company’s audited consolidated statements of operations and comprehensive income (loss) to distinguish the interests from that of the Company.
Segment reporting
ASC 280, Segment Reporting, establishes standards for companies to report in their financial statements information about operating segments, products, services, geographic areas, and major customers.
Based on the criteria established by ASC 280, the CODM has been identified as the Company’s chief executive officer. The CODM has determined that the Company operates as a single operating segment and uses consolidated net income (loss) as measures of profit or loss on a consolidated basis when making decisions regarding resource allocation and performance assessment. The Company’s key financial metrics used by the CODM help make key operating decisions, including allocation of budget between cost of revenue and general and administrative expenses.
Government assistance programs
Government incentives are recorded and presented in the audited consolidated financial statements on a gross basis as other income. The benefit is generally recorded when all conditions attached to the incentive have been met or are expected to be met and there is reasonable assurance of their receipt.
Pilot Subsidy Scheme for Third-party Logistics Service Providers
The
Hong Kong government has launched the Pilot Subsidy Scheme for Third-party Logistics Service Providers (the “Pilot Scheme”)
to encourage the adoption of latest technology and enterprise resource planning solution by the logistics sector for enhancing efficiency
and productivity. All non-listed enterprises registered in Hong Kong providing third-party logistics services and with substantive business
operations in Hong Kong are eligible to apply the Pilot Scheme. All conditions relating to these grants have been fulfilled. The grant
of $
Technology Voucher Programme
The
Hong Kong government has launched the Technology Voucher Programme (the “TVP”) with the objective of supporting local enterprises
and organizations in adopting technological services and solutions to enhance productivity, or upgrade or transform their business processes.
All non-listed enterprises registered and with substantive business operation in Hong Kong are eligible to apply the TVP. All conditions
relating to these grants have been fulfilled. The grant of $
F-20
PS INTERNATIONAL GROUP LTD.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
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 principal 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 decisions; d) immediate family of management or principal owners; e) a parent company and its subsidiaries; and f) other parties that have ability to significantly influence the management or operating policies of the entity. The Company discloses all significant related party transactions.
The Company adopted ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions. Per ASC 850-10-50-5: “Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated.”
Economic and political risks
The Company’s operations are conducted in the Hong Kong. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environment in the Hong Kong, and by the general state of the Hong Kong economy.
The Company’s operations in the Hong Kong are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company’s results may be adversely affected by changes in the political and social conditions in the Hong Kong, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things.
Credit risk
Financial
instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents,
restricted cash, accounts receivable and loan receivable. All of the Company’s cash and cash equivalents and restricted cash is
maintained with banks in Hong Kong. Cash balances in bank accounts in Hong Kong are insured under the Deposit Protection Scheme
introduced by the Hong Kong Government for a maximum amount of $
Exchange rate risk
The reporting currency of the Company is $. To date the majority of the revenues and costs are denominated in HKD and a significant portion of the assets and liabilities are denominated in HKD. There was no significant exposure to foreign exchange rate fluctuations and the Company has not maintained any hedging policy against foreign currency risk. Management will consider hedging significant currency exposure should the need arise. Under the Linked Exchange Rate System in Hong Kong, HKD is pegged to $. Therefore the Company does not expose to significant exchange rate risk in respect of its assets and liabilities denominated in HKD.
F-21
PS INTERNATIONAL GROUP LTD.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Recently issued accounting pronouncements
In November 2024, the FASB issued ASU No. 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The amendments in the ASU require public entities to disclose specified information about certain costs and expenses. Additionally, in January 2025, FASB issued ASU No. 2025-01, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date to clarify the effective date of ASU 2024-03. This ASU is effective for annual periods beginning after December 15, 2026 and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of adopting the standard on the audited consolidated financial statements and related disclosures.
In December 2025, the FASB issued ASU No. 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities, which provides updated guidance on how to recognize, measure, and present government grants. The ASU will be effective for annual reporting periods beginning after December 15, 2028, including interim periods within those fiscal years. with early adoption permitted. The Company is currently evaluating the impact of adopting the standard on the audited consolidated financial statements and related disclosures.
NOTE 3 — CONCENTRATION OF REVENUES AND COST OF REVENUE
Concentration of major customers and suppliers:
| For the years ended December 31, | ||||||||||||||||||||||||
| 2023 | 2024 | 2025 | ||||||||||||||||||||||
| Major customers representing more than 10% of the Company’s revenues | ||||||||||||||||||||||||
| Customer A | $ | % | $ | % | % | |||||||||||||||||||
| Total Revenues | $ | % | $ | % | % | |||||||||||||||||||
Revenue
from the Company’s major customers accounted for
F-22
PS INTERNATIONAL GROUP LTD.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 — CONCENTRATION OF REVENUES AND COST OF REVENUE (cont.)
| As of December 31, | ||||||||||||||||||||||||
| 2023 | 2024 | 2025 | ||||||||||||||||||||||
| Major customers of the Company’s accounts receivable Company A | $ | % | $ | % | $ | % | ||||||||||||||||||
| Total | $ | % | $ | % | $ | % | ||||||||||||||||||
Accounts
receivable from the Company’s major customers accounted for
| For the years ended December 31, | ||||||||||||||||||||||||
| 2023 | 2024 | 2025 | ||||||||||||||||||||||
| Major suppliers of the Company’s cost of revenue | ||||||||||||||||||||||||
| Supplier A | $ | % | $ | % | % | |||||||||||||||||||
| Supplier B | % | % | % | |||||||||||||||||||||
| Supplier C | % | % | % | |||||||||||||||||||||
| Supplier D | % | % | % | |||||||||||||||||||||
| Total Cost of Revenue | $ | % | $ | % | % | |||||||||||||||||||
Cost
of revenue from the Company’s major suppliers accounted for
| As of December 31, | ||||||||||||||||||||||||
| 2023 | 2024 | 2025 | ||||||||||||||||||||||
| Major suppliers of the Company’s accounts payable | ||||||||||||||||||||||||
| Supplier A | $ | % | $ | % | % | |||||||||||||||||||
| Supplier B | % | % | % | |||||||||||||||||||||
| Supplier C | % | % | % | |||||||||||||||||||||
| Supplier D | % | % | % | |||||||||||||||||||||
| Total | % | $ | % | % | ||||||||||||||||||||
Accounts
payable from the Company’s major suppliers accounted for
NOTE 4 — OTHER INCOME
| For the years ended December 31, | ||||||||||||
| 2023 | 2024 | 2025 | ||||||||||
| Government grants | $ | $ | $ | |||||||||
| Management fee income | ||||||||||||
| Management fee income from related parties | ||||||||||||
| Insurance compensation | ||||||||||||
| Miscellaneous income | ||||||||||||
| Total | $ | $ | $ | |||||||||
F-23
PS INTERNATIONAL GROUP LTD.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 — OTHER (LOSS) GAIN
| For the years ended December 31, | ||||||||||||
| 2023 | 2024 | 2025 | ||||||||||
| Exchange (loss) gain | $ | ( | ) | $ | ( | ) | $ | |||||
| Total | $ | ( | ) | $ | ( | ) | $ | |||||
NOTE 6 — PROVISIONS FOR COMPENSATION AND PENALTY
| As of December 31, | ||||||||
| 2024 | 2025 | |||||||
| Provision for compensation | $ | $ | ||||||
| Provision for penalty | ||||||||
| Total | $ | $ | ||||||
The
provision for staff injury compensation represented the management’s estimated liability for work-related injuries incurred by
its employee. The provision was calculated based on estimated maximum future cash outflows to settle the staff injury claim. The claim
considered the assessment loss of earning capacity including the necessary period of absence from duty and the percentage of loss of
earning capacity permanently caused to the employee as a result of the work injury in accordance with Hong Kong Employees’ Compensation
Ordinance and ASC 450. In accordance with ASC 450-20-30-1, $
The
provision for staff injury compensation of $
The
provision for penalty claim represented the management’s estimated liability for a dispute with one of its suppliers regarding
a penalty claim. The dispute arose due to the Company’s underutilization of the cargo aircraft’s capacity, leading to a suboptimal
load weight on the aircraft. Consequently, the supplier levied charges on the Company for the freight rate, fuel surcharge, and security
charges, amounting to a total of $
The
provision for penalty claim of $
NOTE 7 — RESTRICTED CASH
Restricted
cash represents amounts held by bank as security for banking facilities and therefore is not available for the Company’s use until
such time as the banking facilities have been fulfilled or expired. The facilities include bank borrowings and a letter of guarantee.
As of December 31, 2025, the bank borrowings of $
As of December 31, 2024 and 2025, all restricted cash has original maturities of three months or less when acquired.
F-24
PS INTERNATIONAL GROUP LTD.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8 — ACCOUNTS RECEIVABLE, NET
Accounts receivable is presented net of allowance for expected credit losses:
| As of December 31, | ||||||||
| 2024 | 2025 | |||||||
| Accounts receivable | $ | $ | ||||||
| Less: allowance for expected credit losses | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
The movement of allowance for expected credit losses is as follows:
| As of December 31, | ||||||||
| 2024 | 2025 | |||||||
| Balance at beginning of the year | $ | ( | ) | $ | ( | ) | ||
| Reversal | ||||||||
| Total | $ | ( | ) | $ | ( | ) | ||
NOTE 9 — CONTRACT ASSETS, NET AND LIABILITIES
Contract assets is presented net of allowance for expected credit losses:
| As of December 31, | ||||||||
| 2024 | 2025 | |||||||
| Contract assets | $ | $ | ||||||
| Less: allowance for expected credit losses | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
The movement of contract assets is as follows:
| As of December 31, | ||||||||
| 2024 | 2025 | |||||||
| Balance at beginning of the year | $ | $ | ||||||
| Additions | ||||||||
| Reclassified to receivables due to billings | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
The movement of allowance for expected credit losses is as follows:
| As of December 31, | ||||||||
| 2024 | 2025 | |||||||
| Balance at beginning of the year | $ | ( | ) | $ | ( | ) | ||
| Reversal | ||||||||
| Total | $ | ( | ) | $ | ( | ) | ||
Contract
liabilities are recognized when the Company received prepayments from customers. Contract liabilities will be recognized as revenue when
promised services are provided. Contract liabilities were $
F-25
PS INTERNATIONAL GROUP LTD.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10 — LOAN RECEIVABLE, NET
In December 2025, the
Company entered into a loan agreement to lend $
Interest income of $
Loan receivable is presented net of allowance for expected credit losses:
| As of December 31, | ||||||||
| 2024 | 2025 | |||||||
| Loan receivable, unsecured | ||||||||
| —Principal | $ | $ | ||||||
| —Interest receivables | ||||||||
| $ | $ | |||||||
| Less: allowance for expected credit losses | ( | ) | ||||||
| Total | ||||||||
The movement of allowance for expected credit losses is as follows:
| As of December 31, | ||||||||
| 2024 | 2025 | |||||||
| Balance at beginning of the year | $ | $ | ||||||
| Provision | ( | ) | ||||||
| Total | $ | $ | ( | ) | ||||
NOTE 11 — PREPAYMENTS AND OTHER CURRENT ASSETS, NET
Prepayments and other current assets is presented net of allowance for expected credit losses:
| As of December 31, | ||||||||
| 2024 | 2025 | |||||||
| Prepayments and other current assets | $ | $ | ||||||
| Less: allowance for expected credit losses | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
The movement of allowance for expected credit losses is as follows:
| As of December 31, | ||||||||
| 2024 | 2025 | |||||||
| Balance at beginning of the year | $ | ( | ) | $ | ( | ) | ||
| (Provision) Reversal | ( | ) | ||||||
| Total | $ | ( | ) | $ | ( | ) | ||
F-26
PS INTERNATIONAL GROUP LTD.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12 — MARKETABLE EQUITY SECURITIES
Marketable equity securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities and are reported at fair value, with unrealized gains and losses recognized in earnings.
Marketable equity securities consisted of the following:
| As of December 31, | ||||||||
| 2024 | 2025 | |||||||
| Cost | $ | $ | ||||||
| Unrealized gains | ||||||||
| Total | $ | $ | ||||||
The equity securities primarily
consist of
The XWIN Shares are pledged as
collateral to secure other borrowings of $
The unrealized gains on marketable
equity securities were $
The Company determines the fair value of marketable equity securities using Level 1 inputs based on quoted market prices in active markets.
NOTE 13 — PROPERTY, PLANT AND EQUIPMENT, NET
As of December 31, 2024 and 2025, property, plant and equipment, net consisted of the following:
| As of December 31, | ||||||||
| 2024 | 2025 | |||||||
| Buildings | $ | $ | ||||||
| Leasehold improvements | ||||||||
| Machinery and equipment | ||||||||
| Motor vehicles | ||||||||
| Furniture and fixture | ||||||||
| Total property, plant and equipment, at cost | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
Depreciation
expenses for the years ended December 31, 2023, 2024 and 2025 were $
On
March 26, 2025, PSIHK, one of the Company’s Operating Subsidiaries, entered into several preliminary sale and purchase
agreement with a seller for the acquisition of certain office premises and motor vehicle parking spaces located in Hong Kong for a
total consideration of $
The
buildings with a cost of $
NOTE 14 — REVERSE RECAPITALIZATION
As described in Note 1, the Company merged with AIB on July 18, 2024. The Merger was accounted for as a reverse recapitalization with the Company as the accounting acquirer. The pre-combination net liabilities of AIB were primarily non-operating liabilities. Under reverse recapitalization accounting, the assets and liabilities of AIB were recorded at their historical cost. No goodwill or intangible assets were recognized.
As part of the reverse recapitalization,
the Company issued
F-27
PS INTERNATIONAL GROUP LTD.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 15 — LEASES
The
Company has various operating leases for office space and photocopiers. The lease agreements do not specify an explicit interest rate.
The Company’s management believes that the Hong Kong Dollar Best Lending Rate (“BLR”) was the most indicative
rate of the Company’s borrowing cost for the calculation of the present value of the lease payments; the rate used by the Company
as quoted by the BLR ranged from
As
of December 31, 2024 and 2025, the right-of-use assets totaled $
As of December 31, 2024 and 2025, lease liabilities consist of the following:
| As of December 31, | ||||||||
| 2024 | 2025 | |||||||
| Lease liabilities – current portion | $ | $ | ||||||
| Lease liabilities – non-current portion | ||||||||
| Total | $ | $ | ||||||
During
the years ended December 31, 2023, 2024 and 2025, the Company incurred total operating lease expenses of $
Other lease information is as follows:
| As of December 31, | ||||||||
| 2024 | 2025 | |||||||
| Weighted-average remaining lease term – operating leases | 1.3 years | 1.7 years | ||||||
| Weighted-average discount rate – operating leases | % | % | ||||||
The following is a schedule of future minimum payments under operating leases as of December 31, 2025:
| As of December 31, | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| Total lease payments | ||||
| Less: imputed interest | ( | ) | ||
| Total operating lease liabilities, net of interest | $ | |||
NOTE 16 — OTHER PAYABLES AND ACCRUED LIABILITIES
Other payables and accrued liabilities consisted of the following:
| As of December 31, | ||||||||
| 2024 | 2025 | |||||||
| Provision for staff bonus | $ | $ | ||||||
| Accrued staff salaries | ||||||||
| Accrued administrative expenses | ||||||||
| Other payables | ||||||||
| Total | $ | $ | ||||||
NOTE 17 — ACCOUNTS PAYABLE
Accounts payable consisted of the following:
| As of December 31, | ||||||||
| 2024 | 2025 | |||||||
| Freight fee and other handling charges | $ | $ | ||||||
| Freight fee and other handling charges – related parties | ||||||||
| Total | $ | $ | ||||||
F-28
PS INTERNATIONAL GROUP LTD.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 18 — BORROWINGS
As of December 31, 2024 and 2025, interest-bearing borrowings consist of the following:
| As of December 31, | ||||||||||
| Notes | 2024 | 2025 | ||||||||
| Secured bank loan, due October 2040 | (1) | $ | $ | |||||||
| Other secured borrowings | (2) | |||||||||
| Total | $ | $ | ||||||||
Notes:
| (1) |
| (2) |
As of December 31, 2025, annual maturities on bank borrowings maturing in the next five fiscal years and thereafter are as follows:
| As of December 31, | ||||
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| $ | ||||
NOTE 19 — WARRANTS
Unit purchase options
In
connection with the Business Combination, there were
The Warrants issued in the Private Placement
In
November 2025, the Company issued
A summary of the activity of the Warrants issued in the Private Placement is presented in the following table:
| For the year ended December 31, | ||||||||
| 2024 | 2025 | |||||||
| Warrants issued | $ | $ | ||||||
| Fair value change in the warrant liabilities | ||||||||
| Total | $ | $ | ||||||
F-29
PS INTERNATIONAL GROUP LTD.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 19 — WARRANTS (cont.)
The following are the assumptions used in valuing the warrant liabilities by Black-Scholes model as of the issuance date and December 31, 2025 (in percentages, except as noted):
| As of | ||||||||
| The issuance date | December 31, 2025 | |||||||
| Liquidity discount | ||||||||
| Volatility | ||||||||
| Risk-free rate | ||||||||
| Expected life (years) | ||||||||
| Dividend yield | ||||||||
| Exercise price | $ | $ | ||||||
| Market price | $ | $ | ||||||
NOTE 20 — SHAREHOLDERS’ EQUITY
Ordinary shares
As
of December 31, 2024 and 2025, the Company was authorized to issue
Business Combination
In connection with the Business
Combination, the audited consolidated statements of changes in shareholders’ equity have been retroactively restated to reflect
the number of shares received by PSI in the First Merger. The audited consolidated statements of changes in shareholders’ equity
as of December 31, 2024 reflects the following transactions consummated in connection with the Business Combination in regards to outstanding
ordinary shares of the Company: (i) the conversion of
Reverse Stock Split
Please refer to Note 1 regarding the Reverse Stock Split for details.
Private Placement
Please refer to Note 1 regarding the Private Placement for details.
Share options
In connection with the 2024
Plan as defined and mentioned in Note 21,
Dividends
The
ordinary shareholders are entitled to receive dividends, if and when declared by the Company’s board of directors. In November
2023, PSI declared and made dividends of $
Change of controlling shareholder
On August 26, 2025,
certain shareholders of the Company entered into a definitive share purchase agreement with Great Rank Limited (the
“Purchaser”) to transfer in aggregate
F-30
PS INTERNATIONAL GROUP LTD.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 21 — SHARE-BASED COMPENSATION
In
July 2024, the board of directors of the Company approved the grant of
Compensation
expense is recognized over the vesting period of the share options based on the fair value of the shares at the grant date. The fair
value of share options is determined using the Binomial Option Pricing Model. Certain shares vest on the grant date or the first anniversary
of the vesting commencement date, while others vest on the second anniversary. As of December 31, 2024 and 2025, a total of
The weighted average grant
date fair value is $
| As of the grant date | ||||
| Volatility | ||||
| Risk-free rate | ||||
| Pre-vesting forfeiture rate | ||||
| Dividend yield | ||||
A summary of changes in the Company’s nonvested share options for the year are summarized as follows:
| Number of shares | Weighted average grant date per share fair value | |||||||
| Balance at January 1, 2024 | $ | |||||||
| Granted | ||||||||
| Vested and exercised | ( | ) | ||||||
| Forfeited | ( | ) | ||||||
| Non-vested at December 31, 2024 | $ | |||||||
| Balance at January 1, 2025 | $ | |||||||
| Vested and exercised | ( | ) | ||||||
| Forfeited | ( | ) | ||||||
| Non-vested at December 31, 2025 | $ | |||||||
As
of December 31, 2024 and 2025, there was $
The share-based compensation expenses related to share options are recorded as components of general and administrative expenses.
F-31
PS INTERNATIONAL GROUP LTD.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 22 — DISAGGREGATED REVENUES
Information for the Company’s breakdown of revenues by service type for the years ended December 31, 2023, 2024 and 2025 are as follows:
| For the years ended December 31, | ||||||||||||
| 2023 | 2024 | 2025 | ||||||||||
| Freight forwarding services | ||||||||||||
| – Air freight | $ | $ | $ | |||||||||
| – Ocean freight | ||||||||||||
| Subtotal | ||||||||||||
| Ancillary logistic services | ||||||||||||
| Total | $ | $ | $ | |||||||||
Information for the Company’s breakdown of revenues from freight forwarding services for the years ended December 31, 2023, 2024 and 2025 are as follows:
| For the years ended December 31, | ||||||||||||
| 2023 | 2024 | 2025 | ||||||||||
| Export shipments | ||||||||||||
| – Air | $ | $ | $ | |||||||||
| – Ocean | ||||||||||||
| Subtotal | ||||||||||||
| Import shipments | ||||||||||||
| – Air | $ | $ | $ | |||||||||
| – Ocean | ||||||||||||
| Subtotal | ||||||||||||
| Total | $ | $ | $ | |||||||||
Information for the Company’s breakdown of export revenue destination for the years ended December 31, 2023, 2024 and 2025 are as follows:
| For the years ended December 31, | ||||||||||||||||||||||||
| 2023 | 2024 | 2025 | ||||||||||||||||||||||
| United States | $ | % | $ | % | $ | % | ||||||||||||||||||
| United Kingdom | % | % | % | |||||||||||||||||||||
| The Netherlands | % | % | % | |||||||||||||||||||||
| Others (Note) | % | % | % | |||||||||||||||||||||
| Total export revenue | $ | % | $ | % | $ | % | ||||||||||||||||||
Note: Others represent a number of countries including, among others, Canada, Qatar and France and Mexico, etc.
Information for the Company’s breakdown of revenues by types of customers for the years ended December 31, 2023, 2024 and 2025 are as follows:
| For the years ended December 31, | ||||||||||||
| 2023 | 2024 | 2025 | ||||||||||
| Freight forwarders | $ | $ | $ | |||||||||
| Direct customers | ||||||||||||
| Total | $ | $ | $ | |||||||||
F-32
PS INTERNATIONAL GROUP LTD.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 23 — INCOME TAX
Cayman Islands and British Virgin Islands (the “BVI”)
The Company is incorporated in the Cayman Islands and several of its wholly owned subsidiaries are incorporated in the BVI. Under the current laws of the Cayman Islands and the BVI, these entities are not subject to income or capital gains taxes. In addition, dividend payments are not subject to withholdings tax in the Cayman Islands and the BVI.
Hong Kong
On
March 21, 2018, the Hong Kong Legislative Council passed The Inland Revenue (Amendment) (No. 7) Bill 2017 (the “Bill”)
which introduces the two-tiered profits tax rates regime. The Bill was signed into law on March 28, 2018 and was gazetted on the
following day. Under the two-tiered profits tax rates regime, the first HKD
For the years ended December 31, 2023, 2024 and 2025, the Company generated substantially all of its taxable income in the Hong Kong. The income tax expenses records in the Company’s result of operations are almost entirely attributable to income earned in the Hong Kong. Should the Company’s operations expand or change in the future, where the Company generates taxable income in other jurisdictions, the Company’s effective tax rates may substantially change.
Significant components of the provision for income tax are as follows:
| For the years ended December 31, | ||||||||||||
| 2023 | 2024 | 2025 | ||||||||||
| Domestic | ||||||||||||
| Hong Kong profits tax: | ||||||||||||
| – Current year | $ | $ | $ | |||||||||
| – Tax reduction | ( | ) | ||||||||||
| – Under (Over) provision for prior years | ( | ) | ( | ) | ||||||||
| Income tax expenses (benefit) | $ | $ | ( | ) | $ | |||||||
The effective tax rates
on income (loss) before income tax for the years ended December 31, 2023, 2024 and 2025 was
The
Company is headquartered in Hong Kong and the subsidiaries incorporated in Hong Kong functions as the Company’s primary business
operation center. Therefore, the Company uses Hong Kong’s income tax rate as applicable statutory income tax rate.
| For the years ended December 31, | |||||||||
| 2023 | 2024 | ||||||||
| Hong Kong statutory income tax rate | % | % | |||||||
| – Non-taxable income | ( | )% | % | ||||||
| – Non-deductible expenses | % | ( | )% | ||||||
| – Temporary difference not recognized | % | ( | )% | ||||||
| – Tax reduction | ( | )% | % | ||||||
| – Income tax at concessionary rate | ( | )% | % | ||||||
| – Tax losses not recognized | % | ( | )% | ||||||
| – Under/over provision for prior years | ( | )% | % | ||||||
| – Others | % | ( | )% | ||||||
| Effective tax rate | % | % | |||||||
F-33
PS INTERNATIONAL GROUP LTD.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 23 — INCOME TAX (cont.)
The table below provides the updated requirements of ASU No. 2023-09 for the year ended December 31, 2025. See Note 2 - Summary of Significant Accounting Policies for additional details on the adoption of ASU No. 2023-09.
Income (loss) before provision for income tax were generated in the following jurisdictions:
For the year ended December 31, 2025 | ||||
| Domestic component | ||||
| Hong Kong | ||||
| Foreign components | ||||
| BVI | ( | ) | ||
| Cayman | ( | ) | ||
| Total | ( | ) | ||
A
reconciliation of the Hong Kong statutory income tax rate of
For the year ended December 31, 2025 | ||||||||
| Loss before provision for income tax | ( | ) | ||||||
| Hong Kong income tax rate | ( | ) | 16.50 | % | ||||
| Foreign tax effects | ||||||||
| Statutory tax rate difference between foreign jurisdictions and Hong Kong | (16.88 | )% | ||||||
| Other nontaxable or nondeductible items, net | ( | ) | 0.24 | % | ||||
| Temporary differences not recognized | ( | ) | 0.14 | % | ||||
| Under provision in prior years | (0.01 | )% | ||||||
| (0.01 | )% | |||||||
Significant components of the Company’s net deferred tax asset were as follows:
| As of December 31, | ||||||||
| 2024 | 2025 | |||||||
| Deferred tax asset | ||||||||
| Net operating loss carryforwards | $ | $ | ||||||
| Total deferred tax asset | ||||||||
| Valuation allowance | ( |
) | ( |
) | ||||
| Total | $ | $ | ||||||
All net operating loss carryforwards are in Hong Kong and do not expire.
Realization of the Company’s deferred tax asset is dependent upon the Company generating sufficient taxable income in future years to obtain benefit from the reversal of temporary differences.
Management
considered all available evidence under existing tax law and anticipated expiration of tax statutes and determined that a valuation allowance
of $
F-34
PS INTERNATIONAL GROUP LTD.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 24 — RELATED PARTY TRANSACTIONS
(a) Names and relationship of related parties:
| Existing relationship with the Company | ||
| Rich Fame International Limited | At 31 December 2025, it was owned as to 50%, 25% and 25% by Mr. Yee Kit Chan, one of the directors of the Company, Ms. Jingyu Hao (the spouse of Mr. Chan), and Ms. Hoi Huen Heidi Chan (the daughter of Mr. Chan), respectively.
At 31 December 2024, it was wholly owned by Ms. Jingyu Hao. | |
| Top Star E-Commerce Logistics Limited | ||
| Profit Sail International Express (SZX) Company Limited |
(b) Summary of balances with related parties:
| As of December 31, | ||||||||||
| Amounts due to related parties: | Notes | 2024 | 2025 | |||||||
| Profit Sail International Express (SZX) Company Limited | (1) | $ | $ | |||||||
| Rich Fame International Limited | (1) | |||||||||
| Total | $ | $ | ||||||||
| As of December 31, | ||||||||||
| Amount due from a related party: | Notes | 2024 | 2025 | |||||||
| Profit Sail International Express (SZX) Company Limited | (2) | $ | $ | |||||||
| Total | $ | $ | ||||||||
Notes:
| (1) |
| (2) | |
| As of December 31, | ||||||||
| 2024 | 2025 | |||||||
| Amount due from a related party | $ | $ | ||||||
| Less: allowance for expected credit losses | ( | ) | ||||||
| Total | $ | $ | ||||||
The movement of allowance for expected credit losses is as follows:
| As of December 31, | ||||||||
| 2024 | 2025 | |||||||
| Balance at beginning of the year | $ | ( | ) | $ | ||||
| Reversal (Provision) | ( | ) | ||||||
| Total | $ | $ | ( | ) | ||||
F-35
PS INTERNATIONAL GROUP LTD.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 24 — RELATED PARTY TRANSACTIONS (cont.)
(c) Summary of related party transactions:
A summary of trade transactions with related parties for years ended December 31, 2023, 2024 and 2025 are listed below:
| For the years ended December 31, | ||||||||||||
| Services fee income from related parties: | 2023 | 2024 | 2025 | |||||||||
| Profit Sail International Express (SZX) Company Limited | $ | $ | $ | |||||||||
| Total | $ | $ | $ | |||||||||
The amounts for the years ended December 31, 2023, 2024 and 2025 represented services fee income from provision of logistics and freight handling services based on a mutually agreed price for each transaction.
| For the years ended December 31, | ||||||||||||
| Freight charges and other handling charges charged by related parties: | 2023 | 2024 | 2025 | |||||||||
| Profit Sail International Express (SZX) Company Limited | $ | $ | $ | |||||||||
| Top Star E-Commerce Logistics Limited | ||||||||||||
| Total | $ | $ | $ | |||||||||
The amounts for the years ended December 31, 2023, 2024 and 2025 represented charges paid for freight and other handling services based on a mutually agreed price for each transaction.
| For the years ended December 31, | ||||||||||||||
| Other income – management fee income from related parties: | 2023 | 2024 | 2025 | |||||||||||
| Profit Sail International Express (SZX) Company Limited | $ | $ | $ | |||||||||||
| Total | $ | $ | $ | |||||||||||
| The amounts for the years ended December 31, 2023, 2024 and 2025 represented services fee income from provision of management services based on the contractual terms of the related agreements. On April 15, 2019, the Company entered into several management fee agreements with Profit Sail International Express (SZX) Company Limited for the provision of management services including administrative, handling and office services, effective from May 1, 2019. The agreements shall remain valid until further notice by both parties. The annual management fee was based on the Company’s workload devoted to the related party. |
| For the years ended December 31, | ||||||||||||
| I.T. maintenance fee charged by a related party: | 2023 | 2024 | 2025 | |||||||||
| Rich Fame International Limited | $ | $ | $ | |||||||||
| Total | $ | $ | $ | |||||||||
The amounts for the years ended December 31, 2023, 2024 and 2025 represented charges paid for information technology services based on the contractual terms of the related agreement.
On
January 1, 2020, the Company entered into an agreement with Rich Fame International Limited for the provision of information technology
services including maintenance, consultancy and hosting services.
F-36
PS INTERNATIONAL GROUP LTD.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 25 — SEGMENT INFORMATION
The
Company uses the management approach in determining its operating segments. The Company’s CODM has been identified as the chief
executive officer, who reviews consolidated results when making decisions about allocating resources and assessing performance of the
Company. For the purpose of internal reporting and management’s operation review, the Company’s does
not segregate the Company’s business by service lines. Management has determined that the Company has
NOTE 26 — SUBSEQUENT EVENTS
The Company evaluates subsequent events that have occurred after the balance sheet date but before the audited consolidated financial statements are issued. There are two types of subsequent events: (1) recognized, or those that provide additional evidence with respect to conditions that existed at the dates of the balance sheets, including the estimates inherent in the process of preparing financial statements, and (2) non-recognized, or those that provide evidence with respect to conditions that did not exist at the date of the balance sheet but arose subsequent to that date. The Company has analyzed its operations subsequent to December 31, 2025 to the date of April 30, 2026, these audited consolidated financial statements were issued, and has determined that it does not have any material events to disclose, except disclosed below or elsewhere in the notes to the audited consolidated financial statements.
| (a) | Exercise of Warrant |
On
February 3, 2026, the Company issued
| (b) | The U.S.-Israel-Iran conflict |
The U.S.-Israel-Iran conflict directly disrupts the China-U.S. seaborne and air freight forwarding businesses in which the Company operates. The Company’s business is mainly focused on the air freight forwarding services. The U.S.-Israel-Iran conflict has disproportionately affected air freight, even though China-U.S. routes do not overfly Iran directly. China-U.S. air lanes are not directly blocked. However, global rerouting has resulted in a broader airspace squeeze. Carriers have shifted widebody freighters from China-U.S. routes to China-Europe routes for higher yields, and some flights avoid Middle East-related airspace and take the north polar routes, resulting in reduced payload per trip.
The current Middle East situation may have an adverse impact on the Company’s business and, as it has done, could in the future reduce the Company’s China-U.S. freight forwarding services due to capacity constraints. The Company may also not be able to fully pass on increased rates and surcharges to customers. Management is currently assessing the impact that such conflict may have on the Company’s operations for the year ending December 31, 2026.
F-37
Exhibit 2.3
DESCRIPTION OF SECURITES
REGISTERED UNDER SECTION 12 OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED (the “Exchange Act”)
As of the date of the Annual Report on Form 20-F (the “Form 20-F”) of which this Exhibit 2.1 is a part, PS International Group Ltd. (the “Company”, “we”, “us” or “our”) has only one class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended: the Company’s ordinary shares (the “Ordinary Shares”).
Description of Ordinary Shares
The following is a summary of material provisions of our currently effective memorandum and articles of association (our “Second Amended and Restated Memorandum and Articles of Association”), as well as the Companies Law (2020 Revision) of the Cayman Islands (the “Companies Act”) insofar as they relate to the material terms of our Ordinary Shares. Notwithstanding this, because it is a summary, it may not contain all the information that you may otherwise deem important. It is subject to and qualified in its entirety by reference to our Second Amended and Restated Memorandum and Articles, which are incorporated by reference as an exhibit to the Annual Report on Form 20-F of which this Exhibit 2.1 is a part.
Type and Class of Securities (Item 9.A.5 of Form 20-F)
Each Ordinary Share has US$0.0008 par value. The number of our Ordinary Share that have been issued as of the last day of the financial year ended December 31, 2025 is provided on the cover of Form 20-F filed on April 30, 2026.
Preemptive Rights (Item 9.A.3 of Form 20-F)
Our shareholders do not have preemptive rights.
Limitations or Qualifications (Item 9.A.6 of Form 20-F)
Not applicable.
Rights of Other Types of Securities (Item 9.A.7 of Form 20-F)
Not applicable.
Rights of Ordinary Shares (Item 10.B.3 of Form 20-F)
Class of Ordinary Shares
As of the date of this annual report, our authorized share capital is US$50,000, divided into 62,500,000 ordinary shares, including 50,000,000 Ordinary Shares and 12,500,000 Undesignated Shares, par value US$0.0008 per share. All of our shares to be issued in the offering will be issued as fully paid.
Holders of our Ordinary Shares will be entitled to one vote for each share held of record on all matters to be voted on by shareholders.
The board of directors may designate Undesignated Shares into one or more classes or series with such rights, preferences and restrictions as the board may determine.
Dividends
Subject to the foregoing, the payment of cash dividends in the future, if any, will be at the discretion of our board of directors and will depend upon such factors as earnings levels, capital requirements, contractual restrictions, overall financial condition, available distributable reserves and any other factors deemed relevant by our board of directors. Under Cayman Islands law, a Cayman Islands company may pay a dividend out of either profits (including retained earnings) or share premium, provided that in no circumstances may a dividend be paid if this would result in we being unable to pay its debts as they fall due in the ordinary course of its business.
Even if our board of directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that our board of directors may deem relevant. In addition, we are a holding company and depend on the receipt of dividends and other distributions from its subsidiaries to pay dividends on the Ordinary Shares. When making recommendations on the timing, amount and form of future dividends, if any, our board of directors will consider, among other things:
| ● | our results of operations and cash flow; |
| ● | our expected financial performance and working capital needs; |
| ● | our future prospects; |
| ● | our capital expenditures and other investment plans; |
| ● | other investment and growth plans; |
| ● | dividend yields of comparable companies globally; |
| ● | restrictions on payment of dividend that may be imposed on us by financing arrangements; and |
| ● | the general economic and business conditions and other factors deemed relevant by our board of directors and statutory restrictions on the payment of dividends. |
Voting Rights
Subject to any rights or restrictions for the time being attached to any class or classes of shares, on a show of hands every shareholder of record present in person or by proxy at a general meeting shall have one vote and on a poll every shareholder of record present in person or by proxy shall have one vote for each share registered in his name in the register of Members.
An ordinary resolution to be passed by the shareholders requires the affirmative vote of a simple majority of the votes attached to the Ordinary Shares cast by those shareholders entitled to vote who are present in person or by proxy (or, in the case of corporations, by their duly authorized representatives) at a general meeting, while a special resolution requires the affirmative vote of a majority of not less than two-thirds of the votes attached to the Ordinary Shares cast by those shareholders who are present in person or by proxy (or, in the case of corporations, by their duly authorized representatives) at a general meeting. Both ordinary resolutions and special resolutions may also be passed by a unanimous written resolution signed by all the shareholders of our company, as permitted by the Companies Act and our amended and restated memorandum and articles of association. A special resolution will be required for important matters such as a change of name or making changes to our amended and restated memorandum and articles of association.
Cumulative Voting
Delaware law permits cumulative voting for the election of directors only if expressly authorized in the certificate of incorporation. There are no prohibitions in relation to cumulative voting under the laws of the Cayman Islands but our amended and restated memorandum and articles of association do not provide for cumulative voting.
Pre-emptive Rights
There are no pre-emptive rights applicable to the issue by us of Ordinary Shares under our amended and restated memorandum and articles of association.
Meetings of Shareholders
Under the Cayman Companies Act, we are not required to call shareholders’ annual general meetings. We, however, will hold an annual shareholders’ meeting during each fiscal year, as required by the Nasdaq listing standards. At least 7 calendar days’ notice shall be given for any general meeting. The board of directors or the chairman of the board may call general meetings at anytime, and must convene an extraordinary general meeting upon the requisition of shareholders holding at the date of deposit of the requisition shares which carry in aggregate not less than one-third (1/3) of all votes attaching to all the issued and outstanding shares that as at the date of the deposit carry the right to vote at general meetings. One or more shareholders’ holding shares which carry in aggregate (or representing by proxy) not less than one-half (1/2) of all votes attaching to all shares in issue and entitled to vote at such general meeting present in person or by proxy and entitled to vote will be a quorum for all purposes.
2
Transfers of Shares
Subject to the restrictions set out below, any of shareholders may transfer all or any of his or her shares by an instrument of transfer in the usual or common form or any other form approved by the board of directors.
The board of directors may, in its absolute discretion, decline to register any transfer of any ordinary share which is not fully paid up or on which the Company has a lien. Company board of directors may also decline to register any transfer of any ordinary share unless:
| ● | the instrument of transfer is lodged with the Company, accompanied by the certificate for the ordinary shares to which it relates and such other evidence as the Company board of directors may reasonably require to show the right of the transferor to make the transfer; |
| ● | the instrument of transfer is in respect of only one class of ordinary shares; |
| ● | the instrument of transfer is properly stamped, if required; |
| ● | in the case of a transfer to joint holders, the number of joint holders to whom the ordinary share is to be transferred does not exceed four; and |
| ● | a fee of such maximum sum as the Nasdaq may determine to be payable, or such lesser sum as Company board of directors may from time to time require is paid to Company in respect thereof. |
The registration of transfers may, after compliance with any notice required of the Nasdaq, be suspended and the register closed at such times and for such periods as Company board of directors may from time to time determine, provided always that the registration of transfers shall not be suspended nor the register closed for more than thirty (30) calendar days in any calendar year.
If Company directors refuse to register a transfer, they shall, within three calendar months after the date on which the instrument of transfer was lodged, send to each of the transferor and the transferee notice of such refusal.
Winding Up
On the winding up of the Company, if the assets available for distribution amongst the Company shareholders shall be more than sufficient to repay the whole of the share capital at the commencement of winding up, the surplus shall be distributed amongst the shareholders in proportion to the par value of the shares held by them at the commencement of the winding up, subject to a deduction from those shares in respect of which there are monies due, of all monies payable to the Company for unpaid calls or otherwise. If the Company’s assets available for distribution are insufficient to repay the whole of the share capital, the assets will be distributed so that the losses are borne by the Company shareholders in proportion to the par value of the shares held by them.
Calls on Ordinary Shares and forfeiture of Ordinary Shares
Our board of directors may from time to time make calls upon shareholders for any amounts unpaid on their Ordinary Shares in a notice served to such shareholders at least one month prior to the specified time of payment. The Ordinary Shares that have been called upon and remain unpaid are subject to forfeiture.
Redemption, Repurchase and Surrender of Ordinary Shares
Subject to the provisions of the Cayman Companies Act, we may issue shares that are to be redeemed or are liable to be redeemed at the option of the shareholder or the Company. The redemption of such shares will be effected in such manner and upon such other terms as our directors determine before the issue of the shares, by either the our board or by ordinary resolution of the Company. We may also purchase or redeem its own shares (including any redeemable shares) on such terms and in such manner and terms have been approved by the Our Board or by Our shareholders by an ordinary resolution, or are otherwise authorized by the Amended and Restated Memorandum and Articles of Association.
3
Inspection of Books and Records
Holders of our Ordinary Shares will have no general right under Cayman Islands law to inspect any account or book or document of the Company except as conferred by the Companies Act or authorized by the Directors or by the Company in general meeting. However, we will provide our shareholders with annual audited financial statements.
Requirements to Change the Rights of Holders of Ordinary Shares (Item 10.B.4 of Form 20-F)
Variations of Rights of Shares
Under the Amended and Restated Memorandum and Articles of Association, if our share capital is divided into different classes (and as otherwise determined by the directors in accordance with the Amended and Restated Memorandum and Articles of Association), the relative rights as between the difference classes may only be varied with the consent in writing of the holders of at least two-thirds of the issued shares of that class or with the sanction of a special resolution passed at a separate general meeting of the holders of the shares of that class.
Limitations on the Rights to Own Ordinary Shares (Item 10.B.6 of Form 20-F)
Rights of Non-Resident or Foreign Shareholders
There are no limitations imposed by our Amended and Restated Memorandum and Articles of Association on the rights of non-resident or foreign shareholders to hold or exercise voting rights on our shares. In addition, there are no provisions in our amended and restated memorandum and articles of association governing the ownership threshold above which shareholder ownership must be disclosed.
Ownership Threshold (Item 10.B.8 of Form 20-F)
There are no provisions under the laws of the Cayman Islands which are applicable to our company or under our Amended and Restated Memorandum and Articles of Association that require our company to disclose shareholder ownership above any particular ownership threshold.
Differences Between the Law of Different Jurisdictions (Item 10.B.9 of Form 20-F)
Cayman Islands companies are governed by the Cayman Companies Act. The Cayman Companies Act is derived, to a large extent, from the older Companies Acts of England and Wales but does not follow recent United Kingdom statutory enactments, and accordingly there are significant differences between the Cayman Companies Act and the current Companies Act of the UK, and differs from laws applicable to United States corporations and their shareholders. Set forth below is a summary of the material differences between the provisions of the Cayman Companies Act applicable to us and the laws applicable to companies incorporated in the United States and their shareholders.
Mergers and Similar Arrangements
In certain circumstances, the Cayman Companies Act allows for mergers or consolidations between two Cayman Islands companies, or between a Cayman Islands exempted company and a company incorporated in another jurisdiction (provided that the merger is permitted under the laws of that other jurisdiction).
For these purposes, (a) “merger” means the merging of two or more constituent companies and the vesting of their undertaking, property and liabilities in one of such companies as the surviving company, and (b) a “consolidation” means the combination of two or more constituent companies into a new consolidated company and the vesting of the undertaking, property and liabilities of such companies to the consolidated company. In order to effect such a merger or consolidation, the directors of each constituent company must approve a written plan of merger or consolidation, which must then be authorized by (a) a special resolution of the shareholders of each constituent company, and (b) such other authorization, if any, as may be specified in such constituent company’s articles of association. The plan must be filed with the Registrar of Companies together with a declaration as to the solvency of the consolidated or surviving company, a list of the assets and liabilities of each constituent company and an undertaking that a copy of the certificate of merger or consolidation will be given to the shareholders and creditors of each constituent company and that notification of the merger or consolidation will be published in the Cayman Islands Gazette. Court approval is not required for a merger or consolidation which is affected in compliance with these statutory procedures.
4
A merger between a Cayman parent company and its Cayman subsidiary or subsidiaries does not require authorization by a resolution of shareholders. For this purpose, a subsidiary is a company of which at least 90% of the issued shares entitled to vote are owned by the parent company.
The consent of each holder of a fixed or floating security interest of a constituent company is required unless this requirement is waived by a court in the Cayman Islands.
Except in certain limited circumstances, a dissenting shareholder of a Cayman Islands constituent company is entitled to payment of the fair value of his or her shares upon dissenting from a merger or consolidation. The exercise of such dissenter rights will preclude the exercise by the dissenting shareholder of any other rights to which he or she might otherwise be entitled by virtue of holding shares, except for the right to seek relief on the grounds that the merger or consolidation is void or unlawful.
In addition, there are statutory provisions that facilitate the reconstruction and amalgamation of companies, provided that the arrangement is approved by seventy-five percent (75%) in value of the shareholders or class of shareholders, as the case may be, that are present and voting either in person or by proxy at a meeting, or meetings, convened for that purpose. The convening of the meetings and subsequently the arrangement must be sanctioned by the Grand Court of the Cayman Islands. While a dissenting shareholder has the right to express to the court the view that the transaction ought not to be approved, the court can be expected to approve the arrangement if it determines that:
| (a) | the statutory provisions as to the required majority vote have been met; |
| (b) | the shareholders have been fairly represented at the meeting in question and the statutory majority are acting bona fide without coercion of the minority to promote interests adverse to those of the class; |
| (c) | the arrangement is such that may be reasonably approved by an intelligent and honest man of that class acting in respect of his interest; and |
| (d) | the arrangement is not one that would more properly be sanctioned under some other provision of the Cayman Companies Act. |
When a takeover offer is made and accepted by holders of 90% of the shares affected within four months the offeror may, within a two-month period commencing on the expiration of such four-month period, require the holders of the remaining shares to transfer such shares on the terms of the offer. An objection can be made to the Grand Court of the Cayman Islands but this is unlikely to succeed in the case of an offer which has been so approved unless there is evidence of fraud, bad faith or collusion.
If an arrangement and reconstruction is thus approved, or if a takeover offer is made and accepted, a dissenting shareholder would have no rights comparable to appraisal rights, which would otherwise ordinarily be available to dissenting shareholders of Delaware corporations, providing rights to receive payment in cash for the judicially determined value of the shares.
Squeeze-out Provisions.
When a takeover offer is made and accepted by holders of 90% of the shares to whom the offer relates within four months, the offeror may, within a two-month period, require the holders of the remaining shares to transfer such shares on the terms of the offer. An objection can be made to the Grand Court of the Cayman Islands, but this is unlikely to succeed unless there is evidence of fraud, bad faith, collusion or inequitable treatment of the shareholders.
Further, transactions similar to a merger, reconstruction and/or an amalgamation may in some circumstances be achieved through means other than these statutory provisions, such as a share capital exchange, asset acquisition or control, or through contractual arrangements of an operating business.
5
Shareholders Suits
In principle, we will normally be the proper plaintiff to sue for a wrong done to us as a company and as a general rule, a derivative action may not be brought by a minority shareholder. However, based both on Cayman Islands authorities and on English authorities, which would in all likelihood be of persuasive authority and be applied by a court in the Cayman Islands, the Cayman Islands courts can be expected to follow and apply the common law principles (namely the rule in Foss v. Harbottle and the exceptions thereto) so that a non-controlling shareholder may be permitted to commence a class action against or derivative actions in the name of the company to challenge:
| ● | a company is acting, or proposing to act, illegally or beyond the scope of its authority; |
| ● | the act complained of, although not beyond the scope of the authority, could be effected if duly authorized by more than the number of votes which have actually been obtained; or |
| ● | those who control the company are perpetrating a “fraud on the minority.” |
A shareholder may have a direct right of action against us where the individual rights of that shareholder have been infringed or are about to be infringed.
Special Considerations for Exempted Companies
The Company is an exempted company with limited liability under the Cayman Companies Act. The Cayman Companies Act distinguishes between ordinary resident companies and exempted companies. Any company that is registered in the Cayman Islands but conducts business mainly outside of the Cayman Islands may apply to be registered as an exempted company. The requirements for an exempted company are essentially the same as for an ordinary company except for the exemptions and privileges listed below:
| ● | an exempted company (other than an exempted company holding a license to carry on business in the Cayman Islands) does not have to file an annual return of its shareholders with the Registrar of Companies of the Cayman Islands; |
| ● | an exempted company’s register of members is not open to inspection; |
| ● | an exempted company does not have to hold an annual general meeting; |
| ● | an exempted company may issue shares with no par value; |
| ● | an exempted company may obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for 20 years in the first instance); |
| ● | an exempted company may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands; |
| ● | an exempted company may register as a limited duration company; and |
| ● | an exempted company may register as a segregated portfolio company. |
“Limited liability” means that the liability of each shareholder is limited to the amount unpaid by the shareholder on the shares of the company (except in exceptional circumstances, such as involving fraud, the establishment of an agency relationship or an illegal or improper purpose or other circumstances in which a court may be prepared to pierce or lift the corporate veil).
Indemnification of Directors and Executive Officers and Limitation of Liability
Cayman Islands law does not limit the extent to which a company’s articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime. The Amended and Restated Memorandum and Articles of Association permits indemnification of officers and directors for any action, proceeding, costs, charges, expenses, losses, damages or liabilities, including legal expenses, incurred in their capacities as such unless such liability (if any) arises from actual fraud, willful default or willful neglect which may attach to such directors or officers. This standard of conduct is generally the same as permitted under the Delaware General Corporation Law for a Delaware corporation. In addition, the Company intends to enter into indemnification agreements with our directors and senior executive officers that will provide such persons with additional indemnification beyond that provided in the Amended and Restated Memorandum and Articles of Association.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling us under the foregoing provisions, the Company has been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
6
Anti-Takeover Provisions in the Amended and Restated Memorandum and Articles of Association
Some provisions of the Amended and Restated Memorandum and Articles of Association may discourage, delay or prevent a change of control of The Company or management that shareholders may consider favorable, including provisions that limit the ability of shareholders to requisition and convene general meetings of shareholders.
Such provisions could be applied to delay or prevent a change in control of the Company or make removal of management more difficult. This may cause the price of the Company Ordinary Shares to fall.
However, under Cayman Islands law, our directors may only exercise the rights and powers granted to them under the Amended and Restated Memorandum and Articles of Associationfor a proper purpose and for what they believe in good faith to be in the best interests of the Company and the shareholders.
Directors’ Fiduciary Duties
Under Delaware corporate law, a director of a Delaware corporation has a fiduciary duty to the corporation and its shareholders. This duty has two components: the duty of care and the duty of loyalty. The duty of care requires that a director act in good faith, with the care that an ordinarily prudent person would exercise under similar circumstances. Under this duty, a director must inform himself or herself of, and disclose to shareholders, all material information reasonably available regarding a significant transaction. The duty of loyalty requires that a director act in a manner he or she reasonably believes to be in the best interests of the corporation. A director must not use his or her corporate position for personal gain or advantage. This duty prohibits self-dealing by a director and mandates that the best interest of the corporation and its shareholders take precedence over any interest possessed by a director, officer or controlling shareholder and not shared by the shareholders generally. In general, actions of a director are presumed to have been made on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the corporation. However, this presumption may be rebutted by evidence of a breach of one of the fiduciary duties. Should such evidence be presented concerning a transaction by a director, a director must prove the procedural fairness of the transaction, and that the transaction was of fair value to the corporation.
Under Cayman Islands law, directors owe the following fiduciary duties:
| ● | duty to act in good faith in what the director or officer believes to be in the best interests of the company as a whole; |
| ● | duty to exercise powers for the purposes for which those powers were conferred and not for a collateral purpose; |
| ● | directors should not improperly fetter the exercise of future discretion; |
| ● | duty to exercise powers fairly as between different sections of shareholders; |
| ● | duty not to put themselves in a position in which there is a conflict between their duty to the company and their personal interests; and |
| ● | duty to exercise independent judgment. |
As set out above, directors have a duty not to put themselves in a position of conflict and this includes a duty not to engage in self-dealing, or to otherwise benefit as a result of their position. However, in some instances what would otherwise be a breach of this duty can be forgiven and/or authorized in advance by the shareholders provided that there is full disclosure by the directors. This can be done by way of permission granted in the amended and restated memorandum and articles of association or alternatively by shareholder approval at general meetings.
Shareholder Action by Written Consent
Under the Delaware General Corporation Law, a corporation may eliminate the right of shareholders to act by written consent by amendment to its certificate of incorporation. The Amended and Restated Memorandum and Articles of Association provides that shareholders may approve corporate matters by way of a written resolution signed by or on behalf of all shareholders who would have been entitled to vote on such matter at a general meeting without a meeting being held.
7
Shareholder Proposals
Under the Delaware General Corporation Law, a shareholder has the right to put any proposal before the annual meeting of shareholders, provided it complies with the notice provisions in the governing documents. An extraordinary general meeting may be called by the board of directors or any other person authorized to do so in the governing documents, but shareholders may be precluded from calling extraordinary general meetings.
The Cayman Companies Act provides shareholders with only limited rights to requisition a general meeting, and does not provide shareholders with any right to put any proposal before a general meeting. However, these rights may be provided in a company’s articles of association. The Amended and Restated Memorandum and Articles of Association permits our shareholders together holding one-third (1/3) of all votes attaching to all the issued and outstanding shares that as at the date of the deposit carry the right to vote at general meetings of the Company to requisition a general meeting. As a Cayman Islands exempted company, The Company is not obliged by law to call shareholders’ annual general meetings. The Company, however, will hold an annual shareholders’ meeting during each fiscal year, as required by the Nasdaq listing standards.
Matters Requiring Shareholder Approval
A special resolution, requiring not less than a two-thirds vote (or a unanimous written resolution), is required to:
| ● | amend the Amended and Restated Memorandum and Articles of Association ; |
| ● | register the Company by way of continuation in a jurisdiction outside the Cayman Islands; |
| ● | merge or consolidate the Company by way of a Cayman Islands statutory merger or consolidation; |
| ● | reduce our share capital or any capital redemption reserve in any manner authorized by law; |
| ● | change our name; or |
| ● | other matters as provided in the Amended and Restated Memorandum and Articles of Association . |
Cumulative Voting
Under the Delaware General Corporation Law, cumulative voting for elections of directors is not permitted unless the corporation’s certificate of incorporation specifically provides for it. Cumulative voting potentially facilitates the representation of minority shareholders on a board of directors since it permits the minority shareholder to cast all the votes to which the shareholder is entitled on a single director, which increases the shareholder’s voting power with respect to electing such director. As permitted under Cayman Islands law, the Amended and Restated Memorandum and Articles of Association do not provide for cumulative voting. As a result, our shareholders are not afforded any less protections or rights on this issue than shareholders of a Delaware corporation.
Transactions with Interested Shareholders
The Delaware General Corporation Law contains a business combination statute applicable to Delaware corporations whereby, unless the corporation has specifically elected not to be governed by such statute under its certificate of incorporation, it is prohibited from engaging in certain business combinations with an “interested shareholder” for three years following the date that such person becomes an interested shareholder. An interested shareholder generally is a person or a group who or which owns or owned 15% or more of the target’s outstanding voting stock within the past three years. This has the effect of limiting the ability of a potential acquirer to make a two-tiered bid for the target in which all shareholders would not be treated equally. The statute does not apply if, among other things, prior to the date on which such shareholder becomes an interested shareholder, the board of directors approves either a business combination or the transaction which resulted in the person becoming an interested shareholder. This encourages any potential acquirer of a Delaware corporation to negotiate the terms of any acquisition transaction with the target’s board of directors.
Cayman Islands law has no comparable statute. As a result, the Company cannot avail ourselves of the types of protections afforded by the Delaware business combination statute. However, although Cayman Islands law does not regulate transactions between a company and its significant shareholders, it does provide that such transactions must be entered into bona fide in the best interests of the company and for a proper corporate purpose and not with the effect of constituting a fraud on the minority shareholders.
8
Dissolution; Winding Up
Under the Delaware General Corporation Law, unless the board of directors approves the proposal to dissolve, dissolution must be approved by shareholders holding 100% of the total voting power of the corporation. Only if the dissolution is initiated by the board of directors may it be approved by a simple majority of the corporation’s outstanding shares. Delaware law allows a Delaware corporation to include in its certificate of incorporation a supermajority voting requirement in connection with dissolutions initiated by the board.
Under Cayman Islands law, a company may be wound up by either an order of the courts of the Cayman Islands or by a special resolution of its members or, if the company is unable to pay its debts as they fall due, by an ordinary resolution of its members. The court has authority to order winding up in a number of specified circumstances including where it is, in the opinion of the court, just and equitable to do so.
Under the Amended and Restated Memorandum and Articles of Association , if the Company is wound up, the liquidator of the Company may distribute the assets with the sanction of a special resolution of the shareholders and any other sanction required by law.
Variation of Rights of Shares
Under the Delaware General Corporation Law, a corporation may vary the rights of a class of shares with the approval of a majority of the outstanding shares of such class, unless the certificate of incorporation provides otherwise.
Under the Amended and Restated Memorandum and Articles of Association, if our share capital is divided into different classes (and as otherwise determined by the directors in accordance with the Amended and Restated Memorandum and Articles of Association ), the relative rights as between the difference classes may only be varied with the consent in writing of the holders of at least two-thirds of the issued shares of that class or with the sanction of a special resolution passed at a separate general meeting of the holders of the shares of that class.
Amendment of Governing Documents
Under the Delaware General Corporation Law, a corporation’s governing documents may be amended with the approval of a majority of the outstanding shares entitled to vote on the matter, unless the certificate of incorporation provides otherwise. As permitted by Cayman Islands law, the Amended and Restated Memorandum and Articles of Association may only be amended by a special resolution of the shareholders.
Rights of Non-Resident or Foreign Shareholders
There are no limitations imposed by the Amended and Restated Memorandum and Articles of Association on the rights of non-resident or foreign shareholders to hold or exercise voting rights on Our shares. In addition, there are no provisions in the Amended and Restated Memorandum and Articles of Association governing the ownership threshold above which shareholder ownership must be disclosed.
Directors’ Power to Issue Shares
Subject to applicable law, our board of directors is empowered to issue or allot shares or grant options and warrants with or without preferred, deferred, or other rights or restrictions.
Inspection of Books
Under the Delaware General Corporation Law, any shareholder of a corporation may for any proper purpose inspect or make copies of the corporation’s stock ledger, list of shareholders and other books and records.
Holders of the shares have no general right under Cayman Islands law to inspect or obtain copies of our register of members or the corporate records (other than our memorandum ad articles of association, as amended and restated from time to time, and its register of mortgages and charges).
9
Changes in Capital
The Company may from time to time by ordinary resolution:
| ● | increase the share capital by new shares of such amount as it thinks expedient; |
| ● | consolidate and divide all or any of its share capital into shares of a larger amount than its existing shares; |
| ● | subdivide its shares, or any of them, into shares of a smaller amount provided that in the subdivision the proportion between the amount paid and the amount, if any, unpaid on each reduced share shall be the same as it was in case of the share from which the reduced share is derived; and |
| ● | cancel any shares that, at the date of the passing of the resolution, have not been taken or agreed to be taken by any Person and diminish the amount of its share capital by the amount of the share so canceled. |
Anti-Money Laundering — Cayman Islands
In order to comply with legislation or regulations aimed at the prevention of money laundering, we are required to adopt and maintain anti-money laundering procedures and may require subscribers to provide evidence to verify their identity and source of funds. Where permitted, and subject to certain conditions, we may also delegate the maintenance of our anti-money laundering procedures (including the acquisition of due diligence information) to a suitable person.
We reserve the right to request such information as is necessary to verify the identity of a subscriber. In some cases the directors may be satisfied that no further information is required since an exemption applies under the Anti-Money Laundering Regulations (Revised) of the Cayman Islands, as amended and revised from time to time (the “Regulations”). Depending on the circumstances of each application, a detailed verification of identity might not be required where:
| ● | the subscriber makes the payment for their investment from an account held in the subscriber’s name at a recognized financial institution; or |
| ● | the subscriber is regulated by a recognized regulatory authority and is based or incorporated in, or formed under the law of, a recognized jurisdiction; or |
| ● | the application is made through an intermediary which is regulated by a recognized regulatory authority and is based in or incorporated in, or formed under the law of a recognized jurisdiction and an assurance is provided in relation to the procedures undertaken on the underlying investors. |
For the purposes of these exceptions, recognition of a financial institution, regulatory authority, or jurisdiction will be determined in accordance with the Regulations by reference to those jurisdictions recognized by the Cayman Islands Monetary Authority as having equivalent anti-money laundering regulations.
In the event of delay or failure on the part of the subscriber in producing any information required for verification purposes, we may refuse to accept the application, in which case any funds received will be returned without interest to the account from which they were originally debited.
We also reserve the right to refuse to make any redemption payment to a shareholder if our directors or officers suspect or are advised that the payment of redemption proceeds to such shareholder might result in a breach of applicable anti-money laundering or other laws or regulations by any person in any relevant jurisdiction, or if such refusal is considered necessary or appropriate to ensure our compliance with any such laws or regulations in any applicable jurisdiction.
If any person resident in the Cayman Islands knows or suspects or has reason for knowing or suspecting that another person is engaged in criminal conduct or is involved with terrorism or terrorist property and the information for that knowledge or suspicion came to their attention in the course of their business in the regulated sector, or other trade, profession, business or employment, the person will be required to report such knowledge or suspicion to (i) a nominated officer (appointed in accordance with the Proceeds of Crime Act (Revised) of the Cayman Islands) or the Financial Reporting Authority of the Cayman Islands, pursuant to the Proceeds of Crime Act (Revised), if the disclosure relates to criminal conduct or money laundering or (ii) to a police constable or a nominated officer (pursuant to the Terrorism Act (Revised) of the Cayman Islands) or the Financial Reporting Authority, pursuant to the Terrorism Act (Revised), if the disclosure relates to involvement with terrorism or terrorist financing and terrorist property. Such a report shall not be treated as a breach of confidence or of any restriction upon the disclosure of information imposed by any enactment or otherwise.
10
Changes in Capital (Item 10.B.10 of Form 20-F)
Subject to the Companies Act, we may from time to time by an ordinary resolution of our shareholders:
| ● | increase the share capital of our Company by new shares of such amount as it thinks expedient; |
| ● | consolidate and divide all or any of our share capital into shares of larger amount than its existing shares of shares; |
| ● | subdivide its existing shares, or any of them, into shares of a smaller amount provided that in the subdivision the proportion between the amount paid and the amount, if any, unpaid on each reduced share shall be the same as it was in case of the share from which the reduced share is derived; and |
| ● | cancel any shares that, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish the amount of its share capital by the amount of the shares so canceled. |
Our shareholders may by special resolution, subject to confirmation by the Grand Court of the Cayman Islands on an application by our company for an order confirming such reduction, reduce its share capital and any capital redemption reserve in any manner authorized by the Companies Act.
Debt Securities (Item 12.A of Form 20-F)
Not applicable.
Warrants and Rights (Item 12.B of Form 20-F)
Following the consummation of the Business Combination, we have assumed the Unit Purchase Option (as defined below) that AIB sold to Maxim Group LLC, connection with the initial public offering of AIB, for $100 (before Reverse Stock Split), which consists of an option to purchase up to a total of 431,250 Option Units (as defined below before Reverse Stock Split) exercisable, in whole or in part, at $11.00 per unit (before Reverse Stock Split), commencing on the consummation of the Business Combination (the “Unit Purchase Option”). The Unit Purchase Option may be exercised for cash or on a cashless basis, at the holder’s option, and expires five years from January 18, 2022. Upon exercise, each unit (the “Option Unit”) contains one Ordinary Share and one right. Each right, upon automatic conversion at issuance, entitles the holder thereof to receive one-tenth (1/10) of an Ordinary Share upon the consummation of the Business Combination.
The Unit Purchase Option grants to holders demand and “piggy-back” rights of the securities directly and indirectly issuable upon exercise of the Unit Purchase Option. We will bear all fees and expenses attendant to registering the securities, other than underwriting commissions which will be paid for by the holders themselves. The exercise price and number of Option Units issuable upon exercise of the Unit Purchase Option may be adjusted in certain circumstances including in the event of a stock dividend, or our recapitalization, reorganization, merger or consolidation. However, the Unit Purchase Option will not be adjusted for issuances of Ordinary Shares at a price below its exercise price. We will have no obligation to net cash settle the exercise of the Unit Purchase Option or the rights underlying the Unit Purchase Option. The holder of the Unit Purchase Option will not be entitled to exercise the Unit Purchase Option or the underlying rights unless a registration statement covering the securities underlying the Unit Purchase Option is effective or an exemption from registration is available. If the holder is unable to exercise the Unit Purchase Option, the Unit Purchase Option will expire worthless.
On November 12, 2025, the Company completed a private placement pursuant to a securities purchase agreement and issued n aggregate of 5,332,216 units at a purchase price of US$1.80 per unit. Each unit consisted of: (i) one Ordinary Share, par value US$0.0008 per share; and (ii) one Warrant to purchase up to two Ordinary Shares. The Warrants entitle holders to purchase up to an aggregate of 10,664,432 additional Ordinary Shares at an exercise price of US$2.16 per Ordinary Share, subject to customary anti-dilution adjustments, and expire five years from issuance. All Warrants issued during the private placement have been fully exercised in their entirely prior to April 30, 2026, the reporting date of this Form 20-F on a cashless basis. Accordingly, no Warrants from this issuance were outstanding, unexercised or otherwise unsettled as of the reporting date. Full exercise of these Warrants on a cashless basis resulted in the issuance of additional 6,753,470 ordinary shares of the Company with corresponding adjustments from warrant-related liabilities to share capital and additional paid-in capital recorded in the consolidated statement of financial position and consolidate statement of changes in equity as at the reporting date.
Other Securities (Item 12.C of Form 20-F)
Not applicable.
Description of American Depositary Shares (Items 12.D.1 and 12.D.2 of Form 20-F)
Not applicable.
11
Exhibit 8.1
LIST OF SUBSIDIARIES
Subsidiaries |
Place of Incorporation | |
| PSI Group Holdings Ltd | Cayman Islands | |
| PSI (BVI) Ltd | British Virgin Islands | |
| BGG (BVI) Ltd | British Virgin Islands | |
| Profit Sail Int’l Express (HK) Limited | Hong Kong SAR | |
| Business Great Global Supply Chain Limited | Hong Kong SAR | |
| PSIG Investment Limited | British Virgin Islands | |
| PSIG Singapore Pte. Limited | Singapore |
Exhibit 12.1
Certification of Principal Executive Officer
Pursuant to Exchange Act Rule 13a-14(a)/15d-14(a)
Under the Securities Exchange Act of 1934, as Amended
as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Chunlin Tong, certify that:
| 1. | I have reviewed this Annual Report on Form 20-F for the fiscal year ended December 31, 2025 of PS International Group Ltd.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b. | [paragraph omitted in accordance with Exchange Act Rule 13a-14(a)]; |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: April 30, 2026 |
/s/ Chunlin Tong |
| Chunlin Tong | |
| Chief Executive Officer and Director | |
| (Principal Executive Officer) |
Exhibit 12.2
Certification of Principal Financial Officer
Pursuant to Exchange Act Rule 13a-14(a)/15d-14(a)
Under the Securities Exchange Act of 1934, as Amended
as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Man Kiu Chan, certify that:
| 1. | I have reviewed this Annual Report on Form 20-F for the fiscal year ended December 31, 2025 of PS International Group Ltd.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b. | [paragraph omitted in accordance with Exchange Act Rule 13a-14(a)]; |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
|
Date: April 30, 2026 |
/s/ Man Kiu Chan |
| Man Kiu Chan | |
| Chief Financial Officer | |
| (Principal Accounting and Financial Officer) |
Exhibit 13.1
CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Chunlin Tong, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual Report on Form 20-F of PS International Group Ltd. for the fiscal year ended December 31, 2025, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Annual Report on Form 20-F fairly presents, in all material respects, the financial condition and results of operations of PS International Group Ltd.
Date: April 30, 2026
| /s/ Chunlin Tong | |
| Chunlin Tong | |
| Chief Executive Officer and Director | |
| (Principal Executive Officer) |
Exhibit 13.2
CERTIFICATIONS OF CHIEF FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Man Kiu Chan, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual Report on Form 20-F of PS International Group Ltd. for the fiscal year ended December 31, 2025, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Annual Report on Form 20-F fairly presents, in all material respects, the financial condition and results of operations of PS International Group Ltd.
|
Date: April 30, 2026 |
|
| /s/ Man Kiu Chan | |
| Man Kiu Chan | |
| Chief Financial Officer | |
| (Principal Accounting and Financial Officer) |
Exhibit 15.1
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the Registration Statement on Form S-8 (Registration No. 333-281480), PS International Group Ltd. of our report dated April 30, 2026, with respect to our audit of the consolidated financial statements of PS International Group Ltd. as of December 31, 2024 and 2025, and for each of the years in the three-year period ended December 31, 2025, which is included in its Annual Report on Form 20-F, filed with the Securities and Exchange Commission.
| /s/ WWC, P.C. | |
| WWC, P.C. | |
| San Mateo, California | Certified Public Accountants |
| April 30, 2026 | PCAOB ID No.1171 |
