UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
For the quarterly period ended
For the transition period from __________ to __________.
Commission File Number
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of | (I.R.S. Employer | |
| Incorporation or organization) | Identification No.) |
| | ||
| (Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit
such files).
Indicate by check mark whether the registrant is a large-accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large-accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large-accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging Growth Company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether
the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No
As of May 15, 2025, the Company
had
SINGULARITY FUTURE TECHNOLOGY LTD.
FORM 10-Q
TABLE OF CONTENTS
| CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS | ii | |
| PART I. | FINANCIAL INFORMATION | 1 |
| Item 1. | Financial Statements | 1 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 27 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 34 |
| Item 4. | Controls and Procedures | 34 |
| PART II. | OTHER INFORMATION | 36 |
| Item 1. | Legal Proceedings | 36 |
| Item 1A. | Risk Factors | 36 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 37 |
| Item 3. | Defaults Upon Senior Securities | 37 |
| Item 4. | Mine Safety Disclosures | 37 |
| Item 5. | Other Information | 37 |
| Item 6. | Exhibits | 37 |
i
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Report contains certain statements that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such forward-looking statements, including but not limited to statements regarding our projected growth, trends and strategies, future operating and financial results, financial expectations and current business indicators are based upon current information and expectations and are subject to change based on factors beyond our control. Forward-looking statements typically are identified by the use of terms such as “look,” “may,” “will,” “should,” “might,” “believe,” “plan,” “expect,” “anticipate,” “estimate” and similar words, although some forward-looking statements are expressed differently. The accuracy of such statements may be impacted by a number of business risks and uncertainties we face that could cause our actual results to differ materially from those projected or anticipated, including but not limited to the following:
| ● | our ability to timely and properly deliver our services; |
| ● | our dependence on a limited number of major customers and suppliers; |
| ● | current and future political and economic factors in the United States and China and the relationship between the two countries; |
| ● | our ability to explore and enter into new business opportunities and the acceptance in the marketplace of our new lines of business; |
| ● | unanticipated changes in general market conditions or other factors which may result in cancellations or reductions in the need for our services; |
| ● | the demand for warehouse, shipping and logistics services; |
| ● | the foreign currency exchange rate fluctuations; |
| ● | possible disruptions in commercial activities caused by events such as natural disasters, health epidemics, terrorist activity and armed conflict; |
| ● | the impact of quotas, tariffs or safeguards on our customer products that we service; |
| ● | our ability to attract, retain and motivate qualified management team members and skilled personnel; |
| ● | relevant governmental policies and regulations relating to our businesses and industries; |
| ● | developments in, or changes to, laws, regulations, governmental policies, incentives and taxation affecting our operations; |
| ● | our reputation and ability to do business may be impacted by the improper conduct of our employees, agents or business partners; and |
| ● | the outcome of litigation or investigations in which we are involved is unpredictable, and an adverse decision in any such matter could have a material adverse effect on our financial condition, results of operations, cash flows and equity. |
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to update the forward-looking statements. Nonetheless, the Company reserves the right to make such updates from time to time by press release, periodic report or other method of public disclosure without the need for specific reference to this Report. No such update shall be deemed to indicate that other statements not addressed by such update remain correct or create an obligation to provide any other updates.
ii
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
SINGULARITY FUTURE TECHNOLOGY LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN U.S. DOLLARS)
(UNAUDITED)
| March 31, | June 30, | |||||||
| 2025 | 2024 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash | $ | $ | ||||||
| Restricted cash | ||||||||
| Accounts receivable, net | ||||||||
| Other receivables, net | ||||||||
| Advances to suppliers - third parties | ||||||||
| Due from related party | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Right-of-use assets | ||||||||
| Other long-term assets – deposits | ||||||||
| Total Assets | $ | $ | ||||||
| Current Liabilities | ||||||||
| Deferred revenue | $ | $ | ||||||
| Accounts payable | ||||||||
| Accounts payable – related party | - | |||||||
| Lease liabilities – current | ||||||||
| Taxes payable | ||||||||
| Due to related party | ||||||||
| Accrued expenses and other current liabilities | ||||||||
| Total current liabilities | ||||||||
| Lease liabilities - noncurrent | ||||||||
| Total liabilities | ||||||||
| Commitments and Contingencies | ||||||||
| Equity | ||||||||
| Preferred stock, | ||||||||
| Common stock, | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive income | ( | ) | ||||||
| Total Stockholders’ Equity attributable to controlling shareholders of the Company | ||||||||
| Non-controlling Interest | ( | ) | ( | ) | ||||
| Total Equity | ||||||||
| Total Liabilities and Equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1
SINGULARITY FUTURE TECHNOLOGY LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(IN U.S. DOLLARS)
(UNAUDITED)
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| March 31, | March 31, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Net revenues | $ | $ | $ | $ | ||||||||||||
| Cost of revenues | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Gross profit (loss) | ( | ) | ( | ) | ||||||||||||
| Selling expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| General and administrative expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Impairment loss of cryptocurrencies | ( | ) | ||||||||||||||
| Allowance for credit losses, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total operating expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Operating loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| (Loss) Gain from disposal of subsidiary | ( | ) | ||||||||||||||
| Other incomes, net | ||||||||||||||||
| Loss before income tax expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax expense | ||||||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net income (loss) attributable to non-controlling interest | ( | ) | ( | ) | ||||||||||||
| Net loss attributable to shareholders of the Company | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Comprehensive loss | ||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Other comprehensive (expense) income – foreign currency | ( | ) | ( | ) | ||||||||||||
| Comprehensive loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Less: Comprehensive income attributable to non-controlling interest | ||||||||||||||||
| Comprehensive loss attributable to shareholders of the Company | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Loss per share | ||||||||||||||||
| Basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average number of common shares used in computation | ||||||||||||||||
| Basic and diluted | ||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2
SINGULARITY FUTURE TECHNOLOGY LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(IN U.S. DOLLARS)
(UNAUDITED)
| Preferred Stock | Common Stock | Additional paid-in | Shares to be | Accumulated | Accumulated other comprehensive | Non controlling | ||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | capital | cancelled | deficit | loss | interest | Total | |||||||||||||||||||||||||||||||
| BALANCE, June 30, 2023 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Foreign currency translation | - | - | ||||||||||||||||||||||||||||||||||||||
| Cancellation of shares due to settlement | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| BALANCE, September 30, 2023 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Foreign currency translation | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| BALANCE, December 31, 2023 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Issuance of common stock to private investors | ||||||||||||||||||||||||||||||||||||||||
| Disposal of subsidiaries | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Foreign currency translation | - | - | ||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| BALANCE, March 31, 2024 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Additional paid-in | Shares to be | Accumulated | Accumulated other comprehensive | Non controlling | ||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | capital | cancelled | deficit | loss | interest | Total | |||||||||||||||||||||||||||||||
| BALANCE, June 30, 2024 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Foreign currency translation | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| BALANCE, September 30, 2024 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Foreign currency translation | - | - | ||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| BALANCE, December 31, 2024 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Issuance of common stock to private investors | ||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| BALANCE, March 31, 2025 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
SINGULARITY FUTURE TECHNOLOGY LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN U.S. DOLLARS)
(UNAUDITED)
| For the Nine Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Operating Activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Non-cash lease expense | ||||||||
| Allowance for credit losses, net | ||||||||
| Impairment loss of cryptocurrencies | ||||||||
| Loss on disposal of property and equipment | ||||||||
| Loss (gain) on disposal of subsidiaries | ( | ) | ||||||
| Reversal of impairment for right-of-use assets | ( | ) | ||||||
| Interest expenses related to convertible notes | ||||||||
| Changes in assets and liabilities | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Other receivables | ( | ) | ) | |||||
| Advances to suppliers - third parties | ( | ) | ||||||
| Prepaid expenses and other current assets | ||||||||
| Due to related parties | ||||||||
| Other long-term assets – deposits | ||||||||
| Deferred revenue | ( | ) | ( | ) | ||||
| Accounts payable | ||||||||
| Taxes payable | ( | ) | ||||||
| Lease liabilities | ( | ) | ( | ) | ||||
| Accrued expenses and other current liabilities | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Investing Activities | ||||||||
| Acquisition of property and equipment | ( | ) | ||||||
| Repayment from related parties | ||||||||
| Net cash provided by investing activities | ||||||||
| Financing Activities | ||||||||
| Proceeds from issuance of common stock | ||||||||
| Repayment of convertible notes | ( | ) | ||||||
| Payment of accrued interest related to convertible notes | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| Net increase (decrease) in cash and restricted cash | ( | ) | ||||||
| Cash at beginning of period | ||||||||
| Effect of exchange rate fluctuations on cash and restricted cash | ( | ) | ||||||
| Cash and restricted cash at end of period | $ | $ | ||||||
| Representing: | ||||||||
| Cash, end of period | $ | $ | ||||||
| Restricted cash, end of period | $ | $ | ||||||
| Total cash and restricted cash, end of period | $ | $ | ||||||
| Non-cash transactions of operating and investing activities | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
SINGULARITY FUTURE TECHNOLOGY LTD. AND SUBSIDIAIRES
Notes to the Condensed Consolidated Financial Statements
For the Nine Months ended March 31, 2025
Note 1. ORGANIZATION AND NATURE OF BUSINESS
The Company is an integrated logistics solution provider that was founded in the United States in 2001. On September 14, 2007, the Company merged into a new corporation, Sino-Global Shipping America, Ltd. in Virginia. On January 3, 2022, the Company changed its corporate name from Sino-Global Shipping America, Ltd. to Singularity Future Technology Ltd. to reflect its then expanded operations into the digital assets business. Currently, we primarily focus on providing freight logistics services, which include shipping, warehouse services and other logistical support to steel companies.
In 2017, we began exploring new opportunities to expand our business and generate more revenue. These opportunities ranged from complementary businesses to other new services and product initiatives. Beginning in fiscal 2022, we expanded our services to include warehousing services provided by our U.S. subsidiary Brilliant Warehouse Service Inc.
We are currently operating through our subsidiary Trans Pacific Shipping Limited. As of July 31, 2024, we have terminated the operations of our subsidiaries Gorgeous Trading Ltd. and Brilliant Warehouse Service Inc. Our range of services are mainly transportation.
To date we have not generated any revenues from our entry into the solar panel production and distribution business.
As of March 31, 2025, the Company’s subsidiaries included the following:
| Name | Background | Ownership | |||
| Sino-Global Shipping New York Inc. (“SGS NY”) | ● | ||||
| ● | |||||
| ● | |||||
| Sino-Global Shipping HK Ltd. (“SGS HK”) | ● | ||||
| ● | |||||
| ● | |||||
| Trans Pacific Shipping Ltd. (“Trans Pacific Beijing”) | ● | ||||
| ● | |||||
| ● | |||||
| Trans Pacific Logistic Shanghai Ltd. | ● | ||||
| (“Trans Pacific Shanghai”) | ● | ||||
| ● | |||||
| Gorgeous Trading Ltd (“Gorgeous Trading”) | ● | ||||
| ● | |||||
| ● | |||||
| Brilliant Warehouse Service Inc. | ● | ||||
| (“Brilliant Warehouse”) | ● | ||||
| ● | |||||
| Artificial Intelligence | ● | ||||
| Regeneration Technology Co., Ltd | ● | ||||
| ● | |||||
| SG Shipping & Risk Solution Inc(“SGSR”) | ● | ||||
| ● | |||||
| ● | |||||
| New Energy Tech Limited (“New Energy”) | ● | ||||
| ● | |||||
| ● | |||||
| Singularity(Shenzhen) Technology Ltd. | ● | ||||
| (“SGS Shenzhen”) | ● | ||||
| ● | |||||
5
SINGULARITY FUTURE TECHNOLOGY LTD. AND SUBSIDIAIRES
Notes to the Condensed Consolidated Financial Statements
For the Nine Months ended March 31, 2025
Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Presentation
The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) applicable to interim financial reporting. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the financial position, results of operations, and cash flows for the periods presented have been included.
The condensed consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries over which the Company exercises control. All significant intercompany balances and transactions have been eliminated in consolidation.
These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the most recent Annual Report on Form 10-K. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.
(b) Fair Value of Financial Instruments
The Company follows the provisions of ASC 820, Fair Value Measurements and Disclosures, which clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:
| Level 1 — | Observable inputs such as unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date. |
| Level 2 — | Inputs other than quoted prices that are observable for the asset or liability in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data. |
| Level 3 — | Unobservable inputs that reflect management’s assumptions based on the best available information. |
The carrying value of accounts receivable, other receivables, other current assets, and current liabilities approximate their fair values because of the short-term nature of these instruments.
(c) Use of Estimates and Assumptions
The preparation of the Company’s unaudited condensed consolidated financial statements in conformity with US 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 dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Estimates are adjusted to reflect actual experience when necessary. Significant accounting estimates reflected in the Company’s unaudited condensed consolidated financial statements include revenue recognition, cost of revenues, allowance for credit losses, impairment loss, valuation allowance for deferred tax assets, income tax expense and the useful lives of property and equipment. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from those estimates.
6
SINGULARITY FUTURE TECHNOLOGY LTD. AND SUBSIDIAIRES
Notes to the Condensed Consolidated Financial Statements
For the Nine Months ended March 31, 2025
(d) Translation of Foreign Currency
The accounts of the Company and its subsidiaries are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The Company’s functional currency is the U.S. dollar (“USD”) while its subsidiaries in the PRC, including Trans Pacific Beijing and Trans Pacific Shanghai report their financial positions and results of operations in Renminbi (“RMB”), its subsidiary Sino-Global Shipping (HK), Ltd. reports its financial positions and results of operations in USD. The accompanying unaudited condensed consolidated financial statements are presented in USD. Foreign currency transactions are translated into USD using the fixed exchange rates in effect at the time of the transaction. Generally, foreign exchange gains and losses resulting from the settlement of such transactions are recognized in the consolidated statements of operations. The Company translates the foreign currency financial statements in accordance with ASC 830-10, “Foreign Currency Matters”. Assets and liabilities are translated at current exchange rates quoted by the Federal Reserve at the balance sheets’ dates and revenues and expenses are translated at average exchange rates in effect during the year. The resulting translation adjustments are recorded as other comprehensive loss and accumulated other comprehensive loss as a separate component of equity of the Company, and also included in non-controlling interests.
The exchange rates as of March 31, 2025 and June 30, 2024 and for the three and nine months ended March 31, 2025 and 2024 are as follows:
| March 31, 2025 | June 30, 2024 | Three months ended March 31, | Nine months ended March 31, | |||||||||||||||||||||
| Foreign currency | Balance Sheet | Balance Sheet | 2025 Profit/Loss | 2024 Profit/Loss | 2025 Profit/Loss | 2024 Profit/Loss | ||||||||||||||||||
| RMB:1USD | ||||||||||||||||||||||||
| HKD:1USD | ||||||||||||||||||||||||
(e) Cash
Cash
consists of cash on hand and cash in banks which are unrestricted as to withdrawal or use. The Company maintains cash with various
financial institutions mainly in the PRC, Hong Kong, the U.S. and Djibouti. As of March 31, 2025 and June 30, 2024, cash balances of
$
The Central Bank of Djibouti (BCD) regulates the banking sector and has implemented measures to strengthen the financial system, such as increasing capital requirements and improving liquidity ratios. However, there is no specific mention of a formal deposit insurance system that protects depositors in case of bank failures. Therefore we do not believe there is any insurance for the cash deposited with the Silkroad International Bank.
As of March 31, 2025 and June 30, 2024, amount
of deposits the Company had covered by insurance amounted to $ $
Restricted Cash
As
of March 31, 2025 and June 30, 2024, our restricted balance was $
7
SINGULARITY FUTURE TECHNOLOGY LTD. AND SUBSIDIAIRES
Notes to the Condensed Consolidated Financial Statements
For the Nine Months ended March 31, 2025
(f) Receivables and Allowance for Credit Losses
The carrying value of accounts receivable is reduced by an allowance for credit losses that reflects the Company’s best estimate of the amounts that will not be collected. The Company makes estimations of the collectability of accounts receivable. Many factors are considered in estimating the general allowance, including reviewing delinquent accounts receivable, performing a customer credit analysis, and analyzing historical bad debt records and current and future economic trends. Accounts receivable represent historical balances recorded less related cash applications, less allowance for credit losses and any write-offs of any receivables not previously provided for.
(g) Credit losses
In June 2016, the Financial Accounting Standards Board (FASB) issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326). The ASU introduced a new credit loss methodology, the current expected credit losses (“CECL”) methodology, which requires earlier recognition of credit losses while also providing additional disclosure about credit risk. The Company adopted the ASU as of January 1, 2023.
The CECL methodology utilizes a lifetime “expected credit loss” measurement objective for the recognition of credit losses for loans, receivables, contract assets and other financial assets measured at amortized cost at the time the financial asset is originated or acquired. The CECL is adjusted each period for changes in expected lifetime credit losses. The CECL methodology represents a significant change from prior U.S. GAAP and replaced the prior multiple existing impairment methods, which generally required that a loss be incurred before it was recognized. Within the life cycle of a loan or other financial asset, the methodology generally results in the earlier recognition of the provision for credit losses and the related ACL than prior U.S. GAAP.
The CECL methodology’s impact on expected credit losses, among other things, reflects the Company’s view of the current state of the economy, forecasted macroeconomic conditions.
Under the CECL methodology, the allowance for credit losses is model based and utilizes a forward-looking macroeconomic forecast in estimating expected credit losses. The model of the allowance for credit losses would be considers the uncertainty of forward-looking scenarios based on the likelihood and severity of a possible recession as another possible scenario.
Other receivables represent mainly customer advances, prepaid employee insurance and welfare benefits, which will be subsequently deducted from the employee payroll, project advances as well as office lease deposits. Management reviews its receivables on a regular basis to determine if the bad debt allowance is adequate, and adjusts the allowance when necessary. Delinquent account balances are written-off against allowance for credit losses after management has determined that the likelihood of collection is not probable. Other receivables are written off against the allowances only after exhaustive collection efforts.
(h) Property and Equipment, net
Property and equipment are stated at historical
cost less accumulated depreciation. Historical cost comprises its purchase price and any directly attributable costs of bringing the assets
to its working condition and location for its intended use.
| Buildings | ||
| Motor vehicles | ||
| Computer and office equipment | ||
| Furniture and fixtures | ||
| System software | ||
| Leasehold improvements | useful lives | |
| Mining equipment |
The carrying value of a long-lived asset is considered impaired by the Company when the anticipated undiscounted cash flows from such asset is less than its carrying value. If impairment is identified, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. Fair value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved or based on independent appraisals. For the three and nine months ended March 31, 2025 and 2024, impairments were recorded. All fixed assets were disposed of as of March 31 2025 due to being inoperable after long time usage.
8
SINGULARITY FUTURE TECHNOLOGY LTD. AND SUBSIDIAIRES
Notes to the Condensed Consolidated Financial Statements
For the Nine Months ended March 31, 2025
(i) Revenue Recognition
The Company recognizes revenue which represents the transfer of goods and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange. The Company identifies contractual performance obligations and determines whether revenue should be recognized at a point in time or over time, based on when control of goods and services transfers to a customer.
The Company uses a five-step model to recognize revenue from customer contracts. The five-step model requires the Company to (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation.
For the Company’s freight logistic, the Company provides transportation services which include mainly shipping services. The Company derives transportation revenue from sales contracts with its customers with revenues being recognized upon performance of services. Sales price to the customer are fixed upon acceptance of the sales contract and there is no separate sales rebate, discount, or other incentive. The Company’s revenues are recognized at a point in time after all performance obligations were satisfied
For the Company’s warehouse services, which are included in the freight logistic services, the Company’s contracts provide for an integrated service that includes two or more services, including but not limited to warehousing, collection, first-mile delivery, drop shipping, customs clearance packaging, etc.
Accordingly, the Company generally identifies one performance obligation in its contracts, which is a series of distinct services that remain substantially the same over time and possess the same pattern of transfer. Revenue is recognized over the period in which services are provided under the terms of the Company’s contractual relationships with its clients.
9
SINGULARITY FUTURE TECHNOLOGY LTD. AND SUBSIDIAIRES
Notes to the Condensed Consolidated Financial Statements
For the Nine Months ended March 31, 2025
The transaction price is based on the amount specified in the contract with the customer and contains fixed and variable consideration. In general, the fixed consideration in a contract represents facility and equipment costs incurred to satisfy the performance obligation and is recognized on a straight-line basis over the term of the contract. The variable consideration is comprised of cost reimbursement determined based on the costs incurred. Revenue relating to variable pricing is estimated and included in the consideration if it is probable that a significant revenue reversal will not occur in the future. The estimate of variable consideration is determined by the expected value or most likely amount method and factors in current, past and forecasted experience with the customer. Customers are billed based on terms specified in the revenue contract and they pay us according to approved payment terms.
Revenue for the above services is recognized on a gross basis when the Company controls the services as it has the obligation to (i) provide all services (ii) bear any inventory risk for warehouse services. In addition, the Company has control to set its selling price to ensure it would generate profit for the services.
On January 10, 2022, the Company’s joint venture, Thor Miner, entered into a Purchase and Sale Agreement with SOS Information Technology New York Inc. (the “Buyer”). Pursuant to the Purchase and Sale Agreement, Thor Miner agreed to sell and the Buyer agreed to purchase certain cryptocurrency mining equipment.
The Company’s performance obligation was to deliver products according to contract specifications. The Company recognizes product revenue at a point in time when the control of products or services are transferred to customers. To distinguish a promise to provide products from a promise to facilitate the sale from a third party, the Company considers the guidance of control in ASC 606-10-55-37A and the indicators in ASC 606-10-55-39. The Company considers this guidance in conjunction with the terms in the Company’s arrangements with both suppliers and customers.
In general, revenue was recognized on a gross basis when the Company controls the products as it has the obligation to (i) fulfill the products delivery and custom clearance (ii) bear any inventory risk as legal owners. In addition, when establishing the selling prices for delivery of the resale products, the Company has control to set its selling price to ensure it would generate profit for the products delivery arrangements. If the Company is not responsible for provision of product and does not bear inventory risk, the Company recorded revenue on a net basis.
Contract balances
The Company records receivables related to revenue when the Company has an unconditional right to invoice and receive payment.
Deferred revenue consists primarily of customer
billings made in advance of performance obligations being satisfied and revenue being recognized. Contract balances amounted to $
The Company’s disaggregated revenue streams are described as follows:
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| March 31, 2025 | March 31, 2024 | March 31, 2025 | March 31, 2024 | |||||||||||||
| Freight logistics services | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
10
SINGULARITY FUTURE TECHNOLOGY LTD. AND SUBSIDIAIRES
Notes to the Condensed Consolidated Financial Statements
For the Nine Months ended March 31, 2025
Disaggregated information of revenues by geographic locations are as follows:
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| March 31, | March 31, | March 31, | March 31, | |||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| PRC | $ | $ | $ | $ | ||||||||||||
| U.S. | ||||||||||||||||
| Total revenues | $ | $ | $ | $ | ||||||||||||
(j) Leases
The Company adopted FASB ASU 2016-02, “Leases”
(Topic 842) for the year ended June 30, 2020, and elected the practical expedients that do not require us to reassess: (1) whether any
expired or existing contracts are, or contain, leases, (2) lease classification for any expired or existing leases and (3) initial direct
costs for any expired or existing leases. For lease terms of twelve months or fewer, a lessee is permitted to make an accounting policy
election not to recognize lease assets and liabilities. The Company also adopted the practical expedient that allows lessees to treat
the lease and non-lease components of a lease as a single lease component. Upon adoption, the Company recognized right of use (“ROU”)
assets and same amount of lease liabilities based on the present value of the future minimum rental payments of leases, using an incremental
borrowing rate of
Operating lease ROU assets and lease liabilities are recognized at the adoption date or the commencement date, whichever is earlier, based on the present value of lease payments over the lease term. Since the implicit rate for the Company’s leases is not readily determinable, the Company use its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow, on a collateralized basis, an amount equal to the lease payments, in a similar economic environment and over a similar term.
Lease terms used to calculate the present value of lease payments generally do not include any options to extend, renew, or terminate the lease, as the Company does not have reasonable certainty at lease inception that these options will be exercised. The Company generally considers the economic life of its operating lease ROU assets to be comparable to the useful life of similar owned assets. The Company has elected the short-term lease exception, therefore operating lease ROU assets and liabilities do not include leases with a lease term of twelve months or less. Its leases generally do not provide a residual guarantee. The operating lease ROU asset also excludes lease incentives. Lease expense is recognized on a straight-line basis over the lease term.
The Company reviews the impairment of its ROU assets consistent with the approach applied for its other long-lived assets. The Company reviews the recoverability of its long-lived assets when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on its ability to recover the carrying value of the asset from the expected undiscounted future pre-tax cash flows of the related operations. The Company has elected to include the carrying amount of operating lease liabilities in any tested asset group and include the associated operating lease payments in the undiscounted future pre-tax cash flows.
(k) Taxation
Because the Company and its subsidiaries and Sino-China were incorporated in different jurisdictions, they file separate income tax returns. The Company uses the asset and liability method of accounting for income taxes in accordance with U.S. GAAP. Deferred taxes, if any, are recognized for the future tax consequences of temporary differences between the tax basis of assets and liabilities and their reported amounts in the unaudited condensed consolidated financial statements. A valuation allowance is provided against deferred tax assets if it is more likely than not that the asset will not be utilized in the future.
The Company recognizes 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 Company recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense. The Company had uncertain tax positions as of March 31, 2025 and June 30, 2024.
Income tax returns for the years prior to 2018 are no longer subject to examination by U.S. tax authorities.
11
SINGULARITY FUTURE TECHNOLOGY LTD. AND SUBSIDIAIRES
Notes to the Condensed Consolidated Financial Statements
For the Nine Months ended March 31, 2025
PRC Enterprise Income Tax
PRC enterprise income tax is calculated based
on taxable income determined under the PRC Generally Accepted Accounting Principles (“PRC GAAP”) at
PRC Value Added Taxes and Surcharges
The Company is subject to value added tax (“VAT”).
Revenue from services provided by the Company’s PRC subsidiaries are subject to VAT at rates ranging from
In addition, under the PRC regulations, the Company’s
PRC subsidiaries are required to pay city construction tax (
(l) Earnings (loss) per Share
Basic earnings (loss) per share is computed by dividing net income (loss) attributable to holders of common stock of the Company by the weighted average number of shares of common stock of the Company outstanding during the applicable period. Diluted earnings (loss) per share reflect the potential dilution that could occur if securities or other contracts to issue common stock of the Company were exercised or converted into common stock of the Company. Common stock equivalents are excluded from the computation of diluted earnings per share if their effects would be anti-dilutive.
For the three and nine months ended March 31, 2025 and 2024, there was no dilutive effect of potential shares of common stock of the Company because the Company generated a net loss.
(m) Comprehensive Income (Loss)
The Company reports comprehensive income (loss) in accordance with the authoritative guidance issued by Financial Accounting Standards Board (the “FASB”) which establishes standards for reporting comprehensive income (loss) and its component in financial statements. Other comprehensive income (loss) refers to revenue, expenses, gains and losses that under US GAAP are recorded as an element of stockholders’ equity but are excluded from net income. Other comprehensive income (loss) consists of a foreign currency translation adjustment resulting from the Company not using the U.S. dollar as its functional currencies.
(n) Risks and Uncertainties
The Company’s business, financial position and results of operations may be influenced by the political, economic, health and legal environments in the PRC, as well as by the general state of the PRC economy. The Company’s operations in the PRC 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, health and legal environments and foreign currency exchange. The Company’s results may be adversely affected by changes in the political, regulatory and social conditions in the PRC, and by changes in governmental policies or interpretations with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things.
(o) Recent Accounting Pronouncements
The Company continually assesses any new accounting pronouncements to determine their applicability. When it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequences of the change to its condensed consolidated financial statements and assures that there are proper controls in place to ascertain that the Company’s unaudited condensed consolidated financial statements properly reflect the change.
12
SINGULARITY FUTURE TECHNOLOGY LTD. AND SUBSIDIAIRES
Notes to the Condensed Consolidated Financial Statements
For the Nine Months ended March 31, 2025
Note 3. CRYPTOCURRENCIES
The following table presents additional information about cryptocurrencies:
| March 31, 2025 | June 30, 2024 | |||||||
| Beginning balance | $ | $ | ||||||
| Impairment loss | ( | ) | ||||||
| Ending balance | $ | $ | ||||||
The Company recorded impairment loss for the
three and nine months ended March 31, 2025. There was $
Note 4. ACCOUNTS RECEIVABLE, NET
The Company’s net accounts receivable are as follows:
| March 31, 2025 | June 30, 2024 | |||||||
| Trade accounts receivable | $ | $ | ||||||
| Less: allowances for credit losses | ( | ) | ( | ) | ||||
| Accounts receivable, net | $ | $ | ||||||
Movement of allowance for credit losses are as follows:
| March 31, | June 30, | |||||||
| 2025 | 2024 | |||||||
| Beginning balance | $ | $ | ||||||
| Allowance for credit losses, net of recovery | ||||||||
| Write-off | ( | ) | ( | ) | ||||
| Exchange rate effect | ( | ) | ||||||
| Ending balance | $ | $ | ||||||
For
the three and nine months ended March 31, 2025, the allowance for credit losses and write-off was all $
For the years ended June 30, 2024, the allowance
for credit losses and write-off was $
13
SINGULARITY FUTURE TECHNOLOGY LTD. AND SUBSIDIAIRES
Notes to the Condensed Consolidated Financial Statements
For the Nine Months ended March 31, 2025
Note 5. OTHER RECEIVABLES, NET
The Company’s other receivables are as follows:
| March 31, | June 30, | |||||||
| 2025 | 2024 | |||||||
| Advances to customers* | $ | $ | ||||||
| Employee business advances | ||||||||
| Total | ||||||||
| Less: allowances for credit losses | ( | ) | ( | ) | ||||
| Other receivables, net | $ | $ | ||||||
| * |
Movement of allowance for credit losses are as follows:
| March 31, | June 30, | |||||||
| 2025 | 2024 | |||||||
| Beginning balance | $ | $ | ||||||
| Increase | ||||||||
| Less: write-off | ( | ) | ( | ) | ||||
| Exchange rate effect | ( | ) | ||||||
| Ending balance | $ | $ | ||||||
Note 6. ADVANCES TO SUPPLIERS
The Company’s advances to suppliers – third parties are as follows:
| March 31, | June 30, | |||||||
| 2025 | 2024 | |||||||
| Freight fees (1) | $ | $ | ||||||
| Less: allowances for credit losses | ( | ) | ||||||
| Advances to suppliers-third parties, net | $ | $ | ||||||
| (1) |
14
SINGULARITY FUTURE TECHNOLOGY LTD. AND SUBSIDIAIRES
Notes to the Condensed Consolidated Financial Statements
For the Nine Months ended March 31, 2025
Note 7. PREPAID EXPENSES AND OTHER CURRENT ASSETS
The Company’s prepaid expenses and other assets are as follows:
| March 31, | June 30, | |||||||
| 2025 | 2024 | |||||||
| Prepaid income taxes | $ | $ | ||||||
| Other (including prepaid professional fees, rent) | ||||||||
| Total | $ | $ | ||||||
Note 8. OTHER LONG-TERM ASSETS – DEPOSITS, NET
The Company’s other long-term assets – deposits are as follows:
| March 31, | June 30, | |||||||
| 2025 | 2024 | |||||||
| Rental and utilities deposits | $ | $ | ||||||
| Less: allowances for deposits | ( | ) | ( | ) | ||||
| Other long-term assets- deposits, net | $ | $ | ||||||
Movements of allowance for deposits are as follows:
| March 31, | June 30, | |||||||
| 2025 | 2024 | |||||||
| Beginning balance | $ | $ | ||||||
| Allowance for credit losses, net of recovery | ||||||||
| Less: Write-off | ( | ) | ||||||
| Exchange rate effect | ( | ) | ||||||
| Ending balance | $ | $ | ||||||
Note 9. PROPERTY AND EQUIPMENT, NET
The Company’s property and equipment, net, was as follows:
| March 31, | June 30, | |||||||
| 2025 | 2024 | |||||||
| Motor vehicles | $ | $ | ||||||
| Computer equipment | ||||||||
| Office equipment | ||||||||
| Furniture and fixtures | ||||||||
| System software | ||||||||
| Leasehold improvements | ||||||||
| Mining equipment | ||||||||
| Total | ||||||||
| Less: Impairment reserve | ( | ) | ||||||
| Less: Accumulated depreciation and amortization | ( | ) | ||||||
| Property and equipment, net | $ | $ | ||||||
15
SINGULARITY FUTURE TECHNOLOGY LTD. AND SUBSIDIAIRES
Notes to the Condensed Consolidated Financial Statements
For the Nine Months ended March 31, 2025
Movement of impairment for property and equipment is as follows:
| March 31, | June 30, | |||||||
| 2025 | 2024 | |||||||
| Beginning balance | $ | $ | ||||||
| Disposal | ( | ) | ( | ) | ||||
| Ending balance | $ | $ | ||||||
Depreciation and amortization expenses for the
three months ended March 31, 2025 and 2024 were $
As of March 31, 2025, all fixed assets were disposed
of by the Company, due to being inoperable after long time usage. This resulted in $
Note 10. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
| March 31, | June 30, | |||||||
| 2025 | 2024 | |||||||
| Salary and reimbursement payable | $ | $ | ||||||
| Professional fees and other expense payable | ||||||||
| Interest payable | ||||||||
| Others | ||||||||
| Total | $ | $ | ||||||
Note 11. LEASES
The Company determines if a contract contains a lease at inception which is the date on which the terms of the contract are agreed to and the agreement creates enforceable rights and obligations. US GAAP requires that the Company’s leases be evaluated and classified as operating or finance leases for financial reporting purposes. The classification evaluation begins at the commencement date and the lease term used in the evaluation includes the non-cancellable period for which the Company has the right to use the underlying asset, together with renewal option periods when the exercise of the renewal option is reasonably certain and failure to exercise such option which result in an economic penalty. All of the Company’s leases are classified as operating leases.
The Company has several lease agreements with
lease terms ranging from
The Company’s lease agreements do not contain
any material residual value guarantees or material restrictive covenants. The leases generally do not contain options to extend at the
time of expiration and the weighted average remaining lease terms are
For the three months ended March 31, 2025 and
2024, rent expense amounted to approximately and $
16
SINGULARITY FUTURE TECHNOLOGY LTD. AND SUBSIDIAIRES
Notes to the Condensed Consolidated Financial Statements
For the Nine Months ended March 31, 2025
The five-year maturity of the Company’s lease obligations is presented below:
| Twelve Months Ending September 30, | Operating Lease Amount | |||
| 2026 | $ | |||
| 2027 | ||||
| Total lease payments | ||||
| Less: Interest | ||||
| Present value of lease liabilities | $ | |||
The Company’s Right-of-use assets, net, was as follows:
| March 31, | June 30, | |||||||
| 2025 | 2024 | |||||||
| Beginning balance | $ | $ | ||||||
| Increasing | ||||||||
| Amortization | ( | ) | ( | ) | ||||
| Disposal | ( | ) | ||||||
| Ending balance | ||||||||
| Less: Impairment reserve | ( | ) | ||||||
| Right-of-use assets, net | $ | $ | ||||||
Movement of impairment for Right-of-use assets is as follows:
| March 31, | June 30, | |||||||
| 2025 | 2024 | |||||||
| Beginning balance | $ | $ | ||||||
| Disposal | ( | ) | ( | ) | ||||
| Ending balance | $ | $ | ||||||
Note 12. EQUITY
Stock issuances:
2020 warrants
On September 17, 2020, the Company entered into
certain securities purchase agreement with certain “non-U.S. Persons” as defined in Regulation S of the Securities Act of
1933, as amended, pursuant to which the Company sold an aggregate of
17
SINGULARITY FUTURE TECHNOLOGY LTD. AND SUBSIDIAIRES
Notes to the Condensed Consolidated Financial Statements
For the Nine Months ended March 31, 2025
2021 warrants
On January 27, 2021, the Company entered into
a securities purchase agreement with certain non-U.S. investors thereto pursuant to which the Company sold to the investors, and the investors
purchased from the Company, an aggregate of
On February 6, 2021, the Company entered into
a securities purchase agreement with certain investors pursuant to which the Company sold to the investors, and the investors purchased
from the Company, in a registered direct offering, an aggregate of
On February 9, 2021, the Company entered into
a securities purchase agreement with certain investors pursuant to which the Company sold to the investors, and the investors purchased
from the Company, in a registered direct offering, an aggregate of
On December 14, 2021,
the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with non-U.S. investors and accredited
investors pursuant to which the Company sold to the investors, and the investors agreed to purchase from the Company, an aggregate of
18
SINGULARITY FUTURE TECHNOLOGY LTD. AND SUBSIDIAIRES
Notes to the Condensed Consolidated Financial Statements
For the Nine Months ended March 31, 2025
The Company’s outstanding warrants are classified as equity since they qualify for exception from derivative accounting as they are considered to be indexed to the Company’s own stock and require net share settlement. The fair value of the warrants was recorded as additional paid-in capital from common stock.
On January 24, 2025 the
Company entered into securities purchase agreements with several institutional investors to sell an aggregate of
Following is a summary of the status of warrants outstanding and exercisable as of March 31, 2025
| Warrants | Weighted Average Exercise Price | |||||||
| Warrants outstanding, as of June 30, 2024 | $ | |||||||
| Issued | ||||||||
| Exercised | ||||||||
| Expired | ||||||||
| Warrants outstanding, as of March 31, 2025 | $ | |||||||
| Warrants exercisable, as of March 31, 2025 | $ | |||||||
| Warrants Outstanding | Warrants Exercisable | Weighted Average Exercise Price | Average Remaining Contractual Life | |||||||
| 2020 warrants - | $ | |||||||||
| 2021 warrants - | $ | |||||||||
19
SINGULARITY FUTURE TECHNOLOGY LTD. AND SUBSIDIAIRES
Notes to the Condensed Consolidated Financial Statements
For the Nine Months ended March 31, 2025
Note 13. NON-CONTROLLING INTEREST
The Company’s non-controlling interest consists of the following:
| March 31, | June 30, | |||||||
| 2025 | 2024 | |||||||
| Trans Pacific Shanghai | $ | ( | ) | $ | ( | ) | ||
| Brilliant Warehouse | ( | ) | ( | ) | ||||
| Total | $ | ( | ) | $ | ( | ) | ||
Note 14. COMMITMENTS AND CONTINGENCIES
Contingencies
From time to time, the Company may be subject to certain legal proceedings, claims and disputes that arise in the ordinary course of business. Although the outcomes of these legal proceedings cannot be predicted, the Company does not believe these actions, in the aggregate, will have a material adverse impact on its financial position, results of operations or liquidity.
On March 23, 2023, SG Shipping & Risk Solution
Inc. an indirect wholly owned subsidiary of SGLY entered into an operating income right transfer contract with Goalowen pursuant to which
Goalowen agreed to transfer its rights to receive income from operating a tuna fishing vessel to SG Shipping for $
Putative Class Action
On December 9, 2022, Piero Crivellaro, purportedly on behalf of the persons or entities who purchased or acquired the publicly traded common stock of the Company between February 2021 and November 2022, brought a putative class action, Crivellaro v. Singularity Future Technology Ltd., 22-cv-7499-BMC, against the Company and a dozen related person and entities in the United States District Court for the Eastern District of New York (the “Court”). Plaintiffs alleged violations of the U.S. federal securities laws by the Company. Plaintiffs seek damages, plus interest, costs, fees, and attorneys’ fees. The Company filed a motion to dismiss with the Court on November 20, 2023.
On December 17, 2024, the Court issued an order that partially denied the motions to dismiss filed by the Company and its former chief executive officer, Yang Jie, arising from various statements made by Yang Jie about two allegedly fraudulent transactions. The rest of the motions are granted. On January 2, 2025, the Company filed an answer to the Second Amended Class Action complaint. The matter is currently in the discovery stage.
20
SINGULARITY FUTURE TECHNOLOGY LTD. AND SUBSIDIAIRES
Notes to the Condensed Consolidated Financial Statements
For the Nine Months ended March 31, 2025
Employee Agreement
For the year ended June 30, 2023, the Company had employment agreements with each of Mr. Lei Cao, Ms. Tuo Pan and Mr. Yang Jie. Employment agreement of Mr. Lei Cao provided for a ten-year term that extended automatically in the absence of termination notice provided at least 30 days prior to the fifth anniversary date of the agreement. Employment agreements of Mr. Tuo Pan and Mr. Yang Jie provided for five-year terms that extended automatically in the absence of termination notice provided at least 30 days prior to the fifth anniversary date of the agreement. If the Company failed to provide this notice or if the Company wished to terminate an employment agreement in the absence of cause, then the Company was obligated to provide at least 30 days’ prior notice. In such case during the initial term of the agreement, the Company would need to pay such executive (i) the remaining salary through the date of October 31, 2026. In addition, to pay Mr. Lei Cao and Ms. Tuo Pan (ii) two times of the then applicable annual salary if there had been no change in control, as defined in the employment agreements or three-and-half times of the then applicable annual salary if there was a change in control. The employment agreements for Ms. Tuo Pan and Mr. Yang Jie were terminated in 2022, the Company has no remaining obligation under such agreements.
In February 2024, Zhikang Huang, a former officer
and director of the Company, filed a lawsuit against the Company in the Circuit Court for the City of Richmond. In the complaint, Zhikang
Huang claimed that the Company failed to compensate him for the severance payment, his two months’ salary and the incentive-based
bonus. On January 31, 2025, a judgment from the Circuit Court for the City of Richmond was entered in favor of Zhikang Huang and against
the Company in the amount of $
Civil Monetary Penalty
In March 2023, as a result of the incorrect accounting
treatment of approximately $
On June 17, 2024, the Company received a subpoena issued by the Securities and Exchange Commission, requesting the production of certain documents related to the investigation by the SEC regarding the Restatements. On January 17, 2025, after cooperating with the SEC’s investigations, the Company reached a resolution with the SEC regarding the aforementioned matters.
The SEC approved the
Company’s Offer of Settlement and issued its Cease-and-Desist Order dated January 17, 2025, with respect to certain violations related
to the Company’s financial reporting, accounting, books and records, and internal controls. Pursuant to the terms of the SEC Order,
the Company will pay a civil monetary penalty of $
Note 15. INCOME TAXES
The Company’s income tax expenses for three and nine months ended March 31, 2025 and 2024 are as follows:
| For the three months Ended March 31 | For the nine months Ended March 31 | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Current | ||||||||||||||||
| U.S. | $ | $ | $ | $ | ||||||||||||
| PRC | ||||||||||||||||
| Total income tax expenses | $ | $ | $ | |||||||||||||
21
SINGULARITY FUTURE TECHNOLOGY LTD. AND SUBSIDIAIRES
Notes to the Condensed Consolidated Financial Statements
For the Nine Months ended March 31, 2025
The Company’s deferred tax assets are comprised of the following:
| March 31, 2025 | June 30, 2024 | |||||||
| Allowance for credit losses | ||||||||
| U.S. | $ | $ | ||||||
| PRC | ||||||||
| Net operating loss | ||||||||
| U.S. | ||||||||
| PRC | ||||||||
| Total deferred tax assets | ||||||||
| Valuation allowance | ( | ) | ( | ) | ||||
| Deferred tax assets, net - long-term | $ | $ | ||||||
The Company’s operations in the U.S. incurred
cumulative U.S. federal net operation losses (“NOL”) of approximately $
The Company’s operations in China incurred
a cumulative NOL of approximately $
The Company periodically evaluates the likelihood
of the realization of deferred tax assets (“DTA”) and reduces the carrying amount of the deferred tax assets by a valuation
allowance to the extent it believes a portion will not be realized. Management considers new evidence, both positive and negative, that
could affect the Company’s future realization of deferred tax assets including its recent cumulative earnings experience, expectation
of future income, the carry forward periods available for tax reporting purposes and other relevant factors. The Company determined that
it is more likely than not its deferred tax assets could not be realized due to uncertainty on future earnings as a result of the Company’s
reorganization and venture into new businesses. The Company provided a
The Company’s taxes payable consists of the following:
| March 31, | June 30, | |||||||
| 2025 | 2024 | |||||||
| VAT tax payable | $ | $ | ||||||
| Corporate income tax payable | ||||||||
| Others | ||||||||
| Total | $ | $ | ||||||
22
SINGULARITY FUTURE TECHNOLOGY LTD. AND SUBSIDIAIRES
Notes to the Condensed Consolidated Financial Statements
For the Nine Months ended March 31, 2025
Note 16. CONCENTRATIONS
Major Customers
For the three months ended March 31, 2025, one
customer accounted for
For the three months ended March 31, 2024, one
customer accounted for
Major Suppliers
For the three months ended March 31, 2025, three
suppliers accounted for approximately
For the three months ended March 31, 2024, two
suppliers accounted for approximately
Note 17. SEGMENT REPORTING
ASC 280, “Segment Reporting”, establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major customers in unaudited condensed consolidated financial statements for detailing the Company’s business segments.
The
Company’s chief operating decision maker is the Chief Operating Officer, who reviews the financial information of the separate operating
segments when making decisions about allocating resources and assessing the performance of the group. The Company ceased to sell crypto-mining
equipment since January 1, 2023. For the nine months ended March 31, 2025, the Company operated in
The following tables present summary information by segment for the three and nine months ended March 31, 2025 and 2024, respectively:
| For the Three Months Ended March 31, 2025 | ||||||||||||
| Freight Logistics Services | Crypto- mining equipment sales | Total | ||||||||||
| Net revenues | $ | $ | $ | |||||||||
| Cost of revenues | $ | $ | $ | |||||||||
| Gross profit | $ | $ | $ | |||||||||
| Depreciation and amortization | $ | $ | $ | |||||||||
| Total capital expenditures | $ | $ | $ | |||||||||
| Gross margin% | % | % | ||||||||||
23
SINGULARITY FUTURE TECHNOLOGY LTD. AND SUBSIDIAIRES
Notes to the Condensed Consolidated Financial Statements
For the Nine Months ended March 31, 2025
| For the Three Months Ended March 31, 2024 | ||||||||||||
| Freight Logistics Services | Crypto- mining equipment sales | Total | ||||||||||
| Net revenues | $ | $ | $ | |||||||||
| Cost of revenues | $ | $ | $ | |||||||||
| Gross profit | $ | ( | ) | $ | $ | ( | ) | |||||
| Depreciation and amortization | $ | $ | $ | |||||||||
| Total capital expenditures | $ | $ | $ | |||||||||
| Gross margin% | ( | )% | ( | )% | ||||||||
| For the Nine Months Ended March 31, 2025 | ||||||||||||
| Freight Logistics Services | Crypto- mining equipment sales | Total | ||||||||||
| Net revenues | $ | $ | $ | |||||||||
| Cost of revenues | $ | $ | $ | |||||||||
| Gross profit | $ | $ | $ | |||||||||
| Depreciation and amortization | $ | $ | $ | |||||||||
| Total capital expenditures | $ | $ | $ | |||||||||
| Gross margin% | % | % | ||||||||||
| For the Nine Months Ended March 31, 2024 | ||||||||||||
| Freight Logistics Services | Crypto- mining equipment sales | Total | ||||||||||
| Net revenues | $ | $ | $ | |||||||||
| Cost of revenues | $ | $ | $ | |||||||||
| Gross profit | $ | ( | ) | $ | $ | ( | ) | |||||
| Depreciation and amortization | $ | $ | $ | |||||||||
| Total capital expenditures | $ | $ | $ | |||||||||
| Gross margin% | ( | )% | ( | )% | ||||||||
24
SINGULARITY FUTURE TECHNOLOGY LTD. AND SUBSIDIAIRES
Notes to the Condensed Consolidated Financial Statements
For the Nine Months ended March 31, 2025
Total assets as of:
| March 31, | June 30, | |||||||
| 2025 | 2024 | |||||||
| Freight Logistic Services | $ | $ | ||||||
| Total Assets | $ | $ | ||||||
The Company’s operations are primarily based in the PRC and U.S, where the Company derives all of its revenues. Management also reviews consolidated financial results by business locations.
Disaggregated information of revenues by geographic locations are as follows:
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| March 31, | March 31, | March 31, | March 31, | |||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| PRC | $ | $ | $ | $ | ||||||||||||
| U.S. | ||||||||||||||||
| Total revenues | $ | $ | $ | $ | ||||||||||||
Note 18. RELATED PARTY BALANCE AND TRANSACTIONS
Due from related party, net
As of March 31, 2025 and June 30, 2024, the outstanding amounts due from related parties consist of the following:
| March 31, | June 30, | |||||||
| 2025 | 2024 | |||||||
| Zhejiang Jinbang Fuel Energy Co., Ltd (1) | $ | $ | ||||||
| Shanghai Baoyin Industrial Co., Ltd (2) | ||||||||
| LSM Trading Ltd (3) | ||||||||
| Rich Trading Co. Ltd (4) | ||||||||
| Less: allowance for credit losses | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
Movement of allowance for credit losses are as follows:
| March 31, | June 30, | |||||||
| 2025 | 2024 | |||||||
| Beginning balance | $ | $ | ||||||
| Less: write-off | ( | ) | ||||||
| Exchange rate effect | ( | ) | ||||||
| Ending balance | $ | $ | ||||||
| (1) |
25
SINGULARITY FUTURE TECHNOLOGY LTD. AND SUBSIDIAIRES
Notes to the Condensed Consolidated Financial Statements
For the Nine Months ended March 31, 2025
| (2) |
| (3) |
| (4) |
Accounts payable- related parties
As of March 31, 2025 and June 30, 2024, the Company
had accounts payable to Rich Trading Co. Ltd of and $
Other payable - related party
As of March 31, 2025 and June 30, 2024, the Company
had accounts payable to Qinggang Wang, CEO and legal representative of Trans Pacific Shanghai, of $
As of March 31, 2025 and June 30, 2024,
the Company had accounts payable to $
Note 19. SUBSEQUENT EVENTS
On January 18, 2024, John F. Levy (“Levy”), a former member of the Board of the Company, filed a claim against the Company in the United States District Court for the Eastern District of New York (the “Court”), Levy v. Singularity Future Technology Ltd. f/k/a Sino-Global Shipping America Ltd., 24-cv-0384-NG-JMW (the “Lawsuit”). The Lawsuit is for reimbursement and advancement of legal fees, costs, and expenses incurred in connection with defending the action Piero Crivellaro v. Singularity Future Technology Ltd., 22-cv-07499 (the “Class Action Lawsuit”), in which Levy was named as an individual defendant. On October 25, 2024, the Court filed an Opinion and Order finding the Company in default of the Lawsuit. On November 21, 2024, Levy filed an Application for Damages, which remains pending.
On April 1, 2025, Levy and the Company entered
into a confidential settlement and mutual release agreement to fully resolve the Lawsuit (the “Settlement Agreement”). Pursuant
to the Settlement Agreement, the Company paid a sum of one hundred fifty thousand dollars ($
On April 17, 2025, the stipulation to dismiss the Lawsuit with prejudice was filed with the Court. On April 18, 2025, the Lawsuit was terminated.
26
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes included elsewhere in the report. This discussion contains forward-looking statements that involve risks and uncertainties. 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.
Results of Operations
Comparison of the Three Months Ended March 31, 2025 and 2024
The following table sets forth the components of our costs and expenses for the periods indicated:
| For the Three Months Ended March 31, | ||||||||||||||||||||||||
| 2025 | 2024 | Change | ||||||||||||||||||||||
| US$ | % | US$ | % | US$ | % | |||||||||||||||||||
| Revenues | 363,070 | 100.0 | % | 446,575 | 100.0 | % | (83,505 | ) | (18.7 | )% | ||||||||||||||
| Cost of revenues | 60,307 | 16.6 | % | 714,054 | 159.9 | % | (653,747 | ) | (91.6 | )% | ||||||||||||||
| Gross margin | 83.4 | % | N/A | (59.9 | )% | N/A | 143.3 | % | N/A | |||||||||||||||
| Selling expenses | 62,030 | 17.1 | % | 56,330 | 12.6 | % | 5,700 | 10.1 | % | |||||||||||||||
| General and administrative expenses | 1,052,018 | 289.8 | % | 1,064,336 | 238.3 | % | (12,318 | ) | (1.2 | )% | ||||||||||||||
| Provision for credit losses, net | 370,479 | 102.0 | % | 10,305 | 2.3 | % | 360,174 | 3495.1 | % | |||||||||||||||
| Total costs and expenses | 1,544,834 | 425.5 | % | 1,845,025 | 413.2 | % | (300,191 | ) | (16.3 | )% | ||||||||||||||
Revenues
Revenues decreased by $83,505, or approximately 18.7%, to $363,070 for the three months ended March 31, 2025 from $446,575 for the same period in 2024. The decrease was mainly caused by shipping revenue decline from our U.S. subsidiary, Brilliant Warehouse, in $110,504 was due to the decline of business volume, offset in part to an increase of revenue from our PRC subsidiaries of approximately $26,999 was due to increase a new customer.
Cost of Revenues
Cost of revenues for our freight logistics services segment mainly consisted of freight costs to various freight carriers, cost of labor, warehouse rent and other overhead and sundry costs. Cost of revenues for our freight logistics services segment was $60,307 for the three months ended March 31, 2025, a decrease of $653,747, or approximately 91.6%, as compared to $714,054 for the same period in 2024. As our US subsidiary, Brilliant Warehouse generated no revenue, rental expenses for the period from July 1, 2024 to December 31, 2024 were reclassified into administrative expenses, this resulted in $641,774 reduction in costs. The cost from our PRC subsidiaries, were $364,960 and $376,933 for the three months ended March 31, 2025 and March 31, 2024 respectively, the decline in costs of domestic subsidiaries was mainly attributable to the introduction of lower priced suppliers during this period, resulting in a slight decrease in unit costs.
Our gross margin was 83.4% and negative 59.9% for the three months ended March 31, 2025 and 2024, respectively, mainly attributable to accounting reclassification and the engagement of lower-cost suppliers.
27
Operating Costs and Expenses
Operating costs and expenses decreased by $300,191 or approximately 16.3% from $1,845,025 for three months ended March 31, 2025 compared to for the same period in 2024. This decrease was mainly due to the decrease in cost.
General and Administrative Expenses
Our general and administrative expenses consist primarily of salaries and benefits, travel expenses for our administration department, office expenses, and regulatory filing and professional service fees for auditing, legal and IT consulting. For the three months ended March 31, 2025, we had $1,052,018 of general and administrative expenses, as compared to $1,064,336 for the same period in 2024, representing a decrease of $12,318, or approximately 1.2% Overall, the changes were minimal.
Selling Expenses
Our selling expenses consisted primarily of salaries, meals and entertainment and travel expenses for our sales representatives. For the three months ended March 31, 2025, we had $62,030 of selling expenses as compared to $56,330 for the same period in 2024, which represents an increase of $5,700 or approximately 10.1%. The increase was mainly due to increased efforts to increase the revenues of our freight logistics segment in the PRC.
Provision for credit losses, net
Our total bad debt expenses amounted to $370,479 and $10,305 for the three months ended March 31, 2025 and 2024, mainly due to the provision for a few uncollectable accounts receivable and prepaid expenses.
Gain from disposal of subsidiary
On February 19, 2024, we dissolved Thor Miner Inc. The total gain from the disposal was $322,240. This disposal was not presented as discontinued operations because it did not represent any strategic change in the Company’s operations.
Other Incomes, Net
Other incomes net was $171,068 for the three months ended March 31, 2025, as compared of $90,927 for the same period in fiscal 2024. The other incomes of current period primarily due to Exchange Gain of $315,289, offset in part by fixed asset disposal costs of $132,727
Taxes
We did not record any income tax expense for both the three months ended March 31, 2025 and 2024.
The Company’s operations in the U.S. incurred cumulative U.S. federal net operation losses (“NOL”) of approximately $48,400,000 as of December 31, 2024, which may reduce future federal taxable income. During the three months ended March 31, 2025, approximately $5,400,000 of NOL was generated and the tax benefit derived from such NOL was approximately $1,134,000. As of March 31, 2025, the Company’s cumulative NOL amounted to approximately $53,800,000, which may reduce future federal taxable income.
28
The Company’s operations in China incurred a cumulative NOL of approximately $2,198,000 as of December 31, 2024 which was mainly from net loss. During the three months ended March 31, 2025, additional NOL of approximately $536,000 was generated. As of March 31, 2025, the Company’s cumulative NOL amounted to approximately $2,734,000 which may reduce future taxable income which will expire by 2026.
The Company periodically evaluates the likelihood of the realization of deferred tax assets and reduces the carrying amount of the deferred tax assets by a valuation allowance to the extent it believes a portion will not be realized. Management considers new evidence, both positive and negative, that could affect the Company’s future realization of deferred tax assets including its recent cumulative earnings experience, expectation of future income, the carry forward periods available for tax reporting purposes and other relevant factors. The Company determined that it is more likely than not its deferred tax assets could not be realized due to uncertainty on future earnings as a result of the Company’s reorganization and venture into new businesses. The Company provided a 100% allowance for its deferred tax assets as of March 31, 2025. The net increase in valuation for the three months ended March 31, 2025 amounted to approximately $390,000, based on management’s reassessment of the amount of the Company’s deferred tax assets that are more likely than not to be realized.
Net Loss
As a result of the foregoing, we had a net loss of $1,010,696 for the three months ended March 31, 2025 compared to a net loss of $969,428 for the same period in 2024. After the deduction of non-controlling interest, net loss attributable to us was $1,670,409 for the three months ended March 31, 2025 compared to $949,759 for the same period in 2024. Comprehensive loss attributable to us was $2,213,137 for the three months ended March 31, 2025 compared to $890,844 for the same period in 2024.
Comparison of the Nine Months Ended March 31, 2025 and 2024
The following table sets forth the components of our costs and expenses for the periods indicated:
| For the Nine Months Ended March 31, | ||||||||||||||||||||||||
| 2025 | 2024 | Change | ||||||||||||||||||||||
| US$ | % | US$ | % | US$ | % | |||||||||||||||||||
| Revenues | 1,339,096 | 100.0 | % | 2,303,741 | 100.0 | % | (964,645 | ) | (41.9 | )% | ||||||||||||||
| Cost of revenues | 1,297,724 | 96.9 | % | 2,693,879 | 116.9 | % | (1,396,155 | ) | (51.8 | )% | ||||||||||||||
| Gross margin | 3.1 | % | N/A | (16.9 | )% | N/A | 20.0 | % | N/A | |||||||||||||||
| Selling expenses | 187,780 | 14.0 | % | 168,258 | 7.3 | % | 19,522 | 11.6 | % | |||||||||||||||
| General and administrative expenses | 2,374,836 | 177.3 | % | 4,264,219 | 185.1 | % | (1,889,383 | ) | (44.3 | )% | ||||||||||||||
| Impairment loss of Cryptocurrencies | - | - | % | 72,179 | 3.1 | % | (72,179 | ) | (100.0 | )% | ||||||||||||||
| Provision for credit losses, net | 370,479 | 27.7 | % | 65,915 | 2.9 | % | 304,564 | 462.1 | % | |||||||||||||||
| Total costs and expenses | 4,230,819 | 315.9 | % | 7,264,450 | 315.3 | % | (3,033,631 | ) | (41.8 | )% | ||||||||||||||
29
Revenues
Revenues decreased by $964,645, or approximately 41.9%, to $1,339,096 for the nine months ended March 31, 2025 from $2,303,741 for the same period in 2024. The decrease was mainly caused by shipping revenue decline from our U.S. subsidiary, Brilliant Warehouse, in $429,251 and from our PRC subsidiaries in $535,394 due to the business volume reduce.
Cost of Revenues
Cost of revenues for our freight logistics services segment mainly consisted of freight costs to various freight carriers, cost of labor, warehouse rent and other overhead and sundry costs. Cost of revenues for our freight logistics services segment was $1,297,724 for the nine months ended March 31, 2025, a decrease of $1,396,155, or approximately 51.8%, as compared to $2,693,879 for the same period in 2024. The decrease was in line with the decline in revenue.
Our gross margin was 3.1% and negative 16.9% for the nine months ended March 31, 2025 and 2024, respectively. It was mainly due to that our US subsidiary, Brilliant Warehouse with low profit margins has no revenue for the nine months ended March 31, 2025.
Operating Costs and Expenses
Operating costs and expenses decreased by $3,033,631 to $4,230,819 in the nine months ended March 31, 2025, or approximately 41.8% from $7,264,450 for the nine months ended March 31, 2024. This decrease was mainly due to the decrease in cost and general and administrative expenses.
General and Administrative Expenses
Our general and administrative expenses consist primarily of salaries and benefits, travel expenses for our administration department, office expenses, and regulatory filing and professional service fees for auditing, legal and IT consulting. For the nine months ended March 31, 2025, we had $2,374,836 of general and administrative expenses, as compared to $4,264,219 for the same period in 2024, representing a decrease of $1,889,383, or approximately 44.3%. It was mainly attributable to the decreased professional fees of $581,711 and the decreased employee compensations of $1,232,531 due to redundancy and salary reductions.
Selling Expenses
Our selling expenses consisted primarily of salaries, meals and entertainment and travel expenses for our sales representatives. For the nine months ended March 31, 2025, we had $187,780 in selling expenses, as compared to $168,258 for the same period in 2024, which represents an increase of $19,522 or approximately 11.6%. The increase was mainly due to increased efforts to increase the revenues of our freight logistics segment in the PRC.
30
Provision for credit losses, net
Our total bad debt expenses amounted to $370,479 and $65,915, for the nine months ended March 31, 2025 and 2024, mainly due to the provision for a few uncollectable accounts receivable and prepaid expenses.
Impairment Loss of Cryptocurrencies
We recorded impairments of nil and $72,179 for the nine months ended March 31, 2025 and 2024, for the cryptocurrencies held by us as the ownership of the cryptocurrencies could not be verified.
Gain from disposal of subsidiary
On September 12, 2024, the Company dissolved its U.S. subsidiary SG link LLC. Total loss from disposal was approximately $1,030. This disposal was not presented as discontinued operations because it did not represent any strategic change in the Company’s operations.
On October 24, 2023, the Company dissolved its Ningbo Saimeinuo Web Technology Ltd. subsidiary. Total gain from disposal was approximately $62,384. This disposal was not presented as discontinued operations because it did not represent any strategic change in the Company’s operations.
Other Incomes, Net
Other income net was $540,392 for the nine months ended March 31, 2025, as compared to other income of $7,263 for the same period in fiscal 2024. Gain on disposal of ROU $354,108 is recognized due to the early termination of a lease agreement in Great Neck, New York, accordingly, the impairment of ROU recognized in previous years was reversed, Exchange Gain was $315,244, offset in part by the loss on disposal of fixed assets of $133,769.
Taxes
We did not record any income tax expense for both the nine months ended March 31, 2025 and 2024, respectively. See – Taxes above.
Net Loss
As a result of the foregoing, we had a net loss of $2,352,361 for the nine months ended March 31, 2025 compared to a net loss of $4,552,967 for the same period in 2024. After the deduction of non-controlling interest, net loss attributable to us was $2,959,995 for the nine months ended March 31, 2025 compared to $4,350,673 for the same period in 2024. Comprehensive loss attributable to us was $3,514,365 for the nine months ended March 31, 2025 compared to $4,315,374 for the same period in 2024.
31
Liquidity and Capital Resources
As of March 31, 2025, we had $14,873,924 in cash (including cash on hand and cash in bank) and $3,048,227 in restricted cash. The majority of our cash is in banks located in the Djibouti a country in East Africa and the restricted cash is in banks located in U.S.
The following table sets forth a summary of our cash flows for the periods as indicated:
| For the Nine Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Net cash used in operating activities | $ | (347,366 | ) | $ | (4,534,686 | ) | ||
| Net cash provided by investing activities | $ | - | $ | 76,077 | ||||
| Net cash provided by financing activities | $ | 1,141,000 | $ | 4,456,576 | ||||
| Net increase (decrease) in cash and restricted cash | $ | 793,634 | $ | (2,033 | ) | |||
| Cash at the beginning of period | $ | 17,736,059 | $ | 17,390,156 | ||||
| Effect of exchange rate fluctuations on cash and restricted cash | $ | (607,542 | ) | $ | 341,441 | |||
| Cash and restricted cash at the end of period | $ | 17,922,151 | $ | 17,729,564 | ||||
The following table sets forth a summary of our working capital:
| March 31, | June 30, | |||||||||||||||
| 2025 | 2024 | Variation | % | |||||||||||||
| Total Current Assets | $ | 18,244,590 | $ | 18,247,523 | $ | (2,933 | ) | 0.0 | % | |||||||
| Total Current Liabilities | $ | 6,905,717 | $ | 5,343,001 | $ | 1,562,716 | 29.2 | % | ||||||||
| Working Capital | $ | 11,338,873 | $ | 12,904,522 | $ | (1,565,649 | ) | (12.1 | )% | |||||||
| Current Ratio | 2.64 | 3.42 | (0.78 | ) | (22.8 | )% | ||||||||||
In assessing the liquidity, we monitor and analyze our cash on-hand and our operating and capital expenditure commitments. Our liquidity needs are to meet our working capital requirements, operating expenses and capital expenditure obligations. As of March 31, 2025, our working capital was $11,338,873 and we had cash and restricted cash of approximately $17,922,151 (including $14,873,924 in cash and $3,048,227 in restricted cash). We believe our current working capital is sufficient to support our operations and debt obligations as they become due for the next twelve months.
32
Operating Activities
Our net used in operating activities was $347,366 for the nine months ended March 31, 2025. The operating cash outflow for the nine months ended March 31, 2025 was primarily attributable to net loss cash outflow of $2,352,361 and partial offset by accrued expenses and other current liabilities increased $1,188,209.
Our net cash used in operating activities was $4.5 million for the nine months ended March 31, 2024. The operating cash outflow for the nine months ended March 31, 2024 was primarily attributable to our net loss of $4.6 million.
Investing Activities
We did not have any investing activities for the nine months ended March 31, 2025.
Net cash used in investing activities was $0.1 million for the nine months ended March 31, 2024 due to repayments from related parties from Zhejiang Jinbang, which is owned by Mr. Qinggang Wang.
Financing Activities
Net cash provided by financing activities for the Nine Months ended March 31, 2025 was $1.1 million which was due to proceeds from issuance of common stock.
Net cash provided by financing activities for the Nine Months ended March 31, 2024 was $4.5 million due to proceeds from issuance of common stock of 9.9 million and the repayment of $5 million of convertible notes and accrued interest of $0.4 million.
Critical Accounting Estimates
The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles and the Company’s discussion and analysis of its financial condition and operating results require the Company’s management to make judgments, assumptions and estimates that affect the amounts reported. Note 2, “Summary of Significant Accounting Policies” of the Notes to consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended June 30, 2024 (describe the significant accounting policies and methods used in the preparation of the Company’s consolidated financial statements. There have been no material changes to the Company’s critical accounting estimates since the 2024 Form 10-K.
Off-Balance Sheet Arrangements
None.
33
Item 3. Quantitative and Qualitative Disclosures about Market Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
As of March 31, 2025, the Company carried out an evaluation, under the supervision of and with the participation of its management, including the Company’s Chief Executive Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on the foregoing evaluation, the Chief Executive Officer concluded that the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were not effective to ensure that the information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the applicable rules and forms due to ineffective internal controls over financial reporting that stemmed from the following material weaknesses:
| ● | Lack of segregation of duties for accounting personnel who prepared and reviewed the journal entries in some of the subsidiaries within the consolidation, lack of supervision, coordination and communication of financial information between different entities within the Group; |
| ● | Lack of full time U.S. GAAP personnel in the accounting department to monitor and reconcile the recording of the transactions which led to error in revenue recognition in previously issued financial statements; |
| ● | Lack of resources with technical competency to address, review and record non-routine or complex transactions under U.S. GAAP; |
| ● | Lack of management control reviews of the budget against actual with analysis of the variance with a precision that can be explained through the analysis of the accounts; |
| ● | Lack of proper procedures in identifying and recording related party transactions which led to restatement of previously issued financial statements; |
| ● | Lack of proper procedures to maintain supporting documents for accounting records; and |
| ● | Lack of proper oversight for the Company’s cash disbursement process that led to misuse of the Company funds by its former executive. |
34
In order to remediate the material weaknesses stated above, we intend to implement additional policies and procedures, which include:
| ● | Hiring additional accounting staff to report the internal financial timely; |
| ● | Reporting other material and non-routine transactions to the Board and obtain proper approval; |
| ● | Recruiting additional qualified professionals with appropriate levels of U.S. GAAP knowledge and experience to assist in resolving accounting issues in non-routine or complex transactions; |
| ● | Developing and conducting U.S. GAAP knowledge, SEC reporting and internal control training to senior executives, management personnel, accounting departments and the IT staff, so that management and key personnel understand the requirements and elements of internal control over financial reporting mandated by the U.S. securities laws; |
| ● | Setting up budgets and developing expectations based on understanding of the business operations, compare the actual results with the expectations periodically and document the reasons of the fluctuations with further analysis. This should be done by CFO and reviewed by CEO, communicated with the Board; |
| ● | Strengthening corporate governance; |
| ● | Setting up policies and procedures for the Company’s related party identification to properly identify, record and disclose related party transactions; and |
| ● | Setting up proper procedures for the Company’s fund disbursement process to ensure that cash is disbursed only upon proper authorization, for valid business purposes, and that all disbursements are properly recorded. |
Changes in Internal Control over Financial Reporting.
There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the quarter ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. On April 24, 2025, we engaged Marcum Asia CPAs LLP to provide internal control over financial reporting best practices consulting services to the Company.
35
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Litigation
As previously disclosed, on December 9, 2022, Piero Crivellaro, purportedly on behalf of the persons or entities who purchased or acquired the publicly traded common stock of the Company between February 2021 and November 2022, brought a putative class action, Crivellaro v. Singularity Future Technology Ltd., 22-cv-7499-BMC, against the Company and a dozen related person and entities in the United States District Court for the Eastern District of New York (the “Court”). Plaintiffs alleged violations of the U.S. federal securities laws by the Company. Plaintiffs seek damages, plus interest, costs, fees, and attorneys’ fees. The Company filed a motion to dismiss with the Court on November 20, 2023.
On December 17, 2024, the Court issued an order that partially denied the motions to dismiss filed by the Company and its former chief executive officer, Yang Jie, arising from various statements made by Yang Jie about two allegedly fraudulent transactions. The rest of the motions are granted. On January 2, 2025, the Company filed an answer to the Second Amended Class Action complaint. The matter is currently in the discovery stage.
As previously disclosed, in February 2024, Zhikang Huang, a former officer and director of the Company, filed a lawsuit against the Company in the Circuit Court for the City of Richmond. In the complaint, Zhikang Huang claimed that the Company failed to compensate him for the severance payment, his two months’ salary and the incentive-based bonus. On January 31, 2025, a judgment from the Circuit Court for the City of Richmond was entered in favor of Zhikang Huang and against the Company in the amount of $468,956.75, with interest accruing from the date of the judgment. On April 23, 2025, said Virginia judgment was filed in the Supreme Court of New York, County of Westchester and entered in New York in favor of Zhikang Huang and against the Company in the amount of $468,956.75, with interest accruing from January 31, 2025. As of the date of this report, Zhikang Huang has initiated the garnishment process.
As previously disclosed, on January 18, 2024, John F. Levy (“Levy”), a former member of the Board of the Company, filed a claim against the Company in the Court, Levy v. Singularity Future Technology Ltd. f/k/a Sino-Global Shipping America Ltd., 24-cv-0384-NG-JMW (the “Lawsuit”). On April 1, 2025, Levy and the Company entered into a confidential settlement and mutual release agreement to fully resolve the Lawsuit (the “Settlement Agreement”). Pursuant to the Settlement Agreement, the Company paid a sum of one hundred and fifty thousand dollars ($150,000) to Blank Rome LLP, which was counsel to Levy. On April 17, 2025, the stipulation to dismiss the Lawsuit with prejudice was filed with the Court. On April 18, 2025, this Lawsuit was terminated.
Except as set forth above and previously reported, there have been no material changes to the legal proceedings that the Company is involved in.
Item 1A. Risk Factors
In addition to other information set forth in this report, you should carefully consider the risk factors described in Part I, Item 1A, “Risk Factors” in our annual report on Form 10-K for the fiscal year ended June 30, 2024 (“2024 Annual Report”), which could materially affect our business, financial condition or future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results.
Except as updated below, there has been no material changes from the risk factors previously disclosed in our 2024 Annual Report.
Risks associated with cash deposited at the Silkroad International Bank
As of March 31, 2025, we have $14,404,155 in cash deposited with the Silkroad International Bank.
The Central Bank of Djibouti (BCD) regulates the banking sector and has implemented measures to strengthen the financial system, such as increasing capital requirements and improving liquidity ratios. However, there is no specific mention of a formal deposit insurance system that protects depositors in case of bank failures. Therefore we do not believe there is any insurance for the cash deposited with the Silkroad International Bank.
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In addition, Silkroad International Bank has indicated that (1) The Central Bank of Djibouti (BCD) faces periodic shortages of foreign currency reserves, which may restrict our ability to convert local Djiboutian francs (DJF) into USD or other foreign currencies, repatriate funds to international subsidiaries or partners, and settle cross-border transactions in a timely manner, which could disrupt cash flow, delay vendor payments, and hinder operational flexibility; and (2) Djibouti maintains stringent foreign exchange regulations, including:
| ● | Approval Requirements: Large transfers or conversions may require BCD authorization, causing delays. |
| ● | Prioritization of Essential Imports: The BCD may prioritize sectors like food and energy, limiting access to forex for non-essential businesses (e.g., consulting services). |
| ● | Unclear Transfer Limits: Bank of Djibouti staff have indicated unspecified caps on outward transfers, increasing uncertainty. |
These restrictions may result in significant negative impact to our ability to operate and execute our business plan.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information.
Item 6. Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q:
| * | Filed herewith. |
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| SINGULARITY FUTURE TECHNOLOGY, LTD. | ||
| May 15, 2025 | By: | /s/ Jia Yang |
| Jia Yang | ||
| Chief Executive Officer | ||
| May 15, 2025 | By: | /s/ Chee Jiong Ng |
| Chee Jiong Ng | ||
| Chief Financial Officer | ||
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